Caroline McCarthy: How To Build a Multi-Brand CPG Conglomerate
Starday Foods may produce CPG products, but at heart, it’s an exciting new parent company platform that thrives off of a powerful data engine. After exposing gaps and interest in the F&B market, Starday is stepping up to fill those needs. Co-Founder Caroline McCarthy has lent her impressive background in tech to the endeavor, with acclaimed Michelin-starred chef Lena Kwak at her side as co-founder.
Starday Foods may produce CPG products, but at heart, it’s an exciting new parent company platform that thrives off of a powerful data engine. After exposing gaps and interest in the F&B market, Starday is stepping up to fill those needs. Co-Founder Caroline McCarthy has lent her impressive background in tech to the endeavor, with acclaimed Michelin-starred chef Lena Kwak at her side as co-founder. Currently, Starday has launched two products and has 3-4 more scheduled to drop this year. In this episode of DTC POD, Caroline broke down Starday’s approach to designing and launching brands, how they raised funding, and why the company’s DTC-driven approach will soon trickle into retail.
Caroline McCarthy is the Co-Founder at Starday Foods. She started her career at Google in the AdWords arena, worked with clients like ClassPass on marketing strategy, and helped build out the performance marketing function at Slack. She also worked for a data science firm that worked for the Obama campaign, followed by working for the banking app One Finance that has since merged under the umbrella of Walmart. Throughout her tech journey, she has been exposed to strategic branding and design initiatives that aid her current work with Starday. Starday is focused on building a next-gen food conglomerate and has two current products: Gooey and All Day.
1:48 - Taking a data-driven approach to CPG
Starday’s data engine uses first and third-party signals to identify gaps in the CPG market.
“One of the things that is really important to our model is we have what I call like an in-house data engine that we've built that parses through third and first-party data signals to help us understand where we think that there are gaps in the market, based on either existing or ‘not popular’ foods that we think we could build a really strong brand and product around, that also is able to meet sustainability principles. And also, frankly, something that we think will taste good. We don't want to make a healthy product that no one actually wants to eat. With Gooey, without going into too many of the details with the data model because I don't want to bore everyone, we saw a fair amount of signal around a couple of different attributes. Low-sugar being one, dairy-free being another, sustainable, eco-friendly, plant-based in some capacity as well.”
4:51 - Seeking mass-market appeal
Most CPG brands are led by strong founder stories. Starday is taking the opposite approach: foregoing the emotional appeal in favor of pure mass-market appeal.
“There's often a really strong founder story behind a product that has really spoken to people. And I say this as someone with a nut allergy, I've always been very passionate about creating a nut-free cookie brand. It will happen one day, I swear. But the idea was to take a little bit of that sort of emotion out of it, and actually be like, okay. What does a wider swath of consumers want? Because the idea behind our products is that they should really be mass market. We're not trying to be in a really niche group…Part of that plays into it as well when we're looking at these products and the different data. Do we think we can actually build a product that's going to appeal to a larger mass of humans? Is this something where when we talk about going into retail, we're saying we can talk to Kroger, we can talk to Target? Or is this really a product that would only make sense at an Erewhon or a Whole Foods? If it's the latter case, there are plenty of amazing brands that are being developed and incredibly successful in that sort of arena. It's just the approach that we're trying to take.”
5:44 - Keeping a similar consumer profile
Focusing on products that cater to similar demographics has helped Starday avoid starting from scratch each time they launch a new product.
“I oversee all aspects related to growth and marketing. So as you can imagine, I spend a lot of time thinking about our brands and the efficiencies that we can find between them. I would say first, we've maintained similar consumer demographics between our first two brands and expect to do so in the future. It's not just in terms of the cross-branding opportunities, but also in terms of how we are understanding our own data. We're not starting from scratch every time, and that's something that's really important and does go back into how we choose our products as well, back to that sort of consumer demographic that we're looking at. If we launch our third brand and we are talking to a completely different type of audience or consumer, that's a whole lot of work and learnings that we are going to have to start from scratch really. And I would prefer to sleep at night. So I would like to actually be able to learn from our last brand launches.”
13:26 - Taking a lean approach
Keeping overhead low means foregoing bells and whistles, but allows Starday to confidently repeat their design & launch process.
“We have a very lean approach to developing and launching. And while that does mean that some of the bells and whistles that come with a lot of launches in this space, whether it's tons of press coverage or it tons of seating or it's a big influencer or celebrity founder, whatever it may be. We're not necessarily going to be having that on every launch. We might try it out for one or two launches, but we've been able to keep a really lean budget. And so I think that the efficiency that we have there is something that also a huge part of allowing us to keep doing this multiple times over. Because we didn't go and blow a bunch of money on launch A, and now we’ve sort of got to wait for revenue to catch up for another six months.”
