A Tale Of Two Failures

Welcome to Keep Going, a podcast about failure and success hosted by John Biggs. Every week we talk to an amazing person about a time they failed and what they learn. And remember when you are going through hell. Keep going.

John- Welcome to Keep Going, a podcast about failure and success. Today's success is Joseph Panetta. I've known him for a long time. Joseph, you asked to self-identify, so?I'm gonna let you do that. Welcome to the show.

Joseph- Why Thank you. By the way, I self-identify as a tropical storm <laugh>. Just the fact that I'm out there makes people nervous and nobody wants to clean up after me <laugh>. Sometimes I self-identify as a natural disaster, and my pronouns are Try me.

But that's just me. I am Joseph Panetta, and for those of you who don't know, I am a long tenured friend of John Biggs. And one thing you may not know about this gentleman is that his,?sense of humor is?like the name of his company, big and wide. His humor is infectious and hilarious. And I've had the joy of knowing him, traveling with him, and laughing with him for quite some time.

John-?I think I once called you coltish in a watch publication, which was my favorite use of the word coltish.

Joseph- Yeah. I remember that! And that was C o l t i s h, not c u l t -ish

John-?No, no. Coltish. Like a little horse. Yeah.

Joseph - Yes. I mean that could sort of define me in a lot of ways. <laugh> But I digress. I run a company called Left of Center Consulting, where unconventional brand strategy is our hallmark. And if you know me like John does, then you know that unconventional is pretty much how I walk through life.? I act as a fractional CMO for companies who are in between leaders in that role, or never had anybody in that function. John, when we met, I held that role for the Swatch Group, the world's largest watch company. And this is a story of me going out on my own, creating my own business, using all of the wonderful tips, tools, and tricks that I know, and then literally an epic flipping failure.

John- Mm-hmm.

Joseph- Back in 2017, I was coming off of my role ushering the wildly famous UK and Australian self-tanner brand Skinny Tan into the US market. Its founder wanted to do something together. And Louise Ferguson, who created the brand is a great friend and remains a great ally. It was late December and she and I were on a Skype together and she'd had a few too many glasses of wine. And she says,” let's, do something together.”

And I had been holding onto an idea that was based on an item from my mother's wardrobe.

Now, mind you, I was born in Panama.?I was an Air Force brat. My mom had this?poncho, which is typically very popular in Central and South America. But this poncho was really interesting because my mother altered it:?as opposed to being something you pull over your head, she made it more like a cape.

Because when you've back combed your hair into a giant beehive in the 60’s and you put all of your makeup on, the last thing you want do is pull something over your head. Right? These are practical considerations after all – and my mother was a southern bell after all.

She cut a seam up the front of the poncho and then sewed together these beautifully covered buttons in the same fabric rendering them invisible.?With these double button holes that that closed the opening created by the seam.

She even put those same buttons in the sleeves so that it actually had sleeves as opposed to just these like little arm areas.

She turned this rather mundane garment into something that was much more interesting.

Now, many, many years ago, I wanted to recreate this silhouette in a pashmina or light silk fabric as a light summer poncho. And my wife at the time made such fun of me and derided this notion and just kind of was like, are you crazy? No one's gonna buy that. 12 months later, every girl on the Upper West Side of Manhattan was wearing a summer poncho!

I missed that opportunity; missed the market, but never forgot the idea.

Fast forward to 2017, I'm talking to Louise and I rekindled this idea. I talked with friends who were in the garment business to learn a little more about what it would take to do this. I attended a fabric show in Paris called Premiere Vision with Louise who was in London at that time. We looked at different fabrics, different buttons, different manufacturers. I tried to find different people to make it and other parts of the world, etcetera. Finally, I come to a local manufacturer in downtown LA where I had moved a year earlier and I bought remnant fabric that would be perfect for this.

I bought five or six different patterns of remnant fabric and had a pattern made.

All of this was predicated on a memory of my mom's super-glam poncho from 40 years earlier (!!).

I had gifted the actual item to the co-host of “What Not to Wear” Stacy London , who was a very dear friend. She originally validated the concept: she was like," oh my God, this is amazing." As far as I know, she still has it.

