🎧🍌 YouTube to Entrepreneur: Epic Gardening's $100+ Million Playbook with Kevin Espiritu, Founder and CEO
The YouTube meta game, why creators have negative CAC, mistakes launching new products, non-intuitive way products influence your cost structure, and why he raised a Series A as a content creator
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The story of Kevin Espiritu and Epic Gardening is incredible. The blog he started in 2013 has grown into an internet gardening empire spanning YouTube, Instagram, TikTok, Facebook and more, launched dozens of products, and acquired a seed wholesaler selling into 4,500+ gardening retailers.
We go deep on the past, present, and future of YouTube, how various creator-led business models work, how Epic Gardening leverages content to sell products D2C and now B2B, and how he’s building Epic into a 9-figure business.
Timestamps to jump in:
05:09 The history of YouTube
12:04 The YouTube algorithm and meta game
40:17 Using Reddit to jumpstart blog traffic
46:56 How creator-led businesses have negative CAC
47:12 Why they must be very small or very large
50:00 Acquiring a gardening blog for $1k from an Indian VC
52:43 His process for doing acquisitions
53:38 Launching his first product
57:54 Biggest mistakes launching new products
58:30 Buying his own warehouse
59:04 Non-intuitive ways a product can influence your cost structure
1:03:00 Kevin’s approach to hiring
1:04:40 Why he raised a Series A as a YouTube creator
1:05:27 How to approach investing in AI
1:19:53 Why Kevin wrote three books
1:23:26 Why more people will grow food at home
1:25:20 How he approaches celebrity partnerships
Find Kevin on Twitter, LinkedIn, and YouTube
Transcript
Find transcripts of all prior episodes here.
Turner Novak:
Kevin, thanks for coming on the show. How's it going?
Kevin Espiritu:
Good, man. Good, man. How are you?
Turner Novak:
I'm good. Excited to talk about Epic Gardening. I think we're going to hit on three main things, YouTube, your business Epic Gardening, and then talk a little angel investing. So first question, what is going on on YouTube right now? Can you talk us through maybe where we're at today, maybe it's helpful to give us some history or some context? Just get us in the mindset of the platform, YouTube, the metagame. You've had some good content around that lately. I think it's kind of a good place to start.
Kevin Espiritu:
Yeah, for sure. I mean it's a deep world and you could go so far back in history here and I think everyone defines it in their own way because when you started is kind of the era that you were in. So if you think about YouTube founded like 2004, 2005, that's era one, right? I mean it's like the most you part of YouTube, Charlie bit my finger. It's back when you could go viral across actually the whole internet at the same time and then you just go on Ellen or something, if you were Charlie, right?
Turner Novak:
Yeah, that was the end state.
Kevin Espiritu:
Yeah, that was it. You'd make the talk show rounds and that was actually the goal. And these days obviously it's just not the case. So back then it was cult classic era. Everyone's sort of just figuring it out. There's no business established behind it. Very, very early YouTubers were sort of just doing it because and that was it. And then when I started YouTube it was 2013 and I started it in a very cringe way. So did everyone, right?
When you start, your first video is probably always going to be your worst. And my first video was one that I made on a hydroponic gardening system. It's something called deep water culture, very nerdy, but instead of recording a video, what I did is, I designed 10 layers in Adobe Photoshop of a graphic and slowly unhid the layers as I voiced over the video describing how this system is built.
And so it's effectively a PowerPoint presentation, but I didn't do it that way for some reason, even though PowerPoint was well in existence by then. And so that was kind of the era I would call it of just sort of figuring things out like the metagame, if we want to talk about that was kind of being developed at the time. There was different formats that were starting to become known, the vlogging format or the reviews sort of thing or reactions.
Turner Novak:
I feel like lyric videos were fairly popular, maybe harder to monetize, but that was a big piece.
Kevin Espiritu:
Near impossible to monetize back then, but definitely a format for sure. And then you get into the later teen, 20 teens, you get into people building real businesses behind YouTube. The first one I can think of that's in a space similar to mine would be Michelle Phan and Ipsy, I think it was a makeup kit or something like that, but that was true YouTube passionate audience directly to a makeup brand or a skincare, I think it was makeup.
Turner Novak:
And she kind of did tutorials, taught you how to apply and then started recommending products. And then I think she created her own line.
Kevin Espiritu:
Then she just created her own line, yeah and that's pretty much the arc that every product based YouTuber will go through it seems like, I mean certainly for me it was the same kind of way, but yeah, she'd do how to do cat eyes and then which is the best mascara for cat eyes, or probably butchering what makeup is actually used for what purpose. But you get the point and then all of a sudden it doesn't take too much of a genius leap to go, well, why am I recommending Maybelline for 5% when I could just make Michelle Phan's makeup for cosmetics at least probably 80% margins or something crazy like that.
And so now I guess what you're seeing at the time of this recording at least is sort of a bit of a changing of the guard I would say, some of the bigger YouTubers are tapping out or they're stepping back. You look at a guy like MatPat, who I would say is one of the better YouTubers ever to exist, and when I say better, I mean in the Taylor Swift sense, not in the esoteric band that only you like sense, that's like mass appeal, huge audience. He's done it 3, 4, 5 times on different channels, different niches, different categories. And he's kind of saying, "Look, there's only so much I can do here. I've kind of tapped it out and I'm giving my channels effectively to my lead writers to run." So he is stepping back as a host.
Turner Novak:
So it's an interesting dynamic, multiple channels. I mean I think I might have an idea, but I'm curious your take, why would someone have a bunch of channels?
Kevin Espiritu:
It's weird, right? It's sort of been a big debate over the last however many years, five-ish years or so is as you expand, so I'll just take us for example, Epic Gardening was the only channel that I had until 2020, and so obviously you're trying to put all your effort on growing one channel because of that compounding effect. The more views, the more subscribers. The more subscribers, the more views. That whole sort of game.
And then in 2020, my reason for creating a new one is, I had purchased a house and I wanted to talk about stuff like canning, preserving, baking, these sorts of things that fundamentally no one signed up for by subscribing to Epic Gardening. And so I decided to create a channel called Epic Homesteading, which at the time had no videos and I just said, "Hey, look, something new's coming." I posted it on Epic Gardening and I think we had 35,000 subscribers before a video even came out. Which is, in a way, awesome and in another way, painful, because it took me years to get to 10,000 on my first channel.
So it's funny how that compounding wheel works, but the reason I think it's because the terminology is kind of wrong. On a YouTube channel, you might think you could have many shows on one channel, because if you make a TV analogy, that's sort of how it works, but it doesn't really seem to work quite that way. It seems better to have... Take MatPat and if you don't know who MatPat is, his biggest channel is Game Theory. He has one called Film Theory, Style Theory and Food Theory. So it's the theory universe is sort of what he's doing there. And obviously if you sign up for Game Theory, you probably might be interested in movies, but if that's all he's starts putting out, you're like, yo, bro, what are you doing?
And similarly with food and style, so he took his essence and he brought it to four different categories, which to date, I actually don't know that I've seen anyone do it at that level, because those are very different, style and food is very different from film and gaming, but he's gotten many, many millions of subscribers on all those. And so the channel is almost like a container for a broad topic that you could have formats underneath, but you shouldn't really, this is just my personal opinion, you shouldn't really go too, too far a field of that. You might as well just make another channel because I think the dirty secret of YouTube is the sub count, the subscriber count effectively doesn't really matter. It's almost like TikTok works these days, where you're going to get pushed a video that you're going to watch whether you're subscribed to it or not.
So if you subscribe to 10 channels in woodworking and never watch a woodworking video, your home feed is not going to have woodworking on it. So it basically means you aren't subscribed to those channels in a true sense. I actually know, so the head of YouTube's algorithm, he's mentioned before offhand, he would never do it, but he is like, "If I could, I would just remove subs from YouTube, because they don't really matter in a fundamental sense." But obviously that's part of the culture of YouTube is to get your email subscriber, you'd never do it. But it's very interesting, I mean, it's way different than I think someone from the outside would imagine.
Turner Novak:
Yeah, I kind of think about it as it's like a cumulative social capital or accumulated how many times you've gone viral essentially. I mean, that's how it's like for me on Twitter. If you go to my Twitter, I don't know the exact number, it's like 164,000 followers I think, and most of my tweets don't get that many views, but some of them get millions and tens of millions, so it kind of doesn't matter. People are not going to see my tweet if it's not something that the platform knows people will watch.
Kevin Espiritu:
Dude, I kind of think that the follower count mechanic is sort of like a 2005 to 2018 era phenomenon that will go, we'll look back in this age of the internet and go like, yeah, why does that actually matter how many followers someone has? Because you're totally right, think about it. Follower accounts do not decrease ever, so you can only accumulate them. You can't prune them like you could prune an email list or an SMS list. So if I could, I would actually love to prune it down, if it actually meant that it works like an email list would like your send percentage, your open percentage. It just doesn't work that way.
Turner Novak:
I feel like notifications, if you turn notifications on for someone's post, you get a push that's almost like a more qualified version of a subscriber or follower, because those will probably see them no matter what the algorithm does. But that's pretty small. I mean, I would assume all people who follow someone maybe less than 1% have push notifications on, maybe it depends on who they are, but-
Kevin Espiritu:
I wonder, I don't know ours offhand, I want to say might be 100,000 people have them on, because when you publish a video, it'll tell you how many pushes it's sent on YouTube and so you can get a sense for it. I'm pretty sure I haven't looked in a while, but you're totally right. And then there's the abuse of that mechanic because the whole phrase marketers ruin everything. So if you treat your channel too much like that, it's not good to push all the time to everyone unless it's bangers only, and few channels run that way. MrBeast is a great example of someone who runs that way, but if you're not one like that, we're definitely not a channel like that, then sometimes we'll just turn them off or just more selective.
Turner Novak:
So you will not let people subscribe to push notification or you will not trigger that notification if you post a video?
