Founded in 1993 through brothers Tom and David Gardner, The Motley Fool is helping millions of people gain monetary freedom through our website, podcasts, books, newspaper columns, radio exhibits and high-level investment services.
In this episode of MarketFoolery, presenter Chris Hill talks to SoapBox Soaps CEO David Simnick about the company’s good fortune, one of the largest hand sanitizer brands in the United States. Government organizations around the world are achieving greater sanitation. Discover its diverse products, business methods and expansion over the years.
For full episodes of all the loose podcasts on The Motley Fool, visit our podcast center. To start investing, consult our quick start-up consultant for equitable investments. A full transcript follows the video.
This video was recorded on August 4, 2020.
Chris Hill: It’s Tuesday, August 4. Welcome to MarketFoolery. I’m Chris Hill. Thank you for taking the time to pay attention, I appreciate it. You may just pay attention to anything right now, and the fact that you’re paying attention to this doesn’t go unnoticed or une recognized, I don’t take it for granted, so thank you.
Today, I need to introduce you to a CEO named David Simnick. He runs SoapBox Soaps, a soap company. They have recently started making hand sanitizers. And now SoapBox Soaps has become one of the most productive brands of hand sanitizers in the United States. This is one of the conditions in which it is tempting to begin to utter the word “good fortune overnight.” But calling SoapBox Soaps a good fortune overnight would not only be wrong, but also forgetting the adventure and project of the company and its founders.
There are many reasons to love this company, there are many reasons to support this company. So here’s my verbal exchange with David Simnick, asking him to take me back to the same birth when he arrived with the concept of creating a soap company.
[…]
David Simnick: SoapBox starts with, I worked for the U.S. Agency for International Development as a subcontractor, which is a great way to say a paid intern. And my task was to locate less expensive afternoons for new projects. I did so many studies on the systems I completed, and I learned that there was a lack of concentration in hygiene. For example, in the area of sanitation and hygiene around the world, the concentrate is in water and greater attention is paid to sanitation; Thank you very much, Bill & Melinda Gates Foundation. But in 2009, there weren’t just a lot of other people who cared about hygiene.
So I called my best productive friend, and I said, hey, let’s create a soap company. Every time we sell one of those pieces, we’ll give a bar of soap, and this in turn will help fund all NGOs around the world, as well as here at home. Food stamps do not cover hygiene products, making it one of the most popular pieces both in pantry and homeless shelters, especially if they have a shower program. So we started with charity in mind, basically, the business was a late idea for, hey, let’s get this right.
So it was number 1, but we continue to do it as a night and weekend project. I literally did the first batch of soap in my kitchen in 2010. So enter the Fight Club joke here; a 22-year-old boy who lives with six other men opens a soap company. And yes, it was strange. But Dan Doll, one of my most productive friends; And I; and Eric Vong, some of my most productive friends; and Stephanie, the same thing, started SoapBox. And Dan and I continue to grow and build it. We went full-time in 2012. We start basically at points of sale and fitness food channels and like those kind of stores. Then, we started launching into larger box stores in 2015.
And we had a terrible logo image, like the less well-designed bottles you can imagine. They just looked bad. And a lot of that was because we didn’t know any more. But then, after we started getting all this distribution and expanding our business, we started to realize that if we look to expand this, if we looked to grow, we just had to be bigger in many other ways. Then, at the beginning of 2018, we had been working with Anthem, [Anthem Worldwide], which is this amazing design firm in New York, for about a year. Introducing our new logo, we started to gain speed, but doubled from 18 to 19, we’re on track to double from 19 to 2020.
Then COVID hit. And what’s so appealing is that one of our retail partners we talked to for about 18 months contacted us and said, hey, do they make hand sanitizer in February? And we’re like, we’ve known how, because the product line we manufacture soap and shampoo, conditioner and shower gel, and hand sanitizer follows similar manufacturing processes. So I went back to them and told them, yes, we think we can do that.
And then, whether it’s it, the next day we were in communication with Wegmans, where they said, hey, we want to order 50,000 sets of liquid hand soap. Which, every single day, you know, a chain of over a hundred amazing outlets as Wegmans, which commissions 50,000 games, is pretty important. So, we said, hey, we make hand sanitizer, you want it too? And they said, oh, you started making hand sanitizer, that’s great, we’re going to take a million. And we’re like what, what? [laughs] So we learned this very temporarily, oh my God! We’ve been in the hand sanitizer industry lately.
