Solo Brands CEO on IPO: Pandemic created a 'step up' for e-commerce success
Solo Brands made its public debut on the New York Stock Exchange. Solo Brands CEO John Merris joins Yahoo Finance Live to discuss.
Video Transcript
AKIKO FUJITA: I want to shift our attention here to a hot debut at the New York Stock Exchange. And we're talking about Solo Brands. This is the company behind some of those smokeless fire pits, as well as some other outdoor gear. Seeing a big pop in its initial-- or in its debut today, up nearly 30% after pricing-- they priced its shares at the higher end of the range. Let's bring in John Merris, the CEO of Solo Brands. John, first of all, congratulations on the listing. You certainly see a lot of demand, at least on this initial day. Talk to me about what you think investors are liking about the company.
JOHN MERRIS: Yeah, absolutely. We're super excited to be here today. It's been an incredible day. It's always been about the customer for us. Our ticker, DTC, is really representative of what we're about, which is helping people get outside and make great memories around the fire or with our other products. So it's just incredible to be here. It's a huge tip of the cap to our customers, who helped us get here.
ZACK GUZMAN: Yeah, I mean, we talked about the main product there, the Solo stove. Me and my friends were around a lot of them throughout the year here in the pandemic. And talk to me about what demand has looked like, as it's kind of, you know, the center stone of an outdoor category-like item. What have you seen?
JOHN MERRIS: Yeah, I mean, what's been beautiful for us is we were direct to consumer pre-pandemic. We were already an online business that was focused around helping customers get products fast and easy. Obviously, the pandemic definitely created a step up in the adoption we were already seeing for e-commerce and for online shopping.
And obviously, then, over the last 18 months, we've been able to lean into that. So we like to step up. Online traffic trends are solid, even from a year over year standpoint, as we're thinking about COVID and the impacts that COVID had on traffic last year online. So we're loving where we're at from a momentum standpoint, as well as a business.
AKIKO FUJITA: Yeah, how do you keep that momentum going when you consider that so much of the growth was driven by just the sheer amount of time people spent at home during the pandemic?
JOHN MERRIS: Yeah, the big key for us as a company is 84% of our business historically is generated through our own websites, which has created an immense amount of first party proprietary data. We have our own correlation regression model. You're hearing more and more of the changes that are going on with big tech companies in the advertising space that are changing the visibility and the ability to attract traffic online.
Because of our 84% on our own sites and our own proprietary data stack, we've actually been able to create this momentum behind our stock. And we're attracting more and more customers to our site. So the key is to drive the business directly. We have this one-to-one relationship with the customer. And that one-to-one relationships are creating momentum. Historically, 40% of our business is driven by word of mouth. So you have customers that are going out to friends and family and bringing them to us, which also has helped tremendously.
ZACK GUZMAN: I'm thinking back to another interview we had not too long ago, Vista Outdoor, and talking about why all these brands helped build on each other. And you guys, obviously, also acquired men's outdoor apparel brand, Chubbies, and you got the kayaks in there, too. I mean, talk to me about how you're really kind of putting together a brand centered around outside, similar to what they've been able to do.
JOHN MERRIS: Yeah, the beauty is, right? Normally, when you hear acquisitions, the first word that comes to mind is roll-up. That's kind of a swear word at Solo. We don't say the word because immediately, it kind of gives you this sense that you're bringing these businesses in and rolling them together. That's not what we've done here. We've acquired incredible brands that are independently operating by the founders, CEOs, and employees still today. But what we have done is leveraged an incredible supply chain network we've built out in-house and this aggregated economies of scale and digital marketing, which is allowing us to scale more quickly and more profitably with the brands and the platform.
But in the platform, what I will say, particularly about the outdoors, is, obviously, with the pandemic, Zoom effect, and people being on their computers all day, a lot of people working from home, so now their home has been infiltrated by their office lives, people are interested in getting out of their house at the end of the day. And we've put together a group of brands, a family of brands, that we're ecstatic really help people. What our brand mantra is create good moments that lead to lasting memories. We believe the starting point for that is in the outdoors. And this group of brands really helps bring that home for people.
AKIKO FUJITA: John, talk to me about the timing of this IPO. It has been a banner year. So many companies coming to the public markets, whether that's through traditional IPOs or through SPACs. Why did this route make sense for you, and why now?
JOHN MERRIS: Yeah, for us, the biggest thing is we started feeling like we were hitting the tipping point from an exposure standpoint. More and more customers are becoming familiar with us. And we think there's a massive opportunity for us, both internet nationally as well as additional growth domestically. This just felt like the right time to raise some primary proceeds that we can then invest in our future growth. So the time just felt really good from a direct-to-consumer standpoint to be able to acquire, again, these proceeds to go and invest in growth.
AKIKO FUJITA: Well, it certainly looks like you timed it right, at least looking at the action on the initial day. John Merris, Solo Brands CEO, great to have you on today. Appreciate the time.
