The Nick Bare Podcast - Archive - The REAL Reason Prices Are Increasing | Katherine Thomas & Josh Holley

Episode Date: July 7, 2022

It’s no secret. Prices for everything that we as consumers are buying these days have risen. Groceries, gas, and yes, even our supplements have seen price increases over the last year or two. Some blame the pandemic, some blame politicians, some blame greedy CEO’s and executives. What exactly is the real cause of these increases? In this episode, BPN’s CRO, Katherine Thomas, and CFO Josh Holley, join Nick on the podcast to discuss the many factors at play that are causing the prices of consumable goods across all industries to increase. Kat and Josh bring years of experience to the table and are able to provide great insight to how this affects both us as consumers and BPN as a company, and how BPN is positioning itself to continue to raise the standard, bringing the highest quality product to the market, even during these uncertain times. More Resources: BPN website: www.bpnsupps.com Nick’s website: www.nickbare.com Nick’s Instagram: www.instagram.com/nickbarefitness Nick’s Youtube: www.youtube.com/user/barelifenutrition Follow Us On Social Media! Instagram: @thebareperformancepodcast Facebook: The Bare Performance Podcast Twitter: @BarePerformPod

Welcome back to another powerful episode of the podcast. I'm your host, Nick Baer, founder and CEO of Bear Performance Nutrition. Every week, we bring you insightful stories, knowledge, and inspiration to help you reach your full potential in life, fitness, and business. If you enjoy the message we're promoting in this podcast, we would greatly appreciate it if you would leave a rating and review on the platform you're listening to. Make sure to subscribe so you don't miss out on future episodes. that embody the go one more mindset.

All right, what's going on? Ladies and gentlemen, we're back with another beautiful episode. Today we have alumni of the podcast, Josh Holly, CFO, and new guest, Kat Thomas, Chief Revenue Officer. What's going on, guys? Excited.

Super excited to be here. Nervous. Yeah, a little shaky. I sit next to this room and I can hear these all the time, but you get in here and it's like it's a, It's a vibe for sure. Well, it's one of those things. I love the podcast because it is this intimate setting, doors closed.

There's rarely an occasion in life now where you don't have your phone on you. You're not getting notifications, emails. You can sit and have a conversation with people and dive deep into a topic. Absolutely. And Kat reminded me everything is editable. So I'm going to just rely on that. That's the thing. We're not live.

We're not live. We're talking about some pretty great. stuff today that I thought was needed to be talked about. And the reason Kat and Josh are on this episode is because they provide insight, experience, education on this topic. And that is one around the current economy that we are living in and experiencing how that is affecting business, supply chain decisions we make on a daily basis and that we plan for. And I think that more importantly for the consumer, the listener, how that affects the business model and the prices they see from the brands they buy from, BPN being one of those and how we are being affected

by inflation, changes in prices and how we have to sometimes pass that on to the consumer. What I think we should do first off is provide a little bit of context overall of some the things we're going to talk about. First off, like, how we set our pricing model from a revenue standpoint, profitability standpoint, financial model, the current state of the economy, how that affects supply chain, how that affects us, how that affects the consumer. I really want to talk about, we've discussed this months ago, the concept that free shipping is not actually free. And I think that will kind of peel back some layers. that expose how supply chain is affected by the economy and brands and consumers.

And then the BPN decision-making model in regards to how we set prices and how those prices change. Now, I'm going to hand it off to Josh to kind of kick this off in a way of breaking into when we set prices for products. The first thing that we need to do to set a price, what is that? because I'll get some context from my perspective. I think the consumer thinks that we make a product, we go to our manufacturer, we make a product, and it costs nothing, they think, and we then just charge whatever we want.

And that's not the case. It's like what is the model that we kind of apply to products and businesses in our business to set a price or a specific skew? Yeah, so there's like, like three things that we kind of, you know, think about when we're setting price for a product. And I think all businesses go through a similar exercise. One thing is obviously the competitive set.

What are other folks selling the same product for? And then there are two different ways to kind of go about pricing a product. There's this sort of top-down approach, which is you go into a retail store, you see what others are selling for. And you say, all right, we got to be on the shelf at $2,99. And you're like, all right, we're going to sell to the store for this. and we got to make sure the distributor has their profit, and you back into like, all right, we got $6 to work with in terms of like materials.

Let's go find ingredients that fit into that. That's a top-down approach. The other way, which is more of the BPN approach, is like in strong food is a great example. And I think that's what kicked off a lot of these conversations internally because that is an expensive product, at least it appears on the surface to be. We said, let's go find the best ingredients, right?

No compromise on quality. Let's go put the best product together. And the cost of those ingredients is what it is. is and there's all kinds of things affecting the price of that product that we can talk about or not, but it comes here and there's a certain price we have to pay for those products, and we have a very high standard here. Now we have a total price of that product and we say, okay, what margin do we need on top of that? And, you know, it's a dirty word, but BPN is a for-profit business. We run it for profit on purpose to build a more stable foundation. That requires us to cover overhead and rent and

payroll and all these other things. And so you have to, by definition, have a certain profit margin on top of those ingredient costs. And that at a very high level is how we go about it. And ultimately, you end up at a price to the consumer. And it's a result of all of those things. It's not like we're trying to, there's not like a preset agenda of any kind other than we have a certain standard on quality. We have a certain profit margin we need to hit to make sure that the business is sustainable and, you know, can weather a storm like we're in right now. What's interesting from like a bootstrapped founder business model is when I started a business, I thought every business operated to make a profit.

And what I learned over years and years is that a lot of businesses chase growth as opposed to profit. I think we need to peel that back a little bit and unpack that statement because I don't think a lot of people understand the difference between those. profitability versus growth. Kat, do you want to kind of dive deeper into that? Absolutely. I think one of the things that's important to bring to light even before we have this conversation is the idea that none of these things are black and white, right?

These things all depend on a multitude of factors. And so when you look at two different types of business, you can run a business as a profitable business or, for instance, you can be a venture-backed business, right? And so if you're bootstrapping a business, you're going to make a product, you're going to sell it. Hopefully you retain some form of profit margin and you're going to reinvest that profit to help fund growth, right? So maybe growth looks like something like hiring an employee, you could then go and sell your product into more outlets, right, from a simplicity standpoint. But maybe you're a venture-backed product and where we see a lot of venture-backed companies, both as consumer as well as technology. Now technology companies tend to gravitate towards venture back

because it takes a tremendous amount of capital to pay engineers to build a product. And so they'll go out, they'll fundraise money, and they'll say this capital is going to last us for the next 12 to 18 months, and then they go back out into the market and then they fundraise again. And that's where we get into this discussion of seed companies,

Series A companies, series B companies, which are at a different stage of growth or a different life cycle. but then you also have just traditional profitable companies, which is I'm bootstrapped. I'm basically going to take any profit that I make. I'm going to reinvest it to fuel growth. But my growth trajectory, it's going to be slower, right?