Kevin Espiritu:
Yeah, sometime you won't push it, for us I always feel like I'm kind of on an island in YouTube because we're such a seasonal business. Gardening is exceptionally seasonal in a literal sense. Spring, summer, fall, in winter, what are you doing? You're just kind of chilling.
Turner Novak:
Yeah. What are you doing right now? You're just hanging out?
Kevin Espiritu:
Well, I'm in San Diego, so I can still grow, but the audience can't most of the time, and so they’re either watching us in their cottage in the snow or they're just not watching us. But yeah, no, for us, the example I always bring up is let's say I want to do a video on how to grow corn from seed. First of all, that video takes a while to film. I have to literally grow the whole plant and film every stage. So the production on it's quite long.
Turner Novak:
How long does that take?
Kevin Espiritu:
Corn is probably like 90 days, 90, 120 days or so. And then you got to remember every sort of phase change of the plant, okay, what do I do here? What do I do here? And you got to remember what you're wearing and all that kind of stuff.
Turner Novak:
You've got to wear the same clothes, that's okay.
Kevin Espiritu:
That's why I mostly just wear this hat and some sort of generic shirt because...
Turner Novak:
Pretty easy, yeah.
Kevin Espiritu:
Yeah, it's simple. Anyways, so when that video comes out, when it's done, the corn's done, so I can start editing that video when the corn is done, but when the corn's done, everyone else's corn would be done. So if I put that video out at that time, it's going to do absolute garbage. And that's what happens. So we put this video out sometime late July, which is well past when you could grow corn, and no surprise it gets a 10 out of 10.
And on YouTube, what I'm saying there with 10 out of 10 is they'll rank your videos as how well they did in relation to the last 10 that you did. So a 10 out of 10 is the worst. It's the 10th best video out of the last 10. And then they'll show you based on the time since release, how many views it's accumulated relative to those 10. And so this corn one is what I call a deep 10. So not only was it worse than the last 10, it was about half of the views. So it was way below.
Turner Novak:
Of the ninth one?
Kevin Espiritu:
Yeah, of the ninth one, exactly.
Turner Novak:
That's sad. Yeah, I'm sorry for you.
Kevin Espiritu:
I was legitimately, that day I was like, are you serious, man? I just spent four months growing this goddamn corn and no one's watching this video. And then I go, you know what? It's just a season. And so the video is out, it looks terrible, but I know in my heart that it's a good video. I know it's a good video on growing corn. So I just waited a year. I think it's at like 700,000 views now. People just needed to search for it again. And so that's one of the ways that we play our channel that's very different than I would say, I don't know, a tech reviewer or something like that.
Turner Novak:
So you think of it more as like SEO keywords, long tail over a long period of time, almost like a blog post versus there's some people that are like, hit space, you're probably going to get most of the views pretty quickly and it's stale, like iPhone 13 review, no one's watching those videos anymore. Is that kind how you approach it?
Kevin Espiritu:
Well, it's both, right? So ideally you could be a channel that doesn't have to rely on one strategy or the other. So for us, I can do, let's say I haven't done a video on how to grow lettuce from seed or mistakes in growing lettuce. Those are great search-based videos. And then we know there's a few formats that work really well for the recommended sidebar. So we'll do like gardeners react to bad TikTok plant advice or something like that.
Turner Novak:
It's really like a funny thumbnail where he was like, ah.
Kevin Espiritu:
Yeah. And you're just like, ah, you know. No, literally, it's just those sort of cringey thumbnails. But they're sort of funny. But we'll do those videos and those videos basically go viral.
I usually use a baseball terminology, so they're usually doubles. Sometimes they're grand slams, and then sometimes they get re-picked up in recommendations, but you're not searching for that ever. And so you're sort of really relying on the algorithmic sensibility to push that one. So there's basically search-based videos and suggested videos. Suggested being ones like you would just simply stumble upon, right?
I mean, I'm sure you've been on YouTube and you've seen, there's thumbnails I can even think of right now that I've seen 74 times, and I've just never clicked it. And then eventually the 75th time, I'm like, "Goddamn YouTube, you got me. I'm in." I need to figure out how these Chinese women overthrew this small town or something like that. And I'm like, okay, fine, I'll learn. So yeah, we try to have a mix of both, but certainly in our field we're in education, gardening education, there's a lot of plants, and there's a lot of searching around those topics.
Turner Novak:
Yeah. Okay. So I guess just to level set, what is kind of the state of Epic Gardening as a business? What are you allowed to share in terms of, I know that YouTube is a big component, but then you also have blog, the website where you do a lot of transactions, you guys sell stuff. Can you give us a high level on what all it is and how it all works?
Kevin Espiritu:
Yeah, sure. So Epic started with a blog. I started it, I mean, technically, I guess in 2013, went full-time on it 2016. But yeah, it really was a blog. I was building websites, I was marketing local businesses, and that was my calling card, was just having this blog saying, look, I can build websites. Here's my little hobby about gardening. And that would close these clients that I was working with back in the day. So today, Epic, I believe we're the second or third most trafficked blog in gardening in the world. It just depends on whatever stats you want to believe at the time, but top five, let's call it. And then on, I think every social platform, maybe with the exception of Facebook, we're the largest account about gardening.
Turner Novak:
In terms of the fake followers and fake subscribers?
Kevin Espiritu:
In terms of the fake followers, but frankly, I think probably also in terms of views, I think, I mean it really hard to say, nevertheless, if in aggregate, there's no one that has a bigger following across all platforms than we do about specifically gardening. But the crazy part is that is cool. And up until 2019, that's what I was all about. But once we started offering products to our audience, I mean, that's really what the business has become is much like Michelle Phan and Ipsy, like we mentioned, the offering and developing of products to the audience.
So now we're multiple tens of millions in revenue. We've made some acquisitions. We own a seed company, actually the first seed company I ever started growing back in the day, which is kind of crazy. We bought that company from the founders a year and a half ago now, some smaller acquisitions as well in the earlier days that we could talk about. But yeah, we're pretty large now. We're teams like in the 50 to 80 range, multiple tens of millions in revenue. We're in retail, and we're online, and we have a bunch of different product lines. So it's grown a lot in the last year and a half or so.
Turner Novak:
Wow. I did not realize you were also in retail too. So you have, is it Epic Gardening branded seeds, or did you keep the name of the seed company?
Kevin Espiritu:
The seed company is called Botanical Interests. Beautiful packets, if you ever go into a nursery and you just look for the ones with art on them and not pictures, that's us. So these very beautifully drawn botanical illustrations. So the brand's amazing. So we would never destroy the brand like that. But in acquiring Botanical Interests, we are now effectively in like 4,500 stores in the country. And so part of the thesis on the acquisition, there's many reasons to do it, but one of them was, well, we have a distribution network now, and we know that we develop products on the Epic side of the business that work, and people buy direct to consumer, and we have that data hard and cold.
So why don't we just offer that to our wholesale network and expand the business that way, which is very hard to build on your own in this industry because you either go big box, which is its own challenge, or you go the way that Botanical went, which is independent nurseries and garden centers, which is kind of the soul of our industry, and that's a very hard thing to do, because you're literally dealing with one to three chain stores across the whole country.
So the scale of that is very hard to crack, and they already cracked it. So that was one of the reasons that we decided to acquire it.
Turner Novak:
Yeah, it's probably a pretty big advantage to have all those set up, launch a new product, plug it across the network, however many locations. Did you know how many of those independent or very small seed botanical shops there are?
Kevin Espiritu:
I would say there's definitely thousands of nurseries and garden centers. It's in the thousands for sure. All of our 4,500, we have a line of a smaller selection of pet related seeds that we offer it through Petco, for example. So we were in 18 stores last year. We're in 200 something stores this year. Hopefully we're doing a full rollout next year. So that's some percentage of our store mix, but I love to focus on the smaller nurseries, because that's where the soul of the market is.
Turner Novak:
Yeah, I feel like in terms of just your positioning, the kind of leverage and power you have over the market, it's probably tricky selling to a Walmart. You can just be like, give us the lowest price possible, and if not, we'll just go somewhere else.
Kevin Espiritu:
Yeah. And it's tough, because you have a brand that's been beloved by independents, and if you go and shop that to a Walmart or something, you're sort of slapping your customers in the face. I mean, that's who they're getting eaten alive by. And so big box is always knocking at the door. I think frankly, big box is really hungry for brands like ours, or if you look at what MrBeast has done with Feastables or the Prime brand with Logan Paul and KSI, they're realizing that getting Gen Z in the store is pretty much only going to happen that way. They're not clamoring to go to Walmart unless they can go grab the latest flavor of Prime or whatever. So yeah, they're always kind of looking, but never say never, I guess. But we certainly wouldn't do it with our seed brand or there's certain categories we just would never do.
Turner Novak:
I want to dig a little bit more into the early days of Epic Gardening. We kind of really quickly skipped over it. We definitely get a little deeper on it. But you had a really interesting point on some of these kind of, I guess, YouTube first or YouTube creator-led brands. You kind of mentioned a couple that have been pretty successful, Logan Paul, MrBeast. How do you see that, I guess, side of the market evolving? Are we going to see thousands of brands led by YouTubers, or will it probably be only the top 10, 5,000, just how do you kind of see that evolving over time?
Kevin Espiritu:
I think if you look at a MrBeast, or a KSI or Logan Paul, they're pure media creators. They're pure entertainment creators. And so, there's no category you can really put them in, because all kind of trying to be the biggest in their category, which is media in-general. And so, just be huge. And so, if you look at, I can't know Jimmy's mind, but I would imagine he was thinking something similar to, I lose a lot of money on my main channel videos because he has this maniacal obsession to perfect videos, and his budget always goes over his ad revenue, so he's upside down on his main channel. His side channels, I don't know if he's super focused on those right now, so those used to pay the bills of the main channel before Feastables existed, is my understanding at least.
