“Don't knock it until you try it. What I mean by that is—you never know what's really going to work from an acquisition model, so you have to spend to learn, and have the willingness to lose money up front and test, iterate, and optimize to find what's actually working.” – Alex Iwanchuk

Alex Iwanchuk is Co-Founder of Feals, a modern wellness brand of hemp-based CBD products. He previously worked with the same co-founders to create Ad Exchange, an affiliate marketing program that was later sold in a successful acquisition.

Chapters in this interview:

00:00:06 – Alex’s background and first company, Ad Exchange
00:03:57 – Data-driven growth vs. intuition
00:08:39 – The end of Ad Exchange and the beginning of Feals
00:13:21 – Data-driven methodology for creating Feals and its product
00:16:18 – The efficacy of a CBD tincture
00:19:02 – The Feals direct-to-consumer model
00:20:40 – The importance of branding to the success of Feals
00:26:42 – Acquiring customers and launching a direct-to-consumer brand
00:35:45 – Working with co-founders on multiple companies
00:40:35 – Depression, anxiety, and the path to mental health
00:47:19 – The importance of a morning routine
00:51:15 – Exercise and fitness with Tonal
00:53:08 – Books recommended by Alex
00:54:29 – The definition of success

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Terminology

Depression
Anxiety
CBD (Cannabidiol)
Topicals
Tinctures
CBD Isolate vs. Full Spectrum
Broad spectrum CBD
Full spectrum
Full terpene
THC (Tetrahydrocannabinol)
Entourage effect
MCT oil
CBG (Cannabigerol)
CBC (Cannabichromine)
CPA (Cost per acquisition)
CAC (Customer acquisition cost)
DTC (Direct-to-consumer)
Pantone
COGS (Cost of goods sold)
LTV/CAC ratio
CPM (Cost per thousand)
CPC (Cost per click)
SEO (Search engine optimization)
Endocannabanoid system

Key Takeaway

Through his success with Feals, Alex is well aware of the importance of great branding, and the fact that it takes trial and error to nail that down. From ad copy to the style of the landing page, everything can be optimized for the end user, and it's worth taking the time to see what works best.

You never know what's really going to work from an acquisition model, so you have to spend to learn. You need the willingness to lose money upfront and test, iterate, optimize, to find what's actually working.

Until they're swiping their credit card, there is a place to optimize all the way through.

Transcript

Daniel Scrivner (00:00):

Alex, thank you so much for coming on Outlier Academy, it's an honor to have you here.

Alex Iwanchuk (00:04):

Pleasure to be here, thank you for having me.

Daniel Scrivner (00:06):

You and I have spent a lot of time talking about your background and your kind of previous experience at Ad Exchange, I followed along through the entire kind of founding journey of Feals which is what we're going to spend the most of time talking about today. So, I'm super excited about this but I thought the place to start in my mind for a couple of reasons. One, you've now had two go's, two different businesses with the same co-founders so to kind of go back to the origin story there and start with Ad Exchange and can you maybe just paint a picture for people listening of what that business was when you started it and kind of the journey there.

Alex Iwanchuk (00:42):

A little background as well, just about me personally. Born and raised in Boston, Massachusetts. Went to Boulder for undergrad, delayed getting a JOB for as long as I could. I actually taught skiing at Beaver Creek in the adaptive program for a couple of years. Got my first entrepreneurial opportunity in 2012, that's when I met Eric and Peter and we started AdEx. It was an affiliate marketing platform, really driven around performance. So, we're a facilitator between media buyers and product owners and we sat in the middle. We built some proprietary software that really helped those affiliates and media buyers scale as fast as they could and go as hard as they could on media buying and then not worry about any limits on what products would be selling out.

Alex Iwanchuk (01:31):

We launched that in 2012, it was a rocket ship, it was exciting. We went zero to 100 million in revenue in 19 months. I wish I could do it again and say it's easily duplicatable but it was an incredible experience really learning about performance marketing and just very grateful for the two partners I had on that journey.

Daniel Scrivner (01:49):

Anytime there's a business that takes off like that, I think the things that my mind goes to is was there an aha or some sort of secret or a founding insight that you guys just had when you started the business so anything there?

Alex Iwanchuk (02:02):

Well, I'd go back to, as affiliate marketing can be pretty ruthless. It's definitely got its rough edges and I think the way we took as an approach of really doing the right thing and making sure we sat in the middle of this privileged position seeing media buyers and product owners and knowing that we had this bird's eye view on what was working and what's not and I think the aha moment really was just leaning in to going and growing as fast as we could and we really leaned into technology, whether it came to split testing and optimization but also onboarding. How did we get a new product owner ready to go as fast as they can and so, we really made a turnkey platform that allowed product owners and affiliates to come on.

Alex Iwanchuk (02:45):

Whether it was doing our due diligence or getting their product optimized for a landing page but we made it incredibly intuitive to onboard with AdEx but it was exciting. It gives me goosebumps thinking about how quickly that grew and bigger than wildest dreams. It was a fun project.

Daniel Scrivner (03:02):

Talk about the kind of final piece of that story. What was the outcome of that business and when did you wind that up?

Alex Iwanchuk (03:08):

I'll never forget when Peter, one of the co-founders came in and this was probably about 18 months in, he goes, "Hey, what do you guys think about selling this company?" I've never sold a company before. It was new territory and in my mind, I was like, "Well, this is going to be great and this will be an easy, let's just off load and keep going." Six months later through diligence and 11th hour deals following through lesson learned that a deal is not done until the deal is done. It was a great learning experience when it comes to talking to private equity or venture funded projects that were coming in to acquire. So, it was interesting to see what was out there but lesson learned on don't count your chickens until they hatch. It was an exciting process and what an incredible moment when we did sell and it was a clean exit and was just a wonderful experience.

Daniel Scrivner (03:57):

It sounds like maybe part of the secret or most of the secret of that business's growth is it sounds like you guys are very data testing oriented and I guess that's one question there, and maybe we can come back to that when we talk about Feals because I'm curious if the approach has changed at all there, but when it came to Ad Exchange, is that true, was it more data oriented versus kind of intuition and is that just because it's innately how you guys think about the world or was it just a super intentional, but maybe difficult thing to cultivate?

