As everyone pulls back on marketing amidst the COVID crisis, e-commerce businesses are actually making forward progress more than ever before. Businesses do not have to get caught standing on the sidelines. Erik Huberman knows this well as he’s seen it first-hand with many of his clients. Erik is the founder of Hawke Media, a full service outsourced CMO agency in Santa Monica, California. Hawke Media launched in 2014 and has since been valued at $60 million. In that time, Eric and his company have also served over 400 brands. Tune in to hear how he has helped some businesses see a 200% increase in business despite the economic chaos that we find ourselves in.
As everyone pulls back on marketing amidst the COVID crisis, e-commerce businesses are actually making forward progress more than ever before. Businesses do not have to get caught standing on the sidelines. Erik Huberman knows this weel as he’s seen it first-hand with many of his clients.
Erik is the founder of Hawke Media, a full service outsourced CMO agency in Santa Monica, California. Hawke Media launched in 2014 and has since been valued at $60 million. In that time, Erik and his company have also served over 400 brands. Tune in to hear how he has helped some businesses see a 200% increase in business despite the economic chaos that we find ourselves in.
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Startup Story LIVE- Erik Huberman
In this week's episode of The Startup Story podcast we discuss how some businesses are seeing a 200% increase in business despite the economic chaos that we find ourselves in.
Every wildfire began with a spark. Every superhero has an origin story. And every single startup has a moment that they point to as their beginning. And every founder has a purpose that drove them in the midst of all obstacles. THAT is The Startup Story.
James McKinney: Welcome to another episode of The Startup Story podcast. On May 14th and 15th we held our first ever Startup Story LIVE event which was an epic, two-day livestream event featuring 13 incredible founders from varying industries. Throughout those two days, our founder guests shared the various tactics and strategies they employed in their businesses as a result of the global pandemic. This event also gave you the listeners a chance to have your questions answered directly by the founders themselves. With that in mind, we have are giving you that same opportunity once again, but in an even more intimate setting. Instead of streaming to 77 countries and to thousands of individuals, it will just be our guest founder and a select very limited gathering of entrepreneurs just like you. How would you like to join a private recording session with Ben Chestnut, the founder of Mailchimp? Not only would you get to be part of the recording session but afterwards Ben will be available for you to ask him any questions you may have. I'm dead serious, this offering is for you. You just need to join The Startup Story Inner Circle ASAP because our recording session with Ben will be taking place on July 31st. This is a revised date from our initial schedule of July 21st, so don't miss this opportunity. And if sitting with Ben Chestnut wasn't amazing in and of itself, we will also be having Julie Bornstein join us for a private livestream event on August 13th. Julie was the former chief operating officer of Stitch Fix, former chief marketing officer and chief digital officer of Sephora, and now founder of The Yes where she looks to build a digital shopping experience that leapfrogs anything that currently exists. These private livestream offerings can truly change the trajectory of your business and accelerate your success. The best part is that it's not too late to be part of these private events. Just visit thestartupstory.co/VIP to secure your spot today.
When have you ever been afforded the chance to sit with a self-made billionaire and receive direct mentorship from them? Ben built Mailchimp from absolutely nothing and now has over 1,200 employees and 15 million clients using their email marketing solutions, and you get to have your questions asked directly to him on July 31st. This opportunity is only for The Startup Story Inner Circle, so visit thestartupstory.co/VIP and become a member today. When you become a member of the Inner Circle, you will get unlimited video access to every live event segment, as well as access to private livestream events just for Startup Story members. As if that weren't enough, all Startup Story Inner Circle members will also receive a hardcover copy of Jaime Schmidt's upcoming book titled Supermaker: Crafting Business on Your Own Terms absolutely free. That is a $25 value as a bonus for joining The Startup Story Inner Circle. You can see all the many perks by visit thestartupstory.co/VIP. All right, I'm sure you can see how incredible the Inner Circle membership truly is, so let's jump into this week's founder session as it was originally recorded during Startup Story LIVE.
James McKinney: Erik Huberman is the founder of Hawke Media, a full service outsource CMO agency based in Santa Monica, California. Hawk Media launched in 2014 and has since been valued at $60 million. Erik and Hawke Media have serviced over 400 brands including the Ridge Wallet, Redbull, Evite, Verizon Wireless, and even HP. As everyone pulls back on marketing amidst the COVID crisis, Erik believes now more than ever we are to be making forward progress and not get caught standing on the sidelines. Please help me welcome Erik Huberman to Startup Story LIVE.
Erik Huberman: I was asked to speak today basically on how to be proactive in this time, how to sort of run at the problem, and yeah really not necessarily throwing your cards and watch your business fall apart because of what's going on. So I think to start I kind of want to give a timeline here. We basically, and I know you had a little bit of intro about me, but just to give a quick overview Hawke Media has been around about six and a half years. We have about 150 fulltime employees and we manage marketing for about 500 brands. Our whole model is the idea is to give accessibility to great marketing.
Basically we found that small startups, even up and coming companies, S&Bs, et cetera it's really hard to find a way to hire really good marketing. Good marketers are few and far between. Bring them in house, it's hard to convince them to work for you, it's hard to afford them, and then you end up operating in a vacuum which is why agencies exist. But agencies, 99% of them are terrible snake oil salesman. The few that are good tend to only want to work with Fortune 1000s and high funded startups. Again, making it very hard to find access to that. So we saw to solve that, everything we do, basically we have teams of people and experts, whether it's a Facebook marketer, email marketer, web designer, et cetera and we go into brands, identify where the holes are in their marketing, and then can spin up people a la cart, month to month, and super flexible. So that's our business.
