April 15, 2025 • 27 mins
Michael Sirpilla is a co-founder and CEO of Society Brands Inc., a tech-enabled consumer products company headquartered in Canton, Ohio that acquires e-commerce native brands. Society Brands recently raised $205MM for acquisition financing, one of the largest early stage raises in Ohio’s history. He has primarily focused on organic growth throughout his career. Prior to starting Society Brands, he founded a financial services wholesale agency with 40 direct reports and built it to a multi-million-dollar business. He also partnered in a population health management business and scaled it from $0 to $150MM in revenue within five years.
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Speaker 1 (00:01):
This is iHeartRadio's CEOs. You should know.
Speaker 2 (00:04):
I'm Keith Hotchkiss, and today our special guest live from
the Hall of Fame Village in Canton, Ohio, is the
co founder and CEO of Society Brands, Michael Surpilla.
Speaker 1 (00:15):
Michael, thank you so much for being with us.
Speaker 3 (00:17):
Thanks so much for having me Keith. I'm excited to
be talking with you today.
Speaker 1 (00:20):
Yeah.
Speaker 2 (00:21):
Right, We're in this beautiful facility for Society Brands that
you have taken over. We're overlooking Tom Benson Hall of
Fame Stadium. You're running a multi million dollar business from Canton, Ohio.
Can you talk a little bit about what Society Brands
is because I think you've got a huge business here,
(00:41):
that's an umbrella business that a lot of people probably
don't know exists here.
Speaker 1 (00:45):
Can you talk a little bit about what it is?
Speaker 3 (00:46):
Yeah, absolutely so. Society Brands is a functional health and
personal care platform dedicated to clean and talks and free
living in on and around your body. So think in
your body, vitamin supplements, functional foods, beverages, on your body,
skin care, beauty products, and around your body. We have
(01:07):
a company called clarify on that we own air ionizers,
for your house, kleanomic biodegradable cleaning products for your home
that's clean and healthy for the environment and also clean
and healthy for you as an individual. So we care
about the human health and human well being, and what
we've done over the past few years is acquired direct
(01:28):
consumer companies that are focused in these categories. So we've
done many acquisitions twelve acquisitions to date and certainly working
on more always. And we've built Swell over one hundred
million dollar business within a little bit over three years. Incredible,
But it's primarily been growing through acquisition and then there's
(01:51):
also been strong organic growth as well. So what we
consider to be organic growth is once you acquire a company,
does that business grow or does it decline ors stay
the same. Fortunately, at Society we on a consolidated basis.
We have a strong organic growth story, so there is
that aspect of the business as well. But we've grown
a lot through acquisition, and we keep the founders on
(02:14):
board post acquisition. That's generally the case at Society Brands,
where we keep them intact. We also keep those teams
in place because when we look to acquire a business,
they're already profitable, they're already growing. There's a phrase that
if it's not broke, don't fix it. There is an
element of that with Society Brands. Because we want to
(02:34):
empower founders, we also want to empower the teams that
are in place, so we believe in a dedicated resource model,
not a shared resource model. As we're sitting here at
Hall of Fame Village, we have well over one hundred
and fifty team members internationally at Society Brands, but as
you can see around here, there's only a few of
us right. So we believe in dedicated resources at the
(02:57):
brand level across the various different brands that we own,
and we help fill in gaps that they are missing.
We have a product development team, we have in operations
and a marketing team. We can help them from a
supply chain, we in house and we provide a shared
resource to all finance and demand planning. So there are
(03:19):
some things and also media buying as well, by the way,
that's another key thing that we oftentimes bring in as
a shared resource. So generally there's things that we bring
in that are shared resources, but a lot of the
heavy lifting of the day to day operations is at
the brand level, so that's what we believe in is
partnering with founders, but we've acquired companies, so we do
(03:40):
own those businesses. And it's been a fun ride for sure.
Speaker 2 (03:44):
Got to be very gratifying for you to take a
company that has.
Speaker 1 (03:50):
A really quality product.
Speaker 2 (03:52):
Maybe it's you mentioned, you know, skincare, toothpaste, oral care supples.
You take a company like that that's, you know, looking
to find oxygen in a crowded market space, and you
help them to find the consumers that they're looking for, right, Well,
and obviously you must have seen I mean obviously e
(04:15):
commerce has been around now for a little while, and
it took off during the pandemic, but you must have
seen this ahead of time, right that this was going
to be the way that people buy goods and see things.
Can you talk a little bit about was that your
vision for Society brands? Has it evolved the way you
wanted it to? I guess, and I imagine there's curveballs
thrown along the way, But talk about where it started,
(04:35):
this idea and how you got here.
Speaker 3 (04:37):
Yeah, So it's it's funny when you talk about growing
a business from zero to over one hundred million dollars
within three years. The false perception that that can give
is it was really easy to do because it happens
so quickly.
Speaker 1 (04:49):
Okay, yeah, that is.
Speaker 3 (04:51):
Definitely not the case. There's always these twists and turns
in the road that that you don't necessarily expect this
an organization, But that's growing pains. Most businessinesses grow from
zero to hundred million within thirty years, and there's a
lot of pain over thirty years that they've had to endure.
Speaker 1 (05:06):
I bet you most businesses don't even make it to
one hundred million, right.
Speaker 3 (05:09):
Most businesses don't get to that. So from that perspective alone,
we're incredibly grateful that we've been able to get here.
But the pain that a business, let's say that goes
from zero to one hundred million within thirty years, they
endure pain, but it's over a thirty year period of time.
Society brands endured that same amount of pain within three years.
But yet today we are stronger than what we've ever
(05:30):
been an organization. Wow, because we've always just kept pushing
and kept finding ways to deliver value in quite honestly,
a really challenging market over the past couple years, especially
when you think of consumer products and CpG and e commerce.
It's been a challenging market, but yet today, because of
(05:51):
our resilience as a management team, we are better off
today than what we ever have been. I'm really proud
to say that, going back to your original question, I
had the idea to start Society Brands in twenty twenty.