And that's what BPN is, and that's where my experience comes. And I would argue that that model is maybe more sustainable because when you get to hit speed bumps in the road like the current economy, that's where you can control your outcome, right? You're not reliant on being able to go out and fundraise $1,5,000, $10 million, $100 million. You're able to say, hey, this business, regardless of what's going on in the broader economy, can stand on its two feet. Yeah, so to connect that back to what I was saying, if you are venture-backed and profit is less of a priority,

you have more flexibility on pricing. And you can explicitly change pricing or you can bake in discounts and promotions. and that's what a lot of these venture-backed companies do. And it's why BPN, other than Black Friday, really doesn't run promotions. So that context that she just provided is so relevant in the specific pricing discussions that we have around new products or existing products, too.

I think it's hard to compare business to business because what I've learned, I mean, we're about to hit 10 years in business in August, but what I've just learned in the past couple years is you can't compare one. business model to another business model because the way one business makes a decision or a choice might be based off of a multiple of factors that another business isn't considering. You know, I call it ignorance, but when I built BPN, I thought the only way to build a company

was by creating a product, selling that product, reinvesting the profits back into the company. and there was this period of time where cash flow is running so tight that you just had to go through this ultimate dirty time of business to just make it through like survival, pure survival. And then I've learned over time, you know, especially with a podcast, Josh, you and I did, talking about ways to fund a business or a company. Oh, there are ways to avoid some of that suffering by raising capital.

Now when you raise capital and your venture backed, yes, you have this influx of cash and reserve, but you're giving up equity, you're giving up ownership, you're giving up flexibility, and sometimes the ability to make certain choices. So the way we've operated BPN over these last 10 years, the way we're moving forward and operating BPN and the people we've brought onto the business, we make our choices based off of what we've done in the past, what we're learning, who we want to be, how we want to build this brand that is one to grow but to grow and be profitable and with building a profitable business at least from my perspective is operating at an effective and efficient rate and

you know what we've been able to do is one take care of the team take care of the customer and take care of the business and when we set our prices for each product there's a lot of There's a lot of considerations that go into. I mean, we can use the example of strong food, a product we recently launched where we created the product first. We created the formula and then we got pricing. And based off that pricing, we then set the cost of what we're going to sell it for. Can we kind of walk through like a small exercise of using strong food, for example, what that might look like from, you know, at your perspective of sourcing different ingredients, trying to get the best pricing possible

for raw materials and ingredients. And then Josh, some of the things that you apply to maybe what we're bringing to that table of how we're going to set that specific price for that product. And we're going to be very transparent in this podcast and this episode of kind of what we have to do to build a business that is sustainable that can take care of the team, the people, the customer, and grow at a profitable rate. Cad, do you want to take a lead on that? Yeah, definitely.

So I think also as we dip into BPN starts to bridge a gap between performance as well as health and wellness, we're going to be seeing this more and more and having to back into this exercise more and more. So we see it a lot with strong food and we also see it with the field bars, I think, because those are whole food ingredient products. But it's not as simple as calling up one manufacturer and saying, this is the product and this is the ingredients I want in it make me this product right you have to source all of those ingredients before they then get shipped to that underlying manufacturer if you take a product like

strong food you have a commodity like oats right and you could dive super deep into oat futures and things like that but even the price of an oat future maybe around five bucks in 2014 it i think even this week it hit a high of eight dollars right and that's all based on supply and demand and that's also based on, honestly, factors of weather, right? So the output of prairies up in Canada was not as great last year as it was in previous seasons. So therefore, demand stayed the same.

Supply was lower. And so the price of oats went up, right? And so you do this exercise across all of these ingredients, right? Oats, sweet potato, you know, MCT oil. That's derived from coconut. Coconut comes from Sri Lanka, from Indonesia. Sri Lanka is in an economic crisis, right? So what starts is this very, very simple exercise actually enters into this world of geopolitical risk and a lot of challenges, right?

And that's where businesses like ours have to make super tough decisions of can we afford for this product to be in this because we don't even know if we have a consistent supply, right? Or it's so expensive to get this product right now. Like, can we afford to have it in this product, right? but we look at with strong food, and I think this is a testament to really the integrity of the BPN team. It was like, this is what we want to achieve, and these are the ingredients we need to achieve that. And so it was going out into the market, sourcing these ingredients, and then finding a manufacturer that was okay with helping us manufacture that product, which is arguably pretty complex. And then you have to go to the market and you have to go and get the actual container that goes in there. and you have to get the label that goes there.

And then you have to figure out what type of box am I going to ship this in and how much labor is going to be required to ship this product. And what are the dimensions of it? And what's my dimensionalized weight? And do I have a negotiated contract with FedEx that's going to make this economically feasible to get this product to the customer's doorstep? And so we as consumers are so used to be able to push a button and something magically lands on our door and we're super blessed to have that

opportunity. But there are so many hands and so many teams behind those products that have to work diligently month over month year over year to make that product come to fruition. And I really think that that's the purpose of this podcast is to shed light on really the effort that goes into the product so that people can appreciate that it's not as simple as calling up a manufacturer saying, I want this, this is my price, make it happen, and then flipping it for a tremendous profit, because that's not what, that's not what is happening here. And so proper accounting, I'm not going to go down a huge rabbit hole, but if you think about a product that goes through this entire journey that she just outlined, you think of it as like a

sponge, every time that product gets touched or moves around, imagine a sponge absorbing water and it just gets bigger and bigger. All of those costs get absorbed into the product if you do proper accounting such that when we go to sell it, all of these things along the way that have been absorbed into that product, we then have to expense on our side. And so full transparency, I mean, we had a meeting about this, I don't know, two or three weeks ago. And I was like, guys, like one of my biggest responsibilities is to make sure that at the bottom of the income statement, like we have an EBITDA margin that we strive for, right? We'll just say it's somewhere between 10 and 20 percent. People can do the math. But if I go, if I have to make sure we stay there to

make sure the business is sustainable and we build this foundation and to extent the economy slows down, we're not laying off people we can still hire. If I start there and I start to work up the income statement, we have people, rent, like I mentioned earlier, marketing costs, there's all kinds of fixed costs that are in the income statement. Then we have all the variable costs. Not only the costs associated with getting the product here, but also getting product to consumers. It's very expensive to ship product and fulfill orders right now, a lot more expensive than it used to be. and all of that means that I have to set the price such that we have enough margin in the product to cover all of that

and at the very, very bottom, we have a 10 to 20% EBITDA margin. That means there's a certain gross profit that we have to hit and at the end of the day, when the product shows up with all these costs absorbed into it, that's how we determine what to sell it to the market for. Plus there's some competitive so we can't be, you know, we are rarely the highest or most expensive product. We try not to do that, right?

we want to be reasonable in our profit margins, but still we're not trying to gouge people or be the most expensive product on the market. Now, what's, I want to say almost scary, is that when the market used to be more predictable, so say, for example, in 2015, I had a price for weight protein. And I will say, like, when we first launched weight protein

in 2000 in I believe it was 2018. We introduced weight protein to BPN. We are almost paying double now what we were paying back in 2018 because

weight protein is commodity and weight protein cost have skyrocketed. A few years ago, you were able to predict what raw materials and products were going to cost you for the foreseeable 6, 12, 18, 24 months.

