Reformers [Episode 1]: Sam McBride, RXBAR

The former COO at RXBAR explains the benefits of selling into niche markets, why self-awareness is a critical hiring criteria, and how constraints are actually a competitive advantage

For our inaugural podcast, Reformers: The gritty details behind the world’s greatest bootstrap successes, we interviewed Sam McBride, the former COO at RXBAR. Sam was one of the first 5 employees at RXBAR, initially joining as VP of Sales and working his way to COO. During his time with the company, RXBAR scaled from less than $2M in revenue to over $130M in revenue, ultimately exiting to Kellogg for $600M in 2017. Below are some of his key insights and tactics from the interview, which can be implemented in your own business. You can listen to the full interview here:

Selling to Niche Markets is an Effective GTM Strategy

Early on, RXBAR was exclusively focused on one customer demographic: CrossFit. In 2014, the business did $2M in revenue, almost entirely direct to CrossFit. In fact, the company derived its name from the CrossFit moniker “RX” (RX in CrossFit means the athlete performs all modalities using the prescribed weight and reps), which shows you how deeply ingrained and important this channel was early on. RXBAR shaped all of its value propositions around this community, which led to its simple ingredients and messaging. As a result, RXBAR didn’t need to do that much selling because the product solved so many of their customers’ problems. Additionally, McBride believes that

“One of the best moves we made as a company was sticking with our niche far longer than most other brands would have.”

Though the business grew slower in the early days because of this focus, sticking with the CrossFit niche resulted in a strong foundation for RXBAR and helped them better understand and improve their own products because the customers were so forgiving of the brand.

Screen for Self-Awareness in Every Candidate

In a small, fast-growing business, each employee is extremely exposed and accountable. Every mistake, day off, and key decision is amplified given how important the contributions are at this phase. Especially at RXBAR, where the business was growing at such a rapid pace — they went from $2.5 in 2014, to $6M in 2016, to $30M in 2016, to $135M in 2017) — there is a high bar to perform and therefore added pressure on each employee, which can be very taxing. Every six months (or sooner), an employee’s role would change within the org, as would the org structure overall. In an environment like this, self-awareness becomes critically important because you need employees who will proactively raise their hands and say “hey, I can’t perform this role anymore; it has grown beyond me” or “hey, I need more resources to get my job done.” When you have employees who can own up to these things, it improves both the productivity and culture of the organization.

As a related note, Sam pointed out a unique aspect about career progressions in startups vs. in big companies. When you work at a large corporation (e.g. Walmart), the more senior you get via promotions, the more of the business you oversee.

“However, at a growing startup, the more senior you get via promotions, the less of the business you oversee because people get hired in beneath you and responsibilities get taken away from you. Having the self-awareness and humility to understand that losing responsibilities in this type of environment is a sign of success (not failure) is critical.”

RXBAR made sure to screen for these attributes in their hiring process by capping off each candidate’s interview process with an hour-long meeting with either Peter Rahal, the CEO, or Sam McBride. During this hour, they would only screen for personality and cultural fits, nothing technical or work-related because the candidates who made it to this phase of the process would be only those who were clearly capable of doing the job.

Email Marketing (Done Right) Should Be Your Highest-ROI Channel

“If you’re sending an email to someone, that means you’ve already acquired them as a customer.”

At this point in the funnel, your main focus is on re-engaging people who have already consumed your product, so doing it right can lead to high rates of repeat purchase without any acquisition costs (given emails cost nothing to send). Invest in this channel by hiring a great email marketer (which RXBAR did very early on) — done wrong, you’ll be leaving a lot of profitable revenue on the table.

Structure Your Sales & Marketing Strategy Around Your Customer

When RXBAR made its first inside sales hires, they began with four people cold-calling CrossFit gyms to generate new customers. However, when they reviewed the early top-of-funnel metrics, they learned that phone calls were a super inefficient method for connecting with coaches/owners of CrossFit gyms. The reason, they realized, was that these people are coaching all day: they don’t want to get on a phone call when they’re about to teach, let alone take out their credit card to complete an order during training hours. Diving even deeper into the email marketing data, RXBAR noticed that many of the opens from their email marketing campaigns were either late at night or early morning when the coaches/owners were home and had time to go through their inboxes right before bed or right upon waking up. This was a huge breakthrough and led to a key learning for RXBAR:

“We needed to redesign our entire outbound sales & marketing system around the lives and routines of our target customers.”

View Constraints as a Competitive Advantage

In the early days at RXBAR, there wasn’t much appetite from investors for yet another protein bar company. As a result, the company was forced to do things very leanly which, although it made things seemingly more difficult, ultimately led to the right long-term decisions for the business. For example, the RXBAR budget for sales & marketing was extremely limited, so the company always had to be thoughtful about what the lowest-hanging fruits were for acquiring customers. They had an internal rule early on to therefore seek out CACs that were either $0 or simply the cost of the product itself, which forced creative thinking across sales & marketing.

As another example, RXBAR had to be sharp on negotiating with vendors from day one: not just the dollars, but the timing of the cash payments and the terms. If a third party (be it a supplier or an agency) didn’t deliver on their work product, RXBAR didn’t pay them.

“When you’re trying to bootstrap a business, literally every penny counts.”

“If you are VC-backed and have a few million dollars on the balance sheet, and a PR firm doesn’t deliver on what they said they would, you’ll probably just pay them to avoid any awkward conflict. In our case if that happened, then we simply wouldn’t pay them until the work was done right.”