A unicorn is a popular and sought-after creature beloved by everyone. But they are also mythical. Tardigrades, however, are real, and they are resilient. They’ve gone through the test of time and are not going anywhere anytime soon. Why not build a brand like that? In today’s episode, Elliot Begoun lists down the ten important traits your company needs to become a tardigrade brand. He breaks down each trait and outlines a helpful guide to create a nimble, capital-efficient, and resilient brand. 

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The Top 10 Important Traits Of A Successful Tardigrade Brand

This episode is going to be one of those different ones where I am my own guest. There are some things that I felt the audience needed to know and that I wanted to share. I’m taking host prerogative and doing just that. The second thing is a reminder that I will be checking both the Tardigrade online community as well as the chat and Q&A function for those who are attending the live taping. I will do my best to address your questions as they come through so please send those through. Last, before I get into the teeth of this episode, I want to take a moment to do a founder shout-out. I want to talk a little bit about Taryn Segal at Double Rainbow Ice Cream. It is an iconic brand based in the San Francisco Bay Area. It was started by Taryn’s dad, Michael Sachar, years ago in the heyday of super-premium ice cream. The days when it was Double Rainbow, Ben & Jerry’s, and Reuben Mattus’ Häagen-Dazs were going head-to-head.

The Double Rainbow is proven resilient and is the ultimate Tardigrade brand, which is why I wanted to feature them. They have been innovators in flavor and the type of product, bringing all kinds of different frozen desserts, not just ice cream but non-dairy, new plant-based offerings and innovative flavors. They have done a lot of formulation work. They still have a plant here. They moved a couple of years ago from their original plant in the Mission District of San Francisco across the Bay to Emeryville. The business is continuing to evolve and innovate. Even during the COVID crisis, they figured out new ways of distribution, leveraging the growing trends of click and collect, DoorDash and Uber Eats. Taryn Segal, Double Rainbow Ice Cream is a true Tardigrade brand. Please visit Double Rainbow Ice Cream’s flagship store in the Castro in San Francisco and visit them online.

Let me dig into this episode. I wrote an article for new hope about this. Feel like we are in the middle of 2021, a year that many of us imagined would be this epic re-emergence where the flood gates were open and all the things that we have been waiting for from new item placement to live events, food shows and investors writing a flurry of checks. All this stuff would be happening with an amazing amount of activity and speed. The truth is we sit here more than halfway through 2021. Although there has been a lot of positives and there are a lot of momentum going into the back half of the year. Things haven’t moved as quickly as most of us had anticipated. The premise of the article and what I wanted to talk about in this episode is the Tardigrade. We have been championing this microscopic water bear for a while as the alternative or the antithesis to the unicorn. It’s something that this industry celebrates wildly. It’s the Tardigrade that is emblematic of what most brands need to cross the chasm, the valley of death between the early days and long-term viability.

What I wanted to share with everyone reading are the traits of what makes a Tardigrade a Tardigrade. What is the key elements of being a brand that is ultimately nimble, capital-efficient and resilient? Let me start this first with a little bit about the Tardigrade itself. The Tardigrade is a microscopic water bear. It is known for being able to pioneer new ecosystems. It could live in a harsh climate. It has been able to survive on the moon and in the depths of the ocean. It can withstand extreme radiation. When it’s under a lot of pressure, it’s able to slow its core metabolic rate down to 0.01% of normal and go into a state known as cryptobiosis, allowing it to survive for up to 30 years without food or water. These things are freaking resilient. They are pioneering, resilient and adaptive. To me, emblematic, it’s the perfect mascot for the kind of brand that every entrepreneur should be building.

The other thing I want to mention is that by no means, I’m throwing shade on unicorns. Unicorns are rare. They are mythical but they do occur in this industry. You also have to be a realist and know when your brand is built to be a unicorn and when it’s not. Unicorn brands typically are radical. They are extraordinarily disruptive. They are creating something that wasn’t there. There are huge addressable market opportunities. They can grow from niche to mass effortlessly in terms of the offer. I don’t mean work-wise but the products are built that way. The reality is most brands are not going to meet those criteria. That’s okay. That’s cool. There are a lot of fantastic businesses that are not going to be or are meant to be unicorns. If you try to build a non-unicorn brand as a unicorn, then you are basically setting yourself and the brand up for failure.

