27 Mar Sisun Lee | From 0 to $1 Million in a Few Months
Who hasn’t had a rough morning after a late night out? Sisun Lee, founder and CEO of More Labs, decided to do something about it with a drink that helps ease your hangover. And it’s backed by science, rigorously tested in the lab and among consumers in person and online, with plenty of feedback gathered to perfect the product.
Along the way they went viral and More Labs went from 0 to $1 million in sales in their first few months
But soon they discovered that their product wasn’t what they thought it was… and their ideal target market was actually completely different.
Sisun explains how this has changed their business and how they’re using these new insights to take things to the next level.
Tune in to discover…
- The surprising things customers can tell you – that you might not want to hear
- Why they used Indiegogo for their crowd funding campaign
- The elements of marketing that are most important to increase sales
- The #1 ecommerce principle you must understand to build a sustainable business
- And more
Mentioned in This Episode: www.morelabs.com
Joris Bryon: Hey, this is Joris of the ECommerce excellence podcast. And today I’m really excited to talk to Sisun Lee. Sisun is the founder and CEO of Morning Recovery and Morning Recovery is a science-backed hangover drink and it helps detox and counter the negative effects of alcohol. In the first few months, they made $1 million and that’s very impressive. So I’m sure this is going to be a very interesting episode. Sisun, welcome to the Ecommerce Excellence podcast. I’m really happy to have you here.
Sisun Lee: Yeah, thanks for having me.
Joris Bryon: So maybe just to start off, yeah. Can you tell me a bit more about your background, where you come from in your career so that our listeners can understand a little bit more about you and how you got started with Morning Recovery and in ecommerce and how you got to this point?
Sisun Lee: Sure. I mean, my background before Morning Recovery, and by the way, Morning Recovery is the brand, and it’s the first product that we’ve launched. The parent company behind Morning Recovery is More Labs. More Labs was a company that was founded a year and a half ago and Morning Recovery is the hero brand that we’ve been sort of pushing forward with.
Prior to More Labs, my background was actually I would say highly unrelated to what I’m doing today. I’ve been in tech, I’ve graduated in an engineering degree. Once I graduated I worked full time at Facebook as a product manager and that I was at a similar role at Uber and most recently before More Labs, I was a product lead for a particular org at Tesla. And so my background is mostly around engineering consumer tech. And yeah, I would say it’s very serendipitous and definitely not planned in terms of how I got, how I stumbled across this ecommerce business.
Joris Bryon: And how did you come up with this idea?
Sisun Lee: Yeah, I think it’s a series of serendipitous events. So right now, I live in LA and our company’s based in LA. Before that when I was working in tech, I was mainly in Silicon Valley up in San Francisco and one of the common things living there everyone is always working on side projects, usually outside of their daytime. And so myself included and a lot of it is for fun. You know, you don’t have this ambitious idea of creating the next business or consumer app, you just get together with your friends because there’s a lot of designers, engineers and hackers, you could just build things easily. So, I’ve always been accustomed to just making things over the weekend. It’s been fun.
And part of that idea was also because I was so used to just building things and seeing where it goes, making samples, we would call it MVP, you know, minimum viable product. When I had an opportunity to visit South Korea, which is where I was born and raised from until I was nine years old, I realized that there was this massive market for hangover drink. They would literally call it a hangover drink and similar to energy drinks in the US where you have Monster, 5 Hour, Red Bull. There were so many of these leading brands. There were all of the domestic CPG companies had their own versions of these hangover drinks. And so, when the idea of an opportunity came up where we could partner up with a few doctors that were studying some of the key components in these drinks, we just kind of put on our hacker mode and thought, “Well, this is really fun. Can we make samples? Is there anything we can do to test this?” And so that’s how the idea began.
And you know, it was a series of months where reaching out to those doctors, getting on a phone, meeting them in person, you know, it took some time convincing them to work together. It took some time. We made bunch of samples we gave to friends and family. And then slowly over time, that momentum took us over to make more samples, giving it to strangers, building a website, getting feedback, building a Facebook group so we can engage directly with our beta samplers. So, it was a series of these kinds of events that an old overtime tipped us over to making a decision to say, “Okay, we think there is a very strong demand. This is really fun making this. We really enjoy learning the science and because we have these doctors at USC, who could help us sort of prove the efficacy and make the formula, we have something.”