And he basically had to ask himself, "How do I create a business off of YouTube that is perfectly aligned with the YouTube audience that I have, which is the biggest on earth?" And so, you have to go to a commodity product that every human being likes and just try to improve upon that. So then, that's why you see chocolate, that's why you see cosmetics, you see energy drinks. I mean, I think chocolate and energy drinks are probably one of the best examples, because we all to some degree have that. Maybe coffee. Emma Chamberlain with Chamberlain Coffee. Yeah, I mean actually she's another really good example, because it's not like she's about coffee on her YouTube channel, whereas someone like myself or there's a really big coffee YouTuber named, James Hoffmann, I don't think he's done product, but he could. So if I come in with a product line, it's about gardening, it's for gardeners and I'm really plugging into the existing infrastructure of that market.
Whereas it seems like what a Jimmy or KSI are doing are basically using their media leverage to force themselves to exist in Walmart, and big-box and they're going crazy scale distribution. So to get back around to your question, I think that in the media side of things, there's probably a few that will dominate, because that's just the nature of markets. But in places where I play, probably similar, but there's going to be a lot of people who can do, okay. I call it the mid-tier creator that'll just have a really solid direct-to-consumer business maybe, where they kind of outsource a lot of it. They shipping via 3PL. They manufacturer ships directly to 3PL. They don't really do much besides put their branding on it. And that'll probably work for quite some time, but I do think coming at it with this more aggressive approach, more of a, I would call a true business approach, will lead towards winner takes all-ish type of things.
Turner Novak:
And is it probably some function of, if you watch a MrBeast video, I don't know if we should say it's low intent, but you're probably not watching it in the mindset of I'm getting ready to buy his product. Maybe that's wrong, but I guess with yours, you're probably like, "I want to garden, I'm starting this journey." There's like an 80% chance I'm going to buy some products to start doing whatever I searched, so it's almost like maybe you have few reviews obviously, but much higher conversion rate and your AOVs are also higher. I guess, I'm thinking chocolate bars from MrBeast, 10 bucks, whatever they cost, versus a starter kit to start your garden or start the season, probably a couple hundred bucks in seeds at least. Well, the tools, if you're getting started.
Kevin Espiritu:
No, I mean, the first product I ever sold, and we can talk about that story if you want, is a Metal Raised Garden Bed. And the cheapest one, I think I sold at the time was, I think 130 bucks.
Turner Novak:
Oh, wow. And these were affiliate or this was your first owned product?
Kevin Espiritu:
I don't own that line, but we have exclusive distribution in the USA for the brand. And so, yeah, I mean the lowest AOV you could spend on my store was $130 at the very, very start. So, you're totally right. And there's a trust I think in these passion niches, like cooking, woodworking, gardening, sewing, crocheting, knitting, all that kind of stuff. There's some sort of passionate person who's teaching it, and having fun along the way and showing you the audience is building some type of digital relationship with that creator. And there's trust being built over time and affinity, so by the time, the smart creators at least say, "Hey, I actually think this is a really solid knitting kit to get started with and there's some things I don't like about all the knitting kits on the market, so I just did all these little tweaks, and I put it in this box and this is the one that I would really trust." Well then, of course, you're going to see that convert. And so, that's effectively what happened with us in the early days.
Turner Novak:
So one more big YouTube question, before we go a little bit deeper on Epic Gardening, what are you seeing today? We talked a little bit about the history, but what do you think is changing and what do you think is successful on YouTube in 2024, or going forward?
Kevin Espiritu:
Yeah, it's so hard to say, because I think if you are a YouTuber, certainly, and you probably know a lot of fellow YouTubers and maybe they're pretty successful, there is this sense of a metagame to the platform of what's working right now. Similar to if you were to play League of Legends or something, a certain champ or whatever is more powerful in a certain patch. There is that sensibility amongst YouTubers, but I think what that misses is that YouTube is absolutely massive. It's so vast and your filter bubble on what you consume is, it's hard to detect sometimes.
If I watch my girlfriend's YouTube account versus my own, it's just so different. I mean, it's very peaceful. It's almost all women and it's all vlog, very artistically shot. The retention is slower paced and all that. And then if you go to my YouTube feed, I don't know, two years ago during pandemic times, it'd be like all these random financial guys going, "The market's crashing," all these memes.
And so, it's very different. I would say the general consensus it seems to be is that the MrBeast-ification era of what's called spectacle YouTube, is slowing down a bit. I think there's some fatigue to that, but every new format that gets developed, it never goes away. Reviews didn't go away, reactions didn't go away, vlogging didn't go away. It just isn't the thing of the moment. And so, I think that's probably what you'll end up seeing with some of this more spectacle style content. And then, I think a lot of people too, who do that type of content and aren't MrBeast, I always like to say, "Every breakout success," and this is not just true in media or YouTube, but I think in life, "Is one of one." There's something they did that broke them out in a way that no one else quite did in that formulation before.
So, you can't be him. The biggest guy, I think behind MrBeast in the style that he likes to create in, is this guy Matthew Beam, who's quite large. I think he's like 10 million something subscribers, well above what we do, but he's never going to get to multiple hundreds of millions, like Jimmy doing similar things. He's sort of MrBeast who does engineering. It's like, "Okay, well, the TAM of that is obviously smaller." So I guess, where I'm going is there is this idea that we're moving towards more relatable content now, longer form, less edited, but that could be true. I mean, there's certainly characters that are breaking out, that are doing that, but that doesn't mean that, that is what to do.
Turner Novak:
One of the things I always think about is, what are the platforms wanting to incentivize? And it seems like today, Twitter for example, it's trying to incentivize video if you pay attention to what's happening on Twitter. But then with YouTube, it seems like they've really, over the past couple of years, made a push to TV, which is just generally longer for sitting down, I guess, higher retentive. Just because you're watching a TV show, versus a YouTube video that you might watch for two seconds. So that may dictate in terms of, YouTube is pushing it as a platform, so that content is going to get more views, more watch time, essentially. Just because YouTube is making sure that it's getting shipped in Samsung TVs as the default video player, so just more people are watching it. You need content to fill that supply or that demand of eyeballs.
Kevin Espiritu:
Yeah, no, you're actually completely correct. My girlfriend and I, when we watch YouTube, obviously it's on a TV. We're not popping a computer up and sitting on a couch. And so, I think part of that is your brain, if you're of our age, is still used to consuming TV as TV. And so, somehow the same video, you are way more likely to retain yourself for longer on it. Even if it's the exact same video and part of that's how we grew up, I think part of it's just the UX of a television is much more annoying to change the video on. Because if I was on my computer, I could simply, I click on a video, five seconds in, I'm like, "I'm out." I can just hit the Google Chrome Omnibox, and just type a different video concept and there you go. On TV, I'm like, "Well, I mean, I don't really want to do that, I have to type in each letter." Then what we've noticed is our percentage of devices by share TV is starting to eat away at, let's say, desktop or something like that.
Turner Novak:
Oh, in the Epic Gardening viewership data?
Kevin Espiritu:
Just in our data. And, I think that's a trend. That's probably a macro trend, I don't think it's just us. So we are leaning into that a bit with longer form videos that are actually edited a little bit differently. They're not as sort of snappy. They're a little bit more pleasing and slow. But also, if you think about that on the business end of YouTube, you can't link in descriptions, smash the like buttons, cultivate the subscribe, you can't really do that.
And so, what we do now is, we'll put a QR code up for whatever we're talking about. So if it's a product match, we probably don't mention too many products in a video. But let's say when our seed catalog is going out in December and January, we do a QR code, say, request a seed catalog, so you could just quickly scan it, literally sitting on your couch. Because there's no other way to drive a click, they're not on the computer, so they can't click. So, that's one way that we've tried to combat that.
Turner Novak:
Interesting. Yeah, that's a good point. And that's possibly like with MrBeast, it's like go to Walmart and buy Feastables or with Prime, it's like, yeah, go to the store, just buy it. Which I feel like then you could almost start to get into co-marketing, where you almost have trade spend or you have, you get assistance from Walmart and whatever, the stores or the retailers that you're in, that are also advertising your product because they know to get the Gen Z, we got to get the chocolate and the energy drinks. So they're marketing you for free to drive traffic to them, I mean, that's a pretty good setup to have.
Kevin Espiritu:
Yeah, I mean, if I was... Maybe they've done this before, but you got to imagine if you're Walmart and you're already making a big bet on this whole Feastables thing, why not just sponsor the video too?
Turner Novak:
Yeah.
Kevin Espiritu:
Why not just go all the way in? So, we've thought about that too. We carry products we develop ourselves, we carry products we distribute. And some of our successful products, we distribute. Sometimes we'll go to them and say like, "Hey, do you want to just also sponsor a video?" Because we'll do, there's a vertical gardening kit that we have that we really like and we just distribute it and we have a custom color that we've done with them. So you can get the color with us, but you can get the product wherever the product is sold. And so, we'll come and say like, "Hey, we want to do a video, do you guys want to throw some budget behind it?" "We'll just really make it about a vertical gardening in this system." And so, yeah, there's some interesting media product, weird revenue opportunities, I think you could come up with.
Turner Novak:
Yeah, it's like the borrowing CAC concept, where you almost share the CAC and I don't know, in theory, the marketing spend, if you're sharing with people, maybe it's more effective. I don't know. It could probably be worse if you don't put out the right product or the video is not...
Kevin Espiritu:
If you miss, yeah, it's painful if you miss, for sure.
Turner Novak:
Yeah. So one question I have to take us back to the early days of Epic Gardening, were you... What came first? Was it starting the blog and was like, "Hey, I'm going to show this proof of work, I'm going to write about gardening," or were you already really knowledgeable and really into gardening and like, "Oh, make a blog about it," what came first?
Kevin Espiritu:
No, I wasn't into... I mean, I was getting into gardening, as I was building the blog out. Because I was building websites on GeoCities as a kid, so I was always into the internet, Angelfire, all that kind of stuff.
