What's up, DTC. Pod? Today we're joined by Matt Zarnecki, who is the co founder and CEO of Verb. So, Matt, I'll let you kick us off. Why don't you tell us a little bit about the company you are building?

Sounds great. My name is Matt. I'm one of three co founders of Verb Energy. Verb is on a mission to make great energy accessible every day with better for you effective energy solutions for the modern consumer. This began actually as a side project in a dorm room almost seven years ago and translated to our first product launch in May of 2018. A plant based snack bar caffeinated with organic green tea. We're really excited. We've built our brand direct to consumer to date and are in the process of getting ready to go omnichannel.

So, Matt, what's your background? I think it's awesome that you were able to start it as a side project. And it's actually funny. We've heard a couple of brands, sometimes the best ones get started as kind of like a side project that just pulls you in and the next thing you know, you've got a real big business going on. But what was your background before and what kind of prompted you guys to go after the energy bar category?

Yeah, absolutely. So at the time when Verb got started, I was studying biochemistry. I had, from the age of about 15, been super interested in trying out all sorts of diets, figuring out how I could optimize my own personal energy levels. I was paleo before paleo was cool. And as a college student, I was very busy. I was training for races. I was taking a lot of intense biochemistry classes and had this experience one night where I walked into a coffee shop, grabbed a coffee and a granola bar, looked at my receipt and I spent over $7. So thought to myself in that moment, what if there were a sort of less expensive, more convenient way to energize? And that's where Verb was born, kind of right alongside that.

I had a little bit of an entrepreneurial itch. In my first couple of years of college, I had a friend who lived on the floor below me who would come up into my room at two in the morning and say, hey Matt, I think I figured out how we could harness energy from the moon. And I would dylan like, you should probably go back to bed. But he and I actually started an entrepreneurial incubator going into our sophomore year of college. It was called Yale Launch. And the goal of the incubator was to start companies and the two of us had a little bit of experience previously doing that. And the two of us actually, to this day are both working on companies that we started out of that incubator.

That's really cool in terms of you guys had the entrepreneurial itch, you had an idea and you had like a background in biochemistry and that sort of, you know, as a side project in college. I don't know, CPG brands are the biggest thing to come out of Yale all the time. So how did you get started? What were the first things in terms of putting the side project together? In your dorm room? Right?

Yeah, absolutely. So I think one of the first things we did was we looked at the existing energy market. So from the beginning we have thought about Verb as an energy brand, we have built Verb as an energy brand. And when we looked at the energy market, we saw a lot of products that were delivering caffeine. Caffeine is really good for you. There are literally hundreds of studies in human models and animal models touting its benefits across all walks of life. What we noticed though, is that many existing energy solutions had real downsides. Coffee often had actually too much caffeine, very acidic, would cause stomach issues, not good on an empty stomach.

Energy drinks full of sugar or artificial ingredients, energy shots full of chemicals. And we kind of thought about that and figured, well, what if we could design the sort of perfect energy solution or solutions? And that's really how we got started. We recognized that it was a big market and from know, we just gotten a college kitchen and bought a bunch of ingredients on nuts.com. And the three of us, Andre Bennett and I would go into the kitchen after our classes at the end of the day and start prototyping all sorts of energy foods. We'd make granolas, we made a sponge cake that was like green and disgusting. But we eventually landed on bars, started handing out these bars to our friends, and eventually started working in a local bakery. In this local bakery, we would go in there around seven or 08:00 p.m., spend five or 6 hours making two to 300 bars, hand sealing them, putting stickers on wrappers, boxing them ourselves, and then we'd sell them on campus the next day. These were true MVPs.

They needed to be refrigerated. They had chocolate chips in them. If you left them out of the refrigerator for more than 15 minutes, they would melt. But this crazy thing happened, and the friends that we started selling the bars to started telling their friends about it. And then all of a sudden, my phone number became this sort of public entity on our college campus. I'd get texts all points in the day saying, hey, I heard you're the verb guy. Could you deliver a box of bars to me in the library at 11:00 p.m.? And that was how we really organically started the company, and from there began to scale and whatnot. But those were the roots.

Yeah.