Our business is completely month to month, completely flexible. The idea is to help companies do their marketing. We've heard since we started the business six and a half years ago that in a downturn or a recession or catastrophic event, the first thing people cut is marketing. You've got to really watch out for that and hedge against that. Of course, just like most businesses in the peak of the best economy in the history of mankind, we were not necessarily hedging against this nor anyone else because if someone had a years' worth of expenses on their balance sheet right now I think they would have actually been laughed at because that would be irresponsible. Why aren't you reinvesting that? The market is booming, keep the momentum going. And so again I want to give context because I think my mindset ended up leading to the decisions I made during this that have frankly helped us come out of this and we're already in recovery mode.
What happened was we were watching the news, we were listening to our people, we had some at risk employees that we allowed to work from home throughout the first couple weeks of March. We weren't really worried about a few individuals working from home with our business. But we've always been pretty adamant about keeping everyone in the office for the collaboration that happens and the engagement. We literally just built a brand new 27,000 square foot office in LA that's beautiful and awesome. We moved in a year ago. In fact, almost a year to the day before quarantine happened.
So March 13th hits, I hear that the president is going to be announcing a national emergency, and we heard that our employees were getting a little nervous about this whole thing. We decided you know what, it's not a big deal, let's send everyone home for a week or two and see what happens. So we told everyone to go home. We were built for that so we didn't have to worry about work Slack and Google Hangouts and Zoom and all these different tools, we're all used to using them so that wasn't difficult. I go home, I start seeing the news get worse and worse, and again we are a month to month business meaning if the critics are right and everyone cuts marketing when there's a panic I could come in on Monday and half my business gone or all of my business gone. We have no guarantees. So it was a stressful weekend to say the least.
We basically spent a lot of time with my partner how are we going to hedge this, what are our options? If our revenue drops in half, if our revenue drops to 25% what are we going to do? So we're creating all these plans without wanting to act too fast, and also saying things like what do we do in these situations, how do we hedge against this, and what is the game plan. So we ran every scenario, really set up a plan. Then we came in on Monday and there was a little bit of a rush of companies saying we've got to hold off, we just got shut down.
Ecommerce is a big majority of our business but we do marketing for carwashes, restaurants, gyms, all sorts of people that were shutdown overnight, couldn't do marketing, just overnight had to cut it. But it wasn't as bad as we thought it was going to be. It wasn't like our revenue dropped 75%. At the same time, we had a rush of people coming in trying to figure out what do we do with digital, how do we do this. So we actually had a lot of new business. So what ended up happening in March and I'm going to rewind after I say this, we actually ended up even until February because we replaced a lot of the business we lost with new business coming in, and we had enough people take a pause that we were okay.
Now, the biggest thing that occurred is that whole weekend was frankly one of the most stressful weekends of my life and I mean that sincerely. Maybe I've lived a good life. I was trying to, I've been building this baby that's based off a lot of other businesses I've built. I've been working on this, my blood, sweat, and tears of my entire life like a lot of entrepreneurs can resonate with for seven years, and I didn't know if I was coming in on Monday and didn't have it anymore. The mental dance that goes on.
Once I realized that it was going to be challenging but not necessarily the sky is falling, I started getting more logical about the whole thing. Something became very clear. Almost every business pretty much every business is going to lose customers in this situation. Whether your customers are consumers which some have lost their jobs, some are scared, whatever their decision making patterns are they're going to not buy. You're going to lose some portion of your customers. If you're a B to B business, some portion of those businesses or again are going to play scared or actually be affected, and I do differentiate between the two. So you have to constantly be watching those customers. Just holding on for dear life right now is a recipe to lose business. Your business will decline if you just batten down the hatches and wait because you will lose customers, you will lose revenue.
It became very clear that if you're a company that hasn't thrown interesting he towel and you're not just saying my business is screwed [10:00], or you're not completely shut down again like some of the businesses that we're working with, this is an opportunity to acquire new customers. You have to because you have to replace that business if you want to maintain at all. I'll answer the questions shortly. But whatever your situation is, if you're not focusing on a sales and marketing effort right now to build your business, you will be losing revenue. You will decline. If you have any kind of fixed expenses the burden of that will start to become very real. So realize that early. We doubled down on our marketing, just rounded up everything we had, did what we could, and really started driving leads.
At the same time, and I'm going to try to speak to a lot of stats to this, the average cost per impression for both Facebook and Google dropped 30%. Advertising is incredibly cheaper than it was a week before because big CPG companies, big automotive companies, et cetera pulled out and if you don't know this, it's all based on a bidding system. It's sort of a supply and demand thing. Now, the supply doesn't change but as demand changes but price changes. So if there's less demand, the price gets lower and you end up with a lot cheaper advertising. That combined with some really interesting economic undertones that ended up happening in the first week here, which I'll get into in a sec, we saw an opportunity for our lead gen as a company, Hawke Media, our cost per lead dropped to a third of what it was.
