31 minutes | Dec 10th 2020

Creating Cohesive, Crazy Value for E-commerce Brands

Lucas DiPietrantonio is CEO and co-founder of Darkroom, a 3-year-old creative e-commerce growth agency that launches new brands to market and grows existing brands to maturity through four robust and specialized verticals: branding, technology, video production, and growth marketing Darkroom often serves as an incubator and marketing partner for companies so new they don’t have a brand, a visual identity, or a tech stack. “But we are selective,” Lucas explains. A typical client company profile would be a consumer-facing, consumer-packaged-goods (CPG) brand with a strong founding team and enough raised capital or the ability to bootstrap that the company could rapidly scale. Darkroom launches 7 to 9 new companies a year. As an example, for the past two years Darkroom has been incubating an internal venture with one of its external partners: a collection of high-quality, limited edition, luxury, athleisure performance “sneakers” unlike, Lucas says, “anything you’ve seen.” Both Nira sneakers and the pre-launch site https://www.nera01.com/ go live on December 15th and are designed to organically grow the word of this shoe. A main site for the brand will target different demographics and have a different purpose. In this interview, Lucas explains how different approaches to video affect its effectiveness. Many companies will engage agencies that are strictly performance-focused and do the creative in-house or engage another agency to do their creative work. Over time, this dichotomy results in a lack of strategic focus and content cohesiveness. Lucas claims that people come to Darkroom because the agency’s integrated production, creative, and performance team can develop a company’s content strategy, with the “two sides (creative and performance) of the same brain” operating in synchrony. The close fit between performance and creative creates a consistent “content engine” with a “feedback loop.” The result? The highest-quality-currently-available content over a long period of time at about the same cost as in in-house marketer. The agency’s high performing, converting websites work because visual identity and marketing create a cohesive digital experience that maps onto the customer experience of other things like packaging. Lucas says everything needs to feel cohesive.  Lucas writes a number of online columns and recommends people check out his informative entrepreneur.com. He is available on LinkedIn as Lucas DiPietrantonio, on his agency’s website at: darkroomagency.com, or by email at Lucas@Darkroomagency.com. Rob: Welcome to the Marketing Agency Leadership Podcast. I'm your host, Rob Kischuk. And I'm joined today by Lucas DiPietrantonio, CEO and co-founder of Darkroom based in Los Angeles, California. Welcome to the podcast, Lucas. Lucas: Yeah, Rob, thanks so much for having me, really great to be here. Rob: Super to have you here. Why don't you start off by giving us a rundown of Darkroom and where the agency excels? Lucas: Yeah, of course, of course. First of all, just wanted to thank you for having me on the show, really appreciate it and excited to talk about Darkroom. This was an agency that me and my co-founder Jackson Corey, we founded about three years ago. And it's really evolved quite rapidly in the past year or so I'd say has really just become something different than what it was, but at its core we're creative growth agency specifically built for e-commerce. And we're really predicated on doing two specific things: launching new brands to market and growing existing brands to maturity. And we do that through four major disciplines which I think are quite rare in the e-commerce space: One is branding, two technology, three video production, and four is growth marketing. And I really think we found service market fit in the past like three months or so and it's just been a scale-game-since year, but yeah, it's been really interesting and fun growing the company, but you'll notice we do quite a bit. Each of those verticals are pretty robust and specialized. Rob: I'll be eager to dig into those. The two different segments of clients you mentioned, it seems fairly interesting, especially when you're talking about that embryonic sort of brand. How do you think about when you're looking at a new e-commerce brand looking at client selection, because there's an element of, to get them somewhere you have to see something in that client that you believe is meaningful in the market. Lucas: The brands we work with from conception, first of all, we are pretty selective with any of the companies that we do end up engaging with. But those that actually want to work with us from conception, they don't have a brand, they don't have a visual identity, or any sort of tech stack. They have an operational idea, an assemblance of what they want to do. We’ll come in and serve as their marketing partner. With a lot of these pre-launch companies, we service them almost as if we're an incubator, which is incredibly fun and rewarding to work with them on, but we are selective. My co-founder Jackson is the only person who will touch branding engagements for the firm, that’s just by virtue of having quality control over our creative output on the brand side of things. So it's minimal.  