One thing that I think is really cool about that is college is such an amazing opportunity to be able to start something like this, because you have customers that are right there that are your friends. So if you're actually able to create a product that fits a need, you're able to kind of get your first ideas of product market fit really fast. Right? And I think the big barrier traditionally before for college students is like, while you're in college, launching a product is really hard. But there's probably now, I mean, in 2018, the landscape was even harder, right? You were putting stuff together in your kitchen, you were making it, but physically, you had people that you could have try out your product, a bunch of people, and then a network to really bring it home. And even today, it's probably never been easier to be able to launch products like you're saying from a dorm room, have people try it. And that initial pull that you were seeing of people hitting you up and being like, hey, I need that fix. I need some energy. Help me out.

That's amazing, because that is what the first blips of product market fit start to look like. So from there, you can start to scale things up.

Yeah, absolutely. And it's actually so funny that you bring that up, because while those initial learnings were so helpful, and while after that initial kind of dorm room working in a local bakery project was successful, we launched a V, one of our bars. In 2017, we got one pallet delivered to my apartment on campus. It was 10,000 bars. We set a goal to sell 10,000 bars in 30 days. We managed to do it with this spreadsheet that showed every single sports team and individual that we could sell those bars to, we were over the moon. We got into this accelerator out in Palo Alto, thought we had product market fit. And then over the next six months, we watched our sales basically go to zero.

But what we also did during that time was we launched a site online and started getting some customers organically who are searching for this kind of product. As our sales were declining, we got on the phone with those customers and said, who are you? Why is this product resonating with you? What could we do better? And what we realized was that the customers that were purchasing online were a very different persona than those that were on our college campus. They were older, they skewed, highly female, and we asked them what we could do differently about the product to really make it perfect. And that's where we landed on this idea of a small form factor 90 calorie bar that still delivered an energy punch. And so our V One was a traditional granola bar with caffeine V Two, very different product. And so in November of 2017, about six months before I graduated, we had gathered those insights, come up with a new direction for the brand, and launched that V Two of the brand with new packaging, new everything, new formulas in May of 2018. And that's what set us on a path to actually building a scalable business. But those dorm room learnings were essential.

What I think is really interesting about that is, like, in the community and the dorm rooms, there might have been purchases based on buzz or somebody telling someone else. But what happens when somebody looks up these specific sort of health products or whatever? It's like the intent to purchase is very different than a purchase based on FOMO. That's why SEO is so powerful. You have the search intent. This person is literally looking to solve.

A problem.

Whereas a buz, it might be on FOMO, on Hype learning, it's very similar to like you could compare the two to sort of influencer marketing efforts versus SEO. Yes, influencer marketing is powerful, but is it a FOMO based purchase? And how much more loyal is that purchase going to be than somebody who's actually following an affiliate, a blogger, something like that, who they're part of their newsletter. They're actually involved in that community, or they found the product by search intent. So the part I find really interesting is, like, how your phone number became a big thing on campus. I don't know if I heard it from another podcast, but I think there might be an opportunity for, say, a big creator or somebody to run a business just like entirely off of text messaging and without a website, it seems like that's pretty much what you were doing then, right?

That is precisely what we were doing at the time. We did not have a website, and we were able to, yes, build a very small local on campus business exclusively over text. Over the past six years, we have learned so much about the power of SMS, the upsides of SMS, and also the challenges of SMS. And I think that it is such an incredible tool for businesses to be using in this day and age. I know you've talked about that before with previous guests on the podcast. What I think is amazing about the platform that we've actually built to date and it tracks along nicely with the trajectory and the way we've built the brand over the last six years is that we still remain very close to the customer. When I was in my dorm room, I would deliver a box of bars to someone by hand and ask them what they thought of the last batch. To this day, when we do a product launch, I will go onto our text platform and talk to customers.

We just relaunched our brand new packaging, slightly upgraded products a couple of weeks ago. I've spent hours this week texting our customers, texting our highest LTV customers, asking them, is there anything we could do better? What do you like about the bar so far? Is there anything confusing in our messaging, answering questions? And I think that ability to just stay so close to the customer has been pivotal for our success as a brand online. And we really hope that we can translate those learnings to offline as well.

Would you say that the conversations on text with a customer, it's a different tone and a different form of communication than by email? Should it be treated differently or is it just a different place to access a consumer rather more so than sort of a different environment?

Yeah, that's a great question. I have always thought of SMS as a channel where you can build relationships and drive sales, as opposed to a channel where you can drive sales. And when we think about the way that we leverage SMS as a brand, first and foremost, it's how are we building relationships with customers over time? We have a great long tail of our subscription. Many of our customers that are subscribers today were subscribers in 2019. And I attribute part of that to the efficacy of the product and another part of it to the way that we've interacted with them and built the brand over time.