So things kept growing and building. Then they gave us a call with Walgreens, then they gave us a call with Harris Teeter, then they gave us a call with Rite Aid, and then they gave us a call with Essendant, who is the most giant workplace distributor in North America. For example, many other people have never heard of Essendant, but if you ever bought W.B. Mason or Staples or Office Depot, you probably buy Essendant. And then we move on. Lately we have been manufacturing hand sanitizers for some giant retail chains.
So I think for us, the explanation for why we have this opportunity, Chris, is that we spent years drinking coffee, sharing bread with all those buyers. And many other new people entered the hand sanitizer industry when the big two couldn’t. So when Purell, who belongs to Gojo, who is part of the total company, was unable to attend the call because the government essentially said that the medical channel must be answered. And then Vi-Jon, which manufactures almost every one of the personal label hand sanitizers he sees on the market, as well as his own Germ-X brand, has been completely stripped, like there’s no way to meet the sales space request. It gave us a great chance.
There are many other people who have also learned this opportunity. The explanation of why SoapBox has been a success when many of those small brands haven’t done it is because we’ve been in the industry for 10 years. And when we made that commitment, we said, hey, we’re going to ship on time, they said, I accept as true with you, because I met you on industry programs, you’re already a salesman, you know how to replace my DC, and so on.
Hill: And it seems that, [laughs] to get back to the birth of SoapBox, you start with the project in mind, it wasn’t like, you and your friend came together, they crossed the numbers and said, soap, it’s a corporate gain, there’s an opportunity, but it turns out that in the decades that followed, you and the other members of your team really showed due diligence [laughs] Array and not just in the packaging , the brand, all those things, but start looking, okay, what other products are there? You know, getting into shampoo is a no-brainer. Looking at the hand sanitizer, so that you really have the advertising look, if not absolutely blocked, you were definitely [laughs] from a point of greater intelligence and greater wisdom than when you were born SoapBox.
Simnick: Absolutely. We keep moving. So, like many founders, especially the new founders, they’ll tell you that, can you be informed of your mistakes before those mistakes kill your baby? What sounds incredibly drastic, and is not intended to be, however, the analogy is this: can this iteration cycle pass faster than the mistakes you have made, harming your business and/or your profitability and/or even your livelihood lopass? ?
And I think one of the attractive things about SoapBox is that, at the resolution point after resolution point for the last 10 years, we have refused to surrender. And Dan Doll, who runs our entire source chain, our operations and product progression, is funny, like, don’t take my word for it, there are industry magazines that have called it the miracle of the source chain, because unlike other brands that buy a finished turnkey item from a potential Array supplier we provide almost everything for the filling and filling services that created those hand sanitizers for us. That’s not normal, is it? If we had to move on to one of our home chain partners and say, hey, can you do that? They’d be like, yes, I can, I don’t have the bottles, or, yes, I can, I don’t have alcohol.
So we supply a lot of those raw components. And the hysterical stories I have, Chris, of other people like, stealing all night looking to sell us fraudulent alcohol or, uh, seriously, that’s one of the reasons so many other people.
Hill: I’m just going to say, while you’re talking, I’m thinking, where can you get a liquor truck so I can make hand sanitizer trucks?
Simnick: Corn. [laughs] So the simplest way I can say is ethyl alcohol, corn. And America has a lot of them. What’s interesting, and it’s a bit of internal baseball, the explanation for why so many hand sanitizers smelled so bad or just bad in the early days of COVID is because there wasn’t enough ethyl alcohol that didn’t meet the USP standard. or pharmaceutical grade. Much of it was fuel, which other people stopped driving so much, so they diverted much of that ethyl alcohol into hand sanitizer. But the challenge is that it smells like ethyl alcohol and smelled bad.
And we took out some lots that smelled of the wrong mixture of margarita, it was too much. Fortunately, nothing we’ve been doing lately is closer. But we’ve become a hand sanitizer logo in the United States, we still are. And that’s for me: look, The SoapBox’s story about how we turn can be reduced to perseverance and relationships. And that’s: I’ve listened to many other customer product entrepreneurs, who say, hey, it’s not a new tech company, you’re driving a new tech company, you can create a new business with a total logo. on the weekend if you wish, because your finishing product consists of zeros and a few. With CPG [Packaged Consumer Goods] now, your product is on someone’s shelf and you have to pay to remove it, or you should wait for the next restart, which is planned 8 to 12 months in advance. So now, keep running in the chalfinishar. So, if you need to rotate, things take a year or two.