Back to the garment - I had this pattern made and we buy a whole bunch of fabric and I find this manufacturer and we had them made at an extortionate per unit cost. The cost was CRAZY. It was a stretch to afford at the time but was the best and fastest thing I could find. It had to be quick.

We were in January- February and I wanted to be able to make the summer season because this was gonna be, you know, something that you wear over your swimsuit or something that you wear to the beach or on vacation.?I really wanted it to be ready for that kind of May-June timeframe.

This was not a thick wool poncho, like those the kids wear after visiting Peru or whatever.

Similar shape but made in a super light elegant fabric that basically the wind can blow through, but you can't see through it.

I put like all of my 30 plus years of marketing to women knowledge into the creation of this and thought through every single element in ways I didn't even know I could.

My friend Mark Brandon helped me write a killer business plan.?Louise and I developed downstream products there was next generation ponchos for different seasons of the year.

We created truly authentic compelling stories (I'm a southerner so storytelling is in my blood).

?did every single thing I recommend my clients do or to action or activate except for one very important thing. ?

After sinking tens of thousands of dollars into this venture I bring my gorgeous twin nieces from Mississippi to California, (they work as professional models) put them on a beach and did a whole photo shoot for a day and a half. The ensuing photos were fantastic. We made little videos.

I had all the content I needed. Everything was frankly verging on awesome. The website, the logo, the product, the imagery, the design, all of it except product market fit. Those three words were a gigantic torpedo in my idea.

I never did any competitive analysis. Whoops. I never went to the shops to see what was on offer that was similar to the product I was offering and what price and what was selling. I consulted with people who had been in the swimwear industry for a long time. They thought the idea was cute, it was novel.

I really wanted to make it super upscale and not cheap. And at $20 to $25 for manufacturing, it couldn't be cheap. COGS were already expensive. What I baked into this thing, everything that I thought I understood about marketing to women. All of that may have well been right, but ultimately you can make all the right decisions and end up with a bad outcome. Just because of one misstep. And that's what happened here. It's like the misstep that slipped on a banana peel that was already on a spot of oil, that was already on a plate of glass, that was already on a sheet of ice.

That's what it was like.

The idea went from concept to finished product in a matter of about 75 days – this rather astonished my friends in the fashion trade.

A dear friend of mine was the president at Dolce Gabbana at the time and had been at Chloe before that. He said, “you went from concept to product in less than 90 days? Nobody can do that.” ? I replied, “Well, nobody told me I couldn't.”

In that instance, naivety paid off. But in retrospect, I probably should have taken a little bit more time to really examine the market that I was selling to and the products that were already available, the pricing, all of that.?I was so sold on my own idea that I could not be objective.

One thing I didn't do: I never looked at Amazon. That was a fatal flaw for one very important reason.? Amazon can tell you what sells and what doesn’t; which price points work and which don't. If you pay attention to the negative reviews, you can design a product that goes directly into those gaps in other people’s products. You can answer all of the issues consumers themselves raise. This gives you a really good marketing hook.

At the time of our launch, Facebook was a primary marketing engine.?Working with Skinny Tan, I sold $1.7 million of a self-tanner that nobody knew inside of seven months doing digital marketing on Facebook alone.

Up to that point, I thought I was a dinosaur. I thought nobody would ever hire me because I didn't know the first thing about posting on social or digital marketing.? I understood strategy and marketing strategy, but I didn't know the ins and outs of Facebook and Instagram, etcetera. Working with Louise, I went from being a digital immigrant to a practical digital native. Thanks to Louise, I learned that very well.

What I didn't know was that Facebook would change their algorithm to such an extent it practically punished small advertisers like us. A lot of marketers know about this. The time when lookalike lists were now not looking so much alike and not delivering.?It was the beginning of that issue that was corrected about a year later to some degree.

John- And you could spend like how much was it that you were spending on ads??

