I Launched A Stress-Diffusing Mints Brand After Building A $10M CBD Business

Published: September 14th, 2021
Brandon Nolte
Founder, Stello
$3K
revenue/mo
3
Founders
0
Employees
Stello
from Sacramento, CA, USA
started
$3,000
revenue/mo
3
Founders
0
Employees
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Hello! Who are you and what business did you start?

Hey, my name is Brandon Nolte, and I am one of the cofounders of Stello. After +8 years and +$10 million in sales in the CBD space, I decided to create a new company: Stello -- stress diffusing mint that helps you get calm and clear-minded, no matter what’s getting in your way.

We just recently launched and are currently making a few thousand dollars per month as we get ramped up.

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Stello - Rowboat & Waves

What's your backstory and how did you come up with the idea?

In 2013, I was doing some marketing consulting (on Upwork), and I happened to meet a distributor of CBD products (back when there were only 5-6 total brands). With his connections, I launched my retail store called Healthy Hemp Oil which sold all the top brands and also explained how to use CBD products.

Our long-term goal is to create an iconic brand that people love, and I think that takes time.

This business did pretty well over the last eight years and I generated over $10 million in sales through mostly SEO and content marketing. At the time, no one was really educating the consumer, and so part of our early marketing strategy was to create guidance and helpful tips and tricks to help novices understand how to use CBD. This plan worked really well in the early years 2013-2018, but as the landscape changed for both content marketing and CBD our strategy became more ubiquitous and we lost a good amount of traffic over recent years.

These changes with SEO, Google, and content marketing, led me to think more about how to create a unique product and a unique offering to customers. Most of the brands that were doing well and surviving were brands that had created a unique product and weren’t just selling other people’s products. I had a strong desire to learn how to create a product from scratch and make it a unique brand for consumers, but I wasn’t sure what to do.

As I was pondering what to do I would occasionally take phone calls with people looking to get into the CBD space. They would ask: what mistakes did you make? What did you learn? What would you do if you had to start from scratch again? I remember having a call with an MBA student, and I told him how cannabis is becoming more and more accessible and more mainstream. I told him that people are desiring more easy-to-use formats of cannabis and that he should find a unique edible that they could create for people. After that call, I had a lightbulb moment where I thought “maybe I should take my own advice and do this myself“. The problem was that I didn’t know how to get started.

I remember being in Entrepreneurs’ Organization at the time, and I had dinner with another member who had a successful business in the food space and he told me how he used a product development company called JPG Resources to help him build his product from the ground up. This was really appealing to me because I was fortunate enough to have cash from my previous business to afford this consulting and cut down on my learning curve. Looking back, I couldn’t imagine doing this work without JPG’s help.

Take us through the process of designing, prototyping, and manufacturing your first product.

The first step we took with JPG was to test various formats of CBD to determine which product would be most compelling to consumers. JPG helped us build and execute some clever customer surveys to gauge interest on which formats would be most exciting to potential buyers. We tested multiple formats such as gummy‘s, lozenges, and even honey sticks in addition to mints (which was the eventual winner).

We decided to go with mints for a couple of reasons. First of all, we heard from the surveys that people were desiring a form factor that was really accessible and easy to use (which confirmed my understanding). Secondly, as we went through our search for manufacturers, we realized that finding a facility to manufacture gum would be very difficult. As of a couple of years ago, the number of manufacturers who were working with this format was extremely limited. Lastly, we also knew that CBD gums gummy‘s were really popular but also that it was an extremely crowded space and wanted to create a more unique format for customers. For all these reasons, we decided to go with mints.

After validating our product idea we moved in parallel paths with both our branding agency Moxie Sozo and our product development company JPG resources to bring Stello to life. With Moxie we worked with them to create a full-scale brand. This included naming, Tagline, mission vision purpose, the visuals of the tin, the website, the inbox experience, and other collateral.

With JPG, we started by searching manufacturers for who could make our product. They really held our hand and vetted manufacturers and ultimately helped us decide which one was best for us. After that, we evaluated suppliers for all of our ingredients: CBD, sugar, etc.

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Early prototype of the Tin

Between the branding and the product development, the whole process took about two years. Honestly, it was much longer than I thought I would take. But it was incredibly fun to be working with professionals who knew how to build a proper supply chain and a proper brand. If you have the funding, I would highly recommend that you work with an agency and a partner who can help you work through these challenges, especially if this is not your area of expertise

Describe the process of launching the business.

