308: How Henrik Werdelin Built a 9-Figure Subscription Box Business for Dogs

Henrik Werdelin has never been about chasing money, power, or fame. Instead, his focus has always been on creating cool things with people he enjoys being around. That’s exactly how BarkBox, now one of many subsidiaries under BARK, came to be.

Despite Werdelin’s non-material approach to BARK, the dog subscription box company has exploded in popularity since its launch in 2012. Today, it boasts hundreds of thousands of subscribers and it is a nine-figure business.

In our conversation, Werdelin shares the most important learnings he’s collected as an entrepreneur—from finding the right funding option for your business to maintaining the right headspace during challenging times. Werdelin also gives us a glimpse into BARK’s incredible company culture and how he managed to build a quirky, kind, and smart team of people to pave the path for the organization. As a bonus, we also get a sneak peek into Werdelin’s book, “The Acorn Method” to understand how companies can grow in an ever-changing environment.

If there’s any other type of content you’d like to see that would be valuable to you during this time, please don’t hesitate to reach out at [email protected]

Nathan: The first question I have for everyone that comes on is, how’d you get your job?

Henrik: The good thing about being an entrepreneur is you don’t have to apply for much. You just have to be an idiot that tried to start something that everybody else thinks is idiotic at the time. So I guess I got the job because my co-founders and me kind of was hanging out and we wanted to build something nice with people we liked and we stumbled over building cool stuff for dogs and yeah, they haven’t kicked me out since.

Nathan: Yeah, wow. So when did Bark… originally BarkBox, right?

Henrik: Yeah, like originally BarkBox. Well, BarkBox is still around, it’s still our biggest product line. Since then, we’ve kind of started to launch other products and services. And so, now the holding company is Bark, but one of the big products line is BarkBox, we have Super Chewer, we have Bark Bright, we have Bark Essentials, we have a number of other things, so yeah. I guess, I think officially we started 2012. Probably started to work on the project in 2011 and then we launched kind of early in the year 2012. So we’ve been up and running for, I don’t know, eight years or so.

Nathan: Yeah, wow. You guys are very, very well-known in the space, is this your first business?

Henrik: No, well, it’s not my first business. I’m an old man, I started back in the very early days of the internet back then and this is way too old for you, it used to be called FidoNet and the internet, you used a service like Gopher and Veronica. And so, I was lucky enough that I’m kind of young enough to have had my careers using technology, but kind of old enough to have been one of the first that kind of started to use technology. And so, I guess I’ve been around the block for a little bit.

Nathan: I see, so how did you come up with the idea for BarkBox?

Henrik: I mean, I think counter to many other people, it wasn’t that with BarkBox was this big idea that we thought would be a billion-dollar business. I think it was Matt and I who started working on it a few months before Kylie joined us, had built businesses before and kind of had raised venture capital. And I think at the time we’re a little bit kind of just wanted to build something that would be a little small kind of hustle where we didn’t have to raise capital. And so Matt and I have met, and this is a true story, in a heart-shaped bed on a cruise ship because we were on this conference and if you took the cheap ticket, you would be automatically matched with somebody else just to share the room.

And obviously, because you didn’t know people, they’ve kind of pushed the bed apart, but I thought it’d be hilarious to put these beds back together. So I was checked into the room first, put the beds together, went out for some drinks and Matt then came in after went to bed before me. And so the first time I ever meet my co-founder, I’m meeting this strange man that I’d never met before lying in this heart-shaped bed in a cruise ship. So we then started to brainstorm about building businesses and Matt had built this business called, which is a pretty famous business over here in the US and is this fascinating man. And pretty quickly we realised that we shared a lot of the same values when he came to business building.

And so yeah, we were just kind of shooting the shit and kind of thought it would be fun to do something with dogs because I was adopting dogs at the time and Matt was kind of had this Great Dane called Hugo. And so yeah, the idea was kind of like, “Hey, let’s do something with dogs. Couldn’t we put like a box together with some cool things.” And it wasn’t kind of too thought through an idea. And then I built the first version over a weekend and then we started to show it to friends and they were like, “Oh, that’s awesome. I’ll sign up when you’re ready.” And we were, “Well, we have Square on our phone, we can just take your money right now.” And so, I think the first 70 account was kind of like us just swiping credit cards on our phones without us having anything else than just a WordPress site that didn’t really work.

Nathan: Yeah, wow, interesting. And then how did you guys meet Kylie?

Henrik: So Matt and I were both entrepreneurs and residents at these venture funds. And Matt was running kind of an incubation space called Dogpatch Labs here in New York City. And that was a venture firm called Polaris, I think, that we’re financing, that people would come and sit there for some months. And Matt was kind of running that I was running something called Prehype. And Kylie was kind of like knew a lot of the people that was kind of in that space, I think she was playing soccer with them. And so, after we’ve found out there was 70 people who wanted our product, we were like, “Hey, now we actually have to do it, that sounds like a lot of work.” And Kylie is this force of nature. And she had just started Uber in New York. So she was, I think, the first hire in Uber setting up the New York operations and she wanted to kind of start her own business. And so, we lured her to hang with us and so that’s how we met her.