Turner Novak:
Angelfire, I used Freewebs and GeoCities.
Kevin Espiritu:
Yep, I was on GeoCities.
Turner Novak:
Yeah, GeoCities, it just had the one ad that came out on the side. Angelfire had multiple ads and I felt their free package was not as good. And when you're 12 years old, you don't have any money.
Kevin Espiritu:
You don't have cash. Yeah, no, man, I was on Neopets back in the day, if you remember that game. I remember when they launched the Neopian Stock Market, and I yoloed all my Neo coins into one stock and made, I don't even know how much money I made, but I was extremely rich on Neopets. And so then, and I'm the oldest of my cousins, so I gave all my cousins 1000 Neo coins for a summer and I was like, "You just have to do whatever I tell you to do," in the real world. So, they were doing my chores and stuff for Neo coins.
Turner Novak:
How much is that worth, a thousand Neo coins?
Kevin Espiritu:
It was worth doing all my dishes for a summer or something, whatever that conversion is. But anyways, long story short, I was always into the internet and I was really actually addicted to video games after coming out of college. I played online poker to pay for college. And then I had an accounting degree, didn't want to use it, so I quit poker because I didn't want to be one of these mid-twenties grinders, but I didn't have anything to supplant it with, so I weirdly just started playing video games, which is just a worst version of poker, frankly. You're not making any money, but you're still spending all the time behind the computer. So gardening was a way to get off the computer, simultaneously then building a digital gardening property. So there's some irony there, for sure. But yeah, no, it was the blog for quite some time.
I mean, I tried to make the blog work in 2013, 14, while I was doing these other businesses. I had raised some money for a relationship personal assistant app as a startup. It was like 2014, and we were trying to use machine learning to recommend concerts your girlfriend would like or whatever. It didn't work out. I then worked at... I kind of hung my hat up, I was like, "Yo, I can't get past a certain level in business, I clearly don't understand how to build things."
So I worked at a company called Scribe Media, it was called Book in a Box at the time. Eric Jorgenson is the CEO now, he's on Twitter. Great guy. Learned a lot there, then quit in 2016 and went full-time on Epic. And at the time, it was still really just the blog. The other platforms existed, but they weren't really being used much. I think it was making four or 500 bucks a month. And I was like, "I think I can turn this into something," and that's kind of where the founding story begins, really.
Turner Novak:
Yeah, and I think you also started a Reddit community for it. Was this before you leaned into it full time or...
Kevin Espiritu:
That was my first growth hack. Because remember back then, growth hacking was a whole thing. There was, Ryan Holiday had a book about it and a bunch of people. It was a whole tech world because frankly, a lot of the advice I've ever learned about growing businesses, I've learned through reading Paul Graham's essay. So it's like a tech, tech-est approach, but I've just never been that kind of guy. So I just applied it to this, I guess. And yeah, I mean, it was a way to drive traffic to the blog. So I started a community, it's still alive today, called r/hydro and it was about hydroponic gardening and that's all I was writing about at the time.
Turner Novak:
So you went very, very niche, like very. Hydroponic gardening is a very small subset. What is hydroponic gardening again?
Kevin Espiritu:
It's growing plants without any soil, basically. So you're growing them in water, and you add the nutrients and you control the whole environment. So a very techy, nerdy way to garden, which fit me at the time. I just had no space. I had no space. I was living in a little townhouse with no light exposure. And so, I was looking up ways that I could grow without any soil. And so, that was the way. And yeah, actually Epic, the original domain for Epic Gardening was called xPonics, just the letter X, P-O-N-I-C-S, xPonics. Because this is the stupidest logic, I was like, "Well, there's hydroponics and then there's aquaponics, which is growing with fish and water, and then there's fogponics," there's all these different subsets of hydroponics.
And I was like, "Well, I'll talk about all those, that'll be a great blog." And then I was like, "Bro, this is way too niche," so I rebranded to Epic Gardening and thankfully that was a smart move. But yeah, I mean in the early days it was just trying to build traffic to the blog, and then put some ads on and make $10 a month or something like that.
Turner Novak:
Okay. You were still working, doing the consulting for small businesses?
Kevin Espiritu:
Yeah, I was designing websites, WordPress websites, and then realized, "Well, okay, well, you have to just keep selling websites once you deliver on these, so what is something that's recurring?" And so, I said, "I'll design a website, but if you want to, I'll also help you market it." And this would be a local San Diego personal injury lawyer, or a local San Diego dentist or something like that. And then, you get that recurring revenue from a marketing contract. So yeah, the whole logic, like I said, was the blog was just my proof point of, look, this gets traffic and it looks good, so clearly I could do the same for you, and then went from there.
Turner Novak:
Was there a moment then when you realized, I think you mentioned making 10 bucks a month, I think you also said 400 bucks a month, maybe it was one of the numbers. At what point were you like, "Okay, I think this can be eight, nine figure a year revenue type of business," was there a point where you're like, "I'm going all in?"
Kevin Espiritu:
That took a while. I mean, I've never really had that in my brain to build some massive crazy business just for the sake of it, I guess. And so, all I really wanted when I quit in 2016, when it left Scribe Media, is the blog was making four or $500 a month, and I actually thought I'd be farming for a living. I thought what I would do is I would sign contracts with neighbors and farm in their yards, give them a share of it, and the rest of it I would be able to sell to local restaurants and stuff like that, like farmer's markets and all that.
And then basically the way that business model would've worked and does work, just it's quite small scale, is you lease the land for a dollar and they pay the utilities and stuff, because you're beautifying their property and they're getting, so free groceries from it. And so, your COGS is quite low, besides labor. And then, so your margins are actually pretty decent on the produce and it's highly localized produce, you can charge a higher per pound price or per count price. So that's what I thought I would do, but...
Turner Novak:
That's a cool idea.
Kevin Espiritu:
Yeah, it really works. I mean, there's a couple guys on YouTube in those early days, 2013, 14, who were doing something like that. And I was like, "Oh, I'll just do that in San Diego, sounds like a fun way to live." But, I didn't feel comfortable just making 400 bucks passively and draining my savings trying to make that work. And so, I told myself, "I'd spend two or three months trying to build the blog up to three grand a month in revenue." And I was like, "Well, I could live off three grand, and then I could just, while that's ticking away, I can start this thing." And then what ended up happening is, I did hit the three grand a month in about two or three months, and then two, three months later, it was five. And I was like, "Well, that's 60K a year." Then I hit I think 2017, the revenue ramp for Epic was, 2016 was $17,000 and that was doing it six months out of the year.
Turner Novak:
And, scaling up over time.
Kevin Espiritu:
Yep. And then 2017 was a 75,000 in revenue, 2018 was 225, 2019 was 500. I started offering products that year. 2020 was 2.8 million. 2021 was 7.3 million. We closed the series A round of funding at the very tail end of that year with The Chernin Group. And then, we've gone on to do multiple tens of millions since then. Obviously, some of that's acquisitive revenue, but Epic as a standalone business is also an eight figure business.
Turner Novak:
Wow.
Kevin Espiritu:
So yeah, pretty crazy. But to answer the question, when did I think it could be eight or nine figure business? I'd say 2019, I was like, "Oh, well, products is the actual business," so that clearly has a higher ceiling.
Turner Novak:
That was when you did 500K?
Kevin Espiritu:
That was when I did 500.
Turner Novak:
The first product you were probably... What was that? You said, "It was the raised?"
Kevin Espiritu:
Metal beds? Yeah. So the revenue breakdown there, is that year prior, 2018 was 75. That's all media revenue, so that's like ad rev, affiliate, brand. So the next year was 250 in the media side, and then eight months out of the year is when I was selling product, so only about two thirds of the year I was selling product. And, that was another 250,000. So I was like, "Well, I just completely dominated my media's revenue in less time in one year." And so, I was like, "Okay, well, clearly I was a fool before, thinking that was the business." And then in 2020, of the 2.8, 500,000 was media, and 2.3 was product. So, dramatic flip. And now, our media business at Epic is multiple seven figures, probably not many, many multiples, but it's probably one and a half, two million business, and the product revenue is obviously way more than that. So, that was when I realized the opportunity.
Turner Novak:
And, it's probably like you generate most of the revenue from selling the products. You would be making the content anyways to sell the products, but instead of it being a cost center, you make a little bit of money from it, which is probably, is that how you think about it or...
Kevin Espiritu:
That's how it works. So this is my thesis, I guess, on how these creator businesses work in the early days, is you build a community, you build an audience, you can sustain yourself from that, but you need to run it really lean, because you can't float five a $100,000 a year salaries on that, you'd be underwater. So, you run it really lean and you can develop some product or service off of that. That is what helps to grow the business, but you also have basically a negative CAC, because you're getting paid to produce the thing that's selling the product. Unlike, let's say a traditional direct-to-consumer business, maybe they spend 20, 30% of revenue on acquisition and they have zero organic traffic, until they reach some weird brand snowball, like Casper Mattress spends hundreds of millions on ads. Now, you know Casper mattress. Whereas with a creator style, it's, I know this person, oh, they just launched this thing, I'm going to go get it. And, that flywheel starts.
So up until 2021, when we touched $7.3-ish million in revenue, all of that was done with $0 on paid acquisition. So our acquisition was revenue generating and our products obviously were revenue generating. So it's, you basically delete 20 points of margin from your cost structure in a creator business and that's why, I think at least, they want to be lean teams, and small and very, very profitable cash flowing businesses. Or they want to be very big, and trying to destroy the market and transform it. But in the middle, I think you get eaten alive by both sides of the equation.
Turner Novak:
So you either have to be really small, really niche, really lean, generate cashflow, etc., or like you said, massive takeover or create a category. You're probably able to raise some money at that point too, to offset some of the hyper scaling cashflow, kind of not quite matching up.
