CAPITAL FRIDAY

View Original

Making Millions With The Black Stuff

Craig Ruckus

Note: This post contains affiliate links. As an affiliate, I receive compensation if you purchase through these links, at no extra cost to you. Complete disclosure statement here.

Two things you’ll hear when you talk to people about business ideas are:

“It’s been done”

and

“Follow your passion.”

John Larkin ignored both of these. He started a natural soap company called The Black Stuff.

Not an AI chat bot. Or a productized service company. A company making soap.

If you’re like me you may be a bit confused on the name. It helps to know that John is Irish. The Black Stuff refers to Guinness, the world's most popular Irish stout. He chose it as It represents wholesomeness, honesty, hard work and heritage.

Now John didn’t have a passion for soap, he actually played poker for 10 years as his main income source.

And he didn’t have experience making soap either. His path after poker involved Saas companies and a startup that made monitors for cows. Yeah. Like moo cows!

But after working with cows he wanted to start his own business. As one does.

So instead of following his passion he was analytical about it. He started brainstorming. He wanted a product that was consumable, small, easy to ship, had lots of variants and could lead to complimentary products.

He landed on soap. Specifically, handmade natural soap.

In January 2021 he ordered ingredients from Amazon and started watching YouTube videos on how to make soap.

His first batch had sand from the beach and water from the sea.

It wasn’t good.

It cut his stomach the first time he used it. Turns out the sand had too many finely broken seashells in it.

Turns out making good soap is hard.

But John kept ordering ingredients and mixing batches of soap. Hundreds of bars. €30,000 worth of ingredients went into testing. But with each batch John was learning and in five months he had a recipe he liked and six scents.

He had been documenting his journey on Tik Tok and in May 2021 it was time to launch. He shipped 600 bars to his third party logistics provider in the U.S. He leaned on his experience with Facebook and Instagram ads and managed a sale on the first day.

After a week he had orders from around 10 people. Then he received a message from one of the customers who wanted to meet him. Seemed odd, but John agreed.

They met up for a pint and John found out his enthusiastic customer was part of a Facebook group of men that were into natural soap (niche!). He was invited in and his first 100 customers quickly followed from the group.

By the end of 2021 The Black Stuff had added four more scents and a soap dish. John had €30K in sales and hadn’t even dug himself out of the hole yet. But things were picking up speed.

In 2022 they launched a limited edition for Valentines Day - Relax the Cacks.

In March they followed up with Shamrock Saint and What’s Yer Poison for St. Patrick’s Day.

The limited edition strategy I think is brilliant. John mentioned that when you launch a new scent a bunch of sales come rolling in. So brands often keep expanding, but that gets to be a pain for production and inventory management. TBS focus on limited editions and mark them as sold out after the event to ensure it creates urgency the next time one is launched.

John also doesn’t discount. He wants TBS to be a premium brand. Instead they do specials where they will throw in a mystery bar or two if a certain threshold is met. For the customers, it’s a benefit and a surprise and John gets to get rid of his older stock or limited editions that didn’t sell through.

Up to this point John had been making batches of 54 soap at a time in his kitchen. He had a line up of 11 core soaps and had expanded into natural deodorant. He would make 2-300 soaps per day four days a week and one day he’d make deodorant.

He needed more space. And help. He leased a small place by his home and hired his first employee. Soap production hit 5-600 a day. By the end of 2022 revenue hit €500K. It was working!

In 2023 they moved to a larger space and hired another employee. John hired a chef and spent a few months teaching them how to make the soap. The business kept growing. In 2023 The Black Stuff hit €2 million in sales. And it’s speeding up!

Now to grow like this the product has to be great. And a key of The Black Stuff soap is that it doesn’t follow the rules. Shea butter makes your skin feel great, but it’s expensive, so a lot of brands only have 1-2% shea butter. John uses more than 20%. Why? Because he liked how it felt.

That focus on a quality product has led to committed customers. John runs cohort analysis for monthly groups of new buyers. The analysis shows that in a group of new customers at least 10% of the group order the next month and the next and the next… For 18 months. That’s amazing retention and allows them to forecast future sales and buy enough inventory to get ahead of it.

John sees a path to €10 million and beyond. Best part. It’s all his. Completely bootstrapped. And they’re still making it by hand, 54 bars at a time.

And if you’re going down the soap rabbit hole check out our story on Dr. Squatch, another amazing soap company. They took a different approach by taking funding to expand at a faster rate.

And remember, next time someone tells you “it’s already been done” that just means that there’s customers there.

Sources:


Business Ideas of the Week

Business Success Stories of the Week

See this form in the original post