Nathan: Yeah, wow, interesting. And you guys went to best known as far as being one of the fastest American growing pet companies. So what do you think has caused that, was that luck? Was it always like that after the first 70 or was it just do you think it’s that rocket ship-

Henrik: Sure brilliance, sure brilliance. I think you’re right; I think there’s a lot of luck. And I think it was luck, not just because timing was right, but a lot of things happened that kind of panned out well for us. The pet industry at the time had not really seen a lot of innovation, people were not really taking it serious. There was a startup in the first kind of .com wave. I think it was called that raised a lot of money and then close down. And so, I think it was considered one of those kind of industries that people didn’t really want to touch.

And so, I think first we came into an industry that hadn’t seen any innovation for a long time, there was hardly any startups in this space. But it’s a humongous industry, every third household have a dog. And there’s this is very big industry and not a lot of players in it, and so we kind of stumbled into that. I think secondly, we came in at a time where the people’s relationship to their dogs were changing. And so, dogs were no longer pets living kind of out in the yard. They were kind of invited in and becoming part of the family.

And maybe because I have a background from MTV where I used to run product development, we kind of took very much like a lifestyle approach to dog ownership pretty early. And so we started creating a lot of content and kind of, I think, tapped into a culture that was already there, but really didn’t have a place to hang out, which we’re everybody like me and Matt and Kylie who see dogs as their kids. And I think then we were good at attracting a lot of quirky people that understood how to kind of use the internet as a tool for customer acquisition. And so, I think the technology was right, the timing was right, our approach was right. And I think all of that with a tonne of luck just made us kind of becoming what we’ve always tried to do is hopefully like a player and becoming kind of that defining brand for dogs.

Nathan: Yeah, I see. And like did you guys end up raising VC?

Henrik: We failed in our not trying to raise money, and so we have raised money. I can’t remember the exact number, it’s kind of like in the $50 million range and we’ve done that over the last eight years. I think though what has always happened is that we’ve always been a pretty frugal company. Matt and I, have in our past, raised a lot of capital for our companies. And I think learned that raising money doesn’t necessarily mean that you’re successful. And so, I think one of the things which we’re very fortunate about now is that we’re a profitable company. And that obviously in a time where we’re times are getting tougher, is a nice place to be because you can decide your own destiny. And so, we haven’t raised capital for, I want to say four years or something like that and I guess we’re a little bit of an old school conservative company when it comes to burning money.

Nathan: No, that’s interesting. So you would say you’ve gone full circle, and if you had a choice for your next company, if you did launch another company you would raise VC, or you would not?

Henrik: I mean, I’m not big on blanket statements. I think founders need to find the company that fit them and sometimes that is a bootstrap company, and I think sometimes that’s a venture-backed company, and I think both are fine. There is, of course, the realisation that you learn when you’ve done a few companies is that the second that you take venture capital, you put yourself on the track of making a very specific type of company. And that is a high growth kind of a little bit of winner takes all kind of position.

And so, I always think the company should just find out how they make a real solid business. The way that I kind of operate is that I like to understand real pure unit economics. And I think if you then have a way of growing that much faster by getting capital, then you should go out and get it. But I’m also like the type of businesses I have been involved with, and Bark, it’s a very, I would say, traditional business where we build a direct-to-consumer brand.

Obviously, if you build a technology company or other forms of companies, then venture is probably the way to go. So I don’t know, it’s not a very sophisticated answer. I think you should be mindful about not taking capital if you don’t know why you’re taking it. And I don’t think that raising capital in itself should ever be a success metric.

Nathan: Yeah, that makes sense. Talk to me around kind of these times, because you made an interesting point that fortunately you guys are profitable and you have the opportunity to be like a more older school business and be a bit more conservative. I’d love to hear your take and comment on these particular times, have you guys been affected, what are you doing to tackle this?

Henrik: I mean, these are obviously various scary times for a lot of companies and I think us too. Every day there is a new, big risk that could suddenly make your company kind of be in real trouble. And so, we’re definitely mindful of that and constantly kind of looking at everything from supply chain to weakening in the market, to all these different things, like banks suddenly kind of changing terms. And so, I don’t think that we are out of the weeds. We have the advantage right now that the pet industry historically is a recession-proof industry. And at this point, it looks like people are still just looking to get our product and we sell it primarily online. And so, I think we are in a decent shape right now, but it’s definitely scary times for everybody.

Nathan: From your experience, because you’ve built companies previous to Bark and sounds like you’re pretty, I could say a bit of a… you’ve got that experience, would there be anything that you would be thinking about or would like to share with our audience around how they should be thinking about things at a time like this? What kind of mindset do you have as a founder right now?

Henrik: Well, the good thing about being a founder is that you’re nervous all the time, you’re kind of used to being in a situation where everything is uncertain and where you have high-level anxiety, so I guess like we have a little bit of a head start on that. I mean, again, some industries are just completely hit. If you’re in entertainment or you’re in businesses like hospitality, there is not a lot you can do because people, for obvious reasons, kind of will not be able to use your product. And it’s very tough and you will probably have to go through what a lot of founders have gone through as part of that career and that is letting people go, or basically, just realising that the thing that you had dreamt about becoming very big won’t be. And I think that is a very traumatic experience for everybody. And you also will have a lot of staff that they’re concerned about their jobs and things like that.