Yeah, Matt, so one thing that I kind of wanted to unpack a little bit is I think it's really cool the fact that as Ramon was alluding to before, it's like you basically built this brand with SMS in mind out of your dorm room, right? You start to scale up. You think you have PMF. I think it's really interesting how you were talking about seeing actually a decline in sales and then actually having to reshuffle and retarget and understand who your ICP was. I think that's really interesting because in the early stages of businesses, a lot of times. And this is something that we went through a lot with seeded. In the beginning, we were building our business on campus in Boston. I know you guys are in Boston as well. It's not like the biggest restaurant city, but we were trying to prove out a thesis that could we match up customers with restaurants.

Right.

In the beginning, the customers that were doing it, we were a bunch of college kids, so we knew a bunch of college kids. And these weren't people who go to restaurants all the time. But as we were building out our tech, if people were college and they could go eat at a restaurant and we could build out that infrastructure of the business and start to scale it up.

Right.

Even though our ICP, who had ended up being was someone totally different than a bunch of college kids going to restaurants. And I see a lot of parallels with you saying you started the business, you start to scale it up, and then as you grow, as you're getting customers from more owned channels, from search, you start to kind of understand that your ICP. It's not just college kids in America looking for energy bars. It's a whole kind of different persona. Right. And that takes us through to where you guys are today. One thing that I wanted you to kind of talk about is how you've built out your own SMS platform. I know SMS is all the rage with brands, everyone's using their own platforms.

But I don't think a lot of.

Brands have taken it to the lengths that you have in terms of really customizing thinking through the whole customer experience and building out to match that. So why don't you just talk to us a little bit about where you guys have come with SMS in your DNA and how you actually thought about building out your platform and why you built it out in house.

Absolutely. Great question. So as I mentioned at the beginning, in those early dorm room days, our friends were texting us to get bars. When we relaunched that second version of the brand in May of 2018, we decided to anchor the brand around this concept of human energy. And we decided that inherent to human energy was personalized relationships with our customers. And so one of my co founders, Andre, is a brilliant engineer, also one of my best friends in the world. I also live with him, but he, in this kind of early time, decided to actually create a separate Slack channel for every single customer that we had buy bars online. And we were literally texting all of our customers in a different Slack channel.

And we eventually maxed out the number of Slack channels that you could create.

How many is that?

I don't remember, but it's definitely at least 1000. So that was V one. From there we decided, okay, we actually need to build a platform that will allow us to text customers at scale, place orders for them, push off subscription shipments, ship bars to one of their friends. And Andre actually built that first iteration of the platform entirely by himself. So by the time that we relaunched the brand in May of 2018, andre built the platform. We launched all online, had our best revenue month ever, and then had a period of 36 consecutive months of positive revenue growth, primarily driven by a massive increase in the size of our subscriber base, all of which were interacting with us over SMS. During that initial period, the three co founders texted every single customer for about the first four months. We would actually more than that, almost our first whole year.

We would do our work early in the morning, later at night, and in between texting customers all day long. It was a massive amount of effort and I know that it was worth it because we learned so much from them. At one point in time, Andre and I brought in another college roommate who had some time before law school. He ended up taking over texting all of our customers. There were no automations, no anything built out. At that point in time, we realized that wasn't scalable. And so the second iteration, beyond just the founders literally texting our customers, was to bring people in house. So we hired our first in house CX person in June of 2019 and we actually scaled that team out to over ten individuals full time, devoted to texting our customers.

While we did that, we also built out our engineering team to about six engineers. And our engineering team was able to watch the way CX agents were interacting with customers and build a lot of automations in our workflows. They built out a lot of kind of services by themselves, not using any other platform. And in that way we were able to make SMS a lot more efficient. And from there, the sort of v three is we transitioned from having this in house team of more than ten individuals, which came at the expense of our bottom line to a very small outsourced team, an incredible engineering team, and a great platform with a lot of automation to enable us to scalably talk to over 100,000 monthly subscribers every single month.

I find that fascinating, but I also find that initial hire that you did like a key hire, especially because SMS wasn't huge at that time. So what were some of the key attributes of that hire that you guys like this person has to be XYZ and have this experience? Or was it more like, hey, this isn't really something that people have done before, there aren't SMS experts out there. What are we looking for here?