I was running a population health management company that I
had scaled to a sizable business at the time, and
(06:13):
twenty twenty had new business slowing down significantly. So I
spent a lot of my time in twenty twenty on
the golf course. But we had this reoccurring revenue model
that we had clients coming back on a regular basis.
So business was going very well in my surpillar household,
even though even though new business was slow because of
(06:34):
the reoccurring nature. But what I did see in twenty
twenty is there was all these Amazon boxes. My wife
was buying a whole bunch of stuff online, right, And
I asked myself a simple question, is there going to
be more or less products bought online ten years from
now than what there is today? I think as consumers
were buying more and more online than what we ever
have been. The data has shown that that over the
(06:55):
past twelve years, e commerce is taking market share from
Bain and Mortar. So you have that trend that's emphatically,
without doubt, has been happening. And then another trend that
I realize is consumers are buying more from what we
call challenger brands or smaller brands, right, that they see
on Instagram, that they see on Facebook, right, they see
(07:17):
online Somewhere in comparison to twenty years ago, people were
buying from the Ralph Loreenz of the world, right. And
I'm not saying that they don't buy from those big
consumer companies today, but there's an evolving trend that people
are buying from smaller brands. So we believe that e
commerce was trending up. We also believe that the trend
(07:38):
of consumers buying from smaller brands, we think that that's
going to continue to keep on evolving. And then also
with Amazon, there's e commerce marketplaces, and what that has
actually done is it's really evolved a consumer into almost
like a shopping mall type of experience where but the
(07:59):
issue with e commerce marketplaces, and we love e commerce marketplaces,
consumers are going there with an intent to purchase something, right,
you don't go to Amazon dot Com necessarily because you're
looking to socialize with your friends. You're going there because
you have an intent to look to purchase something. What's
interesting now, and this is just another evolving trend that's happening,
(08:22):
is the non intent to purchase, or in other words,
the window shoppers. You go into a mall, you might
be going to a mall to actually make a or
go to meet up with a friend for lunch. Then
you start window shopping, and then you can essentially see
that that's what social media marketing has brought to it.
Speaker 1 (08:40):
Not only window shopping of twenty twenty five.
Speaker 3 (08:42):
Absolutely so you have the Amazon dot Coms of the
world where if you have an intent to purchase, you
go there. But then also e commerce is getting the
portion of the marketplace to where people are window shopping online.
You're on social media, you're on Instagram, you're on face Facebook,
you're socializing with your friends. You see an ad right
(09:03):
and you click on that ad. So we believe that
e commerce is only going to continue to keep on
taking market share at a more rapid pace because of
the social media aspect of purchasing.
Speaker 2 (09:13):
Today, you talked about challenger brands and you're right as
we're sitting here thinking of.
Speaker 1 (09:20):
What it was like to shop for toothpaste.
Speaker 2 (09:22):
As an example, twenty years ago, you were fairly limited
to whatever Walmart, Target or Marx stocked, and that's why
you went with Colgate, Crest or the rest. Right, And
now you own, as an example, an organic toothpaste brand,
and talk a little bit about though the Challenger brand. Yes,
it is easier. In fact, the consumer has the power.
(09:44):
You see an Instagram ad and you go with the
intent to purchase this, But there's so many more brands
and almost death by choice, right, it overwhelms people. Now
you can find anything, and how do your brands get
oxygen in this space?
Speaker 3 (09:56):
So the very first thing that we do when we
diligence a brand to see if we like to acquire them,
is we start testing the products ourselves. Can I personally
as the CEO? Can I be a consumer? And if
you were to come to my house, you'd see a
whole bunch of society brands products. Of course, because we
love in my household, we love the products that we sell,
(10:18):
but that's not because we own them. That's because we
tried them out first and realize that, hey, these products
actually work, and our product development team tests them. All
of our team generally like all of our corporate team,
tests out the products and we give true market feedback.
The reason why that matters is it all comes down
to is there a product that consumers love and does
(10:39):
it actually work? We test it ourselves and we also
check the customer cohorts to see if customers are coming back.
Not to get too nerdy on this podcast here, Keith,
but during our diligence process, we do what's called a
customer cohort analysis where we're testing out and we're looking
at how sticky the customers are. You could tell if
(11:02):
customers really love that product on if they're coming back,
and that's where you could actually tell if a brand
is resilient and if consumers really love the products. So
one can do I actually see that the product works
for me personally? Then two are there other customers out
there based off the data that we're studying do those
customers agree with what me personally? I could think something's great,
(11:25):
but if the customer data doesn't show that, then we
probably wouldn't make a purchase on that brand. So that's
what it comes down to, is the stickiness the resilience
of the customer base and is their products really working
the way that they claim that they do in the
marketing efforts. And I understand it's a competitive marketplace. There's
(11:46):
other organic toothpaste brands, there's other skincare products, you name it.
But is our messaging resonating and does that mean that
repeat purchases are coming back? And if we that that
is good tailwinds behind us to where we have strong
customers that are coming back on a regular basis. We
(12:08):
know how to bring those brands to the next level
from a performance marketing perspective, right by studying that data.
So that's what we bet on.
Speaker 2 (12:17):
We're talking with Michael Surpilla, co founder and CEO of
Society Brands, who has really sort of found a secret
sauce of aggregating organic e commerce health brands. You obviously
saw that trend coming with people worried about chemicals and
the food and chemicals in the toothpaste that may or
may not be good for you, right, And so that
(12:38):
marketplace is only going to grow, but it's going to
get more crowded. Right, How do you continue to see
the next evolution of e commerce? We talked about capturing
consumer data, remarketing what's the next sort of five to
ten years look like as the space evolves.
Speaker 3 (12:52):
To us, it's all about omni channel. That there is
a place from like a media buying perspective that when
you're looking at your initial row as and for your audience,
that's that's essentially return on ad spend. Right. So another
thing or another way to phrase that is the initial
average order value versus the customer acquisition cost. You're looking
(13:15):
at how much does it cost to acquire a customer
and how profitable is that initial purchase over and above
that CAC or that customer acquisition cost. When when you
look at that, you're essentially studying studying that information, and
you might be doing Google marketing, Facebook marketing, Amazon marketing,
(13:36):
and you're growing a brand slowly, but surely they're primarily
on your direct consumer. Because Society brands, most of our
revenue is D two C. So seventy percent of our
revenue today is direct consumer where people are going to
our dot coms that we own Club early Bird dot com,
Primal Life Organics dot com are actual dot coms and
(13:56):
making the purchases seventy percent of the time.