Now, the adverse effect of this and the part that's important is conversion rate went down a little bit, purchase cycle extended a little bit, people are taking more time to think about their purchases so it's not as quick. But it still didn't counteract the fact with the savings we had on the advertising side because of all the people that also played scared and just cut their marketing before they even knew what to make sense of. So we basically stood on the podium of this is the time to keep with it, and this is really what's important, and a really big learning about this whole thing. You have to act according to data, not emotion. Everybody tries to predict the future and they're always wrong. Even right now, everybody is speaking in certainties about the future and everybody disagrees on it because no one knows. That's really the truth.
So all you can do if you're a pragmatic leader is work with the data that you have and watch it closely. We are having our team pull reports every day on the numbers we were seeing, what was happening, and through March those first two weeks, we didn't see a decline in sales across the board. We saw a quick couple of days with certain brands, but then everything just came back. We had no sign in actual data that told us we should be battening down the hatches and closing things off, meaning for our clients. We had our own business that we had clients that were cancelling, et cetera, because of their individual, but our customers especially ecommerce companies were not.
Then we also realized another aspect of this which is we do a ton of business at trade shows, so do a lot of B to B businesses, and B to C. All of those were cancelled in the crunch. Everything for the next now probably for the most of the rest of the year, every in person conference was cancelled and there was a hole there. This is filling one of them but we realized, this was before even this conference existed. There wasn't Startup Story LIVE going on, there wasn't a lot of online and we went well someone has got to do it so we might as well. So we jumped in and threw an online conference on April 7th.
We were able to Damon John, Dan Price, Brandon Web, Anthony Scaramucci, a bunch of great people to come and speak online to help people think through what was coming. But it had only been three weeks, we still didn't know, but we had enough data to see it might not be as devastating across the board as we thought it was going to be. The market went down to sub 20,000 in terms of the DOW and then quickly came back, and we're seeing that now. It's still on the up today, and so what we're seeing is there was a huge fear around what this could actually be and don't get me wrong, I don't want to belittle the people that are actually hyper effected. I'm talking about just the global economic impact. There is an impact. There's probably some more coming, but here's where the interesting financial stuff came in.
With the PPP and the stimulus that everybody got, and unemployment, disposable income went up. People have more savings in their accounts right now than they have in 30 years. Think about that stat, more than 30 years. Right now where we're supposed to be having this huge economic… now the argument against all this would be that the US printing money is going to be the problem which, listen again can't tell the future, but there's not much fear around inflation right now. We almost had deflation and that's what would be caused by printing money, would be the devaluing of the dollar. Hasn't shown yet. And in the meantime, unemployment is paying an extra $600 a month so if you're in the top tier of unemployment, you're getting $1,150 a week total after taxes. That's an insane amount of money for most of the waiters and trainers and people that are laid off right now. So they all have more income than they've ever had off unemployment. On top of that, they got an extra $1,200. On top of that, businesses got their two and a half months of payroll coverage. So in terms of the short-term effects on business right now, [15:00] it shouldn't be very heavy. What I've seen in a lot of this is a lot of people are using COVID as an excuse for just poor business practices. I watched a lingerie company lay off 30% of their staff. We have several lingerie clients that have had record months by 200%. So those are all the drivers of this.
Now the result is ecommerce last year was 13% of overall consumer purchases. 87% was in stores, 13% online. In the past six weeks, that 13% grew to 30% and consumer spending has not declined very much. So with all that in, if you're doing a decent job online and you're above average, you've just doubled your business on average. The average company doubled in the past 30 days online. By the way, we've seen those results. We have companies that have doubled and tripled, many, many companies. There's a list of dozens of them that we work with in the past 30 days because of this, and it's not Clorox and toilet paper. It's a plant company, you know house plants, it's a high end jewelry company, it's a lot of different things. I'm sorry to hear that your revenue is zero. I would have to know more about your business, but I have an example I'm going to be talking to that.
So to answer a couple questions real quick before I get back into this, in terms of a very small startup with limited budget, we try to be as accessible as possible so I would have to know more, but either way we're doing a ton of free help right now if you just go to hawkemedia.com/speed-marketing, or feel free to reach out to me. We're really trying to help anyone we can right now. We do have some bandwidth. We do have clients that are affected and that aren't marketing, so we have some people that are free. We're actually just giving back with that. Reach out, we can try to help.
In terms of if you have zero revenue, again have to know more about your business. If you're a travel company, you're in a really tough spot. If you're a restaurant, I have many, many friends that own restaurants. I am actually an investor in a restaurant. The number that I've seen with restaurant business currently is revenues are down between 40-50%, their revenues are down. But delivery and takeout is actually for a lot of restaurants is making up for it, including some of the national chains that we've seen, but a lot of mom and pop restaurants too. And their expenses are way down. They've laid off their wait staff. It's interesting to see that their profitability actually has not been affected. I have many, many friends with many, many restaurants that are seeing their expenses covered by changing the way they're doing business.
My favorite example of this that I love this because he's also a friend, Innovative Fitness is a Canadian gym chain. I think they have 25 gyms across Canada, been around 20 years. Overnight were told they had to close their doors and within a few days they pivoted to virtual training. Which by the way, they had plans for before, it was way out and they had never done it, and they just went well, you know. He was like a lot of us bad shape, but just went I've got to do something, and quickly pivoted. He was able to actually increase his revenue because all his existing members wanted some sort of fitness. They're stuck at home, give me something, and a lot of people that wanted to be members of his gym but never had the time to actually go in and walk through the doors were able to sign up and get his training at home. So he's increased his business because of pivoting online and adapting to this.