There’s probably seven to nine brands we’ll launch each year and we are pretty particular about it. Some of the formula things that we look for are CPG brand, consumer facing, really strong founding team, most often raised capital of some degree so they can eventually scale or has bootstrapped and has the ability to scale pretty rapidly after launch. That founding team needs to be strong operators and people we really believe in. We work with people as if we're investing in them. It's important for us to feel really good about the partnership. On the incubation side, that's how we really engage with companies and what we look for. Rob: Interesting. Is there an example you can give, just to fill in some of the context here, of a brand you've kind of taken through that early launch stage that maybe we can go out and check out when we're done with this conversation? Lucas: Yeah. There's one that's really top of my mind and really close to home for me. It's what I've been working on for the past two years or so. It's not exactly launched just yet, but it's going to be launching in the next two months so I might as well mention it. It's a sneaker brand called Nira. It's actually a Darkroom internal venture that we've been incubating with one of our partners outside of Darkroom. It's a sneaker brand we've been working on it for the past three years. It's a long incubation period, and that's just because we've really been more involved on the operational side of things to sourcing and being hands-on more or less as founders rather than just marketing partners. But what that relationship has really looked like has been coming up with the actual brand story based on the vision of the founder distilling that into a visual identity, moving to technological specs. So we have a pretty robust pre-launch site that we're going to be launching as well as a main site, both of them are aimed at different demographics and different purposes and then we're going to be doing all of the ongoing growth initiatives. Along the way, we traveled to Italy three times . . . these sneakers are being made in Italy. They're inspired by Italian Motorsport culture. So you really get this rich vibrant marketing plan and visuals, which we've really enjoyed a fast shoe, fast sneaker, but for people who are going to listen to the podcast these sneakers are going live and our pre-launch site is going live on December 15th at nirashops.com. And, you know, that's about a month and a half away, and it's a pretty big launch that we're gearing up for one that we're really excited about. Rob: How many varieties are you launching with colorways? And is there an angle for the collector market when you're in the sneaker land here? Lucas: Yeah, so all of these sneakers are limited. We're only producing like a few hundred pairs of each sku, so we definitely wanted to go into this with the idea of quality over quantity, perfecting our craft. We're using some of the best craftsmen and all of Italy. We've vetted quite a few different factories they're being made in the Abruzzo region near LA marsh. And you know, each individual shoe probably touches 44 different hands and takes 48 hours to build so they're very high quality. We're launching with only seven different skus -- so not too many. they're going to be tranche out in terms of releases. But we've got so many different shoes that we've made along the way that we're hoping to release that we just can't release. So that pre-launch site that I was mentioning on December 15th, we have these really limited, beautiful sneakers, they're unlike anything you've seen, it's like an athleisure performance shoe, but it's luxury And you know, you're not going to run with it.  And it's like a suede shoe So it's, it's interesting, but it doesn't look like a common project or what you would typically expect from a lot of these USD to see brands popping up from Italy so it's definitely got its own niche. But that site on December 15th that we're launching because we have all of these prototypes it's going to be for our friends and family that we've been talking about for the past three years. And they're like, hey, when can I get a sneaker, when can I get a shoe? Like those look awesome, when can I have some more information? What we're going to be releasing is a prelaunch site aimed at just kind of growing the word of this shoe organically. So there'll be some referral structures built in, but everyone who sort of accesses that website will have an opportunity to, you know, get a free pair, but also get a prototype. So, a pair that will never release ever . . . one that is a one-on-one sneaker. I mean, you have to do a few different things to actually be able to qualify to get that sneaker, but that's how we're really going to give them back to our community who supported us early on. Rob: That's excellent. I think you've given us a pretty good walkthrough and how you are even thinking about branding and how that would translate through to clients. You started to bridge, I think, a little bit into the technology, but e-commerce is a wide berth when it comes to technology. Paint a picture of what your range of engagement looks like on