Capital Efficiency: Maximize Your Dollar

The alternative is to build a Tardigrade, a nimble, capital-efficient and resilient brand. To do that, there are traits. I’m going to highlight the top ten of those. Any more than ten, I’m pretty confident with both the tones of my voice that you would be long asleep before I’ve got to number 11 or 12. The first one I want to talk about is Capital Efficiency. For those of you who are regular readers of this show, my articles and blogs, thank you, first of all. Secondly, you will know that I am a preacher of this gospel. I want to spend a moment trying to better define what I mean by it. What is capital efficiency? How do I operationally define capital efficiency? Simply put, it’s the concept that every single dollar you deploy works hard for you. Every dollar that you put to work does the work of more than $1. More specifically, I define capital efficiency by looking at the crosshairs of two specific accesses.

On one access is the return of contribution margin or revenue but contribution margin is more meaningful because contribution margin is what’s left from the revenue generated that can be applied to the fixed costs or operating expenses of the business. For every dollar that you put to work, how many dollars of contribution margin does it return and there should be a multiple to that. The second access is the time. How long does it take for it to return those dollars in contribution margin? What I have found is that the brands and the entrepreneurs who put a priority on this, who build businesses around trying to maximize the return of contribution dollars for every dollar deployed and do so with the quickest turnaround time, simply out-perform and are in a better position to withstand the forces of the marketplace. Those that spend too much, too fast or who spend too much on things that won’t show return for too long don’t do as well.

Growth Hypothesis: Have Measurable Objectives

Capital efficiency is paramount. My rallying cry is capital efficiency is the new velocity. Slowing down the arc of growth in return for better capital efficiency will serve your business. Even if your hockey stick looks more like a caricature because the paddle end of the stick is much longer and your slope is more gradual so be it. If that’s what you need to position you and your brand to succeed over the long-term, then do it. The next thing I want to talk about is the importance of having a real growth hypothesis. There are a lot of different ways. This is the term. Some people call them sales plans, strategic plans or financial plans. Those are all great to have but those are inherently static. Those often are theoretical. Not something that you can apply in the market and validate or not. A growth hypothesis necessitates that you build from the bottom. That it’s testable, measurable and you have a real clear discernment of the arc of your growth.

I like looking at these over a five-year horizon. What are the revenue sources? Of those revenue sources, what are the assumptions that you are making within them? That would be how many of them you are going to acquire. When you are going to acquire it? How many weeks you are going to be on the shelf? That kind of velocity. That applies for brick and mortar for D to C. It’s the number of new customers, the lifetime value and the average order size. All of those assumptions are built into the model. What resources are you going to need to achieve those revenue targets? That would include things like how much are you going to spend on trade, marketing and acquisition. It’s basic assumptions around the business itself. What do you anticipate your cost of goods to be? What do you anticipate freight to be? What about working capital needs? How many days of inventory? How many days of receivables?

Growth Hack Mindset: Test Your Hypothesis

All of this should be there with clear assumptions over the five years. They should be done in a way that allows you to go out and test those things that hold true. They can be put into practice in the market in a way that allows you either the surety of it being expandable and scalable or the knowledge that there’s something flawed in it that needs to be addressed and adjusted. Having that cogent growth hypothesis is a must. The next is Growth Hacking. This is very much aligned with having a good growth hypothesis. Ultimately then, what you want to do is adopt this mindset of being a growth hacker. You have heard that term. A lot of people are claiming to be biohackers, doing the same, trying to understand themselves. Growth hacking is taking those assumptions that you outlined in your growth hypothesis, designing and executing controlled experiments to isolate some of those variables and test them.

The cool thing about a growth hacking mindset is that every single interaction and transaction that you have as a business is a potential growth hack. You don’t have to create scenarios that are just for these experiments but you can look at, for example, a cluster of stores. You might pick a cluster of stores. Five stores versus five other stores that you call your control stores. Those are stores where you test a different price point, strategy or promotional strategy. You can do it by geography. You could pick two similar small geographies. It could be ZIP codes or cluster’s ZIP codes in one geo-target, some paid social effort and the other you do nothing and you see what the difference is in terms of revenue generation. It could be anything along those lines.

