Connor MacDonald of Ridge on e-commerce bloodbath: Meta worse, consumer sentiment at year lows, tariffs freezing capex

Conor's first guy. Surprise. We got Connor. Uh so for those that don't know, you I'm sure everybody already knows. So uh Connor and Sean are uh business partners and uh uh uh leaders over at the Ridge, dear friends of mine. Connor, I wanted to have you on for a bunch of reasons.

One, because I knew you were going to dress for the occasion. Of course, looking sharp. Showing some respect to TVPN. Yeah. Yeah. Respect. And a little little fun fact, piece of lore for the fans. In our first launch video, when you see us having dinner and drinking wine, Connor was at that dinner with us.

And he is pictured, he's the shoulder that you see us over. Fantastic cameo. Little cameo. Early early Technology Brothers supporter for sure. Thank you. We appreciate it. And now you're on the show. Welcome. Uh it's great to have you on.

I I wanted to get a a kind of a market update on how performance marketers are thinking about the various platforms and planning for the rest of the year. We've lived in a world uh you're also a young adult uh but uh our our entire lives have just been every single year ads get more expensive.

So you kind of need to plan around that to some degree. But um you're very plugged into the sort of e-commerce space broadly. There's challenges in ecom on the sort of tariffs uh side, but there's al there's sort of this like sort of dual pressure. Uh it's hard to get products. It's expensive to get products.

It's expensive to sell them. Uh maybe I'd love just sort of like a high level sort of like market update around how you're thinking about the different ad platforms and and maybe we can get into like where you're finding an edge.

Obviously, don't give, you know, give away the stuff you were doing like uh nine months ago. Exactly. Yeah. Yeah. Yeah. Of course. No, perfect. So to take a quick quick step back, yeah, Ridge is a direct to consumer brand. Uh, as Jordy mentioned, the last 10 years, it's gotten harder and harder every year.

I think DTOC acquisition has been like a war of attrition. Things get more expensive. You're reaching that new marginal buyer who's harder to acquire, more expensive. It is uh it's been a a a difficult environment to scale in as a DDC brand regardless of kind of consumer sentiment.

I think what we're facing right now clearly what all the data is telling us is that not only are things getting more expensive, ad platforms are performing worse.

There's uh restrictions on privacy, but I think people are spending less money and when it comes to the business of selling minimalist wallets like I do, that that's become increasingly difficult. So, I've got two quick data points, one anecdotal, but there's a great um there's a great service called DTOCindex.

com and they have something called the the direct to consumer confidence index. So it's like a standin for CPI which has like you know they only take that snapshots of data sparingly throughout time. DTCCI is measuring the sentiment of consumers every single day.

And on the 18th so just a couple days ago consumer sentiment about the economy dropped to the lowest level since October 14th of last year to paint the picture of how are people feeling about spending dollars today.

Um, the second point that I have is from uh our contact at Meta who described the current climate for B2C brands, at least the growth oriented ones, as a quote unquote bloodbath. Um, so that's my that's my quick uh that's my quick performance update is uh that that is what we're working with.

Um, but I can talk uh maybe what we're doing to to to work through that a little bit if that was. Yeah, that would be great. Yeah. Yeah. What's Yeah. Amazing. What is working right now? Um, so actually with a little more doomer news and then I'll get into what's working. Um, consumers tougher.

That makes everybody's lives harder. On top of that, I think there's been changes within meta that makes everybody's lives more difficult. Um, and people like to poo the the importance of meta, but it's like, you know, there's that stat. It was like 40% of every VC dollar went into meta advertising.

It's like 30% of all digital dollars spent, something like that. Um, so when meta is worse, it's it's harder for everyone. And right now we're at this point in time where it feels as if the meta platform in and of itself is not doing what it used to do. Um they've began kind of waiting outcomes differently.

It's become more middle and bottom of funnel to say um you know it's serving to warmer and warmer audiences and us as marketers or or or you know growth people like we want to be driving incremental results. Meta is harder to get that done with uh at least in the way that it has always been.