Again, Andrew I have no idea what your business is. If you want to put that in there I'm happy to spitball about how that can be possible, or maybe it's not. As I said, there are a cohort of people that are hyper affected by this that don't have options, and that is a shame and that is a problem. But there is a lot of opportunity if people are looking for it, and that's the important part. And if you are completely shut down, there's opportunity even right now to build community. Depending on what you're doing with your time, there's opportunity to build community so when things start to open back up people can't wait to come back to your business. Because what is the truth is there are businesses that are either adapting, thriving, or at least fighting right now and those businesses have a fighting chance.
James McKinney: Before we continue with our episode I want to let you know that all the great content from our most recent Startup Story LIVE event is available to you in an on demand format. Basically a Netflix for entrepreneur. After two full days of groundbreaking content at Startup Story LIVE my head was spinning for days. Every time I thought, "That's going to be the biggest takeaway," I was floored by another mic drop moment. And that's why we created a new membership program for entrepreneurs who want to leverage the Startup Story LIVE experience as much as possible.
You've heard me talk about it at the top of this episode and that's The Startup Story Inner Circle. When you become a member in this exclusive group you secure an unlimited VIP pass to The Startup Story LIVE content and bonuses designed to help your business succeed no matter what the environment. Your Startup Story Inner Circle membership includes on demand access to every founder session from our past event. We're talking real practical, tactical advice from real entrepreneurs and real business owners, not some self- proclaimed thought leaders. We have full transcripts of every session with crucial talking points highlighted, so you can quickly scan and focus on the information you need right now. We're going to have exclusive livestream events each month with top founders from companies like Mailchimp, Stitch Fix, Meetup, and StickerMule. We're going to have access to our private Facebook group where entrepreneurs support other entrepreneurs, and make valuable connections and even find new clients and customers.
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If you want to be in the group that emerges stronger then you need practical strategies to survive and the support of entrepreneurs who want to see you thrive. And you'll find both and more when you become a member of The Startup Story Inner Circle. Let's fight for your business together. Secure your three month membership for the flat rate of $99 by just visiting thestartupstory.co/VIP today. Again, just visit thestartupstory.co/VIP to start your Inner Circle membership today. All right, now let's get back to our episode.
Erik Huberman: Because what is the truth is there are businesses that are either adapting, thriving, or at least fighting right now and those businesses have a fighting chance. There's a lot of businesses that are closing their doors, restaurants that didn't even try to do delivery, things like that, they're just shutting down. Their outcome is pretty much guaranteed. We've seen it. We saw ecommerce companies shut down everything for no reason other than fear. I'm not saying that all businesses that shut down are because of fear, just to be very clear on that, but there's a lot of missteps by founders and owners because they just aren't, again they're not working pragmatically as to here's my new case and problem, how do I solve this.
That is a really, really important thing to look at is this is another issue. If you've been a founder or entrepreneur for a little while, you've probably dealt with adversity before. This is a really weird one, because everyone is affected by this. The whole cliche now of we're all in this together, there's truth. We all were affected by this but as a business owner, you're dealing with fires all the time. That's the job of a business owner. If you treat this mentally like another challenge and how do you solve it, I've just seen a lot of people really surprised. That was my goal today, that was my goal coming here was hopefully a lot of you, maybe I can encourage some of you to do something about it.
By the way, any of you that want to be a part of it, we're going to be promoting businesses in June that are really fighting to kick start the economy. Not getting political here, I totally… I'm not going to agree or disagree with shutdown, I don't have enough data. I'm just saying I want to see business owners fight for their employees, fight for their products, fight for their business. This is a time to go to battle and that's something we've been preaching since late March. This is what this is right now. I have some very close friends in the Navy SEALS. One of them spoke at our conference, quarantine conference. I've been told by multiple that this period has been more stressful than being in Afghanistan or Iraq by a significant level. And that's a quote, it's not me. I don't want to belittle what our soldiers are doing, but just understand don't diminish the stress that you're feeling as a business owner right now, and the mental battle that you're having to have right now because there's a lot of biology and a lot of studies around the fact that when your business is threatened as a business owner, it feels like your life is threatened. Know that is psychology, that is something that exists. It's okay to be stressed. It's okay to be scared of what's going on, but then act accordingly, and act with bravery. Run at this and you have an opportunity.
So for small businesses that have pivoted from in store to ecommerce due to COVID, how do you approach initial customer acquisition efforts? Again, really depends on the company. As long as you've got a web presence I'd go to your existing… if you've got a brick and mortar store, hopefully you've been gathering some sort of data along the way. Hit up all your customers. Shopping is crazy right now. Again, ecommerce sales are doubled. That's not a bullshit stat; that is a real, real number. Klaviyo which is the biggest email software provider to partner to Shopify just reported that not only is the revenue doubled, but their revenue per email doubled, meaning the amount… it's not just people flooding in and spending more. Individuals are spending twice as much as they used to. There's just a ton, again a ton of opportunity there.
In terms of how to look at marketing I'll just give a quick overview. Again, feel free to keep the questions coming. We look at it as like you have to cover three categories: awareness, nurturing, and trust. So you have to find a way to create new awareness for your product. That could be Facebook ads, Google ads, influencer marketing, word of mouth. Tell your customers to spread the word right now. The cool thing about right now is if you've built a community around your company which is critical for a long lasting company [25:00], ask them to help. Even people called us saying, "How are you doing? Anything I can do to help?" I said it straight up, like, "Listen, we've lost some customers. We need new ones. If you know anyone that needs marketing, now is the time to make an intro." Be straight up with people. It's okay to be transparent.