And so the final decision was, let’s see if people would actually pay for this, which was the idea of launching an Indiegogo crowd funding campaign. And I would say when that was successful, that was really the first milestone. That got us over the phase of a project to really think about this as a full time business.
Joris Bryon: Right. Yeah, that’s when you basically got proof of concept on Indiegogo. But speaking about Indiegogo. You chose for Indiegogo and not for Kickstarter, can you share the story how you ended up with them?
Sisun Lee: Well, the funny thing is supplement category is not allowed on Kickstarter. And so for any entrepreneur or any makers out there that wants to launch a dietary supplement through a crowd funding campaign, Kickstarter is just simply out of the question. And so that makes the option really easy, right? Because then the next I would say the big platform that people are familiar with is Indiegogo.
That being said at the time, I wasn’t actually aware of that fact. And so we were actually evaluating between Kickstarter and Indiegogo. We actually chose Indiegogo on its own, despite realizing that even if we chose Kickstarter, we couldn’t have actually done it. And that was because we would work with the partners in each of the companies. And by the time we reached out to them, we weren’t just at a point of an idea phase.
We’d already accumulated over 20,000 email list by then. And for these crowdfunding campaigns, the biggest proxy for success is how big your community is, even before you launch. Because when you launch a product on these platforms, you had a very strong momentum to get going right away. And if you have an initial base of customers that you can target, that if they can come in and help accelerate the pre-order phase, there’s a virtuous magic that happens, right? Then all of a sudden, you reach your target goal faster. The algorithm kicks in in this crowdfunding campaigns because these are the ones that are being funded, it gets shown in their email, their homepage, which means there’s more discoverability, which means more people outside of your email list visit, some of them will buy and it’ll continue and continue.
And so by the time I reached out to them, we had some leverage in a sense that, hey, we have 20,000 people that are very eager to pre-order. What can you do for us? And so we listened to both of them. Kickstarter didn’t offer too much. Indiegogo offered more perks, in terms of promising us a spot on the homepage, promising a spot in the email. And ultimately to work with the indigo team a more for their belief that if they were to work together with us, we could blow this out of the park.
Joris Bryon: Which you did. Right?
Sisun Lee: Yeah. Well, I mean it’s one of those things where we never had a binary threshold of what a success looks like. We wanted to raise $25,000 because that’s what we needed to get our initial production off the ground in a factory. And so I would say anything above $25,000, we would have been happy with and we would’ve pursued it. But we did $252,000, so that was definitely unexpected. And you know, we were obviously very happy with it.
Joris Bryon: So, those 20,000 emails that you had upfront played a vital role in getting there or essentially, the first probably 24 hours typically are essential on Kickstarter or Indiegogo. But how did you get those 20,000 emails before launching Indiegogo?
Sisun Lee: Yeah, I think, I think one of the things that I’ve learned building products in the Bay Area is it’s all about building an initial momentum. You don’t need a perfect product. You need an MVP that solves the core problem that you’re intending to solve, and you need an early niche community around supporting that.
And so for probably six months during our sample phase, it was just continuously iterating on making the right samples. I mean, our initial version was pill, then we had powder and we realized that people would much more prefer a ready to drink beverage just because of two things. One is I think the convenience. Second thing is when you put it in liquid, you’re dissolving very small amount into a large solvent, which is water, which means it gets diluted, which means then you have that ability to change the flavor.
And so it doesn’t have to taste like whatever to notion people have about these type of detox drink. You can actually make it taste pleasant. And so all in all, I mean that’s something that we learned quickly. And so we kept iterating on our minimal viable product. We changed the flavor multiple times, but along this time, I mean, I think we’ve made about 1,000 samples along those times. Gave them away, got feedback. Many were structured, like surveys. Many were just informal.
But the idea was keep expanding on that sample list from friends and family to then strangers. So the way we got strangers was we opened up a website, posted on Product Hunt and the website was basically saying, here’s what we’re working on. There’s a form, very simple, give us your name, give us your address and we’ll ship it over to you.