We are still currently in the launch stays phase of Stello. We did a nice friends and family launch virtual launch event to get us kicked off but we are still working on getting our initial traction. To fund Stello, My co-founders and I collectively put in around $350,000. We spent our capital roughly like this:

  • $150K branding (including the eCommerce website)
  • $115 product development
  • $50K inventory
  • $25K miscellaneous operations (legal, etc)
  • $10K marketing

When all was said and done and we had the products created and in stock the website belts and any other collateral, we were left with less than $10k for marketing to launch with. This was one of the biggest learning lessons for me as a founder. We didn’t leave enough cash for marketing! Ultimately my partner and I decided to put in an extra $10K each to give us more breathing room for marketing.

Since launch, what has worked to attract and retain customers?

The reason we need more cash is that marketing in the CBD space is a weird one since most typical ways to require customers aren’t available. Sadly, you can’t spend money to buy ads on Google or Facebook like a normal company, so you have to find ways around it.

You also can’t sell your product on Amazon at least not for an extended period of time. There are always arbitrageurs out there who are happy to make a quick buck but they will always get shut down on Amazon because it’s against their terms and conditions to sell CBD products on Amazon.

Because of these limitations, we started our efforts by working on a two-prong approach. First, we desired to get into several well-known publications that would write about the launch of Stello. I was using a tool called Buzzsumo to find people who were writing articles about CBD and then trying to find their email addresses using a tool called Voila Norbert. I then reached out to them and tried to pitch my story and didn’t get a very great response rate. We have a couple of things in the works (like this article in Forbes which is more about my entrepreneurial experience) and have had some success with PR but it’s been very slow going.

One of the biggest lessons we’ve learned so far came from an insider in the journalism industry. He told me when I asked for feedback that most of the companies that he is not working for are moving to a paid model. He basically said that unless your story is otherworldly, it’s going to be pretty tough to get into these publications. This confirmed my lack of success with outreach to journalists. Either my story wasn’t interesting enough or they just wanted me to pay to be promoted.

However, the learning lesson from PR is a benefit when it comes to our second strategy which is more geared towards doing joint venture deals. We are still in the very early stages in this but we’ve gotten much better reception from companies that are open to writing sponsored or branded content than we ever did with PR. The downside of this obviously, is that you need to have money to get written about. You may need to pay money upfront and you may need to also offer a commission on sales. We are still working on many deals with this strategy but are optimistic about how it will turn out.

How are you doing today and what does the future look like?

Our long-term goal is to create an iconic brand that people love, and I think that takes time. Right now we are mainly focused on getting Stello‘s into the hands of more people so we can get feedback to improve the product and the customer experience. That is paramount for us right now.

launching-a-stress-diffusing-mints-brand-after-building-a-10m-cdb-business

launching-a-stress-diffusing-mints-brand-after-building-a-10m-cdb-business
Stello - Tin - Lemon

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Stello - Tin - Matcha

Our sales are currently 100% online (and also 100% through our own store) to the US only. We also plan on keeping it this way for the near future. Our goal is to eventually go into brick and mortar once we’ve gained more traction online. That will make it much easier to negotiate. We also plan on expanding internationally online as well in the near to mid future.

We are still working on figuring out our Customer Acquisition Costs and the Lifetime Value of a Customer. Those are two of the metrics that we are most keen to understand as we launch our first few joint venture marketing campaigns.

Through starting the business, have you learned anything particularly helpful or advantageous?

One major issue that we had building the tin, was trying to get the colors from our brand guidelines to match the colors on the physical tin in real life. We had to go back and forth with our manufacturer who was nice enough to make multiple samples for us to find the exact right color. I even had to borrow a huge Pantone book of colors from our branding agency and match them with my untrained eyes -- it was kind of a mess.

Ultimately, we were able to get the right colors and it looks great now, but that probably delayed us a few extra months to get it right. One thing that could have saved us some time is if our branding partner and tin manufacturer were on the same page about the colors.

launching-a-stress-diffusing-mints-brand-after-building-a-10m-cdb-business
New Stello Tin -- Left, Old Stello Tin -- Right

Another major issue that we had related to product development was the shipping of our tins from China. We would love to source these tins from the US, but right now it’s just cost-prohibitive. Anyway, we were working with a manufacturer in China and they had one delay after another. At one point we were all ready to start selling, we had all of our packing materials, all of our mints built, all of our collateral, and we were waiting on the tins for several months -- it was extremely frustrating.