Speaker 2 (13:58):
That's interesting, right, because you would I think that the
aggregator of Amazon would be in Shopify to a degree
would be more appealing. But I guess at the same time,
if you have a good connection with someone on Instagram
and they like what you're promoting, they're going to go
right to the consumer website, right versus trying to There
is some convenience factor that Amazon brings that I think
(14:19):
you guys deal with a lot, right.
Speaker 3 (14:21):
Yeah, yeah, absolutely so direct to consumer the beauty of
direct consumer. And we're not an Amazon aggregator, because there
are Amazon aggregators out there. Some have struggled. But the
big aspect is if you're too reliant on Amazon. If
one hundred percent of your sales are coming from Amazon,
you're getting your fulfillment from them, advertising, every aspect and
(14:43):
there's constant margin compression that you actually don't control. And
probably most importantly is you, as the brand, don't have
the loyalty from the customer. Right The loyalty from the
customer is Amazon. So when people go to our dot coms,
the loyalty that the customer has is to us, right,
not to Amazon. Now, to your point, we love that
(15:04):
Amazon as a partner. It makes up probably twenty five
percent of our sales on a consolidated basis, but we're
not reliant on Amazon today. So going back to your
original question of like, how do we scale and how
do we think about scaling, we think direct consumer and
looking at that those initial advertising metrics, we grow and
(15:25):
scale a business, likely in the US for the most
part there, and then we eventually broaden out to not
only performance marketing, because eventually performance marketing starts to wear
off a little bit, and then you need to start
doing things like brand marketing where you're actually spending money
where you're not actually able to track the attribution quite
as much, so Director response marketing on the D two
(15:49):
C side of things, and then also Amazon, then eventually
brand marketing, then eventually omni channel and getting into retail.
We already have a fairly signal retail presence and we'll
keep going on that in the future.
Speaker 1 (16:03):
And retail meeting even the brick and mortar side.
Speaker 2 (16:06):
Right for some of your brands, Yeah, I mean you
have to have omni channel, that's what it is, right.
You know, you mentioned your the family business here. Your
brother is part of Society brands and in addition to
your hundreds of teammates. But you mentioned that scaling a
one hundred million dollar business in three years has it
probably leaves you bruised. You have young kids, how what's
(16:28):
something about entrepreneurship that you've can share with our listeners
that you may not have known going into it. Can
you talk a little bit about the journey and the
bruises and how you came out across solve those challenges.
Speaker 3 (16:40):
I love that conversation, so let's definitely go there.
Speaker 1 (16:43):
Yeah.
Speaker 3 (16:44):
So, so first off, you mentioned justin one aspect that
I would say as far as entrepreneurship is, you need
to have the right people around you. Because where businesses
stay small is when you, as the entrepreneur, you think
that you have everything, and the truth is is you don't.
And it takes a humble heart and a humble attitude
(17:05):
to say, here's the thing that I bring to the business,
and I know what my skill sets are as an entrepreneur,
and I've been an entrepreneur for fifteen sixteen years at
this point, but I know clearly what I do, and
then I also know clearly where I have gaps. And
you need to have either co founders or other team
members that fill those gaps. Justin is a person that
(17:27):
has a ton of m and a background that I
did not have prior to Society Brands. So that's essentially
where we're able to compliment each other. And then also
our other co founder, Sean Doherty, has a ton of
experience in CpG. She's co founder of a company called Mophy.
She builds it. She's sold a billion dollars of products
direct consumer. She exited that business a few years ago.
(17:47):
I can now leverage all of her expertise, even though
it wasn't actually mine. But going back to the original
question on just challenges and difficulties that arise when you
start a business, you cannot go into it thinking that, hey,
I'm going to dip my toe in the water and
see if this is going to be successful, and if
(18:10):
I realize any sort of challenges, I'm going to give up.
If that's how somebody's mindset is, then they probably shouldn't
be an entrepreneur. What you should do is say I
will do whatever it takes, whatever it ethically takes for
me to make this business a success. And if that
is the underlying truth that you have, regardless of whatever
(18:33):
challenge has come your way. You're going to either bulldoze
through those challenges, You're going to find a way around them,
You're going to jump over it, you name it, you
will find a way. So I think that what it
comes down to, there's going to be a lot of
things that come your way, for sure. But are you
committed or are you only committed when it's easy? And
that's the question that any early entrepreneur needs to ask themselves.
Speaker 2 (18:55):
That's a great question, are you committed or are you
only committed when it's easy?
Speaker 3 (18:59):
Right? Because I.
Speaker 2 (19:01):
Know from speaking with entrepreneurs over the years, Yes, there's
some security blanket of a corporation that people need and
like because you're going on in a high wire in
many cases without a net. It's your own money, it's
your own family's money, and you're worried about having to
feed them at night in addition to trying to run
(19:22):
a business. And that's got to be I think scary
for a lot of people. And it's not for the
faint of heart. Is that fair to say?
Speaker 3 (19:28):
Yeah? Yeah, absolutely? And the whole thing with like work
life balance, it's a real challenge, you know, it really is.
I mean I've been here at the Hall of Fame
Village at my office, when it's light out, when it's
dark in the morning, right before the sun comes up,
and when it's dark at night when the sun goes down.
Speaker 2 (19:48):
And probably Saturdays and Sundays and holidays as well.
Speaker 3 (19:50):
Right, yeah, absolutely, But I'm married, I have three kids.
I love my wife, love my family, and it's always
that balance between that. But I think that the biggest
thing that I try to teach my children throughout this
process is it's about the impact that you're making. And
(20:11):
they see me go to work every single day happy
knowing that their dad is making a difference in this world.