So, for us, it was a constant confidence that our project was valuable enough to be constantly in the trenches and build that brand. And, fortunately, we’ve created a phenomenal herbal product that consumers really love. So we just build the basis of the following elements that really love our brand. And now, like, it took us 10 years to give 10 million bars, Chris, this year alone, we’re going to give over 10 million. Like, it’s just crazy.
And I am very grateful for the paintings with the wonderful team we have, as well as to all the wonderful partners we have. For example, I can explore a long list of all the stores that are simply other phenomenal people to paint with, whether it’s in the look of shoppers and in the look of everyone else, to a verifier, just a glorious team effort.
Hill: So, one of the things we’ve been talking about in this exhibition for the past few months, regarding customers’ assets, and especially the retail sector in the United States, is how, to vary the degrees of success, other national chains have innovated. , have been to meet their customers like never before, from grocery retailers to mass classic stores like Target and Walmart. What did you see from your position? I mean, I can do it from the point of view of an undeniable customer and an investor, for someone who’s in the business you’re in, what do the last 4 months look like in terms of necessarily the loopy rush that all these others have? companies have been looking to undertake?
Simnick: I think there are regional super forces, like Publix, like Meijer. Meijer is an existing store; H-E-B owns Texas, the existing SoapBox product store; Wegman’s power station in the northeast and in the Mid-Atlantic, the existing SoapBox store. I promise you it’s not a trap. Hy-Vee, the same with our products, in Iowa and the Midwest. They are innovation labs whose goals and Walmart are learning. Even Amazon will take a look at what Wegmans is doing to offer this customer a phenomenal delight.
And I think what’s so desirable is how everyone learns from each other and evolves, and it happens faster and faster. And nothing I’m going to say will be revealing because 20 or 30 years ago, the veterans we have on our team are like, buying was a matter of relationships, now buying is much more about knowledge and the fact that you’re negotiating with the consumer. When someone buys a SoapBox product, fortunately, we have twice as much loyalty as other companies. So we know that our project in “one by one” is not the explanation why you buy this the first time, that is surely the explanation of why you buy us the second, third and fourth time, which is phenomenal. Because when I can pass a visitor and say, hey, I give you a bigger margin, we can make many smart paintings in combination in the world, also, I have a grip that will bring the visitor back to their doors or return to their online page or place an order through their distribution; It’s phenomenal, is it rarely?
And the other thing is that I know for sure that I build the basket, so SoapBox products have a much higher basket ring than other products. So when I bring this client to your door, I have a more valuable visitor to them. And that, like, the ability for me to cut this knowledge from all other angles, even physical ones, don’t you occasionally think that this only happens with online retailers, where there is more access to knowledge? But I’d say the brick and the cement got temporarily stuck with that. And what you can get from IRI or Nielsen is phenomenal, especially one of them, most of your listeners probably already know, but all reward systems know a lot about you. And as scary as it may be, from the supplier’s point of view, what I am for those retailers, it’s phenomenal, because I know what you’re buying and I know why you’re buying it, and I know that if you buy one of our products or one of our competitors, I know how to get it through us.
Hill: Another thing we’ve noticed in recent months is obviously that big customers move on to corporations that need to work with major retailers, but we’ve also noticed they’re turning toward their own e-commerce efforts. several times Pepsi [laughs] was dating Snacks.com and just saying, hey, yes, we need you to come to the grocery store and buy Frito-Lay products, but you can also buy them directly with us. What is the precedence for you and your team to get others to access your website, or at this point, not the most sensible on the precedence list?
Simnick: So, Chris, a phenomenal question. The B2C is fascinating and, as a “challenging brand,” it’s fun to say we’re small. [laughs]
Hill: It’s a version. [laughs]
Simnick: Hey, we’re one of the 10 most sensible disinfectant brands in the U.S., but still a challenging brand. What fascinates me is that the B2C is about the weight of shipping. For example, if you’re a customer brand, delivery is everything, because customers have been trained through Amazon to get your shipment loose, and if I send you a liter of shampoo, there’s no way to make money. for the value I need to sell you to.
So we charge, we eat part of the shipping fee, so basically every time someone buys something on our website, we say, hey, our commitment to our customer base is that part of that is in us. So the margins I deal with are already narrow, because we have to be an herbal product, but accessible, so we have to be close to Dove and close to Softsoap. For example, we need to be offering a larger product without parabens, without EDTA and without other dyes and other dyes. We don’t control the animals. All those things that are close to our hearts, however, we don’t need to have a value that a customer is going to have, eh! I’ll just use what my mother bought and my mother’s mother bought it before.