Yeah, that's a great question. So in our first CX hires, one of the most important traits that we looked for was simply grit and persistence. Texting customers all day long is really hard. And believe it or not, two of the first hires that we made onto that CX team ended up growing into roles entirely unrelated to that initial job. They learned so much from customers over a year, two years, that one of them became our influencer manager for a while and the other one is on our people team today and likely on a path to becoming Chief of staff. So that kind of grit and persistence was essential to just getting through 3000 tickets in a day, which is so much greater volume than any CX agent on email could handle, but shows the power of automation as well as just the efficiencies within the platform that we've built. So I think those are sort of some of the essential traits when it comes to SMS strategy that was largely architected by the three founders. And so I think the way we architected that strategy was really in a customer first way.

We knew we wanted to build relationships with customers. We knew we wanted to grow our subscriber base, we knew we wanted to mitigate churn, we knew we wanted to increase average order value. And so we thought about all of these kind of key strategic pillars of the business and then thought about how we could integrate them into SMS.

Got it. And it seems like your strategy in terms of hiring a bunch of engineers is pretty unique in the CPG space, right? And maybe even if you're thinking about the customer experience and being able to grow and use that really customer first mentality to scale up, it seems like that was probably an unfair advantage for you guys to be able to scale up, have systems that other brands couldn't tap into, be able to be customer centric in a way other brands couldn't, and really devote time to building out a holistic. Like we were saying, having six engineers building out a digital product for your product, which is like a physical bar, that's a lot of resources devoted to architecting that sort of experience. So what was kind of your intuition that led you down that path when a lot of people might just look to say, oh, let's just look at what other enablement solutions are out there. We'll buy some SaaS and we'll stitch our stack together. And rather than you saying, oh, no, we want to really go hard on.

This, yeah, great question. So I won't say that we were the first brand to really lean into SMS from a direct consumer perspective. There was a brand before us called Dirty Lemon, which you may be familiar with, that became known as the kind of first brand to pioneer texting their customers individually. As I mentioned before, we knew that we wanted to text our customers one on one, have SMS be such a critical part not only of our strategy, but of the brand. And at the time, in late 2017, early 18, there did not exist. Strong and effective SMS solutions. A lot of the SMS solutions that you see that have come up over the past couple of years are very new and they are evolving too. What I think has allowed us to be really successful is that as we've built the platform, we've also built the brand, as opposed to just building a software platform in itself.

And in that way, I think we've been able to come up with a lot of sort of verb custom solutions that have been extremely effective in increasing LTV, reducing churn and down the line. So I think it's definitely an investment. Having six engineers on the team is an investment. We're, we're a lean startup. We're a lean organization for us, because I always love to say SMS is in our DNA, because it's in our DNA, it has 100% been worth it.

No, absolutely. And I mean, even for us, when we were building out, we were doing heavy SMS in 20 16, 20, 17, 20 18. But that was all stuff that we had to build out with Twilio and our engineers built out our whole in house system. It wasn't just something you could just hook up, plug and play and have it done. So the fact that you guys did that, I think just goes to show how focused you guys were on the customer experience. And you even as the founders constantly chatting with the customers, I think that's something that's really important, especially in that phase where you're really trying to nail something that's truly, truly scalable across all your different customers. Right. That kind of leads us into our next question, which is around go to market, right.

Like you said, that some of the ways that you grew early on were unique. So how did you guys approach growth beyond just like leaning into providing an amazing customer experience? What were some of the other growth levers that you guys were pulling that enabled you guys to start reaching some scale?

Totally. So when we were just getting started, the way we thought about building the brand was we figured that we were creating a category most people have never had a caffeinated snack. So we wanted to make the barrier to entry as low as possible to get as much trial as we could out of new customers. We believed in the product, and at the time, in a world where Facebook CPMs were really low and you could get away with a really low average order value, first purchase and pay back on it very quickly, this ended up being an extremely effective strategy. So in the summer of 2018, right after we launched the brand, we launched a three bar trial on Facebook. We were sitting in our airbnb in Austin, Texas. I screenshotted a photo that I think we had gotten from a photographer in Instagram stories, added a text overlay, we put it on Facebook the next day and let's just say that the other two co founders and I spent a lot of time at the post office that summer. It was an extremely effective strategy, and we were acquiring customers for $2, $3.