Alex Iwanchuk (04:26):

Yeah, I was definitely on the operation side. So I was more of the hustle, "Let's get the new affiliates in, new product owners," and I have to give hats off to Eric, a co-founder at AdEx. He really comes with both sides of the brain firing, when it comes to design, data, analytics and just a very strategic outlook. So as we looked at the industry and saw the opportunity to really lean into data and allow affiliates to scale faster with optimized websites, and if they weren't performing, we were able to swap them out really quickly, so that data driven approach really, I have to give Eric credit for that and really this thoughtful approach to getting the best performing products to be converting the best.

Alex Iwanchuk (05:09):

Then, that was really from Optimizely and using software in the backend, but then also really using the data driven of what was working and what wasn't working. It was applied again on the Feals launch but I have to say that Eric really opened my eyes to what a data driven approach could be.

Daniel Scrivner (05:27):

Okay, one final question before we go on and spend most of our time talking about Feals, Ad Exchange, AdEx was both your first time as co-founder, as part of a founding team, which is a fascinating experience, your first time in 18, 19 months going to 100 million in revenue, which sounds like a Goldilocks scenario and then your first time really, as an entrepreneur. So there's a bunch of things there that I'm sure you're just learning really, really quickly. So I'm curious, as you reflect back on that experience, is there any ahas or any surprises that stood out to you from kind of that first go, for many of those lenses that we talked about there?

Alex Iwanchuk (06:00):

What comes to mind really is having a relationship with myself. I did not have that. During Ad Exchange, I was so narrow minded when it came to growth and company and I didn't recognized the patience that I needed to have on that project. So reflecting on it, I was short tempered at times and found myself getting flustered or frustrated and not being able to articulate what was frustrating me. So I think the lack of the relationship I had with myself, I think post Ad Exchange was really more of an aha moment for me and how I was kind of navigating my own personal mental health, post Ad Exchange. That was really an important part to it, but reflecting on it just ... I don't think I was patient with myself enough and the speed bumps were probably more like potholes.

Alex Iwanchuk (06:52):

I think I definitely could have had a better calm demeanor, maybe that's probably why we launched Feals a few years later, but I think it was really that relationship with yourself when you're by yourself as an entrepreneur with co-founders, but there is no roadmap. There is no, "Hey, this is what you do when you get legal notices served to you." There was speed bumps, I mean, just where my heart sank during those times. Now, I think as I've matured, and here we are on project two, I'm able to kind of take those and stride a little bit better, and I think even the people around me, whether it's teammates, co-founders. They see, I think, a better version of myself as I built that relationship with myself as well.

Daniel Scrivner (07:38):

That's fascinating. I mean, I'm glad you brought that up because I think that the emotional and the mental and just that personal side of the equation is really, really, really difficult when you get into business because it's high stakes, nonstop, full of surprises, completely unmapped. So, it's a perfect situation to yeah, just throw a lot of curveballs at you and see how you hold up under pressure, so I'm not surprised.

Alex Iwanchuk (07:59):

Grateful for the mental health journey that I had, post Ad Exchange and having that kind of time to reflect and focus on self care and that routine because it's just ... if you don't have that you're burning in at both ends and next thing you know, it's just ... you need that balance.

Daniel Scrivner (08:14):

I mean, to your point, it's not that you don't accomplish something when you're in that mode, but you're not showing up as your best self and you're not rubbing off in the best way on the rest of your team, and you're also contributing probably to a not so awesome environment.

Alex Iwanchuk (08:28):

I had a lot to contribute to the not so awesome environment. So I appreciate that reflection on that and being able to look back and also appreciate where I've come, which I think is a big part of it as well.

Daniel Scrivner (08:39):

So now transitioning from AdEx to Feals, the band breaks up. You guys end up selling this business. A couple of years go by, kind of give us the story ... feel free to start wherever makes sense for you, but give everyone listening, I guess a little bit of the story of what that was like. I imagine, maybe when you guys ended up selling AdEx, you weren't sure if you were going to do a business again together. How did you decide on this space that you ended up building a business in and we can talk about that. Then what was that journey like for you and your co-founders to get together and say, "Hey, let's go do this again."

Alex Iwanchuk (09:10):

I think there's two parts to it that come to mind is one, I was ready to go 12 months later. I was pitching ideas to Eric and I'm grateful he said no to every single one. We got back together with a new project just to kick the tires and see if there was something on it. We actually jumped into the timeshare industry. I'm not sure if you're familiar with it but it is not a pretty industry. We recognized quickly that that wasn't meant for us, which were ... it was fortunate that it just wasn't the right fit.

Daniel Scrivner (09:41):

Was that like a new better model for doing a timeshare was kind of the idea there?

Alex Iwanchuk (09:45):

We were looking at helping people get out of timeshares and also getting them in the appropriate hands of people that may be interested in timeshares, so you think of people at Disney, their kids are now 18, 19. They've had that timeshare for 15 years. They're still paying annual dues on it. Could we find a family that would be excited about using that with their kids at seven and eight years old, with no hidden bells or whistles? So we tested it, we definitely could find people interested for getting into a timeshare but transferring a timeshare is near impossible. The legal work that we found, interesting model, I think there's still something there, anybody's interest.

Daniel Scrivner (10:26):

I'm sure it's not intentional, it's difficult to get out of.

Alex Iwanchuk (10:29):

Very much so, great learning curve when it came to a new industry and just trying to see if it was there. So I guess, to back up, I was diagnosed with depression and anxiety when I was in high school. It's something I was never open with anybody until I was 32 years old. I'm 36 now. So it's something I kept with myself, all that time. I've been on an antidepressant for the last four years. The change that happened or kind of the pivot, I was introduced to CBD in 2017, so this is post Ad Exchange. I am living supposedly my best life but also incredibly anxious. I am worried about what's next or what is this next project, and what should we be doing or am I fulfilling my time correctly? When I was introduced to CBD, things slowed down, specifically anxious thoughts.