And so, I don’t think necessarily there’s a universal piece of advice. I mean, I feel that if you have strong integrity and you are honest for your staff and you try to be optimistic, but you’re telling people as it is, I think if nothing else, they will respect you for that. And so, I think that’s the only thing. I will say though, that as a founder, a lot of people look at how you conduct yourself. And so, it’s important not to lose yourself.

And so, I would give the advice that I think I give advice to entrepreneurs at all times, and that is making sure that you stay in a good headspace, make sure you get to work out a bit, instal that Headspace app, or whatever you’re using to kind of make sure that you don’t kind of go crazy yourself because a lot of people’s kind of jobs and mood is greatly affected by how you conduct yourself on Zoom or on video conference every day. But I don’t know, I don’t think necessarily I have a magic wand or a piece of advice that is super helpful in these times.

Nathan: No, that’s fair enough. Because I’m always really interested in mindset, like one time I met somebody and they said to me, “If you want to build a hundred million dollar company…” Or let’s just say hypothetically, let’s say you want to build a $20 million company. If it’s already done in your mind and you believe that you can do it, you’re 50% of the way there. Do you agree with that statement?

Henrik: Do you know what? I think there’s different ways that people think about this. I think my co-founders, they are very goals orientated. They see something and they go for it, and I think that is very helpful. And I think for a lot of people, that is a very good way of having your mental model. I think for me, it’s a little bit different. I’m more of a means or environment orientated person. I kind of try to make sure that I’m good headspace, I try to work with the smartest people I can gather around me, but I don’t necessarily know what then will come out of it.

And so, it’s a little bit of, if you make sure that you have all the different components, all the ingredients are fine, then something good is going to be created at the end of the day, but I’m not in the same way as other people where say like, I want to build a hundred million dollar company. I want to hang with people that are kind, and smart, and quirky, and I want to build cool shit that the world needs, and then I hope I make a lot of money doing it. It’s not the other way around.

And I think ironically for me, it wasn’t really, until I started to think that way that I started to make stuff that actually worked. Before, when I was just chasing cash, I always ended up kind of building stuff that was too late or just didn’t work because I was chasing the cash instead of chasing or understanding a problem that the customer had and finding a good solution for it.

Nathan: No, that’s an interesting take. So when it comes to mindset, the things that you’re doing is mainly kind of things around just like meditation, working out and just-

Henrik: Yeah, I’m a chubby Danish boy, so I’m not sure necessarily like I… it makes it sounds like I’m all fit. I do think that… I’m 44 now I’ve been building companies most of my career. And so, I guess I’ve done it a few times. And I’ve definitely learned that you can work yourself to death and not necessarily become successful. And so, I’m probably taking more of the stand of make sure if you choose to be an entrepreneur, you are statistically likely to fail. It’s going to be hard work.

And so, make sure that you go through that journey with people you like and make sure you build something that you can’t be bothered thinking about every day. The byproduct of being entrepreneur is kind of like the value that everybody is jealous of. Yes, they’re also jealous when you’re successful and you make the money, or envious or impressed. But it is like choosing who you can work with, choosing who you work with, choosing at what hours you work that a lot of people would like to emulate. And so, make sure that you do that.

Nathan: No, that makes sense. And you said something that was interesting to me around kind of surrounding yourself with really nice people, good people, kind people and some of the smartest people. That makes sense, but how does that work in practise? What do you do to do that? Let’s just say, you said in the early days of Bark, you met some really… you brought on some really quirky, cool people. Is there anything there on the hiring front that you could share from your experience when it comes to finding really, really smart, great people?

Henrik: I mean, I think different companies have different DNA and I have definitely seen very, very successful company that are very aggressive I feel with just killer types and that is great for them. And there are businesses out there that, they’re like, a very, very large businesses building culture like that, that is just not how I am, and so I wouldn’t thrive in that specific culture. And so, the type of organisations that I try to be part of, or I to try to make are one that’s a little bit more mirrored over the types of environment that I prefer to be in and the one that I kind of enjoy.

So I will say that I probably emphasise jelling and connecting with people that I work with a lot specifically in the early days because I know that when you build an organisation, the DNA that you set in a company in the first, let’s say 20, 30 hires is very often the culture that you’ll see when you are then 300 because people hire people who have the same values as themself.

And so, I have the joke internally that I’d rather hire somebody that I like than somebody who is competent which is, obviously, a joke, but there is a little bit of the meaning to, you will have to call people on the weekends and you will have to have very difficult conversations with people. And so, you might as well choose people where you think that conversation is going to be not as difficult as if it’s somebody that you don’t have a good rapport with.

And I think the quirkiness is maybe just because Matt, Kylie and I are quirky people ourselves. But also we work about making dogs happy, it’s not a very killer industry. It’s about having empathy and loving animals and really kind of being the people that the dogs thinks we are, which seem to be like super humans that we’re not really, but at least my dog always think that I’m awesome. And so, I’d like to be that person.

Nathan: Yeah, that’s cool. I’m curious, someone asked me this question the other day, and I’d love to hear your take around kind of with your team, are you really good friends with people in your team or how do you maintain that kind of… do you want to maintain that there is a difference in kind of hierarchy or anything like that? What’s your take there? Do you want to be the boss or do you want to ever be perceived as the boss or, yeah, you know what I’m talking about.