That's what I truly believe. And we want to give
our children time and I certainly give my children my
wife a lot of time and energy and attention, which
I love, like they're everything to me. But also it's
the example that you're showing as well, and the example
(20:33):
that you're showing of working hard, treating people right, having integrity,
making a difference in this world. When my kids are older,
that's another way of being a good father is giving
them a good example.
Speaker 2 (20:45):
It has to be quite rewarding to see businesses that
you're an entrepreneur and You've helped other entrepreneurs to maybe
had a product that was really catching fire in the marketplace,
or should catch fire in the marketplace, but they don't
know where to go. So we're talking with Michael Surpila, CEO,
co founder of Society Brands, and we've if you've been
(21:09):
listening all the way through the podcast, you know that
Society Brands purchases challenger brands. It helps them scale and
grow to the level of the founders that always dreamed of.
So if someone's listening to this, Michael, how you know
what questions should they ask themselves Besides the question are
you in it for the easy and the hard? What
else should they ask themselves about their product and repeat customers?
(21:31):
And you know you mentioned a little bit about how
you test a brand, but what should someone say look
for if they want to maybe get be part of
your brands.
Speaker 3 (21:39):
What I would say is if somebody's looking to sell
to Society, I mean we look at direct consumer brands
where at least fifty percent of their sales are coming
from their own website. Maybe they have the other portion
coming from Amazon or other e commerce marketplaces. We'd love
to see some sort of retail presence. All of that
sounds good. We like that ten to forty million dollars
(22:02):
revenue is what their business would have to be. It
takes the same amount of work for us to acquire
a million dollar revenue business that it does a forty
million dollar revenue business, right, so we might as well
make more of a meaningful impact. And you know, ten
to forty million dollars revenue is generally our size. We
want to see anywhere from fifteen to twenty five percent
profit margins, and we want to see healthy margins. When
(22:26):
we look at their financials, we don't only look at
what happened within the last twelve months. We look at
what the most recent months have been doing from a
margin perspective. Are those margins expanding, are they staying the same,
are they compressing down? What what EBITA adjustments, what ad
(22:48):
backs are they trying to look for? And then also
how sticky are those customers. So if you own a
brand and if you're looking to sell, we would be
happy to talk with you, and even if it's just
to give you advice whether Society Brands is the purchaser
for you or not. We're happy to just have a
conversation and give you some advice because we know what
(23:09):
it's like to be on the buying side, and we
know what we're looking for. And a big aspect is
what we talked about earlier Keith, which is the customer data.
How does that actually pan out inside that business? Are
the customers coming back? What's the customer acquisition cost over
the initial AOV or average ordering value? What's the lifetime
(23:29):
value of a customer? All those things are the most
critical aspects of a business in order for any company
to be successful. So you've got to know those answers
to those questions. And if you know those answers, and
if you know they're compelling, whether it's society, brands or
somebody else, you could probably find a buyer.
Speaker 2 (23:47):
You know, Michael, this has been so interesting because you're
finding success. You're helping make dreams come true.
Speaker 3 (23:54):
Right.
Speaker 2 (23:54):
You've got founders that had a product idea that really
they didn't know what to do with it next potentially,
or they they grew it into a really nice sized business,
but they wanted to grow it more. But obviously these
folks that are in this business, they are stressed. They
are wanting to put their whole They've put their life
savings potentially into this product. How does someone like that
(24:17):
you find safety and security are their founders' groups? I mean,
we talk about this podcast, we've talked about your potential
podcast that you're looking to launch to help founders, But
how does someone like you decompress and distress in a
world where you're getting all this stuff thrown at you?
And how can a founder kind of think about centering
themselves and grounding themselves.
Speaker 3 (24:36):
I'm very fortunate to have mentors and people on our
board at Society Brands. I've just been very fortunate to
connect with people that have walked a similar path before
me built a business, sometimes to billions of dollars, sometimes
hundreds of millions of dollars, and they will give me
(24:58):
guidance and I actually lean on those people. Yeah, because
and here's what's funny about somebody who's been there before.
They're not surprised by any anything that I bring up.
Like if there's a challenge that we're trying to overcome,
it could be a small challenge, but whatever it is,
they're not like, oh my gosh, this is so, this
(25:20):
is so how do you overcome this? It's kind of
almost like they don't even sweat that. They're just they
know what it's like to build a business. You decide
to start a business, the next step is you experience challenges,
you overcome those challenges, and then you have success. Society
brands successful today because part of that journey is the challenges.
(25:42):
And then in order for us to get to the
next level, guess what, there's gonna be more challenges and
then we need to overcome those and then we'll have
more success. So it's really finding people that have been
to similar places that you've been before. Likely what you're
going to find out is there not much different than
what you and me are. And that's been the most
inspiring thing is they would say this. They would say,
(26:05):
you know, you and I are the same. And I
would say this to an entrepreneur. If there's an entrepreneur
listening that has a million dollar two million dollar business today,
what I would say to them is you and I
are not much different at all. And you know what
is my IQ in comparison to somebody else? Have no idea,
but do you have the resilience? Are you willing to
(26:26):
listen to others? Are you willing to surround yourself with
other like minded people and just never ever ever stop
believing that you could be somebody great in this world.
Speaker 2 (26:36):
So, if you've been listening to this podcast and you're inspired,
Michael and his team at Society Brands have helped many
entrepreneurs realize their dream of selling and owning and operating
an e commerce business. That gives them the security to
know that they're going to be growing in that place.
(26:58):
So if they want to reach out to you, right,
it's brand's website, right, Michael.
Speaker 3 (27:01):
Yep, go to Society Brands dot com. I believe that
there's a contact us tab and yew, you could reach
out and we love to chat with you.
Speaker 2 (27:11):
Wow, that's really interesting. We appreciate your time today, Michael.
It's been great to talk with you about growing e
commerce brands. Check out Society brands websites. If you're into
the organic health space, which I know a lot more
folks are these days, some of the brands you have
on there are just fascinating to see how they've grown
and see what they've become. And we'd love for you
guys who are listening to purchase some of those products
(27:31):
as well. It might find it good for you. So Michael,
thanks for your time today. All right, thanks Keith, and
this has been iHeartRadio CEOs. You should know today's show
is produced by Bob COATESID.