Alex Iwanchuk (11:21):

It was really a game changer for me when it came to managing every day kind of mild anxiety and it was truly a game changer. So I shipped some product over to Eric. If you didn't know small doses of CBD tend to be more of a stimulant, and everyday wellness, anti-anxious thoughts and you get into a larger dose of CBD, it can have sedative like effects. So Eric tried this product for his lack of sleep, and it worked wonders for him as well. So as we looked at kind of our background with digital acquisition, a new industry that's just getting started, that is incredibly gray, it wasn't ... the 2018 Farm Bill had not passed at that time, so we were jumping into a project really with no clear lane that we'd be working on.

Alex Iwanchuk (12:09):

So we really started with a proof of concept. We didn't just dive in with Feals but we leaned into a data driven approach. We wanted to know what efficacy was. Was this going to truly help people feel better? We quickly realized two things, not all CBD is created equally and we also realized that there was efficacy. Our consumers were finding relief and whether that'd be from depression, anxiety, chronic pain. I mean, today, I still learn a new ailment that someone's using our product for. It's incredible the benefits that we're seeing. So that data driven approach we sold topicals, tinctures, pet products. We sold different extraction methods. We sold isolate, full spectrum, broad spectrum, really to take that data driven approach to what was working and we landed on just one product.

Alex Iwanchuk (13:00):

So when we launched Feals, we were not a CBD Mart. We were not trying to sell anything under the moon. We really approached it with just one product and it was that full spectrum, full cannabinoid, full terpene, efficacious product, really to keep things as simple as possible in such a new industry, that there's a lot of stigma around cannabis.

Daniel Scrivner (13:21):

I want to stop and go back because I think some people listening might not have kind of realized exactly what you just talked through. So you guys have this insight that you think there's something interesting. Obviously it's very personal, especially for you, the kind of CBD specific, I guess, angle here but before you guys decide to go all in on a single product, so before you decide to really focus down, you blow that out. So what does that look like? You're not using the Feals brand, just walk us through that methodology because one, I haven't heard enough entrepreneurs talk about how they got tested their ideas and how they got to that insight. So I want to kind of deconstruct that a little bit for people listening.

Alex Iwanchuk (14:00):

So we really looked at the industry and how busy it was the stigma that came with product. I mean, there was still an older generation that just did not want to touch cannabis. So we looked at it at kind of what was out there? What's working? We weren't sure what products were truly going to work. All of our products today have 0.3% THC and that's done with intent. So efficacy is really driven by what's called the entourage effect. So, what we did is we sold isolates, broad spectrum and full spectrum, really to see what was working for folks. We did it in capsule form. We did it in topical form. We were using surveys as product was going out and gauging efficacy. Did you find relief? How was your pain? Did you feel a little less anxious and it's so unique with CBD, it's not what you feel but it's what you don't feel.

Alex Iwanchuk (15:01):

So it's not a high, you're not going to feel that fuzzy haze, so it's really ... you have to tune in and be really patient with yourself, "Oh, yeah, I am a little less anxious today or hey, you know, that inflammation in my hands is ... Wow, I'm feeling a little bit better today." So we took that data from customer feedback and also looking at retention. We were a membership product. What was the repeat purchase rate on isolate? What was it on broad spectrum? So it was so apparent to us that full spectrum in the tincture form was by far one of the most efficacious ways to take CBD, so that's sublingual, so it's going straight into your bloodstream. It is a bit medicinal field. The tinctures are not for everybody but we found that to get relief, it was by far, the best path.

Alex Iwanchuk (15:51):

So that data driven approach really was so eye opening to us, because we could have kept going with that brand. It was what we call throwaway brand. Eric designed, it was beautiful website, it converted. We had repeat customers, but we realized I think there was a bigger opportunity in a busy market to double down on brand. This was a new territory for all of us to really lean into the brand side of things, so that was also a pretty new territory for us.

Daniel Scrivner (16:18):

When you say tincture, that's doing it orally, where you're dropping in underneath your tongue and I think it'd be great to talk about that and why that's better than an edible or an oral or any of that stuff. In my experience, most people don't even know that that's a delivery method. Most people haven't encountered like a drug or something that they put underneath their tongue. I'm here in Boulder, there's apothecaries, I know like, in kind of the nichey hippie world that's more common, talk a little bit about what you found that was special about that delivery method and then another one is just, if you could flesh out for people that maybe aren't familiar, what is unique or what is special about full spectrum and what does that mean?

Alex Iwanchuk (16:53):

Yeah, so when we tested different extraction methods, so the way that we're taking the hemp product or the hemp plant, and extracting it to getting it to its raw form, the best carrier agent ... so I guess we'll back up, we're using two parts in our product. It's a full spectrum oil but then we're using an organic MCT oil as the carrier agent. So when you mix these two together and you're using it as a sublingual product, the absorption rate to go into your bloodstream is going to be the fastest way, second to inter-venously, so thinking right into your bloodstream on a shot. This is the second best way to be going straight into your bloodstream. So when we were able to test the different form factors on efficacy, topical, you think it's really, it's not ... it has to go through a whole couple layers of skin, and it's really not going to get your full absorption rate.

Alex Iwanchuk (17:46):

So the tincture side was really interesting to us, because you could feel it within a few minutes. It really isn't a wait 30 minutes, hope for the best. It was really ... our customers were finding benefits really quickly and I think your other question on the full spectrum side, so our products are full spectrum and by definition of full spectrum, not only do we have CBD in our product, we also have trace amounts of CBG and CBC, and also trace amounts of THC under the legal limit of 0.3%. So when you get all of these cannabinoids together, they call it the entourage effect. So it's a more efficacious way that all the cannabinoids are working together and it really ... you can feel the entourage effect is real.

Alex Iwanchuk (18:36):

So even with the trace amount of THC, it was put in there purposely because it really ... they work very well together, all of the cannabinoids. Just so you know, there's 113 different cannabinoids in the hemp plant, I think we're ... and that may be even shy of a few and so we're still learning and just scratching the surface on the science behind what each cannabinoid can be helpful with.

Daniel Scrivner (19:02):

So we've talked about your unique relationship and interest in CBD. I want to I guess, switch and talk a little bit about the business model, because for people listening, they've heard us talk a little bit about the business model, but I want to flesh out, you guys sell directly to consumers, you ship in all 50 states and you can do that because you're underneath the legal limit. Were there other things you explored or was it basically, "Let's focus on CBD, let's make sure we're underneath that legal limit and let's make sure we can drop ship as widely as we can."