Be Investible: Why You Need A Clear Process

The thing that you want to be doing is questioning, which of the assumptions are inherent in your growth hypothesis that you need to validate the soonest and the quickest to be confident that you get back to the first thing we talked about, which is maximizing capital efficiency. They all fold together. They all fit. In order to drive capital efficiency, you need to have a growth hypothesis. To validate your growth hypothesis, you have to growth hack. If you do first those latter two, ultimately number one is going to improve and grow. It’s capital-efficient, growth hypothesis, and growth hack. The next thing is being investment-ready. It is hard to raise money. It is even harder to raise money in that pre-seed prior Series-A range. There are a lot that goes into it, including luck and timing, all of those things.

The one controllable you have as an entrepreneur is to position yourself to be ready for that investment. I have seen this too often where a brand has a conversation with an investor and the investor is interested in the brand but as soon as they pop the hood, it’s over because the brand is not in an investment-ready position. What does it take to be investible? First of all, to be investible and scalable is you have to have a clear capital strategy. You need to know what you need to bring in and the timing of that over some timeframe. Going back to your growth hypothesis, that should be over that five-year arc of growth so that you know the kind of structure of that capital that you need and the timing of the tranches that need to be filled. Next, you need a very strong investor narrative. Investors invest. It’s not a question of, whether an investor is going to invest. The question that you are trying to help that investor answer is why should he or she invest in you? If you don’t have a strong investor narrative or you haven’t built that, then you are not going to get further.

Those two things are the table stakes. I think many people do those two things well but where I see it start to fall apart is on the less sexy stuff. Once you have done those two things, then you have to do the work of ensuring that you can absorb the growth and win that investment. You have to show them that we are ready for this. We can absorb this. We structurally and foundationally have what’s necessary that if we win this investment, we can deploy this investment and get the results you expect. That includes having a defined order to cash process. If you are taking ten orders and you need to get the 10,000 orders between brick and mortar and B2C to achieve the result. You have an order to cash process, ability and system in place in order to do that. You have a strong supply chain that is scalable that includes co-man, ingredients sourcing and packaging. What you can do can grow to the level that you are saying you can grow?

The next aspect of that is having good financial reporting. Maybe you are not all the way to gap accounting but you are getting there. You have a good solid foundation of accounting reports that you are reviewing regularly. That includes the basics, P&L, balance sheet and cashflow but you also are thinking and doing things on a cruel basis, flattening out some of the bumps in the business. You are looking at the business. If an investor were to dig in, they are going to have a level of confidence that not only you are reporting things and looking at things the right way but you can absorb the growth of that. You have done the necessary legal work. You have all the regulatory compliance, legal documentation, trademarks, codified agreements with co-manufacturers, operating agreements, all of those kinds of things in place so that you are ready for that investment.

Operate Along The Shopper Continuum

Sometimes, it’s just that that’s in the due diligence process derails the investment. After you have done all the work to win them on your growth hypothesis, get them to believe in the vision that you have and see the opportunity, it’s sometimes the fact that you don’t have your shit together from this aspect that will cause them enough pause or concern to pack it in and go home. We have talked about capital efficiency, the importance of a growth hypothesis, the need for a growth hack mindset and being ready for investment and scale. The next thing that Tardigrades recognized is that shoppers don’t shop in channels.

As an industry, we talk about segmentation or channel strategy. We talk about the difference between natural, organic and conventional clubs and mass online. The last time I checked with anybody going about their day, they don’t think in that way. They don’t think like, “Now, I’m going to be a mass shopper. At 3:00 this afternoon, I’m going to shop on the club channel. Tomorrow, I will shop in the natural channel. Sundays are my conventional days.” That’s not the way we shop. We go out there, buy things and grab the brands that we want to or need to.

Tardigrades understand that. They understand that shoppers shop on a continuum. On one end of that continuum is where they discover, try new things and on the other is where they replenish and restock their favorite things. There are two planes on that continuum. One is the digital plane. That’s all of the eCommerce as well as paid social and then your social media. The other is the physical plane. That’s the brick and mortar, the events and places where people can physically tactilely touch and see the product. You’ve got this access and these two planes. The tardigrade brand thinks about, “Where can I bisect? Where can I intersect that continuum in a capital-efficient and innovative way?” It doesn’t mean that I’m going to go to the biggest, most common or available intersection because more than likely, as a smaller brand, I’m going to get lost there. It’s going to be hard for me to see the parade.