Kevin Espiritu:
Yeah, I think so. I mean, I think if you look at us, I could have said no, and actually did a few times to the series A round that we did. And the alternative, which I would always say is, "Look, we're doing many, many millions of dollars a year in revenue and it's very profitable, what is the point of raising money then, the logic?" Especially in a VC model, what's the logic? I already have product market fit.
Turner Novak:
Yeah, you have less control over the business. They're probably like, "You got to hit these milestones and targets," which there's a lot of pressure, you just can't mess up. You got to stick to the plan and the track.
Kevin Espiritu:
Totally. Yeah. And so, that would always be my counter. And so, I would say, "If someone is running one of those businesses, it's almost like, do you want to play the game or do you not want to play that game?" And I wanted to play it, because I thought there was a lot of opportunity. And I think these types of businesses are really well suited to really smart strategic acquisitions, because take, we will rewind way back in the day, let's go to 2017. I make my first acquisition of $1,000. It was a $1,000 buy. And what I was doing is I was getting into houseplants at the time. It was kind of when the houseplant craze was going on, but I had no articles on that on the blog, and the blog was all I was focusing on. And so I was researching for a houseplant article and I found this blog called houseplantsforyou.com, and it was like an OG design. It was like 2007 style design.
And I was like, "You know what?" I did some research on it. It was getting 30,000 to 40,000 unique sessions a month. So I did a who is search on the blog because it just looked unmaintained. So I do a who is search. Fortunately, the guy did not have his who is protected, so I could see his name.
Then I searched his name. It was like some Indian VC who's living in India. I found him on Twitter and I shot him a message. I was like, "Hey, I found your houseplantsforyou.com blog. Can I just buy this blog? It doesn't seem like you're doing anything with it." And he's like, "Yeah, sure. I actually forgot I had it." And so I go, "Well, how much do you want for it?" He's like, "Well, there's 90 articles, so what about $10 for an article?" Like that's my valuation model. I was like, "Well, hell, yeah, dude, that's effectively free." Because all I did was I just did the RPM math, the revenue per mil, right? And so I was like, "Well, if I buy it for 1,000, it pays itself off in three or four months if there's no growth."
Turner Novak:
Just from AdSense or were you using something else at the time?
Kevin Espiritu:
Well, at the time, yeah. At the time I was on, I think it was called Ezoic, but I was making $5 per a thousand, which is really trash, frankly. I should have been making more. But, regardless, 30,000 to 40,000 sessions, call that $150, $200 a month or something like that. So you're buying it for a thousand. You're like, "This thing pays itself off in a year if I do nothing at all." But what I did is I bought it for a thousand. I went through an escrow service. I was so scared. I was like, "Oh my God, what if he steals it?" A thousand bucks because I mean, how much money did I have at the time? $20,000 bucks. So it's like 5% of my stack.
So I was scared. And then I bought it and I went to this coffee shop every day, and I'd rank the articles by traffic, and I'd pick two of them every day, and I'd rewrite them and redirect them to my blog. So I'd improve the article and redirect his link to my link. And then what happened a couple of months later is that chunk of migrated articles was a hundred thousand or so of a month in sessions added to the blog at a higher RPM.
So I paid that acquisition off in like, I don't know, two and a half months or something like that. And so that's when I was like, "Okay, you don't have to always do everything from scratch all the time." Obviously, looking back, I mean we made one very large acquisition with a seed company and looking at a thousand dollars, it's like, "Dude, we spend that probably in the time since we've talked in multiple areas of the business already." So it's kind of funny looking back but, frankly, I mean it worked really well back then.
Turner Novak:
Yeah. Well, even 5% of the size of the business, no matter how big the business is, that's a sizable thing. What do you do in a year? Five percent? That's like three weeks or something. Two and a half weeks. Maybe my math is off, but yeah, it's a pretty decent chunk of time you got to invest in something like that.
Kevin Espiritu:
Yeah, dude, when I bought the first shipping container of those metal raised beds in 2019, it was $30,000 out of $80,000 that I had in the business. So it was a big bet, but I think it was quite de-risked. But yeah, I mean sometimes you're just spending a big chunk.
Turner Novak:
So then how did you decide the first product? Because I'm assuming you looked at different things. How did you decide what was the right one to sell?
Kevin Espiritu:
So this is where I think you could be so smart, you're dumb type of thing. I like that phrase a lot. So I had tried to think of products. I was like, "Okay, well, I need to ideate and create this, that, the other." And I'd do micro green seeds or kits or this or that. And then meanwhile, what I was not realizing is that, well, I have a media business basically, and people watch that content or they consume it, and brands want that, right? That's why brands do brand deals. They pay you to put their product in front of your audience. So I was getting products from a bunch of different brands and I would just kind of work them into the garden if I liked them, and I wouldn't really mention them unless it was a sponsored thing.
And there was one that everyone's like, "What is that thing? It looks really cool." And it was this metal raised bed. So I woke up one day and I was like, "Why am I trying to invent all these different products when everyone just wants this thing that they can't get in America? Why don't I just email those guys and just say, 'Hey, do you have it?'"
So I emailed them probably every two months saying, "Hey, do you guys have a distributor here? Can I sell them?" They had one already, I guess. They're like, "No, no, no." And then, in the end of 2018 going into 2019, they emailed back and said, "Actually, our distributor decided they wanted to pause. Do you want to do something together?" And they basically taught me how e-comm worked to some degree. And I made so many clown moves back then.
Dude, you got to remember, at this point in time I don't really know e-comm at all. I don't know anything about it. I don't have Shopify. I'm not savvy in that world at all. I know media and I'm just so clueless. I don't know how shipping works, I don't know how fulfillment works, anything like that. So my grand plan was I'm going to spend $30,000. I'm going to get 500 units of these metal beds from my supplier in Australia, which they're the guys who invented the product. So great brand. And so I go, "Okay, cool, I'll spend that money." I'm like, "Teach me how these Incoterms work. How do I know who owns the product when? How the hell does it even get to America? Do I go get it at this port? Do I drive up there?"
Turner Novak:
With a big truck or-
Kevin Espiritu:
Yeah, I had no idea, dude. And so my grand plan was when it got to the port of Long Beach, I was going to have someone drive it down, and then I was going to rent a storage space out of like a Costco, just like something you'd do if you were moving. I'd put all those beds, the raised bed product, in that. I'd get satellite internet or something, and then I'd print the labels and ship out of that little thing because I didn't know 3PLs existed.
Turner Novak:
Okay, so you were trying to full stack, build the whole supply chain yourself basically.
Kevin Espiritu:
Because I just didn't know that you could hire someone to do it. It was just so dumb. So then I talked to another friend of mine who had an e-comm business, and he's like, "What?" He's like, "Dude, what are you doing?" And this was a week before they were landing. I was calling these storage facilities. So this guy goes, "Let me just introduce you to my third party logistics company." And so then magically they pick it up or a trucking company picks it up, brings it to them. I have my Shopify. My Shopify hooks to ShipStation at the time, and then we both have access to ShipStation and they ship the orders out. Because I guess I thought it wasn't authentic if I wasn't doing it myself or something, but that's not what I'm good at. So why would I be doing that? But no, it was so silly, dude.
And there's a lot of other stories from that time. But basically what ended up happening is two weeks into shipping that product out from Australia, which it's still on the water, it had sold out on my Shopify store on pre-order. And so the $30k becomes whatever, $90k. And so I use another $30k and buy another one, sell that out. So that's another $90k. So I'm flush now and I go, "Oh crap, this is actually the business." And so I think that year I bought five 20-foot containers, which is a half-sized container.
Turner Novak:
You said this there's about 500 of these things.
Kevin Espiritu:
About 500 of this particular SKU would fit in that 20-foot container. So I probably sold two and a half thousand of these in that first year. And I was like, "Okay, now I do not like spending as much money as I'm spending on freight, so I just need to buy a bigger container." So you'd buy the 40-foot high cubes, which is sort of the standard, and then you start getting into how much am I paying per unit to ship it? You start really getting into the optimization. And then I started getting mad. This is 2019, this is 2020. I go, "Yo, I'm paying these 3PLs like 20 grand a month. I don't like this." I never thought I'd raise any money for the business. So I go, "F that, dude, I'm just going to buy a warehouse and do it all myself."
So I bought a warehouse in San Diego down here, and I was like, "Hey, I'm just going to YOLO, do my own warehouse thing." I had one in-person employee at the time who's my garden assistant. I was like, "Bro, we're going to go get our forklift cards." So we went and got our forklift cards. I bought a $50,000 forklift and started unloading all these containers myself.
The logic there was more of personal logic of my business rents the property I own and they're separate businesses. So I have a real estate business that owns the property. I have Epic that rents the property from the real estate business. So just, on a personal sort of finance level, you're building this nice little structure. Obviously changes when things get more complex, but that was the kind of logic there. And it worked for quite some time until we started offering a more complex product line and then it was too difficult and we went back to 3PLs and then we bought the seed company and they have a warehouse. So we're doing some stuff there too.
Turner Novak:
Interesting. So you have your own warehouse again and also still using one 3PL? Do you use multiple?
Kevin Espiritu:
We use multiple, yeah, because, weirdly, it was a really obvious product to start with because everyone wanted it, but also it's not a great direct-to-consumer product for the dimensionality and the weight of it. It's almost the perfect worst style product because it's high in dimensions and it's also heavy. So when you get charged on a dimensional weight basis, you're kind of getting screwed. If I ship from San Diego, which is where I live, to Maine, on a 60-pound bed, you're out $90-100 pf the $330 of cost. So it's like thank God I don't have to pay for advertising because I would have zero margin left after this.
And so we do use 3PLs on both coasts to cut down the average ship zone to a four or so. There's eight zones so it's roughly half. So yeah, we have to. Otherwise, our cost structure would be too high.