And that's how we got to our first, I think, about 30,000 subscribers, was through that kind of trial offering. One thing that happened concurrently was at the end of that year, we recognized that social proof was such a key way to get trial given the newness of the product. And we started working with Influencers. And this is also a time where the influencer space wasn't super saturated. And I remember that the first few Influencers we worked with cost several thousand dollars, which for us was a significant investment at the time. And I remember we told them to post between like three and 05:00 P.m. Because that's when people would be hitting the afternoon slump. I happened to be at the gym during one of those first Influencer posts, and at the time, we used to get slack notifications for every single order.

And I was literally just sitting at the gym doing nothing, watching orders come in for an hour because I could not believe the magnitude and the volume of orders that we were getting from that one Influencer post. And for the next two years, influencer was our number one channel as a brand. Definitely other brands that thrived on Influencer during that time, definitely other brands that could say the same thing. But for us, it was such a great way to leverage social proof. And many of the Influencers that we started working with then have been partners of ours for many years. One great example is one of our earliest influencers is named Jen Todrick. Her instagram handle is the rambling redhead. She initially promoted the verb trial pack in its earliest iteration.

And going into Black Friday 2020, we decided to actually do a co branded partnership with her on a product launch. We really believed in the authenticity of building Influencer relationships. And so we went to Jen and we said, hey, Jen, we'd love to do a flavor collab with you. Do you have anything that you think would be effective or successful? And she said, I actually think I have something great. I have a coffee shop. And the top selling flavor or top selling latte in my coffee shop is Cookie butter latte. I think that if we created a cookie butter flavored bar together, it would do incredibly well. And so we decided to create that flavor together.

We have an in house chef who's been working with Ferb for over two years, and he created that flavor in his kitchen, sent Jen prototypes. She gave us some direction. We worked with her on the packaging. And then for Black Friday of 2020, we launched that co branded cookie butter flavor and had our best revenue day in history by a country mile. We did over $300,000 in. Revenue, and it was actually our top selling flavor for all of 2021 thereafter. So, such a great way to just build an authentic relationship, and our customers loved it. A lot of our customers had actually become customers because they knew Jen, and I think that was one of the best ways that our brand was able to lean into growth that maybe was a little bit different from how some other brands were thinking about it at the time.

What year was this?

The partnership and the launch of Cookie Butter was 2020.

So that sounds amazing. 300k while hitting the weights at the gym. Sound like a great day. I assume you guys are like, well, how do we scale this? Have you done more of those partnerships? Or it's just really complicated to pull this together, and the alignment has to be so perfect that it's just really hard to scale.

Yeah, so we care a lot about integrity as a brand and only want to work with Influencer partners that are aligned with our brand values, with our diversity, equity and inclusion values. And I think that's really important. And partially for that reason, we have not done any co branded product launches since then, except for one. We launched a couple summers ago, a Lemon raspberry flavor with a chef named Nick de Giovanni, who's one of the biggest food TikTokers. Now, it was a little bit before he became big on TikTok, but it's very similar strategy. We said, hey, I think we could build a great story behind this launch. Let's build a fruit forward flavor, let's have Nick go to farmers markets, pick up some raspberries, pick up some lemons, and create this amazing bar. And we launched that, I believe it was in late May, early June.

Ended up being a great performer, too. But similar to Jen, Nick was really brand aligned. We had known him for a while. And I think advice that I would give anyone else is if you're going to do a formal partnership outside of maybe just like a sponsored post, but let's call it a kind of co branded product or a product. Launch together. Really make sure that you've built this kind of foundation of trust with that individual or individuals to make sure that it's successful. Beyond that, when you look at the Influencer space as a whole, as I'm sure you know, it's changed a lot over the past four years. When we first got into it, Instagram stories were brand new.

Influencers would maybe post a couple of sponsored posts a week, and over the last four years, we've seen that change a lot. And if you go to some Influencer stories today, you'll see 50 slides and 25 of them are sponsored posts. And in that world, it becomes a lot harder to really stand out and be authentic. And so what we've really done with our strategy is focus in on influencers who truly believe in the brand. And some of these influencers that we work with have large followings. Like Sean Johnson. She's former Olympian, has several million followers on Instagram. We've worked with her for several years.