That said, what we’ve noticed [laughs] is that our B2C just exploded, because consumers don’t want to leave, while we put something on Amazon, it sells faster than we can fill it. And we have such an unwavering base that it’s going to our place. I think it makes sense for any logo to think about how it integrates its own site and its own direct access to consumers from the beginning. And even if you don’t have the economy to help you, you still want to talk directly to your client. So, for us, our site is more informative about the logo and we also offer you the opportunity to buy from the logo. But I think for us it actually comes down to: sending liquids from here to the country and it’s very expensive and consumers are waiting for it.
Hill: Two more things and I’ll let you get back to your current job. I’ve been saying for a while on this show, as far as Clorox is concerned, even though I don’t own Clorox shares, I can’t believe That Clorox [laughs] may not do any more business in the next decade than they do. over the next decade. Without revealing too much, because you’re obviously a personal company, when you look at the next two years, is it a matter of hand sanitizer?
Simnick: So, everything we sell is double digits, the maximum of everything we sell is at a SKU level [Inventory Maintenance Unit], now we have 120 SKUs. So we’ve introduced over 30 SKUs in 3 months, which doesn’t make sense to those who know the consumer. Everything exploded. And my favorite phrase for other people who perceive finances is that we’ll get more profit this year than we expected in terms of gross income.
Hill: That’s a smart line. [laughs] It’s even bigger when it’s true.
Simnick: It’s crazy, Chris. So there have been other people who have come to sniff our interest and we look forward to those conversations. Being a personal company allows you great flexibility, we have amazing shareholders, basically circle of family offices that have supported us and our project from the beginning. And what I’m saying, like the long term we’re going to, is that we need to focus on creating herbal products that are incredibly effective in making other people healthy and safe. And that’s our long term.
So where we see SoapBox heading is to continue building lasting and lasting relationships with our retail partners, whether offline or online. We have developed many other channels. I mean the workplace channel through Essendant, as well as Staples and a lot of other customers. I’m talking about expansion in catering. There are some customers who liked that I didn’t call them. There is an immediate expansion in retail.
The most attractive thing about retail is that you can take a look at IRI or Nielsen, and it’s essentially an industry-wide dashboard, and it’s fun to be able to watch a hockey stick and then know that everyone in this industry can see the same thing. hockey stick. Then it was a laugh.
But for us, it’s also very comforting to know that an additional unit we sell is not only one more herbal product we can offer our customers, but it’s also an additional unit that we can provide to our help. Partners. And especially at this time, as 501 (c) (3) and charitable efforts literally affected the number of donations that came through the door, we were able to intensify things with them. And let’s say, look, their hygiene implementation budget, they gave it to us and we can double it or triple it. And that was the most productive component of the job.
Hill: The latest. Regardless of all the paintings you’ve done in the last 4 months, what are you doing to stay sane during the pandemic, or there’s something you’re watching on Netflix, or it’s yoga, they’re crossword puzzles, what are they? What do you do to avoid thinking about paintings, to the extent possible?
Simnick: The common joke in the workplace is that no one here has slept in a few months. We believe that there are incredible opportunities at hand, that a moment like this only happens once, maybe two, in the history of a company, and it is an absolute privilege and an illusion to continue to function in structure to be able to do more. Okay. There are many new products that we will launch in the coming weeks, there are a lot of new stores that we will launch in the coming weeks, we are incredibly excited about what it means for our brand. I mean, more excited about what we’re going to be able to offer our consumers and humanitarian partners.
Hill: Yes, you can catch up with Tiger King at any time.
Simnick: You know, I feel like I’ve noticed. I didn’t, but I feel like I understand. And the other one is, and again your listeners can do it, I have all the little bun running, and also, I have blond hair. So when I drop my hair, and if I wear a trucker’s hat, boy, it’s dangerously close, dangerously close to a gentle guy named Joe Exotic.
[…]
Hill: Yes, you’re not wrong about that. I know it’s audio, but you’ll have to accept it as true, he can achieve that kind of Joe Exotic look.
Seriously, if you want to know more about corporate and its mission, you can move on to SoapBoxSoaps.com.
As always, program participants may have interests in the movements they’re talking about, and The Motley Fool may have formal recommendations for or against, so don’t buy or sell shares based solely on what you hear.
This will serve this edition of MarketFoolery. The screen is combined through Dan Boyd, my call is Chris Hill, thanks for listening, I’ll see you tomorrow.