Turner Novak:
That's fair. For anybody listening who's not familiar, basically the country, talking about the US, it's kind of cut up into these different zones. So we might say the state of Texas is a zone. There's a ring outside of Texas or something, and the middle couple states in the country like North Dakota, South Dakota, Colorado ... I don't know how the zones are split up, but-
Kevin Espiritu:
It's point of origin. So from here to Texas might be a four from San Diego, but obviously from Ohio it'd be less or something. You know what I mean? So it's the distance traveled and each carrier has different calculations for it and all that.
Turner Novak:
And it's basically the more zones you're going through, just the more expensive. And if you stay inside of a zone or only go two zones or whatever, it's cheaper. Just it's how they do the pricing just generally.
Kevin Espiritu:
It just has to go less far and so there's less handoffs, there's less fuel surcharges, all that kind of stuff. So yeah, that's why I always get jealous of ... I know you had Sean Frank on the podcast. Shipping a small wallet, I just am like, "Oh my God, what a dream." Obviously, it's a less pricey product too, but still his fulfillment cost is probably net way lower than ours.
Turner Novak:
And it's just like, "Here's a wallet, just chuck it onto the truck." I'm exaggerating a little bit.
Kevin Espiritu:
Not only that but if you think about it, man, the form factor of your product line, think about our seed business. If we had to, how many seed packs could we fit in a 40-foot container? It's like probably millions. But how many beds could we fit? The most is like 1200, 1300. So that changes your whole cost structure because if I wanted to order a hundred thousand units of beds, I actually need to fundamentally change the way those are shipped to me. I need to ship them in components or something and assemble them stateside because it's simply too expensive otherwise.
Turner Novak:
You'd almost need a full boat. You'd need your own carrier container ship.
Kevin Espiritu:
Just one ship just for us.
Turner Novak:
So I would assume then the seeds probably have pretty good margin spend or better ... It was probably a better margin business as you started to shift into that.
Kevin Espiritu:
The seeds are great because there are a few things that, as a gardener, you really need and love to purchase every season. And as a gardener, you're just so excited. Every season there's new varieties coming out or you need to re-up on a particular herb or tomato or something that you really like. It's almost like collecting Pokemon for a gardener. "I want this variety, I want that one."
And then generally you are buying seeds a couple of times a season, you're shifting to a summer crop or a fall crop or something like that. And yeah, you're right. I mean the margin on even just if you were to look at shipping, it's way more favorable. And just due to the way that the product is produced, it's a great business and it's one that we really enjoy running.
Turner Novak:
How did you go through hiring people? You have this gardening assistant, I think you said now about 50 to 80 employees. How do you think about it? How do you convince people to join? What's your process for finding good people, all that stuff?
Kevin Espiritu:
Honestly, this is not my best area. This is something that I wish I was better at. The early days, the very first hire I ever made was a writer off of Upwork who now runs our ... She's our staff horticulturist actually. She used to run our blog up until last year. We made a big blog acquisition and she's our staff horticulturist today. So she was off of Upwork. My garden assistant, actually when I moved into the house that I'm in now and started that Epic Homesteading channel I mentioned, he lived around the corner and he had started gardening in the pandemic. So it was probably like six, seven months. He was a PhD geology student, and he DMd me. He had like a little pumpkin as his avatar and his name is Jacques. So I thought some old French guy was trying to slide in, and he goes, "Hey, I think I'm your neighbor." And I was like, "Oh God, dude, don't start here." Because this happens. If you have a presence online, people will just show up at your house and they'll do weird stuff. So I was like, "Oh my God."
So this guy, he walks over, he's got a straw hat on and he's like this 28-year-old Bulgarian guy named Jacques. So we started working together and I think in about six months he left his PhD to come work for us. And that's how I found him. My initial assistant was actually a fan of Epic and she decided to come work and she now runs our customer experience. So she's head of customer experience at Epic.
A lot of the hires that came after that, though, were a result of doing the Series A round. So we do the Series A round and then we're like, "Okay, well, you were running this company on a skeleton crew." Because going back to that these businesses want to be small or really big. So I was in the small phase. So we're like, "Well, you need someone to run your commerce, you need someone to run your operations." I'm like, "Yeah, you're right, because I'm actually doing all of those things." So, frankly, it was a lot of networking, recruiting. We did recruit for a few roles.
Turner Novak:
You're saying hire a recruiter?
Kevin Espiritu:
We hired a recruiter for a couple of roles, but the rest are coming from the network. I mean The Chernin Group has a really fantastic network of people and operators. And so, frankly, I wish I was a better person to answer questions on hiring, but I'm just simply not yet. I've had some big, big learning lessons.
Turner Novak:
The decision to raise money I think is a pretty significant one for the kind of business that you have. How did you decide I'm going to do it versus not do it? And then how'd you meet Chernin Group? How did that process go?
Kevin Espiritu:
Yeah, man, maybe you can tell me because this was 2021, it was probably February or March. I think once you get past a certain scale of business, somehow investors just know, even though you may have never disclosed something. I wasn't out here like, "I'm making this much money." Somehow they just know. And so 2021, I was just getting emails cold from Bessemer partners and all these different people, and I'm like, delete, delete, delete, delete. Something about the Chernin email really stood out because I admired the companies they had built. I'm not a sports guy but it's no secret that Barstool Sports is a fantastically successful company. MeatEater is a portfolio company of theirs. I just like the ethos of that brand.
Turner Novak:
They have some other good outdoor brands too.
Kevin Espiritu:
Yeah, totally. Food 52. They've done some stuff in anime. And so it was just like my vibe. That's the world I play in. And so we kind of danced for a while and the idea was, "Hey, look, at Epic you've already proved out this whole idea of this content to commerce sort of buzzword that you hear tossed around a lot." And I was like, "Yeah, I know. So what are you talking to me for?" And they were like, "Well, it's actually way bigger than you think it is." And I was like, "Yeah, I know, but I don't really care to make it like that."
And it took a while for me to get my head around it, but I was like, "You know what? Actually this could be really fun." Because offering the products ... At that time, I had already had a couple of different products that we were offering that I knew were better, and we were selling them and they were doing really well, and I was like, "You know what? We could actually attack this industry and make it a better experience for everyone." Especially people like me who I didn't grow up gardening. I had no clue how this whole thing worked and it's given me so much to my life. And I was like, "Man, if I could do that for more people, that would be amazing."
I would say that was the general logic. And at the same time I was like, "I'm already out ahead in my market and there's copycats coming both on the media and the product side. So if I'm already out ahead, why not just make sure I stay ahead by partnering with probably the best investors in that exact type of business that I'm running?" So that's kind of how it was. Plus, I mean I'm sure you know, 2021 was just a nutty year, and I was like, "I don't think these opportunities just come around every year." And it turns out I was right on that one.
Turner Novak:
Yeah, what I'm seeing now, it's like if you're not an AI company, it's impossible to raise money.
Kevin Espiritu:
What do you think about that, by the way, the whole AI thing? Are people just YOLO-ing their bets into AI because something's going to win? Is that how that works?
Turner Novak:
Of all these kind of hype cycles that we've gone through with whether it's crypto, remote work, AI's had, I guess multiple in the past like mobile, the internet cloud, all these different technologies that come in, I do think the AI is one of the more legitimate actually going to deliver business results over time. Whether it's cutting costs, we're kind of seeing that. Public companies are coming out and saying, "We're incorporating AI to our customer support and response times are way faster, which leads to higher customer service or satisfaction and potentially more revenue. But also it's all AI. There's no people, so we're cutting costs." So I think it's very real just in terms of the business performance that it can deliver. So what we're seeing is we're seeing a lot of large companies be like, "All right, we need to incorporate this and we're shifting our entire business."
So the way I think about it is just, as an early stage investor, I just need to make sure I'm not investing in things that are directly a top priority of a company that does billions of dollars in revenue. Even though the big companies don't always win, if it's pretty easy for them to and the CEO is incentivized and the whole company is like, "Oh, we can double our margins if we shift the business," they will do that.
There's a ton of nuance to that, but I generally think about what are new areas where we haven't been able to incorporate software and AI will unlock new types of businesses that just never really existed before on the internet. I think a lot of people are saying in healthcare, in education, in robotics. Robotics is really interesting. You don't need a mouse and click point type of UI. You don't need a touch screen. It can literally be spoken. I don't know when the time on this will be, but brain interface computing, the Neuralink stuff. In 50 years, it'll probably be here.
Kevin Espiritu:
It'll be here for sure in 50.
Turner Novak:
So I kind of think about just are you building a business that just has never been possible before and no one else is really trying to do that. So I think we'll see in like healthcare, you've probably seen there's studies that have been like, "Hey, this AI large language model actually outperformed a doctor. It gave better advice." I think you have to be very, very careful. But what AI does a lot of times is it just kind of augments or it does an even better job of low labor repetitive skills.
So data entry, super interesting example where you can replace data entry with AI. No human actually likes doing data entry. You enter the data to then make decisions from. So if you can use large language models to somehow automate data entry, there might be some labor efficiencies and savings there. Some people lose their jobs but also some people, there'll be new jobs unlocked because we don't have to spend time doing data entry.
I feel like we've kind of hit on this a little bit on the podcast in the past where accountants were freaking out about spreadsheets. "They're going to replace our jobs." But it's like, well, it actually saves you a ton of time as the accountant. It's legally required you need an accountant so you can't get rid of them.
Kevin Espiritu:
That one's safe. Yeah, that one's safe. What do you think, though, about this idea of ... I'm not super knowledgeable here, but doesn't the LLM sort of collapse to being a commoditized service? And then what really matters is the data input that goes into it. So you have to invest in something that has some sort of proprietary gated data. Otherwise, anyone could analyze public data with any LLM off the shelf, right, eventually?
Turner Novak:
Yeah. I'm not an expert on this, but the way I think about it with the internet is most technology gets commoditized and it usually comes down to your distribution or your customer relationships. So that could be unique data. So I guess I'm just thinking in the gardening space, maybe no one's really built software for nurseries or something, and you can capture data on when to grow, when to plant, what works best. That leads to you being able to build a really good software product on the business, a vertical software business in a box for a nursery or a gardening center or something. Again, I'm just kind of making things up here, but-
Kevin Espiritu:
I get it. You're saying that you use an LLM, use the proprietary, you have to then create a product off of that.