Instead, the Tardigrade thinks about where along that continuum that they can interact and intercept their shopper smartly and differently where there is a small crowd or no crowd where the streets are quiet and the view unabated. They are constantly trying to think about new ways, new intersections. When you have success in one, this is a business where success breeds followers and there are lots of fast followers. If you are succeeding in one area, sure enough, people are going to recognize that and are going to rush to that same intersection. Soon, that intersection will be crowded, then you should be looking for the next one. It’s the shopper continuum and thinking, not in a channel strategy but in an innovative way around were to intersect with the customer and the shopper along that journey from discovery to replenishment.

Have Discipline: Know Your No’s

The next one is discipline. Not the topic that most entrepreneurs relish is talking about. Not something that comes naturally for many of us because we are creators, innovators and disruptors. That usually does not go hand in hand with being regimented, disciplined or having a lot of rigor but it’s abundantly important. I’m talking here about the discipline to know your noes, not to get sucked into the vortex of this business and being resolute in the execution of your growth hypothesis. This means not falling prey to the allure of new distribution, going into the wrong type of retail account where you are not going to succeed or spending money on an activity just because the activity itself makes you feel more comfortable because you are doing something.

What you are doing is confusing activity with results but rather recognize that you are in an ultra-marathon. It’s the disciplined approach to running the race, keeping it at your pace and refueling your business at the right intervals. Doing those kinds of things is the recipe for success in the long-term, being able to not fall into temptation and not get yanked when things are going slower. You are not seeing the progress, you want to or feel the need to make sure you are showing the investors what you think they need to see and you make a short-term decision. Those are the things that Tardigrades don’t do. They stay steadfast and resolute. They can discern the difference between activity, result and the important from the interesting. They remain disciplined and focused.

Nimbleness: Be Flexible And Agile

We have covered capital efficiency, growth hypothesis, growth hacking, investment readiness, the shopper continuum and discipline. We are going to move onto that term that I use often, which is nimbleness. For whatever reason, by the way, in the grammar checker that I use, often it says not enough people will know what nimble means. Why don’t you replace it with agile or flexible? To me, there’s a subtle difference between agile, flexible and nimble.

Nimble means you cannot only be flexible and agile but you can do both those things quickly. You can be reactive, proactive, do it better and faster than others. The Tardigrade itself is truly the embodiment of that. They stay in that cryptobiosis. Tardigrades have small teams. They carry minimal fixed costs. They try to keep their fixed costs and the mouth that they have to feed day in and day out, as small as possible. They listen to the market deeply. They are always trying to take in the signals, the insights and the intelligence from the market. As they get that feedback, they can make adjustments. They embrace this concept of imperfect action.

Accountability: Infuse Rigor In Your Business

Intention and action equal results. That’s simple but a lot of us wait too long to take action. We don’t want to take flawed action. Being smart and knowing when to take imperfect action. Iterative action that is aimed at continuous improvement but aimed at moving forward is better than inaction any day. That nimbleness of being willing to carry a team that can adjust to the ebbs and flows of the market to the fickleness of consumer behavior is committed to having an ear to the marketplace, a means to grab that feedback and bring in that market intelligence. Imperfect as it may be, taking action to move things forward and doing it faster than anybody else is what smart Tardigrade entrepreneurs do. That’s nimble. We are getting to the next one, which is less sexy. That’s accountability. I recognize that most entrepreneurs did not get into this space or start their businesses with the mindset or the thought of accountability being something that they wanted to spend their day promoting but the truth is promoting, infusing accountability and rigor throughout your business will be the difference between long-term liability and failure. It’s that simple.

Every stakeholder in your business should be accountable and held accountably. Stakeholders are your team, investors, advisors, outsourced folks and agencies. You should also have financial and performance reviews every month. If you are reading, you will say, “It’s just me. It’s a tiny little business. I’m selling online.” It’s great. Set up a chair with a mirror, do a financial and performance review. Review all the key things. Put articulation against it and talk about each of those kinds of things because it’s vital. Find an accountability buddy, somebody who you can meet another founder and say, “How about you present your financial performance review to me monthly and I will do the same to you then we will talk?” Get into the habit of having that process every single month, reviewing your sales, reviewing your P&L, your balance sheet and looking at your cashflow. I would encourage cashflow to be reviewed weekly. Make sure as well that everyone alongside you and yourself included have clear objectives measured by well-defined key results.