And we basically said, it’s just like please give us, fill out the survey after you try it. Obviously, not everyone’s going to fill it out, but we had about 50 to 60% completion survey rate and I think as you do this, you’re building on community. And once we started making more samples and it became harder to manage everything over email, we opened up a Facebook group, a private group, which is open today called Morning Recovery; Beta Testers. And then we basically told people over email that we give samples to, “Hey, like don’t worry about the survey. If you do it, it’s great, but can you join this Facebook group and just like give us real feedback?” And the idea there was one, it was easy to manage. We can directly communicate with them. But the second thing was we were having more people who wanted to try our samples than we had the capacity to make the samples at the time, which meant even if those cook people, we couldn’t give them the samples.
We wanted to invite them to a place where they could read and listen and hear about the feedback from their peers. And so the idea was very simple, which was how do we build this community in an authentic way? And we didn’t have to make it. I think it could be super raw. Like, anybody can make a Facebook group. There’s nothing refined about it. But the idea was let’s get it out there that we’re working on this, let’s get the feedback, let’s get their friends of friends excited about it. And then along the way, you know, the word of mouth spread. We’ve obviously done a lot of our own sort of viral marketing towards getting the samples heard. You know, we made a website, we went out, we gave samples away in front of like nightclubs, where we know people probably are drinking maybe more than they should.
We posted and use forums like Product Hunt. We put it on places like Reddit. Some of the small blogs picked it up. Uncrate picked us up and that gave us a big traffic in the website. And so, there was not a one thing. It just kind of grew over time, over time. But really how we got from probably around 6,000 people to about 20,000 people is during that time the word of mouth spread where somebody from Business Insider reached out and wanted to write an article about us. And I’m pretty sure, and it’s very hard to track the attribution, but I’m pretty sure that press really gave us a significant boost in traffic. So, over the weekend when that press went out, and that was a Business Insider article that had a title called “Ex-Tesla Engineer Created an FDA-Compliant Hangover Drink.” Our email list went from about 6,000, 7,000 to about 20,000. And then, you know, it started to grow more and more and more.
And by the time we had about 25,000, that’s when we launched Indiegogo.
Joris Bryon: Cool, so basically, people were very passionate though really from the beginning because you were solving a core probably that they probably faced too many times in their opinion probably. But, as strange as it might seem, you found out that your product is not as much about preventing hangovers, is it?
Sisun Lee: Yeah, that’s a good question. And it’s something we’re actually continually iterating on. I think the DNA that our team has is we’re actually not CPG veterans, right? And I wouldn’t even call us eCommerce veterans. You know, we are a bunch of, our core team is from the tech world and the philosophy in tech, especially in consumer tech, like Facebook and Uber, is iterate quickly, test what you don’t know and get to the right answer quickly.
And when we launched this, we had an assumption and hypothesis as to who would want this, why would they want it? And I have to be honest, I think early days I thought this was going to be a very conventional “hangover drink.” My target is going to be college, college students, young professional, and people that just wanted to party hard but also have the responsibility to take care of himself the next day, whether they go to class, for student athletes, you know, go do your workout or young professionals get to work.
And so we definitely catered towards end need and we wanted it to be very functional. This is all about hangover. But to our sort of pleasant surprise, when we went out like that and then we started observing our customer base and their feedback and what they were saying, we quickly realized that we were actually quite off. Our biggest demographic early on and still today are actually mostly parents, age ’40s to ’50s. They are professionals. But the common theme is that they have kids and the use case of why they use Morning Recovery is actually not as conventional as you might think. They don’t drink alcohol as often as, or as much as, you would think that they might need a drink like this. But they definitely enjoy themselves. But they want to enjoy themselves guilt-free in a responsible way.
And then the next day, they have a high urgency to wake up in time, take care of their children and do the things that they need to do. And that’s the first, but the commonality is all there. And the actual reason why you need might need to wake up could be take care of their kids. Some people want to wake up to go workout, do yoga, get to work early, meditate. But it was all about being more productive the next day and being able to do more of the things that they need to get done.