Joseph- In that case it was like $10,000, a hundred thousand just to get that first million in sales.?For Skinny Tan we spent, during those first seven months, we probably spent $250,000 - $300,000 – usually $20,000 and $30,000 on a monthly basis but we were also a reusable product. So once someone got the product and they used it three or four times, they had to re-up. And the margins were great. When you sell a garment, why do people need to come back and rebuy? It’s almost a ‘one and done’ scenario. Um, so when I tell you that we failed out of the gate and then we just kept failing <laugh>. Okay. And it was, it was ego destructive.

I tried for months to get it going. I swapped retail channels, I dropped prices. I even tried selling it on Amazon against $9.99.?

But on Amazon, if you're shopping there, that's probably your tolerance level. You don't want a hundred dollars beach poncho, right??

I gave away a lot of product.?I probably sold somewhere between 500 or so after having made thousands.?That’s 500 pieces over the entire time. And these were one-offs to individuals. That never sold them to a retail establishment.

I made every mistake that I advised my clients not to make.

We were lacking product market fit. If I'd had that right, it might've changed the outcome entirely. But I will tell you, I was caught up in the moment.? I was really swept up in the speed to market idea or what I call the speed to market ideal.

And Plato said, "we can never achieve the ideal because we live in the real."? Boy, did that hit me between the eyes <laugh>. I saw this venture through to its very bitter end when I found a jobber who could sell it to someone who would basically get rid of it. When they finally received all the product, they tried to negotiate me down from the pennies on the dollar that they were spending on it anyway. Hmm. I think at the end of the day I got rid of about a thousand units of the garment in different style iterations.

I think I got $1,200 for it all in.

That inventory represented about $20,000 worth of investment right there.

From that failure came a lot of scars. Those scars were the lessons that are scratched on you and seared into your memory. But I will tell you that they now inform my approach to my clients and when I speak with authenticity about having made this mistake and what it cost me financially, what it cost me relationship-wise and what it cost me in my own ego and soul, they listen.

It was a real learning moment. Maybe I'm not as smart as I think I am.?I will tell you that I firmly believe you learn more from failure than you do from success. But damn, I wanted that to be successful.

John- So we got a couple questions. I think you and I are similar in the ways that we do things. I think.?We get excited about something, and we want to pull it all together. I think in this very specific case you did that. Like me, I recently got excited about an idea, and I basically coded it over the course of a month and now it's out in the world and I basically got four signups. What's the best way to stop impulsive people like us from making horrible mistakes?

And?what are some of the pre-planning that we should do to prevent that kind of thing?

Joseph- I don't know that you can stop super excitable people from being super excitable. I think it's in their DNA. Einstein once said, “God bless the heretic for it is on him or her that all progress is made”?So for people like us who move forward and fail, in some ways we allow other people to succeed. I believe that to be true.

When you ask that question, that's the first thing that runs through my mind.

Let's not stop ourselves from making those mistakes because it may push somebody else forward. And even ourselves, I do believe that there is a moment when we get caught up that we need to ask ourselves the question, am I getting caught up in this? It's a pause, it's a moment of self-reflection. And for those of us who believe that we are abundantly self-aware, there are always moments like this that help us realize, well, maybe I'm not as self-aware as I think I am.

And that's where you need to have friends and listen. For those of you who don't know it or believe it, support doesn't always look the way you think it should. It doesn't mean everybody's on the sideline cheering for you. Your real friends are the ones who pull you aside and be like, “Have you thought about this? Have you really looked into this?”

My takeaway from my whole saga was effectively: Have a plan B and have a plan C because plan A may not happen

John- And plan C might not even happen.

Joseph - In my case, plan Z didn’t happen?

John-?How do you convince folks? One of the things that happens, I think, is you come to a person and you say, look dude, I've seen this happen. I've seen this project before. I've seen this happen before. It never works that - it's like that old Rocky and Bullwinkle. It's that that trick never works. Right??And if you've been around long enough, you know that the trick never works for whatever reason.

And maybe it's the permutation of the trick somebody's trying to play. Maybe those, maybe your Dolce Gabbana friend could basically say, Oh, I see what the permutation is here, watch out. This is how you're gonna break." But how do you break through that sense your client or your friend or whoever is gonna do it anyway? How do you convince them to, to slow down?

Joseph- It's a good question. I don't know that you can. I just know that you should try.

A former boss of mine used to say, “A person will go a hell of a lot further with their bad idea than they will with your good one.”