Her content continues to perform really well for us as a brand. But let's say some of the folks that we worked with two or three years ago who maybe hadn't heard of Verb, we sent them some bars they posted on their story once it sold a lot of product. That strategy isn't really working anymore because those influencers are the ones who are posting 50 slides.

Yeah, I mean, I think one thing that's really interesting here is just the speed at which all of these marketing sort of channels evolved. Right. First you were talking about Facebook. That opportunity isn't quite there to be able to give your free offer and have the same CPM you were seeing. Then you guys were quick into influencer, that whole strategy's changed. And now the direction you need to go is like you're saying you need to be working with people who have the long term partnership in mind, as opposed to just a one off post. Because if it's just one post, they're going to post it and it's gone. Whereas the first time influencers were doing posts, people hadn't seen that stuff before, and everyone was like, buying everything.

It was like, bye bye, bye. Right. So that kind of leads me to my next question is you guys have always kind of been on the forefront of kind of sussing out really good opportunities for marketing and being able to put your focus there. Other than some of these collaborations that you're looking into, what are some of the marketing channels that you guys are seeing a lot of opportunity in in the current landscape?

Yeah, I think probably most importantly than what channels are we seeing the most success in is I would say, how have we evolved our strategy, given what's going on across channels today? As I mentioned earlier, when we first launched, our strategy at the beginning was sell three bars, just cover shipping in a world of 15 plus dollars CPMs on Facebook and Skyrocketing influencer rates. That's never going to work. And for us, a key, key part of continuing to be successful over the past couple of years has been an AOV increase and correspondingly LTV increase, as well as a gross margin built. And without getting too into the specifics, I would just say that we have over three x our average order value in about the last 24 months, and we've increased our gross margin by nearly 20 percentage points by shifting order mixes, by optimizing manufacturing methods. And if you go on Twitter today, you can learn from pretty much anyone that e commerce is not easy. And I think that you got to be really thoughtful about the way that you're building a plan from a revenue to a gross profit to bottom line perspective, knowing what channels are available to you, what products you have available to you and how you can be successful.

Which varies a lot in the category unit, economics, et cetera. Which is why you said that it all starts from you. Break it down from the unit. Economics. And again, I do think that a lot of companies and you can still obviously build in some of these verticals that aren't as obvious and even some forgotten ones, like affiliate marketing and blogs are still huge channels. We're seeing a lot of retail. Are you guys doing anything that's like.

Absolutely. I mean, we are marketing on Facebook every single day. It's a very hefty portion of our marketing. US. You know, Whitelisting has been a really effective strategy for several years there. We'll take some of our best influencers content like Sean Johnson and Whitelist it we'll be really thoughtful about creative testing, test, different hooks, different cuts, different captions down the line. The platform has evolved so much and at this point in time you got to just get the right creative together and do a lot of testing and see what works. And Facebook will almost do a lot of the work for you.

But Facebook's big for us, influencer continues to be an important channel. Referral continues to be an important channel. Traditional google always been a big channel for us. We launched on Amazon in November. That's an exploding channel for us right now. I think we're going to see about nearly 100% quarter over quarter growth on Amazon from Q Two into Q three. So we're absolutely, I mean, we're a brand with a mission to be accessible. And what that means is we want people to find us on the channels where they expect to find us.

Part of that is online, part of that is going to be offline in the very near future.

So all direct to consumer. I mean, Amazon, if you consider it direct to consumer, but like no retail, no physical retail stores yet.

As of today, our brand is All Verbeenergy.com and Amazon, we've done some partnerships with Misfits Market, which you may be familiar with, imperfect Foods, largely on kind of excess inventory, outdated inventory. And for us, 2023 is going to be the year where we really go into retail and make a big push there. So we brought on a VP of Sales early this year. We've been building a retail strategy for a very long time and we're super excited to be launching in stores, actually for the first time in December, with many more to come in 2023.

That's super exciting in terms of the fact that you guys started out building it from the dorm room, being able to go from SMS, continue scale all the way, continuing to still sell through SMS, and then being able to eventually really start scaling into retail. And Matt, before we wrap up here, one last thing I want to talk about is. I know you had mentioned some other initiatives that you guys were looking at, like being able to test different recipes and all that really quickly. So why don't you tell us a little bit about your guys'strategy in terms of product development?