Alex Iwanchuk (19:27):

Our background with digital acquisition certainly aligned well with the direct to consumer model, but when we were doing our proof of concept, we couldn't touch Facebook. We couldn't touch Google. We couldn't touch Instagram. So we really had to get crafty on where we could buy ads. So we were ... kind of our hands were tied, whether it was display networks or just some really not high sophisticated algorithms helping you do those media buys, so it was really interesting that we were able to launch and still find CPAs or CACs that we could back out. We could make that work, but it was such a great learning experience to not have those big platforms that are ... typically the D2C companies really can ... you have tunnel vision.

Alex Iwanchuk (20:13):

If Facebook works, you put all your eggs in that one basket, but it really ... it forced us to try new things and so, we were grateful that it forced us on new channels that we've never explored before and we were really excited to see that we could make that work. As we've seen those new platforms open up, it certainly has been advantageous to be first movers and helping those groups form policy around what CBD advertising is and can be.

Daniel Scrivner (20:40):

I think it'd be interesting to explore one more piece of it, I mean, for anyone listening ... and we'll include links to this in the show notes. Now, for anyone listening, go to feals.com and take a look at the experience, because one thing that I have always been really impressed by with the approach is, number one, the focus on wellness, which I think is really unique in the industry, where that is typically not the kind of focus, it's on other things. You guys truly ... that's a huge part of the brand and how you position the product, but two, as a direct to consumer play, you guys have spent a lot of time and energy and effort making a brand that just is really appealing. I'm guessing that's potentially not the case with AdEx.

Daniel Scrivner (21:19):

So what was that process like this time around and why did you guys know that you needed to get those two pieces right and what did it take to get there?

Alex Iwanchuk (21:27):

You're right, AdEx did not have any branding play to it. It was certainly ... we learned a lot about conversions and really optimizing a website, but there was no, I'd say legs behind kind of the conversion pages we were building. So, as we looked at what the industry in the CBD industry was really creating, we knew we could ... we had an opportunity to really double down on brand and I think the stigma that came with cannabis, we're really trying to take it out with a more medicinal wellness approach. So we called ourselves the anti-cannabis cannabis company, really trying to make it more approachable. People are looking for natural alternatives to over-the-counters and they are hearing about cannabis as a potential.

Alex Iwanchuk (22:13):

I think one of the branding initiatives we worked on is, it was a kind of an inside joke but we said, "CBD your mom would try." So it was really ... our branding was really, I wouldn't say intuitive but it was very purposely built that it was approachable for what we called cool for our millennial friends that we could share with but then also the millennials were sharing it with their parents as well. So we have this cross generational approachability to cannabis. So we've got our friends who are saying this is really neat, I'm taking it for anxiety and then, sharing it with their parents for sleep or inflammation. So really that branding exercise early on, we did use a branding agency out of LA to get things going.

Alex Iwanchuk (22:55):

It was such a unique learning process and here I budgeted X dollars, let's just say, it was two and a half X of what that budget was. It was worth every penny and I think ... and I've never done a branding initiative when it comes to pantones and voice and what type of stylizing are we in. All of those really come together to make a well oiled machine, and I think as we looked at not only the branding and the approachability and the UI, UX around wellness, but also we were looking at really the content, the community that we could build around folks who would like to find a natural alternative. So as the branding really evolved, the content behind it, whether it's a science or education was really a pillar of ours on our advertising.

Alex Iwanchuk (23:43):

It wasn't a DR, 40% off your first order. It was learn the facts of CBD or let's coach you through the five things to look for when buying a CBD product. So we were able to really lean on the education side and build trust around our consumers and when you look at some of the websites that are out there, I don't know if my mom would be comfortable buying CBD from some of these shops online. So the change that we had there was really ... it was unique to see, but the education was just a pillar and still it continues to be on how we are doing our marketing.

Daniel Scrivner (24:19):

Especially in a really misunderstood space, which it's going to be the case for, I imagine the very long, foreseeable future. I know it's hard to tease out how impactful the brand has been in the success of the business so far and the growth of the business so far, and the community you've built and the retention, there's like a million factors that could potentially influence but I'm curious for just your opinion or your take and maybe some of that is things you've heard anecdotally from customers, but you talked about, that you ended up spending, and I'm sure it was painful at the time, 2.5X and I'm sure you felt every dollar of that but it also being worth it. So I guess just anecdotally or just for your opinion, your take, how impactful has the brand been and I guess any kind of examples you can point to there.

Alex Iwanchuk (24:59):

I immediately go to our customer experience team. I was on the calls when launching the brand as the one and only CX agent. So, when we were getting calls from customers that are bringing myself to tears and them on this product that has changed their life, whether it's their mom that is finally able to walk around the block with her, since her inflammation is down, I vividly remember, we were with our branding agency and we were trying to build the ethos around Feals and we were in the office in LA and the branding agency is there, the founders are there and a CX call came in from our proof of concept. I said, "Hey, let's take this, let's listen in," and we had our branding agency and everybody is listening in.

Alex Iwanchuk (25:44):

By the end of the call, everybody was in tears. I mean, the entire room and the movement that we've seen and the efficacy, it's truly making an impact on people's lives and I think that's continued to be our North Star for Feals, something we're really quite proud of, it's just ... we have a success Slack channel. So our CX agents are delivering true, honest reviews on a daily basis that our entire organization is rallied behind. So seeing that, and they come in on the daily and it's just they still bring goosebumps and tears to my eyes, it's just been an incredibly emotional experience to be able to truly take our acquisition background, and shift away from selling timeshares and apply that to something and a product that really can help people feel better.

Alex Iwanchuk (26:36):

It continues, that was definitely early innings for us and that was really ... it proved to us that we were onto something.

Daniel Scrivner (26:42):

I'm sure, that's incredibly rewarding. For anyone out there that's thinking about building a direct to consumer brand or just interested in this space, I personally think the way you guys approach the brand you've built is fantastic exhibit of what you can build and what that looks like and feels like. I want to transition and talk, kind of zoom in a little bit on what it takes to build a direct to consumer business because for you, obviously, this is a first go at it. You've built another successful business, but I imagine you've learned a lot along the way. I'm sure it's very simplistic, but as I think about what makes a direct to consumer business work, meaning what helps it get off the ground, then what helps it scale, it seems like it's really acquisition.