Part of this was poor planning on our part. If I knew it would take so long to get the colors right and that there might be major delays with shipping from China I would’ve prioritized getting those purchases ASAP. This might be obvious now, but Covid has not been kind to China’s supply chain. Everything is crazy backed up there. Our manufacturer said it might take another 4 to 5 months to get new re-orders when we are ready to do that. Even shipping via air freight (instead of by boat) is a mess. It’s very expensive because everyone is doing it. If you have the cash that might be an option for you. Otherwise, I would recommend trying to source things locally, or place your orders much further in advance than you think you might need to.

Another issue that we had come up with unexpectedly is that one of the flavors for our mints expired. We had assumed they all had the same shelf life, but that wasn’t the case. Two of our flavors had a long shelf life but for whatever reason, our third flavor had a much shorter shelf life. By the time we got around to manufacturing our mints, this 3rd flavor itself had actually expired. Fortunately, we were able to go back to our flavor company and get another batch of flavor to use with the product, but this did delay manufacturing a bit. Next time I’ll be much more aware of these dates. I might even use a Google calendar event to stay on top of purchasing and expiration dates.

What platform/tools do you use for your business?

  • Voila Norbert - Email Finder - It can help you find someone's email address even if it’s not listed on their website by pinging their mail server.
  • Ahrefs - SEO Tool - The best overall tool for assessing which content to go after for your website and evaluating how you are doing from an SEO standpoint.
  • Soona - Product Photography - Wonderful product photo shots and affordable prices. They also have a cool online platform where you can watch the photoshoot live.
  • Klaviyo - Email Marketing - Best email marketing platform. We converted from Active Campaign and saw immediate benefit in our open rates (through techniques they recommended).
  • Refersion - Affiliate Campaigns - Just getting started with this.
  • BuzzSumo - Content Marketing - Great for finding content ideas, new content, tracking content tops, finding viral content, etc.

What have been the most influential books, podcasts, or other resources?

I love anything Naval Ravikant related. He is an investor and advisor and entrepreneur in Silicon Valley and I think he’s one of the most brilliant minds out there in the space. If you can catch him on one of his podcasts or a YouTube video I guarantee you he won’t be disappointed with his knowledge around building businesses. He is more on the high-level philosophy and strategy of business-building rather than the tactical side but I think that’s more important to start with.

I really love the “Well Made” podcast by Lumi. It’s A show about e-commerce and entrepreneurship and the host Stephen brings on incredible guests. I recently just listened to one of the episodes from the founder of Jin Lane (branding agency) which was really interesting. I won’t spoil anything for you but it was a whirlwind of a podcast. If you’re looking for some inspiration I think this is a great podcast.

One of my other favorite resources is the Tim Ferriss book Tools for Titans. I keep this on my bedside table as a reminder for all the amazing people out there doing really cool stuff. It’s an easy book to flip through and I find that reading someone else’s story can be very motivating. As an entrepreneur especially if you are running a solo business it can be very isolating sometimes. That’s why having great resources like tools for Titans and also Starter Story can help you feel more motivated and excited for the long journey of entrepreneurship.

Advice for other entrepreneurs who want to get started or are just starting?

No matter where you are in your business, I am a big fan of masterminds. When I was growing Healthy Hemp Oil, I was a mastermind from zero sales all the way to seven figures. Every six months or so we would close the mastermind and start a new one with people doing them around the same level of revenue because you have different issues depending on how big your company is.

Masterminds are great because they sometimes can help you see challenges and through obstacles in ways that you can’t see, sometimes because you are too close to the business. If you can get in a group with people who are honest and genuinely interested in growing together there can be a real sense of camaraderie and collaboration.

If you are just starting and are less than six figures I would recommend looking into the Dynamite Circle which is a paid membership forum for entrepreneurs. They also set you up in masterminds with groups of like-minded and similar business staged entrepreneurs. I’ve personally been in the dynamite circle for over eight years now and it’s a great group. I’ve met tons of friends and also partners and advisors in my business here.

If you are doing over $1 million per year in revenue I would highly recommend looking into EO (Entrepreneurs’ Organization). It’s a wealth of knowledge and expertise with something like 11K members globally. Like the Dynamite Circle, EO is a group of entrepreneurs who want to help each other grow not just in business but also life. While I was in EO I was lucky enough to be a part of some amazing masterminds with extremely talented business people and I learned a ton. I would highly recommend checking out EO if this is something that interests you.

Where can we go to learn more?

Reach out if any of this resonates with you and you’d like to connect.

Also, if you have any questions or comments, drop a comment below!