And so, you know, it wasn’t like we had this magical intuition, hey, it’s not about hangover drink, it’s about productivity. We definitely started with the idea of the latter and over the course of iterating with our customers, we just realized that actually that wasn’t the core problem that we were solving, which is why actually after a year and a half, this is what we’re gearing for is March 2019 we’re launching, we’re announcing the launch of multiple new products beyond Morning Recovery.
You know, we want to help people outsmart themselves, not just when they add rough mornings, but when they are fatigued, when they are stressed, when they can’t get enough sleep, or have poor sleep quality, when they have a brain fog. To us, this is a natural extension of what Morning Recovery customers want, which is when do you think about what slows you down, hangovers is one of them for our customers, but there are other daily stressors that slow you down. It could be the things that we just talked about, which is a brain fog, fatigue, anxiety and stress, poor sleep quality, low immunity. And those are all the things that we believe at this point from learning from our customers that it is what they expect from us in terms of the product and the value that we bring. And so, it was an iterating cycle over time and it’s still something that we’re learning. What is the true value proposition? And I think it’s not binary for different customers. It differs.
Joris Bryon: Sure. No, I love that story because it shows how important it is to keep listening to your customers and it actually determines the course of your entire company with the launch of those new products, because if it had been all about hangovers all the time, you probably wouldn’t have shifted the entire company towards other products about productivity. So yeah, that’s very cool.
This product in particular, it’s typically a product that people might be skeptical about. How do you try to overcome this?
Sisun Lee: Yeah, I mean, it’s a constant battle, and I think that’s something that is common amongst all products in this category. Supplements, drugs, or anything that’s highly functional.
And so I don’t have a magic solution because if I think if I did, you know, we would be $1 billion company. And so I think it’s a constant battle, but I think there’s just like key themes that we try to tackle. I think one is like reason to believe. What is our true reason to believe? And that could be science. That could be the credibility. That could be sort of the social proof. And it’s probably a combination of all, but we wanted to quickly give people an opportunity to understand that here are the reasons why you should believe. And it’s probably other things such as, you know, we have a very strong money back guarantee. In your first order, if you don’t like it, you don’t even have to tell us why, we’ll just take your money back. I mean, we’ll take the product back and we’ll give your money back.
And the idea there is very simple. You know, we’re dealing with efficacy where it’s all about subjective reasoning. Even if we can prove to you that actually we improved you, because we’ve lowered your acetaldehyde, sort of accumulation in your body, which is the toxin that alcohol turns into that your liver your liver has to process and if you drink more than your liver can process, it accumulates and it causes a nasty feeling.
That doesn’t matter if you wake up and say, “I don’t feel good.” You know, at the end of the day you didn’t have a good experience with us. And so I think it’s a combination of making those kind of promises, staying behind your product to realize that it’s going to be a very, very small percentage of your orders and customers.
And really just trying to craft all of these reasons to believe in a very, very compact manner that people can take away within a second. Because, you know, this is something that we try to emulate across all of our advertising. When we ask all of our employees and we now have a little over 20 people in LA, the reason why they join, you know, everyone has different reasons, but the core theme, the one variable that’s inclusive of everyone is because “I tried it and it works and it’s really, it’s based on real science,” because no one would realistically join this company if they thought that they were selling placebo bottles. So, everyone gets to try it. Everyone gets to read our papers. Everyone gets to talk to our doctors. But that is cycle of multiple days and weeks of learning about us, talking to me, talking to her doctors, talking to our advisors, trying it yourself.
The problem in this world of the eCommerce/CPG is the attention span of the consumer is very limited, right? We’re fighting for their attention. There’s other brands out there. There’s other things out there, so how do we provide all of these contexts and true reasons to believe that we’ve talked about probably into like a 30 second advertising, in terms of providing it in a website in a manner where if you join our homepage for 10 seconds, there’s something that you can take away with? And we understand that you know there’s going to be multiple touchpoints before a prospective customer decides to give us a try, but the first time they hear about us, it has to be a very, very compelling reason to believe because I think like our hypothesis is very simple. If you have strong, strong conviction that this would work, then within our demographic of consumers who are generally on a higher disposable income scale, we think you would buy it.