Now it is so volatile and variable that you don't know what you're going to be paying for a product from one production order to the next. And you see it all across every industry, not just the dietary supplement industry, but one of our manufacturers was telling us, while an ingredient was in route from the supplier's manufacturing facility to the manufacturing facility, the price. went up on that raw material. And he said he's never, our salesperson has never seen that in his entire career. And he's been in this space for 30 years.

So it just goes to show that what used to be pretty consistent and you could rely on certain prices, you can't anymore. And I think we should now that we've talked about how we set our price model. You know, we are a for profit business. We operate for profit. we are not venture backed. We want to build solid products, products first. Then we set pricing.

We want to take care of our team, the consumer, the business. I think we now need to talk about why things are changing, why our mindset needs to change, why we need to be more proactive. And I think for the listener, more importantly, why are they starting to see price increases across the board from all companies? And one of the reasons, no, go ahead. Can I add one thing before we leave?

that because I think it's important. You guys are both founders, so you're going to totally appreciate this. EBITDA margin, profit, being profitable does not mean that founders are sticking a bunch of money in their pocket. Let's be very clear. Yeah. And we reinvest pretty much every dollar of profit into the business. Just because we're profitable doesn't mean the cash that comes in from a, you know, positive gross margin ends up going out the door. It goes right back into the business. We are hiring people. we are investing in technology. We're trying to improve products so that we can keep price stability.

Profit does not equal owner distributions. And I think that's very important as part of this discussion, just to keep in mind. Yeah, I mean, I'm sure Kat can really lean into this too, but that is a very common misconception that business owners, founders, entrepreneurs are making a lot of money off their business.

I would say 99% of the time they are severely underpaid for what they've built in the position they're in. Do you have anything to add into that? Because we've talked about this many, many times before. Yeah, no, I mean, I think that that's one of the biggest misconceptions about being an entrepreneur, right? And we as a society of very much romanticized the entrepreneurial journey. And, you know, I think it's, I mean, I think we can both speak from being more bootstrapped companies as opposed to maybe a company that's venture backed from the beginning. but it's the bootstrap ones too.

I mean, you don't pay yourself for years, right? It's like you don't hear a lot of entrepreneurs talking about like the starving entrepreneur journey, but that's really what it is. And the misconception is that when a business is profitable, that that profit goes right into the founder or the owners or the, you know, maybe investor who came in later stages pocket. And that's not the case. And also I'd argue that the best thing that, you know,

Nick's done with BPN too is all that's been invested really into high. hiring and really focusing on building a media team in-house and realizing the power of content creation in-house, right? And so, you know, maybe earlier on there could have been taking some cash off the table, but instead it was like, no, we want this to be a healthy business and I need help and realizing that investing that cash early on to build a foundationally stable team will reap a long-term benefit. And I think that Nick, you're the perfect testament to that investment. And I think BPN is a testament to that. And honestly, it deserves a lot of kudos, because a lot of founders aren't willing to necessarily make that decision when presented with the

ability to take cash off the table early on. And the way he's built this is rare. Like, I think that's why, so Kat and I are both relatively new, for those that don't know, to like, you know, being full-time here. I've known you for a while, but new to being in-house. And she and I were having a lot of conversations. We were both kind of contemplating coming on board and being part of of the recent investment round and things like that. And there was such a, I know we've gotten off your, I'm going to come back to your questions that you ask, but. We'll bring it all back together.

There was such a, from 2015 through pretty recently, the grow at all cost venture-backed model was by far in a way the primary vehicle for growing a CPG food and beverage company. it became more and more of an anomaly to do it the way that you did it. And so I think that's why a big part of why we gravitated towards this and a lot of people do for that matter. It's just the way in which this has been built.

And I think the reason that's important, again, not to go back to the pricing stuff, but making sure we don't F that up, you know, and we continue to have that same mentality. Like we want to come in and carry that torch that you've already kind of laid the great. Incredible responsibility for she and us. and others here to make sure that we don't take that for granted.

And that means that a lot of that profit needs to go back into the business and continue to build this fortress. Like every dollar of profit is like a brick that we just kind of lay on top of the business. So that when we're in an environment right now, we're still hiring. There's a lot of companies that are venture-backed CPG. And this isn't to disparage them. That model can absolutely work. If you can grow fast enough and you can raise money intelligently,

you can exit and do very, very well. But you're playing with fire. and you haven't done that. And so I think this is just, you know, all part of why she and I were attracted to this and the strategy and thought process that we want to continue to carry forward in the business. I think I've tried to build the business the same time, the same way I race a race is I like to bank a lot of my time in the beginning. So like when I went and ran Leadville or Buffalo, New York,

it's like, I'm going to go out. I'm going to bank time in the beginning. I'm going to shave off a few seconds on each mile so I can put it in reserve so that I can just hold on for that back half, hoping for some help. And when I look at the way I've kind of built BPN alongside my brother, Preston, is we've sprinted by ourselves as long as we had to. And we kept putting all the profits we were making in reserves so that we knew we were hoping we'd get to a point where we could be. bring on people to help us like you guys and other people in the team where those reserves were banked for a certain purpose and reason where when we really needed help we could finally bring on the help we need to get to the finish line wherever that is and uh i guess that might be the reason i

i i race the way i race is like i want to bank time in the beginning because i know i have the energy i have the i have the capacity the capabilities so that when i need the help i can afford the help. And I appreciate those words from you guys. And I think a lot of that's based off of ignorance. I just didn't know any other way of them to build the way we built the business. But in retrospect, I'm glad we've done it the way we've done it and where we're at right now with the people we have because the people we've brought on their values align with exactly what I'd hope for. They're boled into the mission, the vision. They want to help people. They They want to see it succeed.