Speaker 1 (27:40):
I'm Keith Hotchkiss. We'll see you next time.
This is iHeartRadio's CEOs. You should know.
Speaker 2 (00:04):
I'm Keith Hotchkiss, and today our special guest live from
the Hall of Fame Village in Canton, Ohio, is the
co founder and CEO of Society Brands, Michael Surpilla.
Speaker 1 (00:15):
Michael, thank you so much for being with us.
Speaker 3 (00:17):
Thanks so much for having me Keith. I'm excited to
be talking with you today.
Speaker 1 (00:20):
Yeah.
Speaker 2 (00:21):
Right, We're in this beautiful facility for Society Brands that
you have taken over. We're overlooking Tom Benson Hall of
Fame Stadium. You're running a multi million dollar business from Canton, Ohio.
Can you talk a little bit about what Society Brands
is because I think you've got a huge business here,
(00:41):
that's an umbrella business that a lot of people probably
don't know exists here.
Speaker 1 (00:45):
Can you talk a little bit about what it is?
Speaker 3 (00:46):
Yeah, absolutely so. Society Brands is a functional health and
personal care platform dedicated to clean and talks and free
living in on and around your body. So think in
your body, vitamin supplements, functional foods, beverages, on your body,
skin care, beauty products, and around your body. We have
(01:07):
a company called clarify on that we own air ionizers,
for your house, kleanomic biodegradable cleaning products for your home
that's clean and healthy for the environment and also clean
and healthy for you as an individual. So we care
about the human health and human well being, and what
we've done over the past few years is acquired direct
(01:28):
consumer companies that are focused in these categories. So we've
done many acquisitions twelve acquisitions to date and certainly working
on more always. And we've built Swell over one hundred
million dollar business within a little bit over three years. Incredible,
But it's primarily been growing through acquisition and then there's
(01:51):
also been strong organic growth as well. So what we
consider to be organic growth is once you acquire a company,
does that business grow or does it decline ors stay
the same. Fortunately, at Society we on a consolidated basis.
We have a strong organic growth story, so there is
that aspect of the business as well. But we've grown
a lot through acquisition, and we keep the founders on
(02:14):
board post acquisition. That's generally the case at Society Brands,
where we keep them intact. We also keep those teams
in place because when we look to acquire a business,
they're already profitable, they're already growing. There's a phrase that
if it's not broke, don't fix it. There is an
element of that with Society Brands. Because we want to
(02:34):
empower founders, we also want to empower the teams that
are in place, so we believe in a dedicated resource model,
not a shared resource model. As we're sitting here at
Hall of Fame Village, we have well over one hundred
and fifty team members internationally at Society Brands, but as
you can see around here, there's only a few of
us right. So we believe in dedicated resources at the
(02:57):
brand level across the various different brands that we own,
and we help fill in gaps that they are missing.
We have a product development team, we have in operations
and a marketing team. We can help them from a
supply chain, we in house and we provide a shared
resource to all finance and demand planning. So there are
(03:19):
some things and also media buying as well, by the way,
that's another key thing that we oftentimes bring in as
a shared resource. So generally there's things that we bring
in that are shared resources, but a lot of the
heavy lifting of the day to day operations is at
the brand level, so that's what we believe in is
partnering with founders, but we've acquired companies, so we do
(03:40):
own those businesses. And it's been a fun ride for sure.
Speaker 2 (03:44):
Got to be very gratifying for you to take a
company that has.
Speaker 1 (03:50):
A really quality product.
Speaker 2 (03:52):
Maybe it's you mentioned, you know, skincare, toothpaste, oral care supples.
You take a company like that that's, you know, looking
to find oxygen in a crowded market space, and you
help them to find the consumers that they're looking for, right, Well,
and obviously you must have seen I mean obviously e
(04:15):
commerce has been around now for a little while, and
it took off during the pandemic, but you must have
seen this ahead of time, right that this was going
to be the way that people buy goods and see things.
Can you talk a little bit about was that your
vision for Society brands? Has it evolved the way you
wanted it to? I guess, and I imagine there's curveballs
thrown along the way, But talk about where it started,
(04:35):
this idea and how you got here.
Speaker 3 (04:37):
Yeah, So it's it's funny when you talk about growing
a business from zero to over one hundred million dollars
within three years. The false perception that that can give
is it was really easy to do because it happens
so quickly.
Speaker 1 (04:49):
Okay, yeah, that is.
Speaker 3 (04:51):
Definitely not the case. There's always these twists and turns
in the road that that you don't necessarily expect this
an organization, But that's growing pains. Most businessinesses grow from
zero to hundred million within thirty years, and there's a
lot of pain over thirty years that they've had to endure.
Speaker 1 (05:06):
I bet you most businesses don't even make it to
one hundred million, right.
Speaker 3 (05:09):
Most businesses don't get to that. So from that perspective alone,
we're incredibly grateful that we've been able to get here.
But the pain that a business, let's say that goes
from zero to one hundred million within thirty years, they
endure pain, but it's over a thirty year period of time.
Society brands endured that same amount of pain within three years.
But yet today we are stronger than what we've ever
(05:30):
been an organization. Wow, because we've always just kept pushing
and kept finding ways to deliver value in quite honestly,
a really challenging market over the past couple years, especially
when you think of consumer products and CpG and e commerce.
It's been a challenging market, but yet today, because of
(05:51):
our resilience as a management team, we are better off
today than what we ever have been. I'm really proud
to say that, going back to your original question, I
had the idea to start Society Brands in twenty twenty.
I was running a population health management company that I
had scaled to a sizable business at the time, and
(06:13):
twenty twenty had new business slowing down significantly. So I
spent a lot of my time in twenty twenty on
the golf course. But we had this reoccurring revenue model
that we had clients coming back on a regular basis.