The next part, nurturing, understand that most people don't buy something the first time they see it so you have to nurture that relationship. Once they see your advertisement, et cetera, email marketing, SMS, chat bots, all these things the ongoing content that helps you stay in touch with a potential customer during that cycle and know that in ecommerce for $50 average purchase you have an average three week purchase cycle. For $100 it's five weeks, for $200 it's six weeks, and it trails off to two to three months after that. But understand that cycle so you know when you're doing all these things to getting customers, it's going to take weeks to months to actually see those benefits. Right now things are a little accelerated, but you have to be monitoring these things because quickly things are going back I'm not going to say to normal, but to a lot of the general principles are starting to come back. A lot of the things that we've seen over the past 10 years are normalizing again and we're kind of seeing things get back to normal in some senses. So make sure you monitor that.
And then trust was the third pillar. 75% of consumers say they don't buy product from a company they don't inherently trust. So once you've established a brand, you have that trust. Before that, there's ways to sort of borrow that trust through press, influencer marketing, testimonials, customer reviews, et cetera. Those are things that will allow you to build out. So I'm sorry if that was a little too general in terms of specific acquisition efforts. It depends on your business. If you want to type in what type of product you sell, I'm happy to give feedback.
The way to look at Facebook versus Google by the way, Google is solving an existing need. I'm looking for a solution to my problem and you can solve it. And Facebook is I don't even know your product exists and it's drumming up new demand. That's the way to look at it. Facebook I can reach the right customer, but we don't know if they actually are looking for my products so the timing component might be a problem. Whereas Google I can't reach a specific customer, I can just reach someone looking for this type of answer. So you always have to think about the context.
So great, thank you for sharing Andrew. So recruitment events, you pivoted online events, reached 10X as many clients. So I'm curious on that because frankly quarantine conference was a highly revenued, big revenue generator for us and we threw it within three weeks. We're not an event company, but we were able to pull in a ton of partners. People were looking for this stuff. So maybe I mean recruitment I guess in general maybe because hiring is down, but again there's an opportunity in there. I'm not trying to be cold about it, but we're hiring. There are people hiring right now and there's no recruiting events, and so there's a way to power recruiting events. There's a way to pivot what you're doing right now to generate some income. Again, and Andrew I'm happy to connect offline. This is something I've been very happy to do.
Part of what frankly has kept me sane in all this is helping others. After getting over my own shit the first few days, I spent a good portion of my time the first month of this just talking to other founders about how we're pivoting, how they should, ideas, brainstorming, et cetera. And it helped me think through challenges with our own clients. But it's also just it feels good. So Andrew, sincerely, happy to chat about it to see if I can lend any hand there. We recruit a ton of people and we attend a lot of recruiting events. Knowing more details, there is an opportunity because the need for that didn't go away. What we're seeing now, because of the unemployment piece paying so much, a lot of companies are having trouble attracting back their employees now that they're ready to hire them back, now that things are reopening. There's going to be a need for recruitment in general. There's going to be something interesting.
So here's the last part that I'm going to say to keep an eye on, and then again we're 30 minutes in and supposed to open for questions completely. The interesting thing about the PPP which forced a lot of companies to keep their employees... I won't say forced, but you know what I mean, it's compelling a lot of companies. The unemployment rates, all that, it all expires July 1. Again, not trying to predict the future but to know that our government is really bad at getting ahead of things, they all like to play chicken and so there's a good chance they don't do anything new by July 1. There's a good chance that we're not fully recovered by then. I hope that we… and by the way, we're seeing it already in terms of a lot of businesses are opening, it's starting to recover. By end of June hopefully we've seen a decent recovery but we're not going to be 100%. That'd be crazy. At that point, unemployment drops more than half in terms of what they're paying and the PPP doesn't force companies to keep their employees anymore.
So if anything we need to very much watch that as kind of the next shoe to drop, and what happened in July. I think through June we're going to be in an all right position and I'm not trying to cause fear, I don't believe in being fear based, I believe in being pragmatic about this… Yeah I don't know where to type. My email address is really easy. It's just the letter "e" at hawkemedia.com, and "Hawke" has an "e" at the end, so email@example.com. Feel free to ask again, but it's pretty straight forward. Just the first letter of my name and then my company, dotcom. [30:00] So really be cautious of that.
I'd say as a leader myself, I turn on the news once or twice a day to try to just stay in the know. I've also been watching CNBC a lot. I owned I think $100 worth of stock so I'm not a public trading guy. I don't really like that market. We have a venture fund, we have other ways. I invest in real estate and other things. I don't really like the public market, but it tells you a lot about the sentiment that is out there. It's really interesting to watch and that's why seeing the DOW climb today, it dove yesterday. The last couple days it dropped a little bit, but we've somewhat stabilized for now. It's up and down 1-2% a day, it's not these crazy swings like it was. I think we're going to see that consistently as long as there's not some giant surge in the disease as people reopen, which Georgia's been open for a couple weeks now so watch them. Watch some of the states that have been more lacks about it. Frankly, we're not seeing any bad signs. We're seeing expected signs, not bad.