And I now have the opportunity to work with and alongside people who have those same foundational values as I do. And it makes coming to work that much better and building something really, really big together. You know, we always say like you can go really fast by yourself, but you can go so much further together. BPN is a clear example of that, not just from a community perspective, but internally, the people who have signed up to grow this thing. very applicable. Yeah, 100%. I do think in this next cycle too, we'll, I think

heading into the macro economic climate that we're in, this will be a testament to the true entrepreneurs. It's not going to be an easy environment, but what I hope is that as we head into this environment, we start to celebrate founders

who have strived towards profitability more than we do celebrate founders who have raised a tremendous amount of money. And that's one thing that I've always struggled with a little bit as a founder is there are so many great founders out there. There are so many great business operators out there, business owners out there, who have always tried to strive towards profitability and provide a great workplace and a great culture and really fostered a healthy environment for their employees. and we don't celebrate them as much.

And the tech crunches of the world and whoever's writing about it is always writing about this company raised this tremendous amount of money. And it's not, once again, to disparage any of that because that model does work at times. But I would love to see society celebrate profitability more.

Nothing to report on when you're just growing and it's boring. It's like, what the hell are they going to write about? Yeah, I mean, it's true. But it takes a very principled person. It takes a very focused. person, takes a really strong team, which takes a tremendous support network,

to stay in that journey. Because it's not as sexy, and it's not as romantic, and it happens slower. But I would argue that you end up getting to maybe even a better destination in the end. And no bullshit, all of that is relevant when we price a product.

It has to, like, that, whether we explicitly have this conversation every single time we price or raise a product, it's so embedded in the culture, like all of this has to be taken into consideration in our pricing. Yeah, that's very important to point out. I've learned from working with you guys that I'm much more proud of the title of founder than I am of CEO.

100%. Yes. I used to lean like into CEO. And just over the last couple months, I'm like, I don't even want to lean into that anymore. I want to lean into founder. I'm so proud of that title as opposed to anything else. As you should be, as you should be. You should be super proud of that.

So now back to, I got us off on that tangent. So the question you were asking, there's a whole bunch of shit happening outside of BPN. Yes. That's funneling in here and also putting pressure on us. And so what is going on? And do we want to touch on that? And I mean, Kat, you're welcome to kind of weigh in, obviously.

But I guess just to touch on like inflation really quickly, we don't have to go too deep down this rabbit hole, but I think people are hearing that word more and more and more. Very simply, when supply and demand get way out of whack, you have inflation. Typically, it's one or the other. Typically, demand is increasing really quickly because the economy is healthy and the supply chain can't keep up, or the supply chain is struggling, something has happened, and they're not able to produce as many goods as they used to.

Post-pandemic, both things happened in a extraordinary way in the opposite direction. And so we had this sort of once-in-a-lifetime event in the supply chain where people were home with money. once we realized we are all going to die from the pandemic we're like let's start buying things we're not traveling or eating out started consuming goods rapidly physical goods at the same time the supply chain was pretty much shut down there were you know lockdowns globally and it created this massive imbalance where there was very limited supply so at any point in the supply chain goods went to the highest bidder it was like hey there's only a limited amount of you know cat made the example before the

podcast about wedding venues, like perfect example, finite amount of supply right now, all of these weddings in the backlog that people have been hoping to have for years and years and years. So now they're going to the highest bidder. And that is such a good example of what happens at every step in the supply chain and why I mentioned earlier, once it gets here, all of these costs that have absorbed into that product are exponentially marked up, right? Because every step of the supply chain, things are going to the highest bidder. And it's absolutely impacted what's happened here. I think the whole globalization concept, I think you should touch on it because nobody is immune to that. And I think whether we realize it or not, it's a, it's a massive issue.

Can we, before we dive into that, can we talk about the timeline in which it happens and then we or the consumer start seeing the effects of that? Like, for example, COVID, you know, happened almost two years ago, I guess. And demand went up then. Supply chain manufacturing operations ceased at that point. So I'm sure a lot of the consumers are saying, oh, it's just an excuse. Like this is two years later. Why are we experiencing it now? And leaning into like the word inflation, I think part of the reason we needed to and wanted to talk about this on a podcast is because a few weeks ago, I was following this guy on Instagram and he runs his company and he had to increase his prices because his manufacturers increased his prices. So he just passed it

along but didn't give any context in his reaction to his increased prices was he created a discount code and it was f inflation and it was saying hey i know we're all getting screwed by inflation right now use this code save some money i'm going to have to increase my prices afterwards but there was no understanding context explanation of well this is why prices are increasing this is why we need to pivot and adjust. I think providing that context first of we're now seeing this nearly two years later, what has happened in those two years that we're now seeing this crazy change in prices? It's a great question.

It's a very complex. It's a very complex answer. And I think honestly, one of the best ways to answer it is actually to go even more simply and compare it to a business, right? So if like if we make a change in the business today, we don't necessarily see the immediate effects of that change within the business, there's usually latency to these strategic changes that happen within a business. And so the same thing inherently happens with COVID, right? And so we have to acknowledge China as like a massive exporter of goods. I think maybe the

crisis in Ukraine is actually even a more relevant topic to help explain it. Like some of Ukraine's biggest exports are sunflower seeds and wheat, right? Let's look at elementary schools. Peanut allergies are a very real thing. Honestly, tree nut allergies are a very real thing. So sunflower seed butter has become one of the preferred nut butters, or not nut butter, but seed butters, rather, for a, like, new age peanut butter and jelly. Well, the Ukraine is only exporting 20% of what it was exporting pre-crisis, right? And so the price of sunflower seeds has gone up over 4x what it was pre-crisis. And so what inherently ends up happening is demand for that seed is staying the same. The supply is down and the price goes through the roof. But that's happened over the course of

months and we're still feeling that today. And all of these things are, it's like a, what's that game, Jenga. So it's like when you pull out one of those other things start to shift. Everything is very, very interconnected. And the life cycle of a product, it has to travel, right? It's grown in one place. It travels, you know, on a cargo freight, then it lands at the port of Long Beach, then it gets put on a refrigerated truck, and then it gets driven here to Texas, and then it lands in a warehouse, then it goes on a short truck, and then it comes to your warehouse. And, there are so many touch points along that cycle that when any of those break,

the supply chain feels the weight of it, and then at the end, the consumer feels the weight of it. And so latency, that's a great point. Let's talk about it from BPN's perspective. Way Protein, you mentioned is a great example. We are right now receiving, you know, purchase orders that were placed middle of last year, third quarter of last year, right?