So that gets to what has been working. Um, we've basically had to completely change our strategy. Real quick, Connor, why is Meta worse?

Is it is it stuff that they that they sort of need to do or is it stuff that they did and that it it was sort of the the unintentional effect is that the ad product gets worse for advertisers. Like why is it why is it happening?

And are your uh contacts at Meta saying, "Hey, we're act we know this is not great and we're actively trying to get back to where we were or is it just get used to it. This is the new normal. " Totally. Yeah.

No, some of the things are out of Meta's control like Meta's obviously gotten less efficient post iOS 14, which was when Tim Cook and Apple really put a lot of restrictions around what data did Meta have access to. Um, at that point you went from, as an example, being able to optimize for a 28-day outcome.

So, if you're optimizing for a purchase that could happen over 28 days, and Meta could take could attribute that that purchase to itself. Now, that's just a 7-day period, right? So, now it's like a much smaller period. You have uh fewer or less ability to exclude the customers that you want.

And Meta has began waiting these clickbased outcomes. So all of those things together means Meta is only able to attribute orders to the platform on a shorter time frame. There's less exclusions and it's serving to people who have already seen your ads.

If you're trying to introduce new people to your brand and actually generate awareness, generate intent and uh drive incremental orders. That's just a harder environment to do it within. And those are like that's half things that are out of their control.

And then part of the things that I mentioned are within Meta's control and I think they are trying to address. Um, so the answer to your question, Jordy, would be a combination of the two. Yeah, that makes sense. Anyways, I have a question on AI ads, not AI generated ads, but actual ads in LLM responses.

Uh, Perplexity is starting to monetize by allowing advertisers to inject advertisements into you ask perplexity, what wallet should I buy? Boom. Ridge wallet ad. Uh people are uh proposing that OpenAI will do this as well in the chat GPT app. Are you thinking about that?

Will that be something that you're testing this year if you're not already? Well, I will say I just got off a a phone call with the VP of growth at RAMP, George Bonacci. He wanted me to remind everyone that if you're looking to save time and money, go to ramp. comtv. There we go. Both. Thank you. Yeah.

Uh but no, we were talking about we weren't actually talking about paid ads in perplexity.

what we were talking about was SEO optimization within uh chat responses which is not something we've done a lot of so far it's one of the things as a more established brand I think we immediately benefit from course um there's already you right and so Reddit gets baked into all the LLMs and you already pop up yeah totally so we I don't think we have to focus on whatever you want to call that like LLM SEO optimization um versus someone else who's less established but I think over time as people catch on to that as a opportunity, then we'll have to pay more attention there.

Um, but I'd be more interested in it from a organic quote unquote organic perspective versus the paid ads on Plexity. Okay. Interesting. Interesting. Yeah. Do you feel like uh the the the sort of e-commerce uh industrial complex like needs another great ad channel right now?

Like it seems like throughout the history of selling products online like things have gotten a bit rough and then you know we got Instagram or then we got reals or then we got you know Tik Tok or whatever and it just seems like in order to like keep the you know keep uh keep growing there there always needs to be that sort of next platform.

Um and could that be LLM? Like right now I don't see a lot of from from my lens it's not commerciallyoriented searches happening on chat GPT.

People still discover products on places like Instagram and then they ask ChatGpt how do I make a good quesadilla maybe but it's not like there's not a lot of commercial intent there.

Um, but do you think do you see a world in which LLMs can be that next like you know 10x ad platform or do you just think it's a different um probably I wouldn't say a 10x ad platform.

I think the the important distinction is like uh there are certain brands and and and and industries that benefit from like these high intent channels, right? You are looking for a mattress or you are looking for insurance.

They're the ones where as people discover those products through LLMs, like that's probably a massive opportunity for them. How many people on a daily basis are going to be searching for men's wallet in chat chatbt? I don't think is going to move the needle on our business.