Careful watching the media. There's a lot of, and I hate the term, but it's just a fact, there's a ton of fake news. Yesterday, LA Times published an article that LA was extending stay at home until June or July. It was a complete bullshit headline. What was stated was that some form of the regulations will be staying in place until the end of July, but at the same time they opened beaches yesterday and are rolling openings. They're opening malls this week, et cetera. So the news, it is what it is. If it bleeds it leads, so be really careful with what you see on the media. Don't take that to heart too seriously, too. Verify everything you read. But there's a lot of information out there.
We've been doing a weekly report that we've been publishing every Wednesday where we aggregate a lot of that data too. We're really trying to help to distill what is really happening and what we're seeing again, from a general basis not an individualized basis, I guarantee there are people listening and I'm sorry for your pain, but from a general basis this is not ending up as painful as people thought it might be assuming that there's not some other surprise coming.
James McKinney: That was awesome. Seriously, that's so good and I appreciate all the insight you gave. Really one of the things that I love most about what you were saying there is the idea that there are opportunities there. If we do just fall into the narrative, and I shared this in the very beginning of Startup Story LIVE is that if all we hear is the narrative of "woe is me" and "mass destruction" and "we're all going to lose our business", obviously unemployment rate is horrific. If that's all we focus on, then we will lose hope. The absence of hope will always lead to destruction. To your point, ecommerce brands that are just folding up out of fear. Again, I'm not even necessarily a data scientist by any means but there's certain things that just don't make sense to me. When you have one indicator saying ecommerce businesses are booming at an exponential rate, and you have ecommerce businesses shutting down for no justifications whatsoever.
Erik Huberman: We have clients that had literally by 2X record months and established 8 figure business having 2X what they've ever had in a month, and shutting off their market. That's what I'm saying. It's just work with the information you have. What we talked about in mid-March, the line that I kept referring back to which was funny now because I was not… it wasn't what I thought. I was like listen, this is going to last, it's going to be three weeks, three months, or three years. Let's bucket it. If it's three weeks, it's going to be a flash in the pan, who gives a shit, we're all out of this. If it's three months, we better adapt. And this again back in March, we better adapt because you can't just hold on for dear life for months in a business, that doesn't work well. And if it's three years, well the world as we know it is kind of fucked anyway so we're going to have to make due and adjust or not and your business doesn't matter anyways.
Get over the three year hypothetical in terms of everyone's fear comes with what if this goes on forever. Get over that. Adjust because you know the other possibility is this lasts a little longer than you can just hold out on so make adjustments to try to be sustainable. And then if it doesn't last, you're fine anyway. Of course, I thought it was going to be three weeks. I'm the optimist. It turned out to be months, but thankfully most of those companies we adapted quickly.
James McKinney: When we were planning Startup Story LIVE and we were going to be at the global headquarters of the Dallas Cowboys, we were having conversations with a major brand for title sponsorship for that event and another event in the fall. I was saying the same thing, like this thing is going to blow over by the end of March, it'll all be the same. I too, an optimist. I didn't think it was going to be lasting as long as it did but I'm learning as we all are. But what I like to do in our time together, Erik, and this is totally on the spot but you are that creative type and I know that you'll dig the exercise.
Erik Huberman: I'm not going to get nervous.
James McKinney: You know, it's about again you have so many ecommerce brands, and I love the immediate response of hustle. I've said the success story time and time again because I love it, the story of a chef that got laid off and created this virtual menu planning service in order to try to make ends meet. But again, back to your point of awareness, nurturing, and trust he didn't have anything going in. it was like a day one exercise. And so from your area of expertise, how does someone like this, and I think this was the core of the question that someone asked, but how does someone come with an ecommerce solution from ground zero based on your area of expertise? How do you see let's just say maybe outflow in hiring Hawke Media to manage social spin, whatever the case may be? What does that cycle look like before they're starting to see revenue to support their family?
Erik Huberman: Yeah. It should start pretty quick. That chef also had a following so that's the thing. There was awareness and they just had to switch over hey we're doing this now. So starting from scratch right now is a whole different thing than pivoting. You have to leverage whatever assets you have, whether it's partners, customer based, friends, family, everything to get it out there right now, and be scrappy about it. Let's take the example that was just put in here. So pivoted to fully digital for nonprofits, you're fully digital. We bring therapeutic entertainment to the ill and underserved, so you're doing digital events. If you can validate, are you doing digital events for the ill and underserved?
James McKinney: For fundraising efforts it looks like.
Erik Huberman: Yeah, okay. So for fundraising efforts. So for fundraising, I think frankly just in general live events are kind of broken for fundraising because the cost is so high you ended up spending too much money on the event versus what you raise. There's a ton of opportunity to raise money for nonprofits. You're servicing the ill and underserved right now, everybody is paying attention to that. You can find another way to raise money than throwing events. Fanatics does this well, Omaze is my favorite I love those guys, O-M-A-Z-E. They get some big celebrity or big activation to donate like you would to a charity auction, but then they sell basically a raffle and they're able to drive raffle ticket sales which are all going to a nonprofit so it's a write off, and just one person wins.
The gist of that is if I donate a $10,000 trip to Mexico to my favorite charity let's just say, I can either help that charity raise $10,000 or get everybody that wants to get a chance at winning… imagine if that bid for $100, that bid for $1,000, that bid for $5,000 all up to $10,000 were all committed capital too that you have to raise as well. That's the model, and get rid of the event because frankly some of these nonprofit galas are great, from a networking standpoint et cetera, but if you give a shit about charity you'll give money to charity. There's a balance in there. So if you're in that position right now it's a hard time for nonprofits in general.