Turner Novak:
Because with these large language models, if you look at the efficiency is getting better, their intelligence, so to speak, their speed, their cost is coming down. All these things are just going to keep trending down to the point of I don't know the exact time, but eventually it will just be like the cloud where they're all sort of the same. There is differences and different things are specialized in certain things. You might use Azure for a certain reason. You might use AWS or Oracle or IBM Cloud. They all kind of have different purposes to them, but there'll only be a couple and you don't really care. But there might be a lock-in because you start to build your stack on AWS. And it's like, "It's kind of expensive, but it's just it's too hard to switch to Azure, so we're just going to stick with AWS."
I think, if I had to guess, that'll be how this plays out which, in a lot of cases, some of these language model tools will be related to the cloud also which is why you see a lot of them starting to partner up like AWS and Anthropic, OpenAI and Microsoft.
Kevin Espiritu:
Could you say then that one strategy could be to just buy public stock? This is not investment advice because I don't even buy public stocks. I'm really bad at that. But couldn't you just buy stock of companies that have the best ability to capitalize on the idea that LLMs will sort of become commoditized, right? Like a Google or whatever, maybe the FAANG companies or something like that?
Turner Novak:
Yeah, I don't know which one. And, again, not investment advice, but if you think about ... So Facebook, for example. What is Facebook's business? It's getting a credit card hooked up and just automatically showing ads that will convert. That's basically what their business model is. And if you start to incorporate things like generative AI into the ad creation process, currently if you're running an ad to manage your program, you've got to tweak things, upload, set a bunch of parameters. But if it can just do it automatically, it just trains and learns itself, you can go ... Like Facebook's tools get even more powerful, which means that they can charge more money for them, make more money, and then it also just makes it harder to compete, in theory.
If you're trying to start up a new ad network, it's like why would somebody waste their time trying to scale TikTok ads or Snapchat ads or insert whatever subscale platform when you can just use Facebook and hit two billion people and you literally just type in how much money you want to spend and the ROI target and it just does it for you and creates ads automatically. It's kind of crazy. So yeah, that's definitely one way to think about it. I think some things that people are thinking we'll see is new types of semiconductors and chips that process some of these models faster. So I think people might be familiar with Nvidia. The stock price is probably one of the best performing public companies or any company over the last couple of years. Maybe that's the weakness of Nvidia, is these new chips that Nvidia can't do. I have no idea. I'm not super deep on the semi space, but I know it's been a popular startup category, is we're building new chips that are custom designed for processing these large language models faster.
Kevin Espiritu:
A sell the shovels thesis there, right, going to the hardware layer? Yeah, interesting. Yeah, I have no idea where all this is going to go, but all I know is we are using it. I mean, we're using it here and there, even just at Epic. Yeah, I mean, just Adobe's generative AI for removing stuff, like we can take imperfect thumbnails now for our YouTube videos and just clean up a little trash in the background or change the weather to sunny or whatever it is, which you could have done, you're right, anyways. But it's way faster to do it with AI and patch up whatever kind of job they did than have a guy out there doing it manually. So it's crazy how much faster it is.
Turner Novak:
Yeah. And then the question is, will Adobe see the biggest benefits from that, or is it a new startup, because Adobe's tools can't incorporate it or something, if that would be a reason? But in this case, it's probably like, well, there's Adobe, there's Photoshop, there's Canva. There's probably a couple other that I'm missing. But there's probably a couple editing tools where if the product team chooses that we're going to incorporate generative AI into product, it will probably be there. So there'd probably have to be something in the architecture of the product, like it's all desktop and there's no web component, so it's hard to incorporate generative AI or something. I don't know if that's actually true anymore because I think they've all kind of adopted web.
Kevin Espiritu:
No, that makes sense. I mean, it goes to your point about saying distribution. If the tech is getting commoditized, the distribution is what matters. So unless they flub it, like a Canva really should benefit the most from some of the generative AI stuff, or Photoshop should. It feels like a self-own if they don't, right?
Turner Novak:
Yeah. And it's probably unlocking a new customer segment too, so you could maybe say ... Let's just say YouTube thumbnails are really underserved. It's just so hard to make those in Canva or Photoshop. And somebody makes a tool that's like the best tool. It's like 10 x better for designing YouTube thumbnails, which is sneakily a pretty big market. Let's say there's like 10 million people that need to design it, that this thing gets to 10 million users and then they find an adjacent category like TikTok editing or short form reel editing, and then suddenly it's like, "Oh, this thing has 50 million people using it. They've hit scale." You can't really kill them and they're one of the incumbents.
Kevin Espiritu:
You buy them or something like that. Dude, I would love a tool ... One of the problems, and this might be very niche, but something that I always get frustrated by is there's different form factors for the content. So you have vertical, you have long form. There's different runtimes on particular platforms, like YouTube only lets you go 60 seconds, whereas TikTok will go 10 minutes vertical and IG will go 90 seconds. So I have a piece, like I just launched a book and I did a piece of short form media on it that I was very, very positive would do well, because it has done well in the past. And so I sort of just adjusted it.
But I have to send that piece to my post-production team and redo it in like four different ways, one with captions, one without, one is a 60-second cutdown, one is a 90-second, one that needs a thumbnail because it's going to go on the IG feed, and one that doesn't need one because it's on TikTok. And I'm like, "I wish I had a machine I could put that in and give it that prompt and just say, 'Please adjust for all these different form factors,'" because that is sort of the post-production version of accountants using long division or whatever instead of a spreadsheet. And so I wish something like that would exist. So maybe it will.
Turner Novak:
Then the question is, will that be built to the Instagram platform? Should Instagram just do that for you? And then the second question, is a priority for them? They might be like, "We don't care." So there's an opportunity for someone else. So that's a very difficult needle to thread, which essentially just means you have to be super on and do a lot of diligence constantly using the platforms, understanding the roadmaps, all that kind of stuff.
One other thing I really want to talk about, and I mentioned this to you earlier, was the book that you just wrote. So just for the audience sake ... When I was telling my wife that we were talking, she's like, "Oh, I love Kevin. Epic Gardening guy." And then I realized the next day my mother-in-law had bought your new book, Epic Homesteading. It was just sitting there. So what was the thinking of writing the book? It kind of seems like a new category. Are you kind of getting into it? Or talk us through that.
Kevin Espiritu:
Yeah, look, I worked at Scribe, so I launched a lot of authors' books. And I understood the traditional publishing model. And then Scribe's is obviously sort of elevated self-publishing, let's call it. And so the logic of writing a book for economic reasons is always pretty much god-awful. It's pretty much terrible, especially with traditional publishing. You're going to get 8% to 10%, maybe 12% royalty. You're going to get in advance. You have to earn the advance, and then you start ... until you get anything else. And so as a cash flow stream, it's like not a lot. Even for me, my first book sold like 40,000, 50,000 copies. I'm not ungrateful for the royalty stream at all, but I could not live off of that at all.
So what I decided to do is I was like ... the first book you're wanting to do because of the social proof, right? There's something in the world. I'm an author now, and there's certain things that sort of come with that. Plus, I just really wanted to do it. I liked creating media. So this is a new form of media that I'd never created before. But when you plug in the commerce side of the business, you basically become your own retailer for your own product that you wrote. And so in our case for the Epic Homesteading book, I'm pretty sure by now we probably sold like 2,500 copies on our store for 30 bucks a pop, buying them wholesale from our own publisher, from my own publisher.
And so I get a royalty on stuff that's sold off of Epic. And then we just buy wholesale for stuff sold on Epic. So pretend like there's no other parties in the business, pretend I still sort of own Epic. I benefit way more as a business owner by buying my own copies and reselling them to my audience than I do just writing the book itself. But then also for me, it services the mission of the company. The mission is teach the world to grow. And in gardening especially, a tactile thing that you can bring out into the garden with you and flip through is really important. It's why I started the podcast too. I was like, "Well, if you're gardening, you can't watch or read, so you have to listen. So I'll make a podcast." And so then I'm in your ears while you're actually doing the thing you're learning about.
So that's the long and short of it. It's probably the last book I'll write for a while, because they're arduous. It's weird, because from a return perspective on time, I've made a YouTube video that got 10, 11 million views in an hour and a half, and I've made a book that the most I've ever sold is 40,000, 50,000 copies per book. And that took I don't even know how many hours. It's hard to say. And so yeah, long story short, only do it if you really, really want to.
Turner Novak:
Interesting. So you said you also ... maybe we didn't hit on this ... podcast. Is that a big revenue driver or is that just secondary, stay top of mind kind of thing?
Kevin Espiritu:
Pretty much. I mean, we may be doing some direct revenue stuff with the podcast soon. I historically have not. But yeah, the idea was I'll just make every type of media that I can make about this topic that I love. And initially it was a daily show. It was three minutes. So it'd be like, "Here's how to prune your tomatoes, go do it." It'd be very simple. Every podcast in my space was like 45 minutes on how to keep chickens. And I wanted four minutes of the 45 as actionable advice. I was like, "I'll just make that part." And I just did that every single day. And so now it's a little bit less frequent. It's probably five episodes a week. Usually there's a guest or we'll have someone on our team come on and talk what they're doing in the garden. And there'll be like eight or 10 minutes. And then we did launch a video version of the podcast this past year. But yeah, the podcast is just ... it's more of a community thing than anything else.
Turner Novak:
And then what are some of the big things you're following in gardening more broadly? Are people going to start growing their own food at home? What's the galaxy brain, we fast-forward the next decade of gardening, what should we be following and paying attention to?