Henrik: I don’t think so. But again, I think it’s just up to the individual. I think Matt, Kylie, and I always really enjoy that people treat us like the interns, and that there’s no need to have specific kind of like respect because we were the first one through the doors. We try to kind of be very approachable and not create that levelling. And so, to answer a few of your questions, we definitely try not to create any type of specific kind of allure around us. And maybe it’s because it’s own insecurities, but I think it has allowed us to have a lot of various smart, very talented, and very autonomous people around us because they really do what they think is best for the business.

So that’s too, likely how people see us. I think to working with friends, I think the early days, obviously, we were very close to people because we were sitting and working together all the time. I think as you kind of mature and you grow as your company, the type of people who come into the organisation and the type of relationship that you need to have with people is going to change in nature.

Yes, you are friendly, but you’re not necessarily… I think I always see people as my friends, but I also realised that I have a dual role. I am both somebody that I hope that they feel that they can trust, but I’m also somebody who have different decision making in their career and if they have a job or not and stuff like that. I think I learned as I got older that you have to honour that you can’t be the one who’s there at the end of the holiday party because people are drunk and they will say stuff to you that they will regret the next day, and it is on you to make sure that you don’t put them in that situation. And so, I do think that yes, you can be friendly, but you also have to realise that often you are people’s boss and that is your responsibility to make sure that that is honoured.

And I would say the third thing is that I think as you then get bigger then people start to… they don’t know you that well. And so, there more folklore kind of comes into place where people see, oh, this is CEO, or there’s the founder, and then suddenly I think you’re seen as more of a thing that you might even think yourself, but just because the people don’t know that you’re just making this shit up as you go along, they think that you know more or are smarter than you are and, therefore, they prescribed kind of more authority to that, I think.

Nathan: No, that’s funny how you said, around making shit up as you go along. You’ve had incredible success as a company and as a leader, but you’ve still been making shit up as you go along and that’s the case for everyone. Nobody really knows what they’re doing, they just pretend, yeah?

Henrik: Yeah, and obviously, when you’ve done it a few times, you have experience with these what not to do, but no, I think right, I was fortunate. I was pretty young and I became a head of product development for MTV International. And I was in my 20s. And I remember once sitting at this meeting with a bunch of CTOs for big companies that was big at the time, like Ericsson, these were big compact, and these were companies that are very large at the time. And I was sitting there with people who are much older than me. I was like, “Oh no, I hope they don’t realise that I don’t know shit and I’m making all this stuff up.”

And then suddenly I looked around, I was like, “Hey, wait a minute, they’re all just making all this stuff up, they don’t know anything about this stuff.” And I think that’s always kind of stayed with me. And I think now, obviously, I’m more secure and I feel more certain in some of the decisions that I make because I’ve tried more things. But sometimes I feel that people assume that you’ve thought much more about stuff and you’ve definitely thought about it, but a lot of times you are just taking decisions based on your experience and you don’t know if it’s the right or the wrong thing and you just hope that you’re right.

Nathan: Yeah, 100%. And that kind of brings me to another thing that I’ve learnt across being to many different founders is the reflection of where you are right now, is a reflection of the decisions you’ve made thus far to get there. And you don’t have to be right a 100% percent of the time, but would you say you have to be right, like 60, 70% of the time?

Henrik: I think often these things are not that binary, you make decisions and they kind of gives you new options and those options can kind of be better or less good. And so, I mean, I was fortunate enough with Matt and Kylie that they know a lot about things that I don’t know much about. And without them… I sit a lot on the creative side of the business and I feel pretty comfortable about a lot of the decisions I make there. A lot of the decisions that I made in their fields, I have no idea. And I just trust that they make great decisions.

As per kind of brand building and product development and stuff like that, I think I feel pretty confident in a lot of the methodology that I’ve developed over time. And I feel pretty comfortable about being vulnerable about the decisions where I don’t have enough information or knowledge or experience to make a clear call. And there, I feel that now we have a good team where we can talk it out and saying, “I don’t know if this will work, but here’s the components of it that I think seem to be working. Here’s the area that I’m not sure about. And so, what do people around the room think?”

So I feel like vulnerability doesn’t have to be weakness. And if you’re comfortable enough in your own skin, in your own decision making to be vulnerable when you have something that you’re not certain about, I find often in dialogue with your colleagues, you can get to a pretty good decision.

Nathan: Yeah, it’s kind of being self-aware and in tune and being, yeah, just kind of trusting your gut as well, yeah?

Henrik: Yeah, and then at one point you just have to make a decision. Sometimes taking a bad decision… I used to make this joke. At MTV, I ran a lot of creative directors and I don’t have a design background. And now, through my last 20 years career, I often sit in a role where I have to make final calls on designs. And so, I used to make the joke about consistency of saying it doesn’t really matter that you designer X has better taste than I have, consistency is more important than taste, and at least, I have consistently bad taste. And so, if we just always follow my taste, then it’ll be consistent.

And I think there’s some truth to that. If you look at brands, for example, that I think are strong, it is because that customers understand what they will get when they interface with them. And that is all about consistency. And then even something that doesn’t look visually as stunning, if it’s consistently that way, then I think people feel comfortable about it.

Nathan: So when you talk about branding and the Bark brand, you guys have done very, very well. What are some key elements there, which you think have built that brand, that you’ve strategically kind of finessed consistently over time in the past eight years plus?

