Building a CPG company with a software mentality — lean, fast, and user driven
As a software product manager, I love pushing code and seeing websites go live. I sold my first software company to a health care operator and now work at BCG Digital Ventures, where fortune 500 companies hire me to build startups for them.
One ice-breaker I often ask my team on projects is:
“You’re launching an online store, one of those Instagram brands… What’s your idea?”
This question is always met with enthusiasm, but how do you actually launch a company like that?
Last year, a few friends and I set out to build a D2C mineral reef-safe sunscreen brand. Despite regulations and large minimum order quantities, we were able to bring an FDA approved product to market in less than 6 months and are on track to make a profit in 2020.
How did we do this without taking on venture funding or investing our life savings? By building a physical product with a digital mentality.
1. Think lean, and de-risk any upfront investment
In software we are spoiled, we can get a proof of concept out the door in a couple of hours with a $10 domain name and a prayer. Over in CPG land, custom formulation alone runs $30K with a year or more in lead time to complete the required formula testing.
Instead of leaning into industry conventions, we discovered that developing a formula from scratch isn’t an upfront risk you need to take-on in your early days.
The fastest path for us was to form a partnership with an all natural lab open to evolving and tweaking an existing formula to meet our needs.
Our launch path allowed us to defer formulation costs to our 2021 official market launch with the added benefit of gathering impactful customer feedback and early advocates. Right in-line with the chemical sunscreen ban starting in Hawai’i this January.
2. Bring the open source software attitude to accelerate lengthy R&D
The software community is built around sharing, with open source code being the backbone of some of the world’s most successful websites. Instead of adhering to the “industry trademarked” CPG culture, when we desperately needed some direction in this foreign physical good space, we started messaging founders. We focused on founders that produced a similar product in a distant industry. We reached out to founders from almond butter to baby food over email, Instagram, you name it… to beg and borrow our way to good advice.
We had responses almost instantly when we shared our vision for the sun care space. SuperFat and EnduranceTap were companies with sleek packaging and successful launches. They gave us direction on suppliers, clued us in on what to avoid, and gave us details on timelines, budget, limitations, etc when developing custom packaging.
3. Use soft launches to collect user feedback and iterate the offering
When we received the first run of our product, we were deep in the COVID-19 pandemic and questioned if we should put everything on hold until we could do a full launch with retail partners.
This didn’t sit right with our software mantra of being agile and user-driven. So we quickly shifted our focus to instead use this time period for two soft launches, completely digital in two different geographies. Our soft launches helped us not only pay for our next run, but have allowed us gather feedback on the formula, packaging, pricing, and give us an inventory of customer reviews on our website for our official PR and retail launch in 2021.
This is just the start of our CPG playbook, and we’re constantly evolving it to find a new normal for our physical/digital CPG baby, inspired by our many years in software startups. In the spirit of open source, we’ve opened up the playbook in hopes that it may help you get that idea off the ground. Drop us a line, we’d love to hear about what you’re building hello@laniandkai.com.
Check out our V1 soft-launch (still live and going strong) and follow our journey to our official launch and V2 in 2021.