Build Community: The 3 Forms Of Community

Many of you have heard the OKR process. I’m a big believer. John Doerr has written a good book on that called Measure What Matters. There’s no benefit of having an objective or goal if you don’t have a way to measure it. Having a clear objective and then defining how you are going to measure that objective with something quantifiable. You should lay those out. My personal belief is that they should be  90-day increments and everybody should have established OKRs. The bottom line is this. A Tardigrade brand, a Tardigrade entrepreneur simply put. They plan, forecast, execute, rinse and repeat. Two more of this top ten list for those of you who are still awake and still hanging in with me. Community, as I continue to be a student of this industry, this one came to me. Through a community that I’m involved with a mastermind community. It was years ago that I went to one of our mastermind retreats. What we were to do there was to present to our group our cohort what we felt like was the highest value activity of the things that we did as a business for those that we serve.

I came in with my chest puffed out and a bit of swagger about this kind of empathy approach to go to market strategy and so forth. The whole group looked at me and said, “You are full of shit.” What’s most important and the highest value is this building of community, this community of founders. Being a founder or an entrepreneur can be isolating. Building a community for them to feel like they are part of something bigger and surrounded by support was key. I started thinking about that more. I started studying that. I met a guy by the name of Jono Bacon who does nothing but talks about and educates around communities. He delivered to me, which I have since adjusted slightly, this concept of building three distinct types of community. The first is the shopper community. As a brand, the people that are going to be your evangelical followers, loyal tribe and do some of the caring of the mantle for you in the places where your products are available both physical and digital.

That’s a place where most brands spend a lot of effort and founders. That one isn’t shocking probably to anyone reading. Most people are probably saying, “We would love to be doing more but we are working on that.” The two other communities are where intention and focus need to be placed with equal fervor. The first is your community of collaborators. This could be your other peer entrepreneurs, retailers or affiliates. It could be whomever. This is a community that you are going to build with intention and the aim of finding ways to collaborate to do better and to do more. That is so vital and often missed. It’s building this team of collaborators. The community of collaborators can also be a great support network and a great way for you to build upon the growth of your business. I want to make sure everyone understands that the level of importance of the building is vital to the long-term benefit of your business.

The third form of community is going to be focused on champions. Building your community of champions is so key. Let’s talk about what I mean by champions. Champions could be your advisors, investors or other retail partners. Your community of champions is going to knock down walls, open doors and windows for you. You have to be intentional in your build-out of your community of champions and understand, which champions you need around you. None of you can do this by yourself. None of you can do all the lifting, connecting, and networking that you are going to need to do to build your brand into long-term viability. Everybody should have some people on this journey with them that are willing to take one for the team, step in front of the bus so to speak, lend the kind of support that you need, both moral and physical, to move it forward.

It’s sometimes uncomfortable to build a community of champions because you are asking for that level of help and you are asking for that level of commitment from people who you are wondering why you should have that support from them or you should get that. Please don’t collect champions that are simply vanity because you want somebody on your pitch deck. Bring people who believe in you, who you believe in, who are willing to support you, help you and so forth. If you put the same effort into building your community of collaborators and your community of champions that you do to your community of shoppers and suddenly you have this amazing solar system of support around you and your brand. It’s ultimately that collective community and those three sub-communities that are going to be your force multiplier. They work as an  Army of support. Believe me, over the long haul, growing and building that Army, and building those force multipliers is going to serve you probably better than any other activity that you can muster around networking, intentional building or collecting of people, so to speak.

Resilience: Learn To Adapt

It’s always hard for me to articulate that one. You could probably tell by that. Sometimes, we gloss over it. We talk about how many followers or customers I have. That type of thing. This is a little bit different than that. This is about bringing people in close and trying to get them to be force multipliers to help grow the brand. We have arrived at number ten, which is resilience. Tardigrades are inherently resilient. What do I mean by resilient? What I mean is that tardigrade brands can withstand harsh conditions. When they don’t have access to food and water, which in this case is revenue and capital, you can slow down your metabolic rate and go into cryptobiosis. When you don’t have the topline you anticipated, you aren’t getting the investment dollars or access to the debt dollars that you had anticipated. It isn’t a zero-sum game or if those things don’t happen, you are done. You have built-in inherent resilience in the business by being able to slow down your spending, reduce your inventory, decreased your receivables and you see the benefit.