Henrik: I think we always had taken a stand of what we call the inside-out brand. And what I mean by that is that we have some pretty… we only hire people who love dogs a lot, and we always have very good intentions. And so, I feel what have happened… and we’ve always given a lot of our staff, pretty big authority to do whatever they wanted to do with the brand. And so in many ways the brand is this kind of cook up that we’ve done together as a group. And I think a few things have happened because that we developed it kind of collectively, we always kind of seemed very authentic when we were talking to people because when you call our customer service team, you’re talking to somebody who probably sits with a dog on their lap. And when you read one of our Facebook comments, you read somebody who was there because they love dogs.

And so, I always felt that authenticity that we’ve had on our mission of making dogs happy was kind of very pure all the way through. Now, sometimes that means because that we just always let everybody kind of in the last mile have a lot of authority in what they could do, sometimes it’s not that pretty, sometimes I’ll see a logo being done in a bad way, or sometimes somebody will do something on social and I’m like, “Ah, that’s probably a little bit outside what I had hoped we would do.” But because that, it all come, I think for good intentions, we’ve always kind of gotten away with it.

And so, I think, just being very approachable and just really being very respectful of the core problem that we’re trying to solve, and being very kind of like aligned with our customers, and that we’re all here just to make dogs happy, I think have allowed us to talk to them in kind of like eye level. Where, I think, a lot of other brands kind of like talk down to them, or they shout at them, or they keep themselves very glossy and beautiful even though on the inside they’re not. And so, I think we’ve always taken a little bit of what you see is what you get.

Nathan: Yeah, level of humbleness.

Henrik: Yeah, I think, we serve our customers. We have a team called the Happy Team. So we talk to about a third of our customers every month, and we obsess about having a chat with them. And the team that talks to them is called the Happy Team. And the Happy Team is led by this guy called Hannan. And he always talks about hiring people who have a servant’s heart. And now, I’m from Denmark, which is a very equal society. And so, the whole terminology of a servant is not something we have. We don’t have servants in Denmark. You go into a restaurant; the bartender will give you a little bit of like, “Don’t try and think that you are anything bigger than me, because we’re the same.” It’s a very, very levelled society.

And so, when he started to talk about hiring people who had a servant’s mentality, it took me a long time to really compute. And I think, what he had managed to do is really attract a lot of people who truly get very happy by seeing other people get happy. They just really would like to help. The hospitality is embedded into their DNA. And that’s one of the reasons why our Happy Team sits in Columbus, Ohio, which is in the Midwest here in the US, where you just have a culture of being very kind, and nice, and humble. Where in New York, we’re a little bit more of like, “Hey, what’s your problem?” And so, I think the Happy Team have really taught the rest of us a lot about how you just make sure that you are very respectful. And it is something to be very proud of if you can serve your customers well.

Nathan: Yeah, wow. So if you speak to a third of your customers every month, in terms of scale, how many is that? That’s big numbers.

Henrik: Yeah, I think we probably have 200-ish people sitting in Columbus, Ohio, with a dog on their lap and texting frantically pictures back and forth for our customers. And we’re happy to talk to them about anything. We will be sending them texts like, “Does your dog sleep on its back or on its paws?” And people’s friends get too tired of getting pictures of their dogs. We are always there to kind of have a good chat about that.

But in many ways, that part of our business is not a customer service team only, it’s our research team. It’s the people who can tell us what products we should build next because people tell them what products they should build. And when we do something dumb, these are the ones who have a relationship and say, “Hey, we’re sorry, we sent you the wrong toy. That’s on us, let us send you a new one.” And so, we feel like the Happy Team is really the heart of our organisation, and it’s the one that informs a lot of the decisions that we make.

Nathan: Yeah, that’s really, really smart. That’s a genius initiative. Because yeah, sometimes I feel within even my own company, that it’s good even for me to get in on the help desk and answer tickets, answer questions, see what’s going on. And I always find it so fascinating. And it made me realise, yeah, we need to get any of this customer service, speaking to our customers, supporting our customers, we need to get that through to our product and our marketing team, because it’s so key. The fact that you guys speak to a third of your customers, and I assume you have in the millions, maybe even tens of million subscribers, what kind of scale are we talking? What can you share?

Henrik: I think we’ve probably shipped two million boxes by now. So we have under a million subscribers, but close to a million. I don’t know the exact number, otherwise, I would share it with you. But let’s say it’s shy of a million subscribers. And so, yeah, we would talk to 300,000 customers a month. And I think you’re totally right. There’s this irony that we talk about trend analysis, and forecasting, and product development, and roadmaps. At the end of the day, our job is to understand what are the problems we can solve for our customers. And very often, they’ll just tell us. So we don’t have to kind of be that academic about it, we just have to ask them.

And if I look at some of the most successful product lines that we created, for example, we have a business line called Super Chewer, which is for more active dogs, more doable toys, rubber-based toys. And it wasn’t too difficult to come up with when suddenly your customer call in and saying, “Hey, all these plush toys that you sent me, my dog chewed them up in 30 seconds.” And I’m like, “Hey, wait a minute. Maybe we should make some toys that they don’t chew up in 30 seconds.” And then, we send them some toys and we say, “Hey, would you kindly tell us what you think about them?” And they say, “This one is good and this is bad.”