the technology side. Lucas: Yeah, so for most, I would say probably 80% of our business is e-com and that's just because we've really built an agency that can service SMBs or larger mid-market e-commerce brands really well, because we just know that customer. We're launching our own brands in the e-com space and we know exactly what they need and know exactly what they don't need and don't want to pay for. On the technological front in e-com, your website is your storefront. It needs to be highly optimized. If it's not, you're just leaving money on the table. We build really high performing, converting websites that are also just top-notch from a brand perspective. Because we're doing your visual identity and we're also doing your marketing, we can maintain cohesion across the digital experience and how that maps onto the customer experience – like packaging. You want everything to feel cohesive.  At the simplest and most important level we're doing digital products for e-commerce brands. For ongoing engagements, we'll do things like conversion rate optimization, web support, really being that back engine driver of an e-commerce brand. And you'll really talk about me say Darkroom being an engine, or like a Ninja for an executioner for a lot of the companies that we work with because we're genuinely trying to position ourselves in that way. We have an office in Odessa and Ukraine spent quite a bit of time and money and resources figuring out the perfect market for affordable, but really high-quality labor for a lot of these brands. They’re not going to pay American engineers who are working on software, and if you don't want to touch, you know, Woo Commerce or Shopify or your headless website unless they're getting paid, you know, 180K annually plus . . . that doesn't work for a lot of SMBs. So we've invested quite a bit in our infrastructure and overseas markets and we've worked with people from everywhere and just landed on Odessa and Ukraine as a perfect market for our use case and our needs. And you know, just for your insight – Darkroom, we did start as just a design and development agency so we've got a pretty high competency on, on the technological front. And, you know, the other 20% of our engagements are Darkroom digital engagements, where they might be more robust digital applications, things of that nature. Rob: Yeah, you mentioned a few different platforms and there, you mentioned Woo Commerce, which some people may know, you mentioned Shopify, which is a big, big name. And something you mentioned that people may not be as familiar with is the headless situation, which it's a content system, but I assume you're building perhaps sort of a bespoke front end, but still using a backend e-commerce engine? Lucas: Yeah. I mean, there's a lot of different ways to approach that. Shopify has also become headless recently, so it just depends on like the specific needs of the client and what they're looking for. I think you're going to start to see the e-commerce landscape move more in the headless direction. Also the no-code direction, using platforms like Shogun and other sort of systems that come up for these SMB convents specifically. The digital landscape on the e-commerce front is definitely changing pretty rapidly, People want more flexibility. They want it to be easier, quicker, that’s a lot of the stuff that we do. Some people just don't want to deal with their technology, but there are a lot of brands and companies coming out with interesting solutions for clientele across the spectrum in terms of size. Rob: You seemed to be very interested, especially in your own work, but in general, in working with non-commodity brands. How do you think about, when you're working with them, the distinction between what commerce they want to have on their site or other places they may want to sell? It seems like almost every big brand wants to be a marketplace now. I think Target even, they'll sell stuff that they don't stock – so how do you think about where your clients should be selling? Lucas: Yeah. It's definitely determined on a case by case basis. You'll have some products that are going to do really well on Amazon or other channels and others that, we might recommend just strictly to see and try and build out that brand. For our clientele, we definitely prefer working with really strong, authentic brands, people who either really know their customer and have developed great relationships with them. And I can think of a number of different companies that we work with off the top of my head that really satiate that criteria. And the other thing is like for me, the agency is all about the people and the sort of talent that we attract and I genuinely want our people to feel happy and fulfilled on the work that they're doing. And that necessitates founders who have built great products or are doing something different or are doing something positive to really excite our staff.  