And at that point, that was a lot of these issues in the supply chain We're still very, very, it's still intense today, but it was certainly more intense, you know, nine months ago. So when we placed that purchase order, the world was very different. It was, you know, it's still an issue today, but it was just a different time from a supply chain standpoint. So that was, that's nine months ago. We're just now receiving that way. When the way, the more expensive way shows up and we've, by time this airs, we've just initiated a price increase, that purchase order was placed nine months ago. And it may take us six months to sell through that way.

So like it could be a 15-month lag on when we place the purchase order from the time we're selling it. And to be fully transparent, it's not like when we placed the purchase order nine months ago, we did the price increase then. We waited as long as possible until the more expensive way protein showed up and then our hand was forced. Right. So we're still selling the prior way protein that we bought at a lower price. You know, previously we're still selling that at the current price and we're waiting as long as possible. But once the new shipments of way protein show up and we actually start selling through it, that's when our hand is forced. this huge lag and what we ultimately price on our website between what's happening in the supply chain. I think creatine is a really good example too. So we get our creatine from Creopure who's in Germany.

It is the most pure, high quality form of creatine monohydrate in the market. We will only ever sell Creepure. We're partnered with Creepure. Now, creatine, Creepure is manufactured in a very energy-intensive process. a lot of their energy comes from over where they're located. And the situation in Ukraine has directly affected their energy source and reserves. So with Creepure being a very energy intensive process to manufacture, energy costs are going up. The cost of creatine is going to go up dramatically. We are now paying more for creatine than we used to sell it for. So I think people see that we're increasing our prices on creatine or protein or protein or

or any product. And for some of these products, I mean, we are paying over double what we used to pay for it, which is absolutely insane to even consider. So here's the conversation that happens in BPN, right? When that happens, it's like, okay, guys, we can buy it for this or we cannot buy it and we can stock out. And then there's no creatine for sale on our website. And it's that black and white.

And we're like, all right, we want to buy it. What's the current price? What does it require us to price it at? and we're going to price it at it and people in the most respectful way possible, they can either purchase it or not. And it's totally understandable if they find another source, cheaper, whatever. But like, that's just a fundamental decision that we make. And it's like, here's what the price needs to be.

The alternative is we stock out and we don't have creatine. It is literally that simple. Yeah, I think, you know, there's, I'll never forget this moment. It was years ago. And we were selling a T-shirt for, I think, $25. And that t-shirt to print everything on it, I think ended up costing us like $15. I mean, we weren't making much off this t-shirt. It was a special run of t-shirts.

And we wanted to do it for a certain event. And we launched it for $25. And I had this one guy sending me this message. And I'll never forget this. There are certain parts of the business that I'll just, I'll never forget. And he sent me this message and he was mad because he was paying $25 for a t-shirt. and I very sincerely wanted to answer this gentleman's question. So I sat down and I typed up this response about, you know, we paid this much for it.

And then considering our overhead of this is what we have in terms of our insurance, our warehouse, our payroll, our benefits. I mean, internally here at BPN, we pay 100% of employees and family benefits. we have overhead that come along with the business, the cost of good, the shipping, and all that factored into the profit margin that we now need to sell it for, you know, there's not much room to play with there. And I will remember this response because the gentleman said, like, thank you so much for sharing that. I never thought about that that goes into a business.

And the truth is, like, if you've never started a business or cared to look into what goes into operating a business, you probably don't think that way. But once you operate in a business, specifically a product-based business where you have high overhead, you have payroll, you have cost of goods, your mind always thinks that way in terms of what am I getting and what am I paying for it. I always look at a product now or even food. If I'm getting food or a product for a cheap price, I just automatically assume that it's super low quality because I also assume that a business prices their products the way we

price products based off of all these considerations. There's a lot that goes into it. And I think we're all very passionate about like we never want to charge, overcharge our consumers for what we are creating and selling. We never want to do that. We have certain margins we have to hit. But then I think it's really also important to talk about we have this. big product line, there are some products that have higher margins that also help with some of the

products that have very low margins. And sometimes our best selling products are low margin products. But that's just part of the business. Like sometimes like way protein, for example, it costs a lot to buy weight protein and it's only getting more expensive. But there's a certain price point that we don't want to sell it for more then because the consumer just can't can't purchase it, you know? So it's, I understand from a consumer's perspective, it's frustrating to see prices increase, but it's also very frustrating from a business owner operator's perspective as well because you don't want to pass that on the customer, but like there's no other options sometimes, you know? That's it. Absolutely. Go ahead. No, I was just going to say, I mean,

I think that's why we're here, right, is integrity and transparency. I mean, everyone here is a very reasonable person and you know I like to think that all humans are inherently good right and so as owners and as operators or whatever your role is it's our job to educate people because I think once you educate people then people can then empathize right but the challenge is is when they don't have complete information they can't empathize with everything that goes into running a business but once you shed light on the life cycle of a product and you know even when we look at costs of goods sold. None of that even includes, you know, we obviously have our expenses of salaries, but, you know, we're talking about raw ingredients and we're talking about packaging, we're talking

about a label, we're talking about corrugated cardboard, we're talking about shipping costs, things like that. But, you know, none of that even includes all the time that we spend just lying in bed thinking about it, right, which is inherently time that we think about ideating on a product. And, you know, I think one of the biggest things, too, is we start to move over into this functional food space, you start to get this question of, well, what type of leader do you want to be in the food industry, right? You can take the field bar, for instance, like that's a 60 gram bar, and that can be a 60 gram bar that is 100% composed of whole food ingredients, or that can be a 60 gram bar that's 50 grams of whole food ingredients and 10 grams of fillers. And you have to make the decision as an owner,

as an operator, as a leader, what do you want that bar to be? Do you want it to be a whole food ingredient bar knowing that that is what is best for your customers, for their health, for their wellness? Or do you want to optimize for being a brand that maybe isn't as integral and you put some fillers in there and see if anyone calls you out on it and make greater margin on the product? And I think the reason that all three of us are in this room is because we are not willing to make a product that we don't stand behind, right? And so as we essentially go through making these business decisions on a daily basis,

these are the things that we have to think about. And it's challenging because you're constantly presented with opportunities for taking shortcuts. And you have to stand on your two feet and be like, you know what? No, we're going to take a hit on this particular product. And we're going to take a hit on the margin of this particular product because we want a whole food ingredient product to be out in the market. And that's what we stand behind. And we're not going to waver on it. And I think that once we educate our consumers on our logic and our reasoning,

then they go, oh, wow, that's awesome. I'm so thankful that they shared all of that with me, right? And that's why we're here and that's what we're hoping to accomplish. I do think to defend the consumer a little bit, I think some people may be sitting there saying it's easy to get complacent and just pass the cost through and hide behind inflation and supply chain and a bunch of buzzwords. if we're being honest, there is a lot that we can do

and are trying to do better to help offset that. If we didn't reflect internally and just continue to just raise prices to raise it, that would be unfair. And I do think there are a lot of businesses that are hiding behind inflation, supply chain, and just kind of getting in line behind it. They're like, oh, everyone else is raising prices.