Yeah, absolutely. So, for us, taste has always been absolutely critical to the success of the business. As a result, we've had in house chefs on our team for almost our entire history. Our first or second hire actually was a product guy. And today we have a chef whose name is also Matt, and who, before this interview, was joking that he should just come in and pretend to be me. Who's been on the team? Yeah, he's been on the team for about two years. He develops all of our products in his kitchen. Every single flavor undergoes dozens, sometimes hundreds of unique iterations to get it to the right place.

About a year ago, we decided to launch our first non bar product. We called it energizing drink mix. We, as a brand, as I mentioned at the beginning, have always thought of ourselves as an energy brand, not a bar brand. So we decided to launch a Drink Mix, which is a powder that had caffeine in it as well. Collagen fruit powders. Very low in sugar, very low in calories. We developed this together with Chef Matt, launched it in the middle of 2021. What we very soon realized was customers had issues with the product.

When we were developing it in our kitchen, we would add the powder to a glass and then add water. When we shipped it to customers for the first time, we realized that they were putting water in the glass and then adding the powder. And what that resulted in was clumping issues. And while our initial rates of orders were really high, customers were excited to try something new from Verb. Excited. In this energy brand, the repeat rates weren't where we wanted. So towards the end of last year, we came up with what I think is a really cool and innovative concept called Verb Test Kitchen. And the way Verb Test Kitchen works is our goal is to maximize quality bets at scale while minimizing risk to our brand or our bottom line.

And so what we've been doing through the test kitchen our first launch was late spring. Second launch was over the summer. Take concepts that we've gotten from customer feedback that we're really excited about. Do small scale production runs for those concepts. Launch them to a small subset of customers. Gather feedback, both qualitative and quantitative, from those customers, and from there, decide whether we want to launch that product or that subline at all. And it's been great. We first ran it with a low sugar iteration of our snack bars.

That was super successful that we've actually launched two low sugars in low sugar bars excuse me, in full to date. And then this summer, we launched a caffeinated protein bar through the test kitchen. Got amazing feedback. I think about 70% of customers said they would absolutely purchase the product again. And in about three weeks, we're going to be launching three SKUs of a caffeinated protein bar to the world. So I think it's been a great way to take some of these nascent concepts, some of which are going to be bigger bets than maybe just a low sugar version of our original bar, test them out among our customers, both new and repeat, and then decide whether we want to launch.

Yeah, I think that's really exciting in terms of, like, you've got the customer base, you've built the brand, you've got all the retention sort of thinking in your DNA, and then being able to rapidly iterate with new products, see what sticks. And if it does, then you can have the conversation about, okay, how do we really bring this to scale within the business? So that's really exciting for you guys. And then in terms of any other plans, anything else on the roadmap that's exciting that you're excited about other than retail and being able to test out a whole bunch of new products?

That's a great question. I would just say that retail has been this passion project of mine for several years. One of the retailers that we're going to be going into later this year, I first started thinking about with an advisor of ours in 2019, and I still have the original spreadsheet from February of 2019 that we worked on together to model out costs down the line. And in December we're going to make that happen. I think it will be a really special moment for me as a founder to be able to walk into a store and see thousands of herb bars, which should be very cool.

Yeah, and it's just exciting too.

With.

All the brand equity that you've built up in the one to one sort of sense. Being able to kind of amplify that with your retail I think is going to be really exciting because it seems like you guys have really a lot of brands try to go into retail a little bit quicker, which is great. It's a great part of the growth strategy. But already having so much direct brand recognition, now you're almost going to be able to snowball on top of that. So that'll be a really exciting inflection point for the business.

Absolutely. Yeah. We've sold over 40 million bars on our website to date and hopefully we can sell a lot more than that both online and offline, moving forward.

Sweet. So Matt, for our listeners, where can they learn more about you, verb, the bars and everything else? Are you personally on Twitter? A LinkedIn? Like, where can people connect with you and where can they connect with Verb, the company?

Yeah, I'm on Twitter. If you just search my name, Matt Zarnecki, you'll find me and yeah, honestly, the best way to get in touch with Verb is to text us, what's the number? I will send it to you.

We'll throw it in the added to the show notes.

It used to be 415-915-8372, but now it's different.

So Matt isn't going to be giving out his personal number on this call. Totally fair. You had enough of that in college. But yeah, we'll drop that in the show notes. And just wanted to thank you for coming on sharing the story about Verb and excited to see where you guys continue to take the business.

Thank you. Awesome.

Thanks so much for all the thoughtful questions. Have a great evening.

You too.

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