So business was going very well in my surpillar household,
even though even though new business was slow because of
(06:34):
the reoccurring nature. But what I did see in twenty
twenty is there was all these Amazon boxes. My wife
was buying a whole bunch of stuff online, right, And
I asked myself a simple question, is there going to
be more or less products bought online ten years from
now than what there is today? I think as consumers
were buying more and more online than what we ever
have been. The data has shown that that over the
(06:55):
past twelve years, e commerce is taking market share from
Bain and Mortar. So you have that trend that's emphatically,
without doubt, has been happening. And then another trend that
I realize is consumers are buying more from what we
call challenger brands or smaller brands, right, that they see
on Instagram, that they see on Facebook, right, they see
(07:17):
online Somewhere in comparison to twenty years ago, people were
buying from the Ralph Loreenz of the world, right. And
I'm not saying that they don't buy from those big
consumer companies today, but there's an evolving trend that people
are buying from smaller brands. So we believe that e
commerce was trending up. We also believe that the trend
(07:38):
of consumers buying from smaller brands, we think that that's
going to continue to keep on evolving. And then also
with Amazon, there's e commerce marketplaces, and what that has
actually done is it's really evolved a consumer into almost
like a shopping mall type of experience where but the
(07:59):
issue with e commerce marketplaces, and we love e commerce marketplaces,
consumers are going there with an intent to purchase something, right,
you don't go to Amazon dot Com necessarily because you're
looking to socialize with your friends. You're going there because
you have an intent to look to purchase something. What's
interesting now, and this is just another evolving trend that's happening,
(08:22):
is the non intent to purchase, or in other words,
the window shoppers. You go into a mall, you might
be going to a mall to actually make a or
go to meet up with a friend for lunch. Then
you start window shopping, and then you can essentially see
that that's what social media marketing has brought to it.
Speaker 1 (08:40):
Not only window shopping of twenty twenty five.
Speaker 3 (08:42):
Absolutely so you have the Amazon dot Coms of the
world where if you have an intent to purchase, you
go there. But then also e commerce is getting the
portion of the marketplace to where people are window shopping online.
You're on social media, you're on Instagram, you're on face Facebook,
you're socializing with your friends. You see an ad right
(09:03):
and you click on that ad. So we believe that
e commerce is only going to continue to keep on
taking market share at a more rapid pace because of
the social media aspect of purchasing.
Speaker 2 (09:13):
Today, you talked about challenger brands and you're right as
we're sitting here thinking of.
Speaker 1 (09:20):
What it was like to shop for toothpaste.
Speaker 2 (09:22):
As an example, twenty years ago, you were fairly limited
to whatever Walmart, Target or Marx stocked, and that's why
you went with Colgate, Crest or the rest. Right, And
now you own, as an example, an organic toothpaste brand,
and talk a little bit about though the Challenger brand. Yes,
it is easier. In fact, the consumer has the power.
(09:44):
You see an Instagram ad and you go with the
intent to purchase this, But there's so many more brands
and almost death by choice, right, it overwhelms people. Now
you can find anything, and how do your brands get
oxygen in this space?
Speaker 3 (09:56):
So the very first thing that we do when we
diligence a brand to see if we like to acquire them,
is we start testing the products ourselves. Can I personally
as the CEO? Can I be a consumer? And if
you were to come to my house, you'd see a
whole bunch of society brands products. Of course, because we
love in my household, we love the products that we sell,
(10:18):
but that's not because we own them. That's because we
tried them out first and realize that, hey, these products
actually work, and our product development team tests them. All
of our team generally like all of our corporate team,
tests out the products and we give true market feedback.
The reason why that matters is it all comes down
to is there a product that consumers love and does
(10:39):
it actually work? We test it ourselves and we also
check the customer cohorts to see if customers are coming back.
Not to get too nerdy on this podcast here, Keith,
but during our diligence process, we do what's called a
customer cohort analysis where we're testing out and we're looking
at how sticky the customers are. You could tell if
(11:02):
customers really love that product on if they're coming back,
and that's where you could actually tell if a brand
is resilient and if consumers really love the products. So
one can do I actually see that the product works
for me personally? Then two are there other customers out
there based off the data that we're studying do those
customers agree with what me personally? I could think something's great,
(11:25):
but if the customer data doesn't show that, then we
probably wouldn't make a purchase on that brand. So that's
what it comes down to, is the stickiness the resilience
of the customer base and is their products really working
the way that they claim that they do in the
marketing efforts. And I understand it's a competitive marketplace. There's
(11:46):
other organic toothpaste brands, there's other skincare products, you name it.
But is our messaging resonating and does that mean that
repeat purchases are coming back? And if we that that
is good tailwinds behind us to where we have strong
customers that are coming back on a regular basis. We
(12:08):
know how to bring those brands to the next level
from a performance marketing perspective, right by studying that data.
So that's what we bet on.
Speaker 2 (12:17):
We're talking with Michael Surpilla, co founder and CEO of
Society Brands, who has really sort of found a secret
sauce of aggregating organic e commerce health brands. You obviously
saw that trend coming with people worried about chemicals and
the food and chemicals in the toothpaste that may or
may not be good for you, right, And so that
(12:38):
marketplace is only going to grow, but it's going to
get more crowded. Right, How do you continue to see
the next evolution of e commerce? We talked about capturing
consumer data, remarketing what's the next sort of five to
ten years look like as the space evolves.
Speaker 3 (12:52):
To us, it's all about omni channel. That there is
a place from like a media buying perspective that when
you're looking at your initial row as and for your audience,
that's that's essentially return on ad spend. Right. So another
thing or another way to phrase that is the initial
average order value versus the customer acquisition cost. You're looking
(13:15):
at how much does it cost to acquire a customer
and how profitable is that initial purchase over and above
that CAC or that customer acquisition cost. When when you
look at that, you're essentially studying studying that information, and
you might be doing Google marketing, Facebook marketing, Amazon marketing,
(13:36):
and you're growing a brand slowly, but surely they're primarily
on your direct consumer. Because Society brands, most of our
revenue is D two C. So seventy percent of our
revenue today is direct consumer where people are going to
our dot coms that we own Club early Bird dot com,
Primal Life Organics dot com are actual dot coms and
(13:56):
making the purchases seventy percent of the time.