And by now, I think we ship like a hundred million products and we have Net Promoter Scores on all of them. And so, if you then take that kind of empathy and you mix that with an obsession of data collection, suddenly, you know what a six year old Labrador in Texas really like. Because you just have been through enough of these conversations to give a pretty good statistical kind of prediction of what this dog would like. And then, obviously, we can use that intelligence to go back and saying, “Hey, you have this and this dog, we think that they really might like this product.”

Nathan: Yeah, that’s genius. So you guys, obviously, started as BarkBox. But then, you’ve kind of opened up, made Bark the parent brand. And if you’ve bolted on other product lines to service this customer base, but then, also have a more wide range offering to bring in other people that might not be interested in BarkBox as an example. That’s a very smart, strategic move and it’s a way to grow, but focus is key. And how do you know when to move into the next product line or just keep crushing and doing really well on the one?

Henrik: Yeah, you know what? This is where I might be a little bit contrarian on that. On Tuesday, I have a book coming out called The Acorn Method, about this specific topic. And that is because, I think, philosophically we have for 50 years heard focus as key. I think the reality is… And so, what I did was, I was looking at some of these companies that was very successful, the Apple of the world, or the Amazon, or even companies like ourselves. And what I think I noticed was, like trees, at one point when a product line matures, it just can’t grow any further.

And so, the way that trees have learned to develop over the years is not to become a much bigger tree, but to become a forest. And so, if you take Apple, for example, they used to be a desktop company, then they became a music player, and they became a phone company, and now service as an entertainment company, or trying to be that.

And so, I think my view is that, yes, you should be very brutal about the discipline, about not kind of like starting to do everything. But you should experiment a lot. And when you experiment, you find exponential ways of growing or of offering a better service and then you should keep doing that. But you should keep experimenting. And so, I think where I would counter a little bit what you said is that I’m on the business building believe that you should grow your service on to a specific maturity. But then, like trees, you should think about how do I regenerate myself? What is my system for keep kind of like be growing. And sometimes, that is not just growing further up, that is about growing wide. And so, that’s the business strategy that we’ve had.

Nathan: Interesting, and what compelled you to write The Acorn Method?

Henrik: I think, I have two organisations that I’m involved in. Obviously, Bark, which is the one that I spent the last eight years on. But I’m also part of an organisation called Prehype, which is kind of a collective of entrepreneurs. And through that organisation, I teach at business schools and I advise kind of large companies on how do you become more entrepreneurial. And, I think what I noticed was that over the last 10 years or so, companies are trying to grow and they’re spending a lot of money doing it, but they don’t seem to be very successful. In fact, most of the Fortune 500 companies are staying in the Fortune 500 index for shorter and shorter period of time. And so, there’s this kind of like fascinating kind of things happening where corporate innovation spend 10X what venture capital does, but the companies are growing slower and slower.

And so, I kind of got obsessed about trying to understand what was that. And after having kind of like been on the advisor side for 10 years doing that, I was like, well, maybe I should take at least the ideas and the learnings that I’ve had there, and then share them as kind of the beginning of a conversation about, how does companies keep growing. Specifically, in uncertain times, where other startups will come in and try to compete against you, or technology companies will come to beat you, or something in the world kind of changes so suddenly, the world is more uncertain. I feel that companies need to find ways of retaining that entrepreneurial and experimental muscle so they can keep grow.

Nathan: Yeah, that’s really interesting. So you’re all about going wider. Well, still go deep, but go wider when you can.

Henrik: Yeah, I think I’m making sure that the core works; the core tree has to kind of like stay tall and be robust. But at one point you are not going to get exponential growth or putting another branch on. You’re going to get exponential growth about creating a system where you can pluck an acorn or a bunch of acorns around fertile ground. And then you have to be very disciplined about not over-investing in any of them that is not basically growing straight up.

Now, one of them might grow straight up so fast that at one point that tree will become bigger than the tree that kind of incubated it as it were. And that is fine because you would be owning that business line. And I think that is what Apple, and Amazon, and a lot of other companies have managed to do. Retaining that entrepreneurial and experimental model so that they can keep eclipsing themselves by building new, that became bigger than what they had originally.

Nathan: Yeah, I think that’s spot on. Now, I think about this as well, even in our company, because we started off as a magazine and now we’re kind of moving into not just magazines, but online education. And we’ve been doing that for a few years now and now we’re going to go deeper there. But when I think of vertical or going wider, I’d love to build like a SAS company or something, a series of tools that help founders. And I think that’s really smart. It’s just from my own experience, it’s very, very difficult to know how to make sure you don’t get distracted. An is it a shiny object versus sticking to the core, maintaining the core, and all of that and that it’s such a fine balance, from personal experience.

Henrik: What a nice pluck for me to talk about the book. I think you’re totally right, and I think that is one of the big issues that companies have, how do you make sure that you don’t suddenly take the focus from the organisation that are basically paying your bread and butter, and then kind of like moving over to the new shiny object. And so, a few thoughts. You need to first, I think, be very good at figuring out what is basically you’re growing on the acorn. And I think what’s important is that it’s something that’s standalone, and is something that is not part of your current organisation.