Here's our chance, even though their input costs may not have gone up as much as they raise prices. So I do think maybe it's worth kind of touching on. There are so many other aspects of the business here because when I talk about a EBITA margin and then you talk about a gross profit margin, there's a lot that happens in between there that we have to do better at.

Fulfillment is a great example. We are anything but complacent around how do we get better and more efficient at fulfilling? Because if we can ultimately ship a package for a dollar less than we used to, that helps offset some of this and therefore we wouldn't have to raise prices as much. So I'd love to hear from your standpoint.

I feel like you have a really good operator mind. You've been a founder, cat. The things that you see internally, kind of you think about the initiatives we put up on the board every Tuesday morning. A lot of that is intended to obviously help the business grow, but also offset a lot of what's going on. So like what you're seeing is like opportunities for BPN to get better

and help offset some of this stuff. Definitely. That's a great comment. I mean, I think the first time that I came through BPN and I walked back fulfillment, I saw one of Cox's box towers, right? And on his tower, I counted and there were 100 boxes, right? And I asked, you know, what was the average cost of a shipment? And I think John gave me that number or someone gave me that number.

And I did a little quick math in my head. And the first thing that I thought was, I can move this as a palette of product or cheaper than I can move this as small parcel shipments, right? And that's when this that's when this arbitraiser pricing matrix started, where it was like, what if we migrated to a bifurcated model and did micro-fulfillment, right? And those sound like a lot of fancy words, but all it basically means is that not all of BPN's packages get fulfilled out of BPN, we partner with a partner who has hubs in New Jersey and Dallas and California. We use trucks to send 26 pallet shipments to those,

and then those go to smaller micro-fulfillment centers, and then those get delivered the last mile to the customer. And what inherently happens there is it's cheaper for me to put that on a truck and to ship it to New Jersey and then go from New Jersey into Brooklyn than it is for me to ship a hundred of those packages from Texas to Brooklyn. And so what we hope to accomplish there is

one, it's a more sustainable option. We're not relying as much on third-party carriers like FedEx and the post office, but also we get to optimize for customer retention, this idea that there are some people right now in the U.S., depending on what metro areas they're sitting in, that can get their BPM products on, you know, select products in either two hours,

hours same day or next day. And we were already doing great in regards to turn around time with fulfillment, but this allows us to reach those outskirts a little bit faster. And then we fill in the center of the country from BPN's HQ. And so just starting to look at some of these solutions with a little bit more of a innovative perspective, like how can we do things differently, how can we turn this model on its head, try something new, fail hard, learn from it, kind of that sort of scenario. And that's what we're working on, honestly, every aspect of the business.

And then the other one I would say is really migrating from shipping in boxes to shipping in a mailer, right? This idea of everyone loves their BPN box, but the way that third-party carriers price a cubic box versus a paper mailer is inherently different. Like it is cheaper, it is more sustainable, and the mailer is 100% recyclable.

We don't have to use paper. We don't have to use tape. That whole scenario. So starting to explore which of these products can travel in a mailer versus a box to ensure that the price of shipping is lower. The customer can just recycle the entire package and not have to worry about ripping the tape off, recycling the box, doing something with the tape, things like that.

So these are some of the choices that we're experimenting with and some of the solutions that we're working on that hopefully, you know, help drive the business forward in a more sustainable fashion, but also help ensure that we can keep margins intact and not have to pass as much cost onto the customer. That was actually a really good point to bring up because it's very easy to pass on cost. You know, your cost of goods go up, your shipping carriers go up. Oh, I'm just going to increase our prices. and it's pretty cut and dry like that's what it is.

What the BPN team has done a really good job at, and I've seen it from all departments, is, and I think this goes back to our foundational values of, we're not venture-backed, which means we had to operate very lean for a long period of time. When you have to operate very lean, you become very resourceful, and sometimes you end up taking on more jobs

because you can't hire someone to do that other job, right? I always use the term Swiss Army pocket knife. Like when I started building BPN, and I think to this day where we're at with BPN and Alan, we are all still Swiss Army pocket knives in some way where you have a Swiss Army pocket knife and it has this body, it has the nail file, the nail clippers, the scissors, the knife, the little jaggedy knife,

and they're all attached that one body. And as you grow on scale, the hopes is that you break off the nail file and you hand it off to someone else. You break off the scissors or you hand it off to someone else. What we've done really well here at BPN is because we all know what that looks and feels like to be the Swiss Army pocket knife. If we ever have to do that again, it's not like it's out of our comfort zone. We're willing to like, hey, give me that nail file back. Give me the scissors back. We need to operate lean as we're growing as we're scaling.

where can we lean in and not pass on these costs or absorb them ourselves and become resourceful? Right. Like it's a responsibility of a business. Like you don't just pass it on. All right. Everyone coming into the circle. What's your department doing? What's your department doing?

What's your department doing? Where can we save money? Like where can we cut costs, reduce expenses, reduce overhead so that we don't have to pass these costs on? And through that exercise, which I feel like we're doing that exercise daily at this point, through that exercise, if at the end we have to increase prices, what we've exhausted are other options. But we're going to exhaust our other options prior to that moment because the last thing we want to do is increase prices.

But if we have to, to survive, to operate at a profit, to be healthy, to be here in 5, 10, 15, 20 years later, this is what we have to do. but we don't want to have to do it. We're going to exhaust all those options prior to. Love that. I mean, it comes down to business fundamentals, right? It's like the greatest thing about the BPN team is everyone is hungry to continue to get better, right?

And so every single day we focus on being better today than we were yesterday, right? And so this idea of when you do hit a little bit of a rough patch and the supply chain is strained and costs are going up 5, 10, 15, 18, 20%, whatever it may be, we are constantly working on business fundamentals in every single department to ensure that this is a well-oiled machine. And we are going to do everything in our power to drive towards efficiency so that we don't have to pass on those costs to customers. That's literally what we're solving for every single day. Like we are constantly analyzing what's our cost of fulfillment in house versus what would be our cost if we lean into this model more, right?