Because it's that fire; that motivation to succeed. And there's always that unbridled optimism that the entrepreneur almost categorically must have. That they are going to succeed in the face of failure and even their own failure, by the way. Mind you, I'm not blaming anybody else for the failure of this brand and this product other than myself. This wasn't anybody else's fault but mine. And, I own that, which also means that I learned from that.

Which means that I can speak from it authentically. So the only thing I can do for my clients is offer them the wisdom from experience. "I've been where you are. I have, I have been in exactly this moment. Let me tell you how it ended up for me." One of two things will happen. They will either listen or they won't.

There are consequences on either side of that decision.

John-?I think if you really think about what you said, what you described, it sounds like a blast, honestly. Like to build something that meant something to you that is meaningful, that you thought may or may not work and that you spent not that much money. I mean, 20k for the average human being is that's a couple months’ salary, but 20k in an entrepreneurial sense that's like a drop in the bucket.?It sounds like you had fun doing it. Presumably, you got to build a brand from soup to nuts.

Joseph - I was enthralled by it. Actually, I don't think I've ever felt quite that energized for quite that sustained a period of time. It was just fantastic. It was intoxicating to a large degree. But in that intoxication, I also forgot what I do - and forgot to treat myself as a client and forgot to ask myself some really tough questions and that unbridled belief that I had it all figured out is not just a fallacy, but also somewhat dangerous.

John - Dangerous Oh, uh, this, I mean this is, this wasn't, you weren't, you weren't like, you weren't making a mammogram machine. You were making a beautiful poncho.

Joseph - In the bigger picture, yeah, I'm not Tesla or making mammogram machines, but it is, in my own way, it was a little bit, uh, it was destructive to my bank account. That $20,000, by the way, was just the remaining inventory that wasn't the ENTIRE Inventory. That wasn't the initial spend. It was still an ouch no matter how you slice it.

John- Right , I don't wanna say you got away, you got away easy, but I don't think you did by any stretch of the imagination. But it sounds like a thing. Sounds like a fun time. Would you do it again if you had that idea??

Joseph- Very different, under very, very different scenarios, would I do it again? And I would really ask myself the hard questions. I would vet a lot of this by somebody who isn't me, because the thing about the tarot card reader is that she can read everyone's fortune but her own. Sometimes you need somebody else to look at the cards.

John- Well, I like the idea of you calling yourself your own client. You should have been watching out for yourself, but you didn't watch out for yourself because the whole thing was so exciting and so heady that that expenditure seemed like a drop in the bucket for the future. I mean not future wealth, but I mean just the future satisfaction of making a product that everybody wants.

Joseph- Correct. The future success, whether or not it was gonna be like, you know, wealth creation at a minimum I wanted to be able to meet my expenses. Meaning, product development, photo shoot, the money you sink into all the marketing. That's not cheap.

John- Was there an emotional toll associated with this? Did you come out of this sad? Did you come out of this upset?

Joseph- Yes. I came out of this a little ego wounded and bruised, No doubt about it. A bit depressed, actually. I think I was depressed because that was my main focus for a sustained period of time and coming out of it, I didn't have clients and revenue and all of that to kind of make up for it or where I could shift my focus and my attention. So I ended up sort of looking down into my coffee and marinating over the loss. So that can lead you down a very not fun path, but what I chose to do was to use it as fuel, as opposed to burning myself up. I could use it as fuel to forge forward. And that's really what I did.

John- I like it. All right. What's the best advice for somebody who's got something burning behind their eyes?

Joseph - Treat yourself as your own client. If you don't have a marketing and brand development background, talk to people who do. Talk to business accelerators and incubators and ask them what their top three watch outs are first. Then ask them for their top three hacks. That, to me, would be the two smartest questions you could ask anybody who's done it. But definitely rely on the wisdom of others. If you are just going with your own wisdom, you're missing large elements of experiential success and failure.

Because as I said, I learned more from that failure than I ever did from any amount of success.?

On the Success side: I did an event? MJ BizCon, the big marijuana conference. It's the longest running cannabis conference and held every year in Las Vegas. I wrote about it on LinkedIn actually. It was called Using Sex to Sell Drugs.