Because you’re based in Australia, one of the business lines we have that is growing very fast for us, it’s our home line, it’s called the Essential Line. It’s beds, and keypads, and poop bags and stuff like that. And we’re selling them primarily on Amazon. And so, Whitney, who runs that used to be an entrepreneur. She built a business, didn’t have big success with that, and was kind of like looking and trying to figure out what to do next. And so, we asked her to basically figure out what she would do with Amazon.

Now, we kind of like put her on the side. We said, “Basically, you can use any of the tech resources you have. You’re basically on your own. But if you have specific things you need from us, you can come and ask for it and we’ll make sure we clean that.” And so, Kylie and her, went off to the side and built this double digit million dollar business line in 12-18 months, just by kind of like using a lot of the assets, but not interfacing at all with our core organisation.

And so, like an acorn, we kind of dropped it in a place where we thought, well, there was fertile ground, which for us, was about building essential products for dogs and selling them on Amazon. And we definitely then had, if you’d like, a root system, so that there was connecting tissue. But we gave it a lot of autonomy, a lot of independence, so that it didn’t kind of go in and remove the focus. And we basically said to everybody, you can deal with Whitney. Basically, she is in control. She calls the shot. Tech team, legal team, brand team, all these other team, this is off limit for you. Now, we’ve done that before where it didn’t work, we launched Vet On Wheels business.

And so, we constantly look at building these new business lines and the way that we look at it is, we take an autonomous team, we put it somewhere we think there’s fertile ground, we give them a certain amount of resources, and if they run out of those resources, basically they’re default dead. And so it’s not where we just keep throwing money at it because we just give them a little bit more… if they’re out of money, they’re out of money. And so I think in the same way as the acorn, which also comes with a little bit of fertiliser, a little bit of DNA from the mother tree and some very strict rules about growing straight and up, then we have tried to kind of emulate a model where we can get those two worlds, we can get the entrepreneurial fast grow but we can also kind of make sure that they don’t interface with the mothership.

Nathan: No, that makes sense, that’s really cool to hear. Do you have to, as a leader though, or even just Kylie, Matt and yourself, make sure you guys don’t get too kind of interested in moving towards this new shiny thing because where your guys’ attention flows… if what you guys are most excited about naturally your team will be most excited about and all that side of things, how do you manage that? You know what I mean?

Henrik: Yeah, totally. Well, I think it’s all about being disciplined about it. I think you’re totally right that does tend to happen. We have the luxury that we are three people so that we can kind of divide and conquer a little bit. With that case, we’re much more kind of involved in the core and making sure that we grew that organisation into something that was very mature. And then, we have really smart people who kind of could help, kind of making sure that we create kind of systems and scaffolding for the core thing. And so, we don’t have to sit there and work on it every day, we can invent systems that other people can take over.

I think you’re totally right, when we sought to kind of get excited about it, then a lot of people want to be excited and we just have to be very disciplined about saying, “No, this person is working on it, they’re the only person working on it, nobody’s invited, nobody’s on the email.” To the point where a lot of these teams, Kylie is doing this on another business line right now and they have their own slack, they’re separate, they have their own email they are for all intended purposes completely on their own island, they have their own tech stack.

Nathan: Yeah, wow, okay. So not even shared services?

Henrik: No, because I think sometimes you have this idea that the shared services is going to be really nice for the synergy but the reality is that it just makes you run slower. And also the people who are responsible for making sure that the existing business that’s working, they have to be a little bit more conservative and they have to be more about protecting that than necessarily trying to invent new where the new has to invent new all the time. And they might want to use, like at Bark now we’re such a big company, the systems that we have to just move all these products that we send out every month around its huge systems. And there’s consultants coming in and making sure they talk to all that systems and there’re accountants coming in and doing auditing and all this stuff. Meanwhile, we’re trying to invent something new over here.

And they have to have the flexibility to just do whatever they want to do because I feel it’s a bigger risk that you built something that the customer don’t care about and that doesn’t scale than it is that suddenly that we can’t tie it into our system. I’ll give you an example, when we started BarkBox, everybody was asking me, how are you going to pack the boxes? And I always used to say, “We’re going to pack them ourselves.” And people were like, “That won’t scale.” And I was like, “I understand that it might be a problem but the idea is I have 70 boxes, it’ll take me a good 20 minutes to pack.” And so it scaled just fine.

When we have a million boxes, we will have a robot and a 3PL and systems in place. But at that time we also have shitload of revenue and so, therefore, we can kind of afford throwing money at it. And so, sometimes people, I think, obsess about the scalability of something before figuring out what is the magic? What is the service? What is the product that the customers really love? If you can find that, then I feel often you can find a way of scaling that on the back of it.

Nathan: Yeah, I love it. So look, we have to work towards wrapping up, Henrik, this is a great conversation. Question around kind of this idea of you focus on the core, you work out what your core is then you look to bolt on other products and or services but while maintaining the core, that’s a good model. And I’m curious, every one of these new product lines that you guys launched, do you first always offer it to existing customer base?

Henrik: Sure, well, yes and no, we do what we call signal mining early on, which is basically, can we get more data about if our thesis is right? And that might be that we send 200 emails to existing customers saying, “Hey, we’re thinking about launching these specific products, what do you think?” And that will give us more indication. Sometimes if it’s something specific we might use external tools. So let’s make a… we have a business line, we have these poop bags and they have funny words on them, like funny statement. So we have one that I think called Poopaganda and so it’s like, “Make logs, not war.” Or we have one with rap titles, I love it when you call me big poo bag.