What has moved the needle are these like discovery channels, which was like when Snapchat was introduced or a Tik Tok or whatever else is how can we get out in front of millions of people and say, "Hey, we've got a better wallet than you currently own.

" Um, you know, they're supposed to launch ads in Meta's threads, so we'll hold out hope. Maybe maybe that's the 10X ad platform. There we go. You never know. There's always a bull market somewhere. I love it. Uh, we had we uh we had Ken Davidson on from Icon.

Uh, his company helps DTOC companies like yourself build and scale out AI ads. Uh, not fully adenerated, a lot of repurposing content. Can you tell us a little bit about how AI is incorporated into the creative workflow? Who's actually doing this work on your team?

It seems like it's probably still like a centaur model where there's a human working with an AI editor of some sort, but can you break down the creative workflow and how AI is impacting that right now? Yeah. Awesome.

And I'll start with, you know, from a performance perspective, I think one of the most important things we've been able to do is scale up our content creation. Y um so that those are like one and the same.

Um, we have two performance creative strategists on our team who went from manually concepting to writing briefs to sending out to creators to receiving that content to editing it to creating ads. Um, we're trying to like truncate that all down via AI.

So, you can imagine the further upstream parts of the creative process, the concepting, the briefing is we're probably doing five ten times faster and probably more with more novelty than we were otherwise just because it's easier to ideulate with something like we use claude mostly.

we found it to be very uh helpful in that sense. Um so that's really benefited the the ideating process um and has speeded up sped up that that uh that workflow quite a bit.

I'm a big fan of icon and Kenon um and they're a really cool example of once we've generated all of this content, how do you go zero to one on like some new concept? We have thousands of hours of of content just laying around in Google Drive. Um so how do we repurpose that and kind of like elongate the value of that?

Um, and Icon's been cool in that because it is basically an AI video editor. We can say, "Hey, we want a concept to appeal to 40 year old men in flyover states, and it will put together a concept and kind of piece together and stitch together the content to do that. " Got it. Uh, do you have another one? No.

Uh, I was going to make a joke about asking Siri to buy me a wallet with high-grade materials, lifetime warranty, and a 99-day risk-free trial, but I don't think Apple intelligence can do it yet. But maybe operator can. I don't know. I had one more.

How are you thinking about sort of activations and stunts and things like that? Ridges at a scale. Once you're doing, you know, hundreds of millions of revenue, you can start to think about, oh, should we sponsor a NASCAR team? Should we, you know, do this? You have a big partnership with M. A racehorse.

Yeah, Jord's thinking about getting a Bentley Continental GT Speed and I thought you could wrap it with a Ridge Wallet logo and uh maybe help him with the the payment on that as he commutes in. Yeah, that'd be great. You can you can have uh you know it'll just be $3,000 a month. Yes, exactly.

Um no, but how how do you think about these sort of bigger stunt marketing and and is it just brand marketing or do you historically just see like like how do you think about attribution? what we're kind of gearing up for right now from a stunt marketing perspective. Each year we do a sweep stake.

So last year we we did a 24 karat goldplated Cybert truck that we gave away or fantasy velociraptor. Yeah. So um so that's what we did last year and I think each year we're just going to try to raise the stakes. That's kind of the name of the game. So what we're we're doing now is we're gearing up for that.

Can't share too many details but we'll have more cars, bigger activations.

Um that'll be live in August so everybody can look forward to I feel like the last one it went really far because I I think I saw MKBHD do something with it but then later like Doug Demiro was auctioning it off and I saw like and I was like we're now like four steps away from the Ridge guys but I'm still seeing Ridge on all of this stuff like how did this happen?

Was that kind of intentional that you talked to multiple influencers and you say okay you're going to have it for a day you're going to have it for a week you're going to off. Is that was that the plan? Yeah. No totally. So uh it was it was that was a part of the plan. Some of it was serendipitous.

So, we had realized the year before, hey, if we can get the car in a YouTube creators video, things just perform like three times as well, which is like no real surprise. So, so the game last year was just like, yeah, how do we coordinate getting one or both of these trucks in as many videos as possible?