Like, $5 for a drink that sometimes that you would probably need when you drank too much, which meant you probably have spent a lot more than five bucks? It’s not very expensive, but it becomes very expensive if you don’t think it’s going to work. Because then all of a sudden the mentality goes from, do I want to spend $5 a bottle to give myself 24 hours back the next day when the obvious answer is yes, but if the framework is I want to spend $5 to try something that probably won’t work? All of a sudden that $5 can seem like a waste of money.
And so it’s about helping our customers shift in mentality. Um, and it’s, it’s really difficult. And I think the more difficult part is that everyone has a different rationale and different reasons to believe. Some of our customers want hardcore science and we’ve got to be able to provide for them. Some of our customers don’t actually care about science at all.
And they just resonate with really viral funny ads. And you know, those are the ones where we have to rely on a lot of clickbait ads to get them into the funnel and let them try it for themselves. Because a lot of times people just buy for shits and giggles, right? Like, that’s what they want. And then we have customers that really want strong, strong social proof. Who’s behind this? Who said this works? Do you have influencers? Are my friends using this? And some customers are forever skeptical until they try it. So then we have to offer some kind of optimized funnel where they can try their first time for free. Perhaps maybe we’ll just give them one bottle for a discount. And so, you know, it’s a combination of everyone, everything. And what we’re trying to do is segment the customers in the right way and provide them with the right reasons to believe that is probably optimized for that segment.
Joris Bryon: Yeah. Very interesting. And I think you do a very good job on the site. Yeah, skepticism in general, I mean, drinking water helps. No, it doesn’t. I mean, that kind of stuff. It’s very convincing, the site. So you’re doing a good job there. What do you believe is key to grow in ecommerce in today’s environment?
Sisun Lee: This is like something that I’m also learning, so I don’t think I have a perfect answer, but I think at the very core when you reason it through first principles, you need the LTV over CAC of the economics to be sustainable no matter what you sell.
For example, let’s assume that somebody is selling a fairly low price, fairly commodity product online, where the one off purchase price point isn’t very high, it’s not very premium. The only way this thing scales is if you have insanely cheap CAC, which is customer acquisition costs or you have an insanely high repeat rate where your LTV goes up. So for those that don’t know what LTV over CAC is, I mean that’s probably the first thing they should really master before starting ecommerce. LTV is lifetime customer value, which basically tells you how much on average profit is a customer bringing you over nearly an entire lifetime. And then CAC is how much money are you spending to acquire a customer, at an aggregate level?
And so, the math is very simple. If you’re paying more to acquire customers than the value that they’re bringing you in terms of dollar, then you have an unsustainable business. If the ratio is flipped around, you have a sustainable business. And I think just really getting to the truth of this economics and really answering yourself whether it is going to work or not, it’s going to be really, really interesting. If you have a very, very high price premium product, where the repeat rate is really low, but when they buy it, you’re getting $500 LTV off of one off purchase, that’s a way to really scale the business because if any of your CAC is higher than usual, you’re making profit off of every order.
Now, if you don’t have a high repeat rate and the LTV sort of caps out there, you’re going to run into trouble as you scale because as your scale, as your CAC goes up, if the only thing you can do to really scale the business is to continuously lower the CAC, but you don’t really have a good way to increase LTV, there’s going to be a plateau at some point.
You need to really think about, can I upsell this? Can I diversify my product offering to increase LTV? Can I create a component and change the business model where there is actually recurring revenue? So these are all things that I think fundamentally determines whether an ecommerce will be successful or not, which is what does your economics look like and is it sustainable?
Joris Bryon: Absolutely. I couldn’t agree more. It’s basic math, simply, but there’s a lot of people that don’t really know it. And don’t really, well, they sometimes look at CAC, but they don’t really look at lifetime value, but I think that’s probably even more important than CAC. Yeah, maybe just, because we’re running out of time. Maybe one last question. What’s the biggest mistake you made?
Sisun Lee: Oh, you mean running the business?
Joris Bryon: Yeah. Running the business and the whole process off getting Morning Recovery launched, on anything.
Sisun Lee: Man, there’s so many.
Joris Bryon: Or you can share a few.