Now, I don’t know which one of the 60 funny statements that my creative team made were the best one. And so, we just buy Instagram ads and we see what people click on. And so, sometimes we do stuff like that. Now the power, of course, of what we built at Bark now is that we are one of the only brands, sorry, we are the only brand in dog that touch in food, that touch in play, that touch in health, that touch in home. And so, we have brand permission now to play on the whole gamut. And that allows us to when we launched, for example, Bark Bright which is our new dental product, we can add it to our box and saying, “Hey, you probably don’t brush the teeth of your dog, you know you should. You don’t want to do that, so we build basically a super cool toothbrush that your dog can eat. And we built this, we found these enzymes from this bioengineering company that will basically break down all the bad things in your dog’s mouth. You should just add that to your subscription and then kind of buy that.”

But I think that’s back to the earlier point about the brand, I mean, some companies have brand permission to spread out. If I told you that Nike is making a new hotel, you probably would have an idea of what that would be. But if I told you that Hilton is making a new shoe, you probably wouldn’t know what that would be. And so, some companies naturally bigger range in what they’re allowed to do.

Nathan: Interesting, when you attack kind of… attack not the best word, when you test a new product line and you kind of go off and incubate an idea or a hypothesis, build the MVP and whatnot probably, for a lean startup if methodology, one thing I know that Jeff Bezos is big on, I’ve done a little bit of it at Foundr is finding people that I’ve come from other companies that have tackled that particular space. If you’re going a totally different vertical but for a similar customer base. Do you do that? Do you look for people that have that experience?

Henrik: Yeah, I think we, again, are a little bit lucky because of our industry and nothing has been made there. And so, we can often find people who’ve done something in a people space and try to attack it the same way. So a bunch of our toy designers have comes from a background of making kids toy because that they understand how you understand how play is. And then how do you create something that strengthened that kind of experience? So we definitely do some of that.

But sometimes we take the posture that you have to invent something new and there we just go from very entrepreneurial people. So people who are very good of being versatile, so they know design development and business development, people who have agitation such as they just have a chip on the shoulder. They constantly are… people who have great use of empathy. So they kind of naturally think about I wonder what the customer would think about that. And so, some of these entrepreneurial kind of attributes that you don’t necessarily recruit because of your experience in this specific industry but you recruit because people have that specific personality.

Nathan: No, I see, okay, interesting. Well, look really mindful of your time, we’ll work towards wrapping up. Last question, two last questions, one-

Henrik: There’s always three.

Nathan: No, all right, we’ll go with three, you’re getting greedy, okay. One, where’s the best place people can find out more about yourself, and your work and your new book?

Henrik: Yes, that is probably on Twitter. I’m @werdelin W-E-R-D-E-L-I-N. And so, that’s probably where I brag the most about things that I’m working on, but they can also just email me or tweet at me, whatever, I’m pretty an open door policy.

Nathan: Yes, and Acorn Method when’s that coming out?

Henrik: It’s coming on, I don’t know when this is going to be released. It’s out on Tuesday, the 28th. So we’re recording this on a Thursday, it’s coming out next Tuesday. So maybe by the time that you’ve removed all the dumb things I said on this podcast and edited it out.

Nathan: Okay, awesome.

Henrik: And if you can go just search that there’s a link to the book there.

Nathan: Okay, And then second question, advice on anyone going through the pandemic, their businesses experiencing some sort of adversity which we know probably majority would be, advice there?

Henrik: Get a dog. I mean, I don’t know, I think we all need to have people around us that we can talk to. And so, I think just to make sure you don’t get too isolated by yourself but make sure you assume call your friends and talk to a few people, because, I think, you can go not save you, just sit there and try to compute the whole thing in your head. But I do say I think saying, getting a dog does help because at least you could talk to that.

Nathan: Awesome.

Henrik: And then give it a BarkBox, of course.

Nathan: Love it. And then last one is what’s exciting for you, in the future what’s most exciting.

Henrik: I am excited about the remote work that people start to do. And I think research, and what I hope is going to be research of entrepreneurship, I think there is a lot of opportunity to build businesses and make money online. And I think this pandemic have taught us all that it’s probably fine to work remote or to hire people who are remote. And so, I think that makes it hard for a lot of people but I think for people probably listening to this podcast probably gives them an edge. And I think being an entrepreneurial person is probably one of the only skills which will transcend through all these different kind of hard times and new technology developments that’s going to happen.

And so, I think becoming better and better of looking at problems and finding systems to solve those problems in a scalable way which I think is the core of entrepreneurship. I think it’s probably one of the best thing that people can be spending their time on. And that’s not just for making money but that’s also for solving the problems that we have in society and our communities and stuff like that. And so I’m excited for the people who probably are listening and reading your magazines and the content that you produce and the classes you guys do because I do think that this entrepreneurship is the skill of the future.

Nathan: Yeah, I couldn’t agree more. Awesome, well look, thank you so much for your time, Henrik. I won’t take any more of it. You were very, very generous, it was a great conversation. And yeah, thank you so much. I hope you stay safe in New York and I hope things get better soon.

Henrik: Appreciate it, thank you so much for having me on.

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