You understand that it’s okay to slow the pace of growth and its associated costs to live and fight another day. It’s this mindset of I’m going to survive to thrive. That’s resilience. Equal to that, maybe I’m going to prioritize over that but hugely important in that is also the prioritization focus and commitment towards your own self-care. The single most important investment you can make in your business is in you because if you can’t show up and manifest the best version of yourself, then there is no chance that your business will manifest the best version of itself. That requires you to take an attitude of being selfish to be generous. It requires that you say, “I have to come first some days.” That may necessitate that you recognizing you are having a shitty day, shutting it down and going out for a hike. It may necessitate that you permit yourself to take a vacation. It also may mean that you invest in things like spiritual practice or reading books and shows that expand your mind and relax your soul.

Those things we pushed to the wayside often as we say, “I would love to go for a run or go to the gym. I would love to sit on the meditation cushion. I would love to go to lunch with a friend, spend some time with my spouse, hang out with the dog, be with the kids or any of those kinds of things but I can’t afford that time. I need to double down on the business. I need to work and do all of that.” What happens is each one of those tradeoffs begins to rob you of the best version of yourself. You start depleting your heart, soul, physicality, health and mental acuity, all of those things. Do it long enough and you are soon to be showing up day in and day out as a shell of yourself. I don’t speak to this like I’m perfect. This is something that I have continued to work on. In fact, it wasn’t that long ago that I had that tough recognition when I stood in front of a mirror and said, “I have done exactly the opposite of what I preach. I have not prioritized self-care. I have not to lean in and prioritized being the best version of me.” I put some intentional effort back against that. I can tell you that I can see the results of it physically and emotionally. Most importantly, from an efficacy around work, I show up better every day. I hope.

Resilience is more than just the ability to shrink your business, grow your business and position it to withstand the forces of the marketplace. It also is equally your ability to do the same for yourself to make sure that you recognize that you are in an ultra-marathon and that you need to prioritize your own self-care, spiritual care and physical care so that when you do show up, even if it’s a fewer number of hours, you show up as the best in the best way. I promise you that 80 hours of a depleted shitty version of yourself is going to be far less effective than 40 or 50 hours of a refreshed, fully vibrant version of yourself. It’s that simple. To recap the traits of a Tardigrade, it’s capital-efficient, growth hypothesis, growth hack mindset, inherently investment ready, belief, look and operate along the shopper continuum. They are disciplined. They know their noes. Nimble, infused accountability and rigor throughout the business. They are actively building all three types of community. They are building their business and themselves to be resilient. That’s it.

If you do those things, you do them well, you commit to it, then you have a good product and a good brand. I’m confident that you have done what’s necessary to succeed in this business. There’s uncontrollable, luck, timing, things along those lines but you have to stack the deck in your favor. You have positioned yourself and your business in every way possible to meet the kind of success that you want if you focus on these ten traits and nothing more. In the interest of time, I’m going to pull moderators or hosts prerogative here and table questions because we are right at the limit but I will dig into this dialogue for those of you in our community on the online chat in the Tardigrade Online Community. I would welcome those reading to reach out to me. I’m happy to invite all of you into a conversation around building a Tardigrade brand. A nimble, capital-efficient and resilient brand. In this industry, although we will continue to see the occasional unicorn, it’s the Tardigrade brand that is best positioned to win. The reality remains because too many companies and entrepreneurs build to be a unicorn.

That is why we continue to see a failure rate of 80% to 90%.within two years at CPG. I want to change that. I want to see that change. I am willing to help in any way I can. One way I can is by being the champion of the Tardigrade. Thanks, everybody, for joining this episode and putting up with me as my own guest. Hopefully, this is one of those episodes that you can come back to and have it also serve the purpose of an alternative to melatonin. We will see you next time. I have some great guests coming on future episodes. I’m excited about it. Everyone, take care. Thank you.

Important Links

• Double Rainbow Ice Cream

• Measure What Matters

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