Uh, the serendipitous part was I had this the Cybertruck here in Salt Lake and JerryRig Everything, who has a very big tech channel. Y, uh, tweeted, he said, "Hey, does anybody in Salt Lake have a Cybertruck that I can use for a project? " And we were like, "Hey, we do.

" Um, and that's how we got into his 24 karat goldplating video. Uh, so that kind of started it and then we got it in a Marquez video. We had it all over the place. I think we made it in 20 24 videos. Colin and Samir did a did an ad read in the truck which was really cool.

And then to top off the campaign, the winner selected uh the cash actually, so they didn't take either car. Um, but we were able to auction off the 24 karat goldplated Cybertruck on Doug Demiro's Cars and Vids. So it was a very YouTubeheavy campaign which was very fun.

Is it tricky running these uh sweep stakes because I think legally you have to be you have to say no entry required. Anyone can just write in and then people can kind of like batch mail in a thousand entries.

I remember hearing stories about uh someone at Keltech in the very early days of the original photocopier figured out that McDonald's monopoly didn't require any purchase, no purchase necessary.

So they dropped off like thousands and thousands of pages of like I would like to enter the contest and they got like every single code back and then they changed their rules or something like that. But uh what do you think about in terms of like manipulation of these sweep stakes?

Is that a risk at all or is it pretty standard these days? We use a we use a third party legal team who like runs sweep stakes professionally. So I think we're relatively buttoned up. You we have the uh you have to be able to mail in you've got some free entries on the site.

Um we we we are able to see some people trying to game it. Um we had this like Yeah. Yeah. Yeah. So we were able to take care of that. Um but otherwise it's very above board. We're not doing any like sort of uh McDonald's monopoly sort of schemes over here. Yeah. Yeah.

You can get in trouble if you're if you're running unregistered lottery. You want to stay away from that. Run a clean game. Clean game. La last question I have because you're talking about a bunch of these different creators you're working with. You guys have your uh MKBHD kind of like core partnership.

Uh I grew up at a time like following the surf industry where every surf apparel company had like you know their core ambassadors and they had other people on the team and then they had the people that were trying to like you know uh you know just more like development side.

Is there a world in the future where Ridge has effectively you sponsor a ton of creators, so you're just like spending money across all these different channels, but is there a world where Ridge has like a proper team of ambassadors that are just sort of rep like in a more serious way like representing Ridge within industries helping with product development or is it the kind of thing that makes sense to do with like one tentpole kind of creator and then everyone else is just more commercial relationship?

Yeah, I think it's a combination of both. I mean, we went from kind of the spray and prayo approach. We've sponsored thousands of creators and billions of views, and now our goal is to just do deeper integrations with with creators over longer periods of time.

Marquez being like Marquez being the flagship example of that, but I would love to assemble like an Avengers team around him of cool creators and celebrities. It's very cool. Well, reach out if you're that creator. Uh, where can people uh find your podcasts? Oh, marketing operators.

You can find it anywhere you listen to podcasts. There you go. Only only weekly so that we're not putting out that much content, but uh but well monetized. You guys would appreciate that. Yeah. Yeah, you do have ads, which is great. We very worried.

We would we probably wouldn't have you on the show if you didn't have some ads. Are you guys going to be sponsoring the All-In Summit? I know you uh are you been running that back this year? That's the one ad, so it's it's a great place to be. Uh but uh but yeah, TVD still. TBD.

Yeah, we got a sweet deal on it last year. If that comes about again, maybe. Cool. Okay. Well, good luck. Good luck. Thanks for coming on. Thanks for coming on, Conor. We'll talk to you soon. Bye. So, what's an absolute dog? An absolute dog. Uh, what's the what's the word on Sean?

Is he joining or should we move on to some timeline? I mean, we can start some timeline and then when he's in the waiting room, I I like timeline. He's coming in right now. He's coming in hot. We got Sean Frank from the Ridge Wallet.