Daniel Scrivner (27:19):

Can you acquire those customers cheaply? Then obviously, that's linked hand in hand with retention. Is that true that those two things are the most important and are there any drivers there? I guess just any thoughts or insights you've had about what it really takes to help a direct to consumer brand take off?

Alex Iwanchuk (27:37):

We were fortunate that we went straight to membership. So you talk about retention and the numbers that really can back out and as this was new territory for us, but we looked at kind of customer acquisition costs when we first launch and also understanding payback period, like how long did it take us to take out our cogs? We probably have pretty healthy margin on these products, but how long does it take to become profitable, because on day one, we're not covering our customer acquisition costs, but if we're able to create a product that is sticky enough and has the retention, it does back out and so that CAC to LTV ratio is really that sweet spot of how hard can we go or how efficient can we acquire those customers on the front end.

Alex Iwanchuk (28:23):

Then you have to think about at scale as well. As you scale, you lose efficiencies. It's not going to be as efficient early as your early innings when you're spending 100X on that. So we've had to back into how efficient we can be on certain channels, but also just the model around D2C and the shift during COVID with companies now going online. We've seen CPMs and CPCs at the highest we've ever seen. So we've had to ... I wouldn't say battle that but really be smart about how and where we're deploying that capital. Everybody is on Facebook. Everybody is on Google and I'd say ... the last time I checked, there's at least 8000 other CBD companies in the industry. So we've had to really shift and be able to not just depend and always iterate.

Alex Iwanchuk (29:17):

I think I have to give credit to our creative team that is just continually, always iterating. They're always coming up with a new angle and getting creative and especially in the CBD industry, we don't have a clear lane on Facebook that says, "Hey, use the Buy Now button and go ahead and show 40% off." Really, they don't want you doing that type of advertising. So we've had to get really creative on educational content on how we can build a funnel and it's not always just CAC and so maybe it's getting our email submits and how can we massage that lifecycle marketing of someone may be interested and how long does it take them on the email content to become a customer? I guess we proved it early on just the CAC and just first numbers that we were seeing.

Alex Iwanchuk (30:07):

Then, we really backed into the other side of it, as with email captures and really being able ... content and we haven't even touched SEO yet. I mean, there's so many things that ... levers that we haven't looked at quite yet that we're excited to keep optimizing.

Daniel Scrivner (30:20):

One of the themes you've talked about so far is just experimentation, and one thing that you guys did that I thought was quietly brilliant, is as a little bit of legion ... and also because again, there's a level of comfort that people have to build with taking CBD. So you guys tried this kind of vial approach of shipping that out and allowing people to try different doses and really find what works for them. I'd love to know more about the origin of that and what you really learned by having that as part of your business model.

Alex Iwanchuk (30:47):

Early on in the proof of concept, another question that came up was, how much do I take and everybody is unique, so we each are pre-wired with what's called an endocannabinoid system. So we are pre-wired for the different cannabinoids that we have but each one is unique. It's kind of like a lock and key. So you may say, "Hey, Alex 40 milligrams is perfect for me. I am cool, calm and collected," and I at the same body weight, same mass, same ... similar may say, "Hey, I really need 80 milligrams to unlock that cool, calm and collected," and there was no real rhyme to reason on what and when or how someone was going to experience CBD. So during that, Drew and Eric really came up with a wonderful flight idea.

Alex Iwanchuk (31:36):

So we leaned on Warby Parker, "Try before you buy" model, and the flight is a sample of 40, 80 and 160 milligrams. You get to try before you buy and see what it unlocks for you and we really leaned into the experience on trying this for the first time. So the literature and the email support that comes with it was really what we called a white glove treatment. So we were delivering this exceptional experience to trying something that was foreign, but for $20, you can try CBD and it was a great lead generation great experiment to give people a chance to try CBD without locking into a membership. We do sell them like hotcakes. It's definitely been an incredible marketing idea that came up that was early on, and it just was a great way to be launching the brand.

Daniel Scrivner (32:32):

It seems like a great solution to that problem of not really knowing that dosage because again, it sounds like one, no one can control that and no one needs to have guilt about it. No one needs to have concerns about, "Oh my gosh, why do I need so much more?" It's more just that you don't know and so then coming up with a clever method. It's I think, a fantastic example of kind of seeing a need and coming up with a really compelling, just interesting way to hook people and get people in the door.

Alex Iwanchuk (32:57):

Yeah, and I think as we've iterated on that, and going back to our roots of data, we've really started to capture top of the funnel information. So now, as people are coming through our website or coming through our Click Funnels, we're able to capture, "Hey, are you sensitive to caffeine? Okay, let's take that and mark there. Are you taking or have you tried CBD before? Has it worked for you? Did you find ..." We're capturing all of this data on the top of the funnel to now give suggestions and enable to help people find what their perfect dose is. So we've been able to do this with just tinctures and so we're excited about kind of what's around the corner with different form factors, but being able to suggest the perfect dose based on not only data that's backing it up, but really, it's exciting to help people find that perfect dose.

Daniel Scrivner (33:48):

So I want to zoom way out and then we're going to change course here in a second. The question that I want to ask is for anyone listening that again, is interested in building a direct to consumer business or is building one themselves, do you have any just general advice or surprises or ahas, as you've been building Feals that might apply in a general sense to other types of D2C businesses?

Alex Iwanchuk (34:11):

I think the one thing that comes to mind is don't knock it until you try it. What I mean by that is you never know what's really going to work from an acquisition model and so, you have to spend to learn. So the willingness to lose money upfront and test, test, iterate, optimize, to find what's actually working. If you spend $10 a day on Facebook and you're getting dollar clicks here and there, you're not going to get a lot of data that's going to really support what you're trying to accomplish, but willing to test to learn, there are weeks on end that we'll be spending to optimize that it's not ... it's not a winning campaign, but as we iterate and continue to learn what's working and apply, it all goes together, whether it's the ad copy, it's the image.