Speaker 2 (13:58):
That's interesting, right, because you would I think that the
aggregator of Amazon would be in Shopify to a degree
would be more appealing. But I guess at the same time,
if you have a good connection with someone on Instagram
and they like what you're promoting, they're going to go
right to the consumer website, right versus trying to There
is some convenience factor that Amazon brings that I think
(14:19):
you guys deal with a lot, right.
Speaker 3 (14:21):
Yeah, yeah, absolutely so direct to consumer the beauty of
direct consumer. And we're not an Amazon aggregator, because there
are Amazon aggregators out there. Some have struggled. But the
big aspect is if you're too reliant on Amazon. If
one hundred percent of your sales are coming from Amazon,
you're getting your fulfillment from them, advertising, every aspect and
(14:43):
there's constant margin compression that you actually don't control. And
probably most importantly is you, as the brand, don't have
the loyalty from the customer. Right The loyalty from the
customer is Amazon. So when people go to our dot coms,
the loyalty that the customer has is to us, right,
not to Amazon. Now, to your point, we love that
(15:04):
Amazon as a partner. It makes up probably twenty five
percent of our sales on a consolidated basis, but we're
not reliant on Amazon today. So going back to your
original question of like, how do we scale and how
do we think about scaling, we think direct consumer and
looking at that those initial advertising metrics, we grow and
(15:25):
scale a business, likely in the US for the most
part there, and then we eventually broaden out to not
only performance marketing, because eventually performance marketing starts to wear
off a little bit, and then you need to start
doing things like brand marketing where you're actually spending money
where you're not actually able to track the attribution quite
as much, so Director response marketing on the D two
(15:49):
C side of things, and then also Amazon, then eventually
brand marketing, then eventually omni channel and getting into retail.
We already have a fairly signal retail presence and we'll
keep going on that in the future.
Speaker 1 (16:03):
And retail meeting even the brick and mortar side.
Speaker 2 (16:06):
Right for some of your brands, Yeah, I mean you
have to have omni channel, that's what it is, right.
You know, you mentioned your the family business here. Your
brother is part of Society brands and in addition to
your hundreds of teammates. But you mentioned that scaling a
one hundred million dollar business in three years has it
probably leaves you bruised. You have young kids, how what's
(16:28):
something about entrepreneurship that you've can share with our listeners
that you may not have known going into it. Can
you talk a little bit about the journey and the
bruises and how you came out across solve those challenges.
Speaker 3 (16:40):
I love that conversation, so let's definitely go there.
Speaker 1 (16:43):
Yeah.
Speaker 3 (16:44):
So, so first off, you mentioned justin one aspect that
I would say as far as entrepreneurship is, you need
to have the right people around you. Because where businesses
stay small is when you, as the entrepreneur, you think
that you have everything, and the truth is is you don't.
And it takes a humble heart and a humble attitude
(17:05):
to say, here's the thing that I bring to the business,
and I know what my skill sets are as an entrepreneur,
and I've been an entrepreneur for fifteen sixteen years at
this point, but I know clearly what I do, and
then I also know clearly where I have gaps. And
you need to have either co founders or other team
members that fill those gaps. Justin is a person that
(17:27):
has a ton of m and a background that I
did not have prior to Society Brands. So that's essentially
where we're able to compliment each other. And then also
our other co founder, Sean Doherty, has a ton of
experience in CpG. She's co founder of a company called Mophy.
She builds it. She's sold a billion dollars of products
direct consumer. She exited that business a few years ago.
(17:47):
I can now leverage all of her expertise, even though
it wasn't actually mine. But going back to the original
question on just challenges and difficulties that arise when you
start a business, you cannot go into it thinking that, hey,
I'm going to dip my toe in the water and
see if this is going to be successful, and if
(18:10):
I realize any sort of challenges, I'm going to give up.
If that's how somebody's mindset is, then they probably shouldn't
be an entrepreneur. What you should do is say I
will do whatever it takes, whatever it ethically takes for
me to make this business a success. And if that
is the underlying truth that you have, regardless of whatever
(18:33):
challenge has come your way. You're going to either bulldoze
through those challenges, You're going to find a way around them,
You're going to jump over it, you name it, you
will find a way. So I think that what it
comes down to, there's going to be a lot of
things that come your way, for sure. But are you
committed or are you only committed when it's easy? And
that's the question that any early entrepreneur needs to ask themselves.
Speaker 2 (18:55):
That's a great question, are you committed or are you
only committed when it's easy?
Speaker 3 (18:59):
Right? Because I.
Speaker 2 (19:01):
Know from speaking with entrepreneurs over the years, Yes, there's
some security blanket of a corporation that people need and
like because you're going on in a high wire in
many cases without a net. It's your own money, it's
your own family's money, and you're worried about having to
feed them at night in addition to trying to run
(19:22):
a business. And that's got to be I think scary
for a lot of people. And it's not for the
faint of heart. Is that fair to say?
Speaker 3 (19:28):
Yeah? Yeah, absolutely? And the whole thing with like work
life balance, it's a real challenge, you know, it really is.
I mean I've been here at the Hall of Fame
Village at my office, when it's light out, when it's
dark in the morning, right before the sun comes up,
and when it's dark at night when the sun goes down.
Speaker 2 (19:48):
And probably Saturdays and Sundays and holidays as well.
Speaker 3 (19:50):
Right, yeah, absolutely, But I'm married, I have three kids.
I love my wife, love my family, and it's always
that balance between that. But I think that the biggest
thing that I try to teach my children throughout this
process is it's about the impact that you're making. And
(20:11):
they see me go to work every single day happy
knowing that their dad is making a difference in this world.
That's what I truly believe. And we want to give
our children time and I certainly give my children my
wife a lot of time and energy and attention, which
I love, like they're everything to me. But also it's
the example that you're showing as well, and the example
(20:33):
that you're showing of working hard, treating people right, having integrity,
making a difference in this world. When my kids are older,
that's another way of being a good father is giving
them a good example.