What can we do in our supply chain? What volumes can we commit to down the line? What can we do in regards to packaging that we're using? What can we do in regards to marketing spend? How can we be more intentional about retaining the customers who we already have in the funnel? How can we be more grassroots about acquiring new customers and not just buying customers, you know, through a digital media? medium. So constantly evaluating, is there something that we could be doing differently that will fundamentally lead to this being an even more well-oiled machine than it was yesterday? And as long as

you keep focusing on that every single day, day after day, and the team at PPN is incredibly principled in that, which is awesome to see, then our goal is that hopefully we don't have to pass on some of these prices as much as maybe some of the other businesses do, because we are fundamentally sound and we are just finding pennies wherever they may fall. So fulfillment is like the second largest variable cost that we incur other than the product cost, customer acquisition is the biggest. And that's a great example of what happened to a lot of econ businesses with the iOS 14 update last year and all the privacy settings. It made it much, much more difficult, much, much more expensive to acquire a new customer. And there was a one-two punch for a lot of econ businesses

between supply chain and customer acquisition cost. And we were getting to a point on acquisition costs. We were like, guys, this is just, there's a certain level we just can't go over. So we got to get outside the box. It is so easy to get complacent and just keep hammering Facebook ads, meta ads, whatever the hell you want to call it.

Keep hammering Google paid search and just hope for the best. But we plan a flag and said, to hell with that, like let's be more creative. We have this IR in real life sort of concept. for marketing and local in Austin. And let's get the hell outside of this building and let's go meet people and be part of the community

and do it that way. And so that means people are working on Saturday at BPN to do these BPN athletic clubs. And I mean, they love doing it. Don't get me wrong, but it's an extra day of the week that they go work. We don't have to do that. But if we ultimately can keep customer acquisition costs down

and we can build a relationship with consumers, not only does that help the income statement, which obviously I care about, but it also builds a bomb with consumers. So that just, not to belabor the point, but there are so many things we're trying to do besides just pass the cost along and be complacent about it. I love the quote, lack of intentionality leads to a repetition of what is easiest. And I think what is easiest is just passing it on.

What is easiest is accepting the iOS update has screwed us. That's why we're not growing. I think one thing like a really successful, innovative team does well is that when something changes it's outside of your control, you all come together and you think, what is, like, what is our plan of attack?

Like, I mean, you sent me multiple articles this past, like, six months of, there's a recession coming. Inflation, economy,

market, this and that. Every time, I don't open it up, I'm like, Josh, I don't care. Like,

we're going to pivot. We're going to, we have a very smart, innovative team. We're going to get past this. Like, this is something that's probably scaring a lot of, of other companies does not scare me because we will find ways to pivot and grow through this

because we're very resourceful or lean, we're scrappy, we're hungry, and we're full of a lot of fighters. Like we're going to fight to make this happen. We're going to fight for the brand, the business, the people, we're fighting for the consumer. At the end of the day, we're fighting for the consumer. It's why we do our due diligence. We do the things we do to create the best products possible because we're fighting for you. We're fighting for them. And I'm very passionate about that area right there, but I don't give a shit about this article.

Yeah, no, we don't have to go down that rabbit hole, but most CFOs by their nature are typically just cautious. I'll just say that. I'm not a pessimistic individual, but it... Cautious is a good word. And I'm paid to be cautious. But the landscape is changing quickly with consumers. that's the main point of those articles.

To think that we're going to be immune to that is crazy. It is, yes. It is impacting the business. Every aspect of the business, we are not immune to it. And so, again, when we have these kind of strategic discussions internally, like all that stuff needs to be taken into consideration. And what's happening with the consumer is 100% relevant to what we're doing here. So that's more of the, it's not so much that I'm nervous because we are well positioned.

I think it is a healthy conversation for a business to say, hey, here's what's coming. Do we want to back off a little? Do we want to put the throttle down? And because we have built, we, you, let me be clear, because you've built this thing over, we've been here too short. Because you've built this over the last 10 years the way you have, like now's the time

you get to reap the benefits of that. You get to lean in and go to the offensive playbook instead of the defensive one. Very, very different for most CPG companies right now. So I think it was a healthy conversation. We talked about it. I mean, I even called you, and I was like, KT, what, how should I think, should I be worried about this?

Like, what do we need to do? I don't know to lean in. Yeah, we couldn't be better. We could not be better positioned to lean in. I totally agree. At least I'm on record now of having voice concerns. But no, I mean, I think we have the opportunity to lean in and we are. And it's because of what, that is why you build the business the way that you did.

So that when these times come, we're not laying people off. We're not stocking out of products that people are running out. Like, we can continue to buy product. We can continue to not only employ people, but we're growing headcount. we're investing in people right now big time you know it's great to see so it's more of just a cautious tone but now we're all kind of on the same page

like no fuck it we're leaning in and we are yeah I mean that's for me that's been the biggest benefit of being able to hire going back to the book No Rules Rule in No Rules Rule they refer to building an organization

in a culture with talent density one of the most rewarding parts of me being able to build a business over the last 10 years is higher talent density. You guys are very, very talented people. I've learned a tremendous amount from working both of you, both of you smaller than me in many, many cases and senses. Not true.

I've learned a lot to that process. And it's so rewarding where you're not in an environment where it's just people saying yes to you, like telling you what you want to hear, but more so telling you what you need to hear. So as much as I didn't want to you or didn't read the articles you sent over, I was very appreciative of like, all right, someone's got my back and wants to see this thing succeed and grow and is being cautious,

but it's also my job to lean in and say like, I'm fighting this thing. I'm here for the fight. I think one thing that we, I think we touched very successfully on how we set our pricing model, some of the changes in the economy, me how we're affected, how we're pivoting, our due diligence we do to avoid some of that. But, you know, this is something we've talked about many times before.

I think Amazon, even though we sell on Amazon, we do sell on Amazon, but Amazon has almost disrupted and, in a sense, destroyed the small and medium-sized business model of D to C because of the free shipping model. and the reality is that like free shipping is not free. And I think we do need to talk about that because as the consumer sees their prices of gas and fuel going up like crazy. I remember years ago when people were like, we might hit $4 in gas. And now it's like, what's $4? If the consumer is seeing that and they have to put more fuel in their tank to get to the grocery store,

to get to work, to pick up their kids. Well, when you're moving pallets around the world in the country, that's passed on. How does that affect free shipping? Because it's not free. It's passed on. I think we need to unpack that. There's a lot to unpack. Kat, I think you could probably dive into it first.

Give it a shot. Hit it. Pull send. So I think, all right, let's start with a shipping route, right? And let's start with, for instance, a FedEx package. and what happens to a package when it leaves BPN's warehouse. And the irony is that we've done some testing with that to make sure that seals on products are good

and that we don't have a lot of issues when products travel. But the average package that travels throughout the FedEx network usually experiences 17 to 18 drops, right? And in addition to sitting on a truck for, you know, miles and experiences vibration and whatnot, which can, you know, cause packages to get damaged. And so the fact that if you back out of those 18 drops, that helps shed light on how many times a package gets touched

over the course of its travel, right? And so the package is on the BPN fulfillment line. It gets packed, packing paper tape, ends up on a pallet. Then a FedEx truck shows up. We load those pallets onto a truck, and then they go to a larger FedEx hub, which then takes them to even larger FedEx hub. and then from there they get unloaded and they get sorted.