Alex Iwanchuk (34:59):

It's the landing page they're landing on. It's the experience from A to Z. Until they're swiping their credit card, there is a place to optimize all the way through. So I think that's one thing that we're always just bullish on at Feals is, don't knock it until you try it because if it's an idea, let's give it a try and see if it has legs. So we really have a pretty sophisticated idea funnel, where we're able to wait them, average them and have a hypothesis behind it. So there's always ... if we're testing something, we're always trying to learn something. So I think that you can test to spend, but as long as there's a hypothesis behind everything you're testing, it really allows you to have that data driven approach.

Daniel Scrivner (35:45):

I want to move in a different direction now and focus on just your relationship with your co-founders and part of that is, I think you have a unique experience of having ... you're now on the second business with the same co-founders and I don't imagine you guys have or maybe ready to write a book yet on how to be the world's best co-founders, but I'm sure you've learned some things that might be really helpful to other people. So I'm curious, just at a super high level, if you could kind of share two bits of feedback there and I think one, what have you learned about being a great co-founder to your other co-founders, and just being a good part of a team? Then two, what have you learned as a team that's helped you be more successful over time or what are some key things that just helped you work well together?

Alex Iwanchuk (36:27):

First thing comes to mind, I'd say it's transparency. I guess, I'll back up, Eric was CTO at Ad Exchange. I was president and COO. Peter was chairman and CEO at that company. Fast forward now, Eric and I are co-CEO and I know that it probably doesn't rub everybody the right way, everybody's had kind of a pretty unique point of view on why or why a co-CEO standpoint could or couldn't work. Eric and I have an incredible relationship, we were fortunate enough to go through a liquidity event together. We're able to hit the reset button together, but during that time, I think we've been able to carve out our lanes and we're able to have a communication path that allows us to, one, give negative feedback in a comfortable manner.

Alex Iwanchuk (37:18):

That is something we have been working on really hard this year and how to have a tough conversation, and how to make sure that that person feels heard, so you can give somebody feedback, but if they're ... it's in one ear, out the other, so we've been able to really ... allow us to give feedback, but then, make sure that that person is being heard so we repeat it right back. If I understood you correctly, and so being able to hear that feedback, we were fortunate enough as well to bring in a coach to help facilitate some of these conversations, but also help us grow as co-founders and co-CEO. We have our lanes pretty clearly defined. I think, Eric with the technology background acquisition, digital experience and I'm more on the operations, customer experience and finance side.

Alex Iwanchuk (38:09):

So we have our lanes to play in but I think it's the ... having a tough conversation is something that I think I'm always going to be working on but the work that we've put in as co-founders, I've also seen payoff in my personal life and having those tough conversations with a significant other or a family member has been incredible and I'm still ... I'll tell you, I'm not great at it. I'm still learning, but it really is an art though, to be able to have a tough conversation and receive feedback, but then also be able to iterate. I think one other point I wanted to make on kind of our successes, is also being vulnerable. We complement each other really well on kind of where we're working in the business but we're also really honest with each other.

Alex Iwanchuk (39:01):

As I mentioned earlier, anxiety has been something that's been tough for me to navigate but being honest with Eric, as we show up week by week and saying, "I'm already feeling a little anxious this week with a few things going on. I just wanted to let you know, I'm having these feelings or I'm having these emotions," and he's receptive to those. He's also stepping up and saying, "Okay, hey, maybe I need to be a wee bit more optimistic this week," or take this off his plate. So I think that transparency and being vulnerable has been a big part to it.

Daniel Scrivner (39:31):

Yeah, it's such a powerful skill and it seems to me, and I know it's true in most companies I've ever worked in that that's not something that's generally encouraged and it's not something that's a part of the culture and yet, man, is it so much easier and are you able to be so much more compassionate when you know where the other person is coming from even just emotionally or just, "Hey, I'm not feeling great this week or hey, I've got this stuff going on outside of work," because again, we're all complicated interconnected beings and we kind of hide all that underneath the surface.

Alex Iwanchuk (39:59):

One other thing that we did was we both took enneagrams, and we took these enneagrams and we reviewed each others of what we were showing up, and how we were showing up, but then at the end of each week, we recap and say, "Hey, how did your enneagram show up this week?" So we're able to identify and see almost now predictive on kind of what will trigger somebody or what will frustrate somebody or what's ... so it's allowed us to really be I guess, a better co-founding, co-CEO unit, allowing us to understand kind of why or how each other tick.

Daniel Scrivner (40:35):

So I want to switch now to kind of exploring the kind of personal side of the equation here? I know it's not a lightweight place to start but clearly, you've gone through a mental health journey yourself and that showed up obviously, in your professional life, I'm sure it showed up in your personal life. Can you share ... I've gone through that myself, I know other people listening, whether they are comfortable engaging in it yet or not have had similar things, but it's a topic that I think we all need to be more open about. If you're open to it, can you just talk a little bit about your journey and any advice or no advice, but just anything you'd share with other people that are struggling with that themselves?

Alex Iwanchuk (41:09):

Yeah, I appreciate you asking. It's certainly new territory for myself talking about it. I mentioned earlier, I was not open with anybody around me about my depression or anxiety until I was 32. So my journey really, it started when I was in high school, when I was diagnosed with depression and ADHD and I vividly remember not really thinking about it much, didn't catapult me into some great understanding of why I felt this way, but I vividly remember, walking to the lunchroom and I had to peel left because I had to go take my Ritalin while everybody else went straight. Thinking back on it now, those moments that I don't think I fully encompassed what I was going through fast forward a bit of time, I leaned into my depression and having a better relationship with it and that really was around therapy. I was able to open up to a therapist. I think I started kind of in college years.

Alex Iwanchuk (42:09):

I have to say finding a therapist is not easy. The first one you meet may not be the right one, but it's really ... you have to be patient and I think finding the right therapist in different phases of your life, it changes. So, thinking back in college, and having that openness to at least talk to somebody about it was so powerful and just being open about it and at least having that conversation behind closed doors and then, I guess fast forward a bit more after being more public about it, I've been so surprised about the amount of other people with me opening up and then also saying, "Hey, I've had my own struggles. Can I talk to you about it or could you ... I share it with you," and I think the stigma around men and mental health and being open about it is even tougher.