Speaker 2 (20:45):
It has to be quite rewarding to see businesses that
you're an entrepreneur and You've helped other entrepreneurs to maybe
had a product that was really catching fire in the marketplace,
or should catch fire in the marketplace, but they don't
know where to go. So we're talking with Michael Surpila, CEO,
co founder of Society Brands, and we've if you've been
(21:09):
listening all the way through the podcast, you know that
Society Brands purchases challenger brands. It helps them scale and
grow to the level of the founders that always dreamed of.
So if someone's listening to this, Michael, how you know
what questions should they ask themselves Besides the question are
you in it for the easy and the hard? What
else should they ask themselves about their product and repeat customers?
(21:31):
And you know you mentioned a little bit about how
you test a brand, but what should someone say look
for if they want to maybe get be part of
your brands.
Speaker 3 (21:39):
What I would say is if somebody's looking to sell
to Society, I mean we look at direct consumer brands
where at least fifty percent of their sales are coming
from their own website. Maybe they have the other portion
coming from Amazon or other e commerce marketplaces. We'd love
to see some sort of retail presence. All of that
sounds good. We like that ten to forty million dollars
(22:02):
revenue is what their business would have to be. It
takes the same amount of work for us to acquire
a million dollar revenue business that it does a forty
million dollar revenue business, right, so we might as well
make more of a meaningful impact. And you know, ten
to forty million dollars revenue is generally our size. We
want to see anywhere from fifteen to twenty five percent
profit margins, and we want to see healthy margins. When
(22:26):
we look at their financials, we don't only look at
what happened within the last twelve months. We look at
what the most recent months have been doing from a
margin perspective. Are those margins expanding, are they staying the same,
are they compressing down? What what EBITA adjustments, what ad
(22:48):
backs are they trying to look for? And then also
how sticky are those customers. So if you own a
brand and if you're looking to sell, we would be
happy to talk with you, and even if it's just
to give you advice whether Society Brands is the purchaser
for you or not. We're happy to just have a
conversation and give you some advice because we know what
(23:09):
it's like to be on the buying side, and we
know what we're looking for. And a big aspect is
what we talked about earlier Keith, which is the customer data.
How does that actually pan out inside that business? Are
the customers coming back? What's the customer acquisition cost over
the initial AOV or average ordering value? What's the lifetime
(23:29):
value of a customer? All those things are the most
critical aspects of a business in order for any company
to be successful. So you've got to know those answers
to those questions. And if you know those answers, and
if you know they're compelling, whether it's society, brands or
somebody else, you could probably find a buyer.
Speaker 2 (23:47):
You know, Michael, this has been so interesting because you're
finding success. You're helping make dreams come true.
Speaker 3 (23:54):
Right.
Speaker 2 (23:54):
You've got founders that had a product idea that really
they didn't know what to do with it next potentially,
or they they grew it into a really nice sized business,
but they wanted to grow it more. But obviously these
folks that are in this business, they are stressed. They
are wanting to put their whole They've put their life
savings potentially into this product. How does someone like that
(24:17):
you find safety and security are their founders' groups? I mean,
we talk about this podcast, we've talked about your potential
podcast that you're looking to launch to help founders, But
how does someone like you decompress and distress in a
world where you're getting all this stuff thrown at you?
And how can a founder kind of think about centering
themselves and grounding themselves.
Speaker 3 (24:36):
I'm very fortunate to have mentors and people on our
board at Society Brands. I've just been very fortunate to
connect with people that have walked a similar path before
me built a business, sometimes to billions of dollars, sometimes
hundreds of millions of dollars, and they will give me
(24:58):
guidance and I actually lean on those people. Yeah, because
and here's what's funny about somebody who's been there before.
They're not surprised by any anything that I bring up.
Like if there's a challenge that we're trying to overcome,
it could be a small challenge, but whatever it is,
they're not like, oh my gosh, this is so, this
(25:20):
is so how do you overcome this? It's kind of
almost like they don't even sweat that. They're just they
know what it's like to build a business. You decide
to start a business, the next step is you experience challenges,
you overcome those challenges, and then you have success. Society
brands successful today because part of that journey is the challenges.
(25:42):
And then in order for us to get to the
next level, guess what, there's gonna be more challenges and
then we need to overcome those and then we'll have
more success. So it's really finding people that have been
to similar places that you've been before. Likely what you're
going to find out is there not much different than
what you and me are. And that's been the most
inspiring thing is they would say this. They would say,
(26:05):
you know, you and I are the same. And I
would say this to an entrepreneur. If there's an entrepreneur
listening that has a million dollar two million dollar business today,
what I would say to them is you and I
are not much different at all. And you know what
is my IQ in comparison to somebody else? Have no idea,
but do you have the resilience? Are you willing to
(26:26):
listen to others? Are you willing to surround yourself with
other like minded people and just never ever ever stop
believing that you could be somebody great in this world.
Speaker 2 (26:36):
So, if you've been listening to this podcast and you're inspired,
Michael and his team at Society Brands have helped many
entrepreneurs realize their dream of selling and owning and operating
an e commerce business. That gives them the security to
know that they're going to be growing in that place.
(26:58):
So if they want to reach out to you, right,
it's brand's website, right, Michael.
Speaker 3 (27:01):
Yep, go to Society Brands dot com. I believe that
there's a contact us tab and yew, you could reach
out and we love to chat with you.
Speaker 2 (27:11):
Wow, that's really interesting. We appreciate your time today, Michael.
It's been great to talk with you about growing e
commerce brands. Check out Society brands websites. If you're into
the organic health space, which I know a lot more
folks are these days, some of the brands you have
on there are just fascinating to see how they've grown
and see what they've become. And we'd love for you
guys who are listening to purchase some of those products
(27:31):
as well. It might find it good for you. So Michael,
thanks for your time today. All right, thanks Keith, and
this has been iHeartRadio CEOs. You should know today's show
is produced by Bob COATESID.
Speaker 1 (27:40):
I'm Keith Hotchkiss. We'll see you next time.
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