And then, you know, depending on whether it's being sent ground or whether or not is being sent through air freight, it either ends up at an airport on an airplane or it either ends up in a truck that's traveling, you know, a long hauled in New Jersey, for instance. And then it ends up in a hub there. And then it goes to a smaller facility. And then, oh, wait, you can't send, you know, a certain size truck into Manhattan. So it has to go on to even smaller van. And so the lifecycle of a package is, like, if you ever had to drive that,

journey, you would very quickly realize that there is nothing that's free about it. And I think that you know, Amazon has set the precedents not just for free shipping, but also for the speed of delivery, right? And the customer is now so used to things arriving same day, 6 a.m. the next morning, one day turnaround, that it forces, in order for other businesses to be competitive, it forces us to constantly re-look at our model and say we need to be faster because like we need to be able to compete. And so the really interesting thing with direct-to-consumer businesses is you kind of have some businesses that are leaning into this idea of unpacking experience. We want it to be beautiful. We want it to be formatted in a box just the right way. We want inserts. We want color.

All of those things. Then you have other people who are focused on sustainability. I want the package to be 100% recyclable. I want it to be. sustainable. I don't want any tape involved, things like that. And then you have the businesses that are solving for time for shipment, which is I just want this to get to my customer as fast as possible. And you see with Amazon, they obviously don't care much about packing experience because a lot of things arrive in a poly bag and things like that. But they're always solving for time to delivery. And so as we have to compete with the precedence that Amazon sets, the faster it gets, the more it costs, right?

A two-day shipment versus a three-day shipment. Sending something FedEx Express, getting guaranteed in two days versus sending something FedEx ground, which would take three to five days, right? So it is nothing in life is free, and it's a really, really interesting. The freight journey that goes, you know, as these small parcels travel is one thing.

And then you also just have the cost of, a lot of people don't even think about shipping in the form of pallet shipment. right the idea that you know how much it costs to move freight around the country and whether or not it's ambient or whether or not it's refrigerated and whether or not you're sending something as less than a truckload or whether or not you're sending things as a full truckload and there is a truck driver who needs to drive that load of cargo all the way from you know port of long beach la all the way across the country to new jersey and like that route isn't automated that is a truck driver who is limited on the number of hours that they can drive straight and they have to stop they have to take a break. And then when they empty their truck on the other side, they have to drive all the way back across the country to then pick up more freight.

And so the more that we shed light on some of these operational nuances, my hope is that the consumer is just like, wow, like I never really thought of it as like a guy driving a truck all the way across the country just so that I could get, you know, the food at my grocery store. And I think that we just need to start having some more of these conversations so that the consumer can be like, wow, I'm so thankful that these Driscoll strawberries traveled from Mexico up to California

and then they made a long haul trek to New Jersey and then they landed in a warehouse in Bayonne, New Jersey and then they went into a small truck with UNFI and then they landed out of Whole Foods and then I was able to buy them. Like, we're unbelievably blessed to be able to have that accessibility, but I think with that we have to be like, hey, let's be honest. like that was not free. And I think once we start to remove that stigma of free shipping and we start to almost

appreciate that these things are so accessible, we can kind of flip the book on this ideology that free shipping is free. That was very well said. I can't add to that. That was extremely well done. I don't know about that. It's more so it's a, it's not a passion. I just, you know, nothing's free.

Yeah. I mean, the hoops of talking about all of this. this stuff is by no means a way to provide an excuse of why we're raising prices or how we set our pricing model or the things we do at BPN. But the hopes is to provide some education, some resources, some insight into decisions that are involved in the business model, to operate a business, to grow a business for profit. I mean, we could unpack each one of these topics we've talked about to go deeper and deeper and deeper. Even like one of the podcast, Josh, you recommended a few months ago, the All In podcast talking about supply chain.

I listened to that podcast as I was in a run in Sacramento, California and just mind opened up to some of the things that go into supply chain and moving inventory or products. around the world and the issues with the ports and sitting at the ports and lead times going from three weeks to three months or some of our lead times went from 12 weeks to nine months and as a business owner operator leader you are trying to navigate these to protect your business your brand your people and the consumer so the goal with this podcast was to provide some insight into. These are decisions that we are actively working to solve on a daily basis. And I think all three of us probably sit up at night and bed thinking about these things of how do we navigate this now and in the future. I know like when I'm in the shower, it's like

I go blank and my mind goes through all these things we've talked about throughout the day. But it's one of those things when you're so personally invested in believe that. and what you're doing, you want to take care of the people who are taking care of you and helping you and supporting you. So these are things we're very passionate about, actively working on and towards.

But again, hope to bring some insight into the consumer's mindset. You guys have any things to kind of wrap this up? I think my takeaway from all this is like, when you see a price like at BPN, I can't speak for others, but like there's very specific decisions or there's a finite number of decisions that we have.

We can either stock out or we can put the business in a fragile position. We can put a crack in the foundation, or we can hike the price. It's a very difficult decision to make between those three, but just to understand the alternatives are not ideal for us, and then a lot of thought process goes into, do we want to jeopardize the foundation

and or do we want to stock out on a product? Otherwise, we've got to take it in a higher cost and pass it through. And we've unfortunately had to experience all three of those for sure in the last year. Absolutely. I think the other thing to highlight is just these things are never black and white and these things are all working solutions just like and we're constantly iterating, right? If you ask me, what are you going to do about this? I'd say it depends, right? Like we are making the best decisions today based on the information that we have today, right? And as that information evolves and as we gain more clarity, that answer might evolve as well, right?

and I think that that's the sign of a functional team and a functional business. I mean, the three of us have had our fair share of, I have one opinion that I'm feeding to Nick. Josh is right next to me, go in the complete opposite direction. And I think that's a functional team. And I think that that's what's also super exciting about BPN is that people aren't willing to just accept today as status quo.

It's this idea of, but what if we did it this way, right? The idea of best idea wins and the idea that we're okay to fail really, really hard. and I think our customer inherently will reap the benefit of that. The idea that we do not fear failure. We will try something new. And if we fall on our face and we get busted up, it's okay. We'll stand back up and we'll try something again.

But we're going to keep kind of trying to push the bounds on how to build a fundamentally sound business in this space. And our hope is that the consumer reaps the benefit of that. Absolutely. Well, guys, I appreciate you. Appreciate you. I think we covered this topic pretty well. It's great. Kat, Josh, we'll see you guys in a feature episode.

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