Alex Iwanchuk (42:58):

So I think as we navigate those and be more honest about our conversations, it's quite invigorating, I'd say to be open about it. I remember the first time I was open about it on a panel in New York City, I was shaking, I couldn't believe I was about to be open about it. I cried in front of probably a good 50 people and it was tough like it was but as I've been more open about it, and been able to be honest with myself, have a better relationship with myself has been a big pivot for me in the last, I'd say a year or so.

Daniel Scrivner (43:30):

It sounds like doing that, the more you engage with it, the more open you are with it, has it become less of a trigger or less of just something that has a ton of negativity and it's become more neutral and something you can engage with more openly?

Alex Iwanchuk (43:42):

Yeah, I think I'm able to navigate tougher situations now and recognize that a depression is not something that has to embody me 24 hours a day. So I do have bad days and I am open with my girlfriend with Eric about having a tough day, and I think the more open I've been and kind of allowing it, I think it's easier to navigate to know that you have the support around you, letting them know that it is a tough day and tomorrow can be better. It's always going to be a journey. I think for anybody with any mental health journeys. It's definitely ... it's not something that starts and ends, it's something that's going to be with you forever, but the way you work with it, it just definitely helps.

Daniel Scrivner (44:29):

I want to ask one more question and I'm hoping it's not an insensitive question, and I'm just going to share a little bit but I never thought that I was someone that struggled with depression and I would say that for much of my life, I haven't but a couple years ago, I went through a period where I was just intensely focused on a bunch of things. I think largely I just went through a period where I wasn't being very introspective. I wasn't really just in touch with how I was feeling, and it was actually my wife that brought it up to me and only through her and I having what was not an awesome conversation about just feeling like I was going through something, and it was a really bizarre experience, because up until we had that conversation.

Daniel Scrivner (45:03):

I would say, "No, I'm not going through any depressive episode," but afterwards, it was incredibly eye opening where I was like, "Oh, my God, I have been and I've been going through this for a period of time." The question I was curious to ask you is, so I had this experience where I wasn't really aware that depression was kind of shaping my feelings and shaping my life. So I'm curious, any advice or anything you can add to how do you know when the depression is what's shaping your day and when a day is just tough because things go ... just because I know, in business and in life, there are things that aren't necessarily your depression, coloring things or it's just an off day.

Daniel Scrivner (45:38):

Nothing goes well. You get bad news. Meetings are missed, you're just off. How do you decouple those two things or how do you know when you're depressed and it's kind of shaping your day or not?

Alex Iwanchuk (45:47):

One thing that comes to mind is just for me, personally, it was my temper, my frustration. I know, thinking back at my days at Ad Exchange, full transparency, Daniel, I went off my antidepressant when I was at Ad Exchange and it was noticeable for the people around me and for just kind of my patience levels. So I guess one piece of advice if an antidepressant works, stick with it. It's worked for me, I've been on it now for three and a half years and I went off of it probably about two years ago, and it works, and I think that I guess, decoupling kind of like a stressful day and truly what depression could be, and I think I find it's also energy levels, I think and being able to get up and get out of bed and at least face the day, versus ... I remember, there's some days being off on antidepressant that I just wanted to stay in bed all day.

Alex Iwanchuk (46:40):

There was ... even running a company, none. I almost felt like there was just this dark cloud following me around and I think as I navigated those feelings, and recognizing that, even reflecting as a kid, I was a pretty happy outdoorsy type of smile on my face and as I grew, and had a better relationship with what my depression looked like, it really allowed me to find and get back to my rosier lens, I think on life and being able to navigate tougher conversations without having ... getting flustered or frustrated easily.

Daniel Scrivner (47:19):

Thank you so much for opening up about all that. It's gotten easier over time, but I still imagine it's not necessarily an easy topic. I want to shift a little bit, you and I have had a bunch of conversations about just daily habits, routines, everything from meditation to things like using a Joov for red light therapy. So, I know that you and I both do a lot of kind of experimenting there, and it's an area we spend some time on. So I'm curious if you can share just what daily habits disciplines, routines you do, and you don't have to list them exhaustively, but I'm just curious, I know for myself, there are some things that are must haves and there are some things that are like nice optional or nice things to kind of do every once in a while. What are the must haves for you that help you show up as your best self?

Alex Iwanchuk (47:56):

First thing that comes to mind is morning routine. So my morning routine, when in perfect shape looks something like this, my cell phone is not in my bedroom. It is plugged in downstairs, so I'm using a waking up light. So instead of having my phone as my alarm, it's a natural light, I think it's made by Philips, but it's birds chirping with a nice ambient light coming in the room. So instead of grabbing my phone first thing in the morning, I am turning off that light and then moving in still not checking my phone, espresso and meditation are kind of the next two pillars together at the same time. So I think the meditation I want to stick there for a second I started meditating, it was probably 2017. Eric introduced me to Headspace back in the day and it was ... I've never had a relationship with myself, I think prior to meditating.

Alex Iwanchuk (48:49):

I think feelings would just come and go for me, but I think meditation really allowed me to navigate what a relationship with myself would look like. So meditation in the morning, and then exercise and this is all before I'm checking email. I find that when I intermittently add an email to any of that kind of schedule in the morning, it can catapult my day in the direct wrong direction. So I've really found separating that and allowing myself to set up my day for success, giving my body what it needs, my mental health what it needs, before I'm checking stats, before I'm checking email, because it will derail.

Daniel Scrivner (49:32):

Well, it's all those things that can emotionally color you before you're ready or before that should even happen yet.

Alex Iwanchuk (49:38):

The exercise and meditation combo is just such a healthy way to start your day. I know, it's to each their own and kind of what that relationship looks like with meditation, and there's so many different forms of meditation, and actually, I'm not using Headspace anymore. I'm now just using Breathworks, which is another app, but it's all about breath. So, it's similar to meditation, but I think it's just that intentional, mindful minute, that really helps you build that relationship with yourself.

Daniel Scrivner (50:08):

Especially in a day where you might not have any more of those minutes. That's my full minutes once things are going. Okay, Breathworks I'll make sure we link to that in the show notes. I'm curious, we've talked about a bunch of things, but one thing I know for myself, and I know for you in general, there's usually something that you're focused in working on. I know for a while it was meditation, is there something you're focused on and working on now?