24:39 - Pitching investors on the platform vs. product
Starday’s platform and vision are ultimately what attracts investors, not the individual products themselves. Not every investor will be able to picture the ROI, but Starday found investors who did.
“What folks were investing in is the platform that we're building. The brands, while I love them deeply and I'm very fond of them obviously, because I spend all day thinking about them, they are really the product of the platform and the data models and the process and the strategy and the technology that we're building, it's that approach. And then also having the right team members in place, that was what folks were investing in…ultimately we were able to raise successfully and with great and investors on the vision that we were trying to build and that strategy. That said, I also realized that's not a very common approach and it's also one that I feel to a certain extent, we were very lucky to have been in the right place at the right time. We raised really from more tech-type investors, and traditional F&B investors maybe would've really been waiting for specific retail data, and certainly a product and market. So at the time that we raised and how we raised I think is, you do have to require a certain type of mindset on the investor side in order for them to see that vision, and understand where those returns are coming from.”
28:26 - Bringing in F&B expertise
Once they had capital to work with, next Starday focused on bringing in food and beverage insights that helped them obtain a holistic perspective and prepare for a retail launch.
“In some ways with this many launches and having committed to doing certain things, it allows us to form closer relationships in some ways with our investors. Because there's always a brand to give feedback on. There's always a product idea to sort of bounce off. We're not sort of sitting on the sidelines waiting and then two years later we come back asking for more money. There's always something new to talk about. And so I think because of that, we've been able to blend their perspective, our perspective, and then also bring in some of those folks that are more traditional F&B that have that perspective of, ‘Hey, when you're in retail, here's what you need to do. Run these types of TPRs. Don't work with that vendor. Make sure that you have shippers in by P6. There's all these things that folks on the more traditional F&B side bring in.”
30:17 - Stocking up on inventory
While the initial plan was to order-as-you-go, Covid-19 made the Starday team quickly realize that they should over-order stock and keep it rather than risk selling out.
“We were playing in this world of like, we're not going to overpay for inventory ahead of time because we want to be able to sort of produce as we go, and manage according to costs and margin and make sure that we're constantly adjusting. That sounds really great. And is great, if it works out. It does not sound so great in the middle of COVID when there's crises at the plants. Folks aren't able to come into work because of COVID. There's delays in shipping times. I think that's a strategy we will go back to when things sort of settle down. But for our second brand, we purchase a lot more inventory ahead of time, just to make sure that we were not getting into any sort of situation where we were experiencing any shortages or out-of-stock situations. We also, because we're working really with shelf-stable products, we don't have to worry about expiration dates. So we are able to purchase inventory ahead of time.”
33:03 Prioritizing DTC before Amazon and retail
Starting with DTC was a no-brainer in order for Starday to develop a relationship with their customers. Amazon and retail remain secondary strategies.
“We launched DTC as that place where we can say, all right. Here's where we’re gonna go. We're gonna run a bunch of growth tests. We're going to do site testing. We’re going to do pricing tests, we're going to do free shipping, threshold testing. And most importantly, we're going to build relationships with our consumers. And then the next step is sort of expanding to Amazon. So you get like one step out, right? You still have some consumer data, but you don't own that data. Amazon owns that data. And then the third step is really going into retail. Where we haven't explored as much so far is sort of on that marketplace. So the Thrives, the Gopuffs, things like that. So that's probably an area that we'll continue to explore if the economics make sense. But in the beginning for every one of our launches, we are going direct to consumer first. I don't see that changing at any point. And we'll sort of continue to layer in those additional levels of retail and go to market strategy in the coming months.”
35:29 - Focusing on organic ads and social media
Building a community online has meant investing in strong social content for each brand in order to scale and develop an authentic brand voice.
“We did not scale any ads. We had some minimum stuff that we were just using for pure testing, but I wasn't running conversion-optimized landing pages or doing a ton of lead gen. It was really more for creative and messaging testing. Really the other aspects are on that social and organic and community building side. We work with Kendall Dickieson on all of them. She's our head of social for both brands and all the brands to come. She helped us build a really strong social strategy that sort of dives in from the beginning of building brand, even when you have 14 followers and it's my mom and all her friends, and sort of understanding how you can scale that quickly without losing the validity of the brand voice.”
Watch the full interview here:
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