Oh perfect, so Comedy Cures. Bringing comedy, funny enough we want to throw a comedy show and donate to a nonprofit, so we should talk. Please email me because we've been throwing online events now more for entertainment than anything, and if you're bringing comedy to people that are ill and underserved, it's very poignant right now so that is really cool. But yeah, partnerships would be a good way. Community and partnerships are a great way to get through any crisis. If you have a surrounding of people that are going to help you. Again, if you're a comedy nonprofit, the people you know, the people around you that might be able to help partner with you to do some big activation online.
Someone did a comedy charity thing on April 4th and they had like tons of major comics, they raised a ton of money for charity. It was like half a million dollars in a day doing a digital thing, which by the way you can do that in a gala but then you have to pay $200,000 for the venue. I can tell you Quarantine Conference cost like $11,000. It was software costs and one speaker fee, and the speaker fee that was 1% of their normal fee. So that part isn't hard, it's just being creative is an important part of this.
And in general if you're a consumer product, because that's a little harder because you can't make as much money per partnership, if you're just starting then it goes down to, if you don't have the capital up front to spend on it try to get press, try to get influencers involved. Find people that have followings to get the word out there because awareness is the initial part that's really hard.
You've got to get people aware that you even exist. You can start to build that trust and nurture that. That's all inexpensive and easy but awareness is the most expensive part because it's advertising. That's the part that scales on an expense base, and if you're early and don't have the money to do that finding other ways to make people aware en masse that you exist, and then frankly you've got to have a good product. If you have a good product, people are going to buy it. Tie dye sweat suits are selling off the shelves. By the way, another ridiculous stat, we do all the marketing for a bunch of major bicycle companies, all sold out. Bikes across the board, record months. People are cooped up, they want their bicycles.
James McKinney: That's amazing, absolutely incredible. If you were to start an ecommerce, and again as I'm scrolling through these questions that have been asked while you were talking, what I'm synthesizing it all down to is, is there an opportunity for a 30 or 60 day turn in some type of revenue? Obviously the recruitment event one was an interesting thing, and I think there's opportunities you mentioned. Again what you did with Q Con, what we're doing with Startup Story LIVE and just the framework of recruitment, I think there is opportunity to be had in there.
Erik Huberman: Speaking of events, did you lost money on this? Point blank.
James McKinney: On this events? Well, the answer… we'll see how it plays out in two days but because so much capital was centered for the live event in person, some of that stuff was locked up and we couldn't do much about it. So we'll see how it plays out, but my hope is break even if anything. Because we started live event in person, so we didn't start digital. There's a lot of things that we paid upfront that there was no recovering.
Erik Huberman: That part yeah. That's going to be an issue. We do a live event every… We do Hawke Fest every year the first Thursday of October and we had put deposits down that are now thankfully rolling to next year, but that money is still out. Yeah, again events, whatever it is, there is opportunity. Now what I will say is do I think most of these online events are going to make as much money as a live event? Probably not, but some are. I've talked to friends that are like their business is hosting motivational events, not Tony Robbins but similar kind of in his circle, and some of them are making more money this way because they can get more people to attend than normally could fly to Florida or whatever. And some of them are down, and that's part of it too is figuring out that balance. But again, there's going to be pain in the short run here, even us. In April Hawke Media was down 15%. In May, we're probably going to be back. It's that quick because we did so much to adapt. If I had just stayed the course, cut everything, we absolutely would not be in a good spot right now.
James McKinney: Yeah. I think that's the core of what you've been talking about this whole time is if you stand still on when everyone else is running, you're catching up. You have to leverage this time for that market share and to keep moving forward. There's one question that came up, not one question but one industry or one product that I found interesting. I think she has asked a question before and it was round luxury lounge wear. It's interesting because I think of, and I think she said 300% she read somewhere that pajama expenditures went up 300% and I believe it because we're at home the whole time.
Erik Huberman: That's a real number.
James McKinney: I 100% believe it and how many Zoom calls have had pajama pants on. It is what it is. So when you think of the idea of direct to consumer, and you said the lead cycle is longer, the sale cycle is longer in a direct to consumer thing, when you think of a product right now that there is opportunity to move quickly, Rigid is or was one of your clients, a brand you represented at one point in time. And I've seen social ads for this hands free device where they can push buttons, open doors without touching anything because that's kind of the space we're in. when you start thinking through ecommerce and products that are going to be hot, now to the next 12 months, what are some things that come to mind based on what you're seeing?
Erik Huberman: Appreciate the question. Funny enough, we haven't seen declines in much of anything but I do believe that the stuff that's going to surge, the stuff that has surged that will continue to, home workout for sure. We're in a society around 40% of the country is obese but I think that exercise is a very prominent thing and gyms are closed, and I don't know that when they open people are going to still be comfortable going in. just the common knowledge that gyms are a dirty place. I feel for them but that's a tough one. I think whether it's virtual training companies as well as equipment companies, because you can only do a mat training with a screen for so long. People are going to want other stuff. So Peloton obviously is having record sales and record stock prices. I think that makes sense. Peloton is obviously servicing the upper market, it's a $2,000 piece of equipment, but I think there's going to be lower market stuff that will do where there.