I was convinced up until we were about 20 minutes into that event that it was a Titanic disaster. That it was going to be a significant spend for a very low return and this thing was gonna go down in flames. I literally thought that's what was happening.? I'm standing there in the room thinking this is what failure looks like. I am going to literally walk-through abject failure right now. I explain in the article that I can't exactly put my finger on it, but something happened about 20 to 30 minutes into that event that turned it from the singularly worst event of my career to potentially one of the best I've ever thrown in my life.

Now, how do you do an 180 degree turn? Like literally, how do you??How do you manage to pull that off? It's like moving the Queen Mary in New York Harbor. Not an easy thing to do and it takes a whole lot of forces working with a bunch of luck behind you to make it happen. And in my instance, it was a bunch of scantily clad Cirque de soleil performers performing kama sutra positions in different rooms of the event. And suddenly everything turned and all 400 people we invited showed up and stayed.

John- Now did you plan this or did they just show up? Because in, in your life it seems like, uh, it seems like circus de soleil performers just show up and do kama sutra positions on any given Tuesday.

Joseph - <laughs> Like glitter and unicorns just like its Tuesday, right? But the strategy behind it is really where it shines. The set dressing is great, but this was MJ BizCon, You're talking to people who are long in the tooth and understand what THC is. So how are you going to introduce them to a new molecule called THC - O? How are you gonna educate people who think they know everything there is to know about THC, about a whole new sister to THC called THC-O? The brainstorm came in a flash (and I thank Steve Krauss for his help) we focus on the ‘O’ So the entire premise of this thing was “the Big O”

We're in Las Vegas, the home of burlesque. Dancers with their boobs out and feathers on their hair for decades.

Dita Vontese, like all of this stuff is Las Vegas central and very specific to Vegas as a locale. We needed a lot of room and latitude to get away with something like this. But the concept here was well honed and a really great idea. We faced a number of uphill battles before the event even began!

• We lost our venue 2 weeks prior. The Airbnb renters just decided that they would rent it to somebody else at a higher price and kicked us out two weeks before.
• Our event was for the first night of the conference- the same night every major exhibitor holds their event – so competition was high.

• All those invitations had been out for more than a month. Every attendee had their first night booked already before our invitations went out.??
• After we lock in a new venue, we send our invitations – all designed and focused on The Big O and we had to shut off the RSVP list at 400
• Understand, this was crazy – everyone already booked their first night and we had 400 people RSVP…we thought folks are just gonna do a drive by. They're gonna come in, have a cocktail, see what it's all about and leave. Because that's what people do on the first night.
• and it's 400 guests - you expect about 30, 40% attrition off that. So you're gonna net roughly 250 people maybe over the course of the four hours. Maybe like 50 people an hour. No big deal in a giant suite at the Wynn Encore.

All 400 people came and nobody left. The police came to shut us down three times. There were people lined up in the hallway to get in.? But the most obstructive thing is that they were lined up downstairs at the lobby desk trying to get into the elevator to come up.

Hotel staff wouldn't let them because we had too many people in the room. We danced this fine line between success and failure, but it's like the best party that the police shut down. And the interesting thing about that was that four months later, someone told me that a friend was telling them about this off-the-hook party they attended at MJ BizCon. And they started to recount the party. And I'm like, "yeah, that, that was my event!"

Seriously. Four months later they're still talking about it!

Not to mention we sold out of the entire year's worth of inventory that night, but the fact that four months after the event, people are still talking about it and MJ BizCon has some pretty big f’ing events, pretty major stuff happens. So the fact that we stood out was amazing considering that the first day and a half to 30 minutes into the party, I thought it was an epic disaster.

John- So, we had two tales of failure and with Joseph Panetta.?The second tale was far different in its conclusion. Whereas your first tale was kind of like the unobvious one. And I’m glad you shared the unobvious one first because I know that you're a track record for success as a cool dude who is pretty high up there.

Joseph- Well, I am trying to live up to your standard, one of these days.

John- Joseph, thank you for joining us. This has been pleasure. This has been, keep going. We'll see you next week.

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