Alex Iwanchuk (50:29):

Prior to our series A, I started Spanish lessons. So I took the Spanish Institute, which is here in Denver. I was doing online classes, I never took Spanish in high school. I actually took Latin, which was great for the SATs but not for anything else. I think that was a neat way for me to really keep ... I had homework, I had quizzes, I had tests and it really was a nice balance to allow myself to really turn that side of the brain on. So I'm actually starting up Spanish lessons again next week. Took a little break there during that race, but it's something that I think is just ... it's a great way to really keep that mind sharp and it was coupled with Duolingo, obviously is the ... I needed the in-person kind of zoom classes but Duolingo also supported that initiative as well.

Daniel Scrivner (51:15):

Joov light is an example of something you've bought and tried that has been impactful on your performance, it's something you'd like to use. Is there a favorite thing, can be as dumb and as small that you've bought and tried that's had a meaningful positive impact on your life or your work?

Alex Iwanchuk (51:29):

One thing that comes to mind, it's called Tonal, a new piece of exercise equipment that just got installed. I guess it's weightlifting for Peloton, I guess, would be the best way to explain it. It is artificial intelligence, tracking weightlifting. It is one really cool piece of equipment and if you're in to weightlifting or tracking, and really just wellness in general, it's been a really unique piece of equipment that's in the house that has, I'd say, been really beneficial for my workout routine and also tracking wellness when it comes to muscle gain and also just tracking total fitness.

Daniel Scrivner (52:09):

I've seen that but I haven't looked at it. Is it guided or unguided? Then I know that it's just like resistance or-

Alex Iwanchuk (52:15):

Yeah, I could talk about this for a whole nother session if you'd like. They use electromagnetic weights. So really, it mounts on the wall, it goes up to 240 pounds per arm but it's basically a cable machine mounted to the wall that is guided and unguided. We always do in the morning, partner workouts, so it tracks your weight. So it really allows one person to jump in, do their set and then when the next person jumps on, it automatically calculates who is lifting and how much to lift. So it's tracking and then it pushes you. So every time you do that set, it's going to add an extra pound or it recognizes, if you're struggling on that lift, it will actually decrease the weight as you're trying to pull up. The intelligence with it, the tracking, it checked all the boxes for something that I was looking for and it's a cool piece of equipment.

Daniel Scrivner (53:08):

I know one of the thing that we've talked about a lot is books, I know that you read a lot. So I'm curious, and we can kind of take the question one or two directions, either books you've read recently that have been impactful or just kind of favorite books or books that you give away to others. Just you know what books have either had a special impact on you recently or that just have a special place in your heart?

Alex Iwanchuk (53:27):

Glennon Doyle, Untamed is a book that I've read in the last year, and it's really about managing unconscious biases. It was really interesting for me to be reading that book and also understanding, it was actually referred to me by my girlfriend. It's definitely from when it comes to biases that we think we may not have, but they're subconscious and they're there. So, it's allowed me to kind of take a different perspective on, when you go to a park and you see a little boy at the park and you say, "Hey, you're real tough," or you see a little girl and you say, "Your dress is really pretty, but why can't the boy be wearing a pretty shorts or why can't the girl be really tough?" Being able to take those biases and really shift them away, kind of to the gender of why we've been using those terms. So I think that was a book that I've recently read that really opened my mind to maybe some biases that I didn't know were there.

Daniel Scrivner (54:23):

Is it gender specific or just much more broad than that?

Alex Iwanchuk (54:27):

It's definitely much more broad than that.

Daniel Scrivner (54:29):

Okay, one last question and then we'll get ready to wrap. One of the things that I want to start asking guests is for their definition of success and part of the reason is for people in business, obviously you can measure your success and I'm sure a lot of the success of Feals is probably a big part of your identity, a big part of what success means to you now in your life. I know for you too, just with the journey that you've been on, on the mental health side, and you're ... just how your focus had changed over time that I'm guessing your answer as evolved and is different than that. So I'm curious, as best as you can, how do you think about success? What's your definition of success?

Alex Iwanchuk (55:01):

If you asked me that 10 years ago, I would say financial 100% and I think I've seen that shift quite a bit in the last five years, as I've recognized that success around financial goals does not deliver the happiness or the checking the box that I was looking for. So most recently, I think it really is ... it's the culture and community that we're able to build within the Feals organization. We really pride ourself on empathy and kindness within the organization and seeing this team now up to 31 be vulnerable with each other and be honest, and give feedback and rely on each other and have each other accountable. It's, again, brings goosebumps. That checks the box when it comes to success.

Alex Iwanchuk (55:49):

We are building a team that's working together and truly helping people feel better. So it's all icing on the cake that our product is supporting people on their mental health journey, but also the team that we're approaching wellness with an empathetic approach. So I think the team and culture is ... it's new territory too. Ad Exchange had 11 people when I exited and here we are with 31. This is different. This is how we navigate community and communication and races and all of those things that come with this team growing but I think it's really allowed me to focus on our culture as probably one of the best gauges for success.

Daniel Scrivner (56:32):

So for anyone that's interested, where can people find you and follow you in Feals?

Alex Iwanchuk (56:37):

Yeah, absolutely. LinkedIn, please come chat with me. If you have any question.

Daniel Scrivner (56:41):

One of the only guests to throw out LinkedIn first.

Alex Iwanchuk (56:44):

Yeah, I'm not in Instagram, not on Twitter. So you'll have to find me on LinkedIn or even contact our customer experience at Feals. I think that's another big differentiator. We have a CBD hotline. Can I plug that phone number now? 844-311-9090, but it is a white glove treatment. So if you're looking to have a communication line with myself, please feel free to call our CX hotline, ask questions, they can loop me in but would be more than happy and would love to hear any stories that may have provoked from my thoughts today.

Daniel Scrivner (57:19):

Thank you so much for your time, Alex. This have been an awesome conversation and a kind of uniquely deep conversation. So I appreciate you for being open.

Alex Iwanchuk (57:26):

Absolutely. Thank you, Daniel. Appreciate you having me today.

On Outlier Academy, Daniel Scrivner explores the tactics, routines, and habits of world-class performers working at the edge—in business, investing, entertainment, and more. In each episode, he decodes what they've mastered and what they've learned along the way. Start learning from the world’s best today.

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