I think athletic wear and leisure wear for sure. It's going to be a while before people go back to the office. I think a lot of people will never go back to the office. Why the hell are you going to dress up if you're not? Funny enough, the first month of this or right up until the day of Quarantine Conference, that day too, I put on jeans every day, I put on normal…I always wore t-shirts but I put on clothes just to keep myself in that mindset. Quarantine Conference is so exhausting to do, but the next day I wore sweatpants and I was like yeah, I'm not going back. It's actually been pretty much workout shorts and t-shirts every day. I think that's going to maintain as well.
Anything to do with the home. Travel is gone so all that money, which a lot of money is spent on travel and hospitality, is now diverted to other places. That means anything around the home, new hobbies are big. Again bike rides, house plants, anything to do with being at home, I don't think that's going away for a while because it definitely sent… This has lasted long enough that people have realized I better make my place a place I like to be. Even remodels and construction. Home Depot, those kind of places I think are going to see a boom in a lot of ways because everyone is looking at their house like, "You know what? We've got to redo our kitchen. I've been standing in my kitchen for two months, I haven't been able to leave, we're fixing this thing." I think you're going to see a surge in a lot of people just investing in their immediate life so to speak versus all the other things people buy.
James McKinney: That's awesome, that's awesome. As our time is approaching our end, we have 17 minutes left so if you're watching continue to populate those questions but one of the things that you said, and it was a passing comment and it was the idea around partnerships. Hawke Media has been a great partner to Startup Story LIVE in helping to raise awareness for the show and the event, and you had many partners when it came to Quarantine Conference. When you think of consumer products, and again I keep going to consumer products from ecommerce perspective. It's a low barrier to entry for people to figure out the dropship world and leverage ecommerce and that whole industry, but when you think of-
Erik Huberman: Careful with the dropship world. There's a scathing article, I can't remember who wrote it, it might have been Fast Company, about the percentage of people that have just ended up with massive losses and a garage full of bullshit because of drop… not garage full, but for drop shipping because they bought a bunch of product and now can't get rid of it and all that kind of stuff. Or invested a ton in ads, et cetera. So careful with drop shipping. There is no quick money.
James McKinney: Correct. There is no quick money, but when you think of partnerships in the D to C space, how do you see partners? Because again from the B to B it has been easier but from a D to C space how do you see partnerships being worked?
Erik Huberman: Yeah, it's you know Parachute Home partnering with, I don't know if they did this but they partnered with some different home rental companies. Can't do that now but I'm just using that as an example, to be the go to sheets. So every home that you go into, they're supplying the sheets, Parachute is getting awareness and they're probably charging at least cost for that so they save money on sheets, they get it out to everyone.
Delta did that with Listen Headphones so all the headphones in their first class are Listen headphones, these nice wooden headphones which is a company that gives a cochlear implant to every kid in need for every headphone they sell. So they have this nice touchy feely story, they're gaining awareness, it's not costing them anything because Delta paid for the headphones because they're buying headphones anyways. They just had to replace a line item. They said well instead of buying these ones that mean nothing, we're going to buy yours but you need to hit this price point. So they just figured it out with their manufacturer and made a custom headphone for Delta that's free advertising for them.
So that's a partnership. Those are not easy to come by. That's a very big example but there's small ones. My neighbor makes chocolate out of their house and this is not going on right now, but our corner coffee shop would carry her chocolate bars on their counter because she asked. She's just like, "Can I have, we'll do it on consignment, can you sell my chocolate bars?" Sure. That's a partnership. It's getting your brand out in a place in a way that doesn't cost money. Doesn't have to make money yet either, but you just wanted to start building that awareness. So digitally it's again influencers. It's giving someone free product to go promote it. There's a little cost there but it's partnering with a publisher. It's even just getting press. It's all sorts of things. Creating content for someone. Figuring out ways that you can help someone fill a need so that they can fill your need too.
This partnership is a good example because we want to reach the audience here. Hawke Media, we work with brands, startups, entrepreneurs, we want to get our name out there. You needed to reach our audience which is the same audience, why not share audiences? We knew you were going to put on a good event. Why not bring our audience to you and you bring yours to us, and together we throw a much better event, we both benefit more, and no one gets hurt in the situation. That's a true partnership.
James McKinney: Yeah, absolutely. I love it. I've enjoyed working with the Hawke Media team. You've always been incredible. I've scanned the questions. It looks like we have answered quite a few… I think all of them actually as I'm scanning through this. So as we come to a close, based on the tone of the questions you can kind of see the space people are in. what would you like to leave them with as our time wraps up?
Erik Huberman: Yeah. And this is going to sound harsh but don't give yourself the excuse. That's really what it is. I understand that it's hard, sincerely. It is a grind right now, it is a painful grind, but you will not regret doubling down right now. I don't mean taking a big risk and throwing all your money at something. I just mean working your ass off to find an opportunity here, and don't throw your hands up with COVID. Plenty of people have done that and a lot of you are going to be struggling. There are companies that are going to have an incredibly hard time doing anything, but you will not regret trying. Give it a shot. That's really what it comes down to. Go for it. If I can be helpful, happy to. One more time my email is just firstname.lastname@example.org so feel free to reach out.
James McKinney: Once you've had a few moments to process all the value Erik brought us in this week's episode please hit me up on LinkedIn, Facebook or Instagram and share with me your thoughts on this episode. Remember, entrepreneurs support other entrepreneurs so visit thestartupstory.co/VIP to learn from some of the most successful entrepreneurs out there. And now for my personal ask.
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