Sisun Lee: There are so many mistakes. Let’s see. I think the first mistake that really hurt us and it took us some time to really get to a better state is undervaluing brand. I come from a pure engineering math background, like we talked about. And when you look at marketing as a whole, you could start to dissect where the money goes to. And I think the easiest way to really think about, in terms of CAC is when you spend money on things that are direct response. Things where like, Facebook ads, Google ads, you pay X dollars. You know that within a week, you know how much revenue you make back and you could calculate your return on ad spend. Those are very direct response advertising.
But then you have all these other sides of marketing that’s around brand awareness that it’s impossible for you to measure the attribution of revenue online. But you know, big brands are doing it all the time. These are sample giveaways, field marketing. These are experiential marketing partnerships, videos, brand videos, things that you know, that you see, like TV ads that you as a small brand might be sort of scared to try out because first of all, they’re much more expensive in order to get sort of one spot out there. They’re not sort of continuous, like spend $1 in Facebook and you can get something out. Each one is going to score a couple thousand dollars.
And then the second thing is just like, you’re not going to be able to measure the ROI on what that advertising did in terms of your revenue. But I think that the limitation is the few things that you require to grow an ecommerce business on top of having an economic sustainable is that you need to compound that with a community and a brand.
You know, those are the things that sort of put everything together, that allow you to learn from, from your customers, that cause that virality, that lifts up that word of mouth. And ultimately your strong defensibility starts to shift away from the fact that you’ll have a good product because the reality is, a lot of people have good products and eventually, defensibility becomes about the brand.
And that becomes super powerful. When you then have that brand all of a sudden, your reasons to believe all of a sudden aggregates towards just that brand affinity, right? At some point, if Morning Recovery becomes synonymous to what a great recovery drink is, we don’t need to train people, “Hey, here are all these facts. Here are 10 reasons why you have to believe.” It’s just simply, “Oh, it’s Morning Recovery. I trust that brand. I’m going to buy it.”
And all of a sudden, that becomes super powerful and that compounds in all these things, like economics because then all of a sudden your CAC goes down because when people see that the brand More Labs, they’re just going to buy it. And so I think like there’s a right balance of how much you should spend on building the brand versus really getting your core economics and doing direct response marketing and just selling the product online.
I don’t have a good answer as to like what’s the right balance is when you should be doing it. But I think because of our background of our team here, we’ve gravitated towards sort of the mathematical growth much more than we should have. And it’s only over the last couple of months that we really started to refocus and put more of our emphasis on branding.
What is the brand that we want to create when people look at More Labs? What do people think and feel and what do we represent? What is our message to our customers? You know, these are all things that when you mentioned stuff like it’s really about productivity and not a hangover drink. Well, that’s a message that people have to get it when they look at our brand.
And so those are things that we’re not going be able to control and adapt through things like direct response marketing, in my opinion. And so I think that’s one mistake. It’s hard to say, like there was one decision I made that caused this massive error, but it was more of a mindset that I had. And it probably cost us in terms of the growth. When we had a lot of momentum, we should have really, really focused on building this brand versus making it super functional and just focusing on making a quick funnel for people to come in and buy right away. So I would say that. That’s the one that is a big mistake that I’ve made.
Joris Bryon: Yeah. And I think it’s very normal mistake to make. I see it all the time at ecommerce companies like brand is like when they’re already selling for years and years and years and then they start to think about, oh, maybe I should start building a brand. So I think you got it pretty, pretty quickly.
But it’s typical, I mean at first you just want to sell, sell, sell and brand seems so big and abstract and have you do it, so you kind of postpone it for later and you underestimate the power of brand.
Yeah. This has been really great, Sisun. And yeah, we could probably go on a little longer, but we’re running out of time. Just want to make sure before we go that people know how they can find you and learn more about you and your brand. What’s the best place for people to connect with you?
Sisun Lee: Oh, just across social, More Labs, so on Instagram, @MoreLabs, on Twitter, @MoreLabs. That’s the best way to reach us.
Joris Bryon: Awesome. Thank you so much for being here, Sisun. It’s been really great.
Sisun Lee: Awesome. Thanks for having me.