Kevin Espiritu:
I think that there will be a lot more people growing some percentage of food at home. You're never really going to get to true scale there, but I think you'll see a lot more people growing their own fruit trees at home once they realize how enjoyable that is. I think you'll see people grow some stuff but then start to supplant the rest of their consumption with local providers of different things. I mean, I'm seeing it in different communities. It's weird how sometimes it's left-leaning politicized media or right-leaning depending on the year. Right now at least, there's a lot of this trad sort of stuff going around on Twitter and other communities. And right now it's more right-leaning people that are like, "Your food is poisoning you, this and that," whereas three, four years ago, it would've been more left leaning people saying, "We need to do better for the environment. We need to grow our own food."
So I think it's weirdly one of these places on the internet where at least in my comment section, there's a communal sensibility depending on no matter what your ideology is, as long as you don't talk about it. Everyone's kind of there to grow. So I don't know. I think it certainly got a boost from the pandemic, but weirdly, unlike many of those pandemic hobbies, it hasn't quite fallen off the way that some of those did. Not that many people are baking sourdough anymore compared to that many people gardening.
Turner Novak:
That's interesting, because gardening is hard. Making sourdough, it's like a couple hours, whatever. But gardening, it needs to become ingrained in your life of staying on top of it.
Kevin Espiritu:
Yeah, it's sort of an identity level shift once you really get into it.
Turner Novak:
So one thing I noticed in some of the content you do, you'll have Carrie Underwood on the channel, you'll have different celebrities. Is that a growth tactic? Is that them coming to you? What's the benefit to doing that? How did those kind of evolve?
Kevin Espiritu:
They just did. It was just random. So someone told me that Carrie was following our account on Instagram. And I mean, I don't mind country music. I'm not a super fan of any particular artist. And so I followed her back. She posted something about tomatoes. I was like, "That's a huge tomato. Congratulations. That's a very large tomato."
Turner Novak:
This is from at the Epic Gardening account?
Kevin Espiritu:
Yeah. I was like, "Hey, honestly, that's a really impressive tomato," just gardener to gardener type of thing. And then she was lives in Nashville and she messaged me and said, "Hey, do you know I just got a greenhouse? Do you know anyone that can help in Nashville set a greenhouse up?" And I was like, "Well, I'm actually going to be in Nashville next month," which I was not, but I could have been if she said yes. And so my girlfriend was actually going out for a conference. I was like, "Oh, I'll just tag along with her." And so that's how that one worked out. We did one with Kehlani. She just DMed me on TikTok. The thing about it too is you could make it a growth thing, but then to me, it internally becomes semi-cringe. And so I'd rather just have it be if they are into it then let's do it, because that should make it a lot better than both of our teams collaborating.
Turner Novak:
Versus they just really like gardening, you really like gardening, it's kind of natural. She has a cool greenhouse. Just showing how it works.
Kevin Espiritu:
It's helpful that the celebs we've collabed with, I know them, but I'm not connected to them in a parasocial relationship type of way. If I was to do Tony Hawk's backyard, I'd probably freak out. But Carrie Underwood or Kehlani, I like their music. I'm not some crazy super fan in that way, which I think is very helpful when you're making the content.
Turner Novak:
Yeah, that's true. Yeah, like Carrie Underwood, I don't even know any of her songs.
Kevin Espiritu:
Yeah, you'd know them if you heard them, though.
Turner Novak:
Yeah, I'd be like, "Oh, it's cool to meet you. You're a creator. You're an artist. We have similar things that we're into. We understand you have to tap into consumer psychology, give people what they want."
Kevin Espiritu:
Yeah. Weirdly, we've done a lot of musicians. So to me, I find something very fascinating about a hyper successful musician, is that's just crazy distribution. If you think about ... it's a piece of media that has ... And I'm like, "Okay, what's different about this person?" So I'm sort of always analyzing them at the same time that I'm working with them, trying to suck up some little tidbit.
Turner Novak:
A lot of people forget quote, unquote "celebrities" or the A-list talent, the people that we all know, it's not just luck. They were probably very intentional and very smart, and they probably had some things that they really cracked and figured out before anyone else did. Maybe no one else has figured it out yet. It's just different secrets that they know. They're entrepreneurs at the end of the day.
Kevin Espiritu:
I grew up playing music. I play piano, play guitar. And I sing, but I sing by myself. No one hears me sing. So we're in the greenhouse with Carrie, and I really wanted to know, because she's widely considered to have one of the best voices regardless of genre, so the range, the quality, the accuracy of tone, all that kind of stuff. I did some research. I was like, there's musicians from all different genres saying she has one of the craziest voices ever. And so I wanted to ask her, if I practiced, if I had the perfect regime and I don't have some sort of vocal defect, how good could I actually get at singing? Could I become at your level? Or is there some level of the genetic structure of your vocal chords or the way that you ... whatever? And not to say she doesn't work hard.
She works incredibly hard, actually one of the hardest working people I've met. But she did sort of look confused when I asked her that, because I think there's a level of innate sort of gift she has for music, where it almost didn't compute that I would be asking something like that. Sometimes with someone like that, it's just they're so, so good and they work so hard that they're so far beyond what you could ever be as a normie, it doesn't make sense.
So that blog strategy, we repeated again at a bigger scale. We purchased a friend's blog who had grown ... I think he'd almost rival our traffic inside of a year. And so I was like, "Okay, look, this guy is speaking to a question on hiring." It's like, "Well, he's better than we've ever been, so let's go ahead and strike a deal with him." We brought him on. He runs all of our written content at Epic now. And we've slowly over the last three, four months, we folded all of his content into the Epic site and doubled traffic.
And not only that, the way that we monetized the blog directly is with ad revenue. And with the doubled traffic, we actually moved up a tier in our ad structure, so we got a higher cut of the revenue we were generating. And so not only is your traffic doubled, which would linearly double your earnings, we actually doubled by way of ... It was like a double double, basically. Our ad rev quadrupled by buying a blog that doubled our traffic. And so that was a scaled up version of the smaller little baby acquisition I did back in the day.
Turner Novak:
Is there a framework you have for thinking through some of these acquisitions? Let's say I'm the Kevin of 2017 or something or whatever, I've never done this before, but I probably could do it. How should I approach it doing my first acquisition or first couple? What are the things to keep in mind?
Kevin Espiritu:
So this is my way. I don't think it's sophisticated. So my way is, is there one good reason, is there one compelling reason to do it? So take the blog. Well, the compelling reason is just that strict math. Whether it's the small acquisition or the large one, the strict math is that the payback period on the investment is relatively quick. But what I try to find is I go, if there's a compelling sort of first order reason, can I craft five to seven second order reasons that kind of make sense that are semi high probability? Like by way of increasing traffic, do I then have increased flow-through traffic to the store? Or do I then have increased flow-through traffic to our YouTube channel? Or by way of hiring, let's say, Jason, who is the guy we bought the blog from, do I then increase the overall cadence of my own blog's output, thus increasing the sort of velocity of my growth of my own blog, even if the first order effect didn't happen?
So if I can craft enough of those and the price point makes sense, then if it was up to me, which it's not always, we like to run it through a process here, and there's very smart people, but if it's up to me, I would just say, "YOLO. Let's do it." Because the price doesn't matter at that point because all those stacking probabilities basically guarantee that it's going to work out.
And look, I've only done this like three times, so maybe this diligence methodology is not really that sophisticated, but so far it's worked, right? We did this with a physical product as well. This is one ... it's our seed tray line. So we have like 10 or 12 SKU line now. I saw the trays from a friend of mine. I started offering them on my store, and they became quickly like 95% of all of the sales of that tray line were coming from our store.
And so I went to him and I said, "Look, why don't you just join the team? We can develop more trays, because there's an appetite for it." And that acquisition or investment, if you want to call it that, I think it was maybe 18 months ago now, maybe a little bit more, it's returned like five or six X the purchase price, but not only that ... So that's the table stakes of what an investment should do, I guess.
But think about the second order. We knew we were doing a big acquisition with a seed company, and so now I have a thing I can actually offer to wholesale that's not seeds that we actually own. So our economics are really good. So I don't know how to describe it. It's very fuzzy in my head. But you sort of see all these chains of events that could happen. And if enough of them line up in the positive sense, something sort of clicks in my head and I go, "Okay, this one makes sense." That's the best way I could describe it.
Turner Novak:
If I were to restate it to you, try to synthesize, it would be the spreadsheet, the numbers, make sure that it lines up and it makes sense. But then also, there are almost adjacent qualitative things that maybe you could quantitate, maybe they can't quite be measured in the spreadsheet, but there's ancillary benefits of ... to the point of, "Well, it'll probably increase traffic on the YouTube account from the cross-selling. We don't actually know, but it's probably there."
So if you have enough of these kind of second, third order effect type of things, it's like, "All right, don't know how to quantify them, but it's probably good enough that it will add some kind of extra benefit that we just don't know."
Kevin Espiritu:
So we would quantify, to be clear, we do the initial spreadsheet math. And we'd have these adjacencies, and I would always just cut them ... I'd say, "What do I think it is?" Like 50% boost to store traffic or something? I'd be like, "Let's just call it 10%. Let's just say it's 10%, and let's say the conversion rate's half because the traffic's colder." So it's super conservative. And then I try to pencil ... like I say, "Okay, let's even say the AOV of that lower conversion is even lower." Okay, well that's still like 250K extra a year. Well, the purchase price is X four times that or something. It's like just that adjacency being crazy conservative makes sense. And so I just try to find things like that. They tend to be on the smaller side than these things where you're running a banking process and all that kind of stuff.
Turner Novak:
I mean, that generally seems if there's some kind of middleman or whatever, they're optimizing the price, the final price that's paid, which there's reasons that you should do that. But as a buyer, you probably want an inefficient process as much as you can. And as a seller, you want an efficient process.
Kevin Espiritu:
Absolutely. Yeah.
Turner Novak:
Well, this is awesome. Thanks for taking the time to come on. This is really fun.
Kevin Espiritu:
Yeah, man, thanks for having me. Appreciate it.
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