Everything from there follows: you have high employee satisfaction, high client satisfaction, the retention rate goes up across the board, and you also get a great portfolio off of that work. I definitely try and look for brands that are a good fit for us. There are definitely some brands that are not a good fit for us and we'll just say that off of the gate, out of the sales process. But ultimately that's where we perform best because we're definitely a brand-focused agency. We want to see our clients succeed. Sometimes it's hard to tell a client what to do if they don't want to do it. Rob: Certainly, I can imagine, if you have an undifferentiated product, if there's low margins, all of those things are going to reduce the flexibility increase. Now, not to say there shouldn't always be pressure to perform because e-commerce is definitionally pressure to perform, but the margin of creativity and in a low margin business can just be such a challenge. Now, you mentioned another discipline that you do work in is video production. I'm sure some clients come to you thinking the key to their entire future is that viral video that's going to get out there. Everybody's going to beat down the door to their site and buy all their stuff. But how do you guide a client’s expectations on what is necessary at what stage of the business in terms of video marketing? Lucas: Yeah. Expectation-setting is baked into every single step of our process. It's only when you have a client who's really dialed into their goals, but is not over-projecting what they've like unrealistic expectations, where we can really sit head-to-head and come up with a strategy for success. On the video side of things people come to us because we are generating the highest quality content in e-commerce right now. And that's by sheer virtue of our talent – people we've attracted and how we're doing e-com content differently. Every e-commerce company – they’re interested in performance and performance marketing, but they'll engage agencies who are either strictly focused on performance and are not thinking about creative because they just don't have that side of their brain operating. So they'll engage your performance agency and then they'll do their creative in house, or they'll engage in another agency who's doing their creative – but these people are not actively thinking about their performance because they're just not operating in the ad account. Or they're not actually deploying those videos, or they don't know exactly how to create videos that will go viral or will perform really well. You have this like separation between creative and performance and it makes no sense. What we've done is we've integrated our video production team, our creative team, and our performance team. Our growth channels and our creative teams operate as two sides of the same brain. What you get is this really nice feedback loop where performance informs creative and creative tests hypotheses and you constantly learn. The way our video production services work – they are meant to be a content engine for a lot of these e-commerce brands. E-Commerce brands traditionally will do things in house, they'll do a sporadic photo shoot when they need content and be like, “Oh, I need this now because we're getting ad fatigue or things aren't performing well, or we need more video content. There's no strategy really behind that. Or you'll engage a production company every six months with a new concept and they'll execute on that. There's no cohesion with the content. If there is, it just takes more time and effort, you need an internal creative director, or whatever it might be.  Our video production service offering, you get a team that is with you from the start, they figure out your content strategy for the next six months, and then we execute against that. So you get consistent content over a long period of time and it costs you about the same as when you've got a producer director, video editor, the entire post team from pre to post – it costs you the same as an in-house marketer. So that's been one of our most popular services, which has been awesome.  On the viral side of things, sometimes we'll layer UGC some of our video that we take on set with our influencer marketing service offering, and we can definitely tap into vitality, just it needs to be done, right. And by reality is all about just experimentation testing hypotheses and seeing what sticks. Rob: I have to ask while we're talking about production, how did in March the COVID-19 pandemic onset affect your production? How was your handling of video production shifted over the course of the past six or seven months? Lucas: That’s a good question. It definitely took a hit at the beginning of what we were doing – just business in general, there was a little bit of a slide. I think people were really scared, they didn't know what was going to happen. There was definitely fear in the marketplace, a lot of young SMB startups were like, “Are people going to be purchasing my products anymore? Are they going to have the disposable income to do that?” There was definitely a fear. I wrote about it quite extensively in some of my columns, but what ended up happening, and I think as everyone knows, is e-commerce is really having its moment right now. So, our growth really just started popping off quickly thereafter. We were set up in such a way to help a lot of these brands who are like, “Oh my God, we need to shift, we need to focus more on e-com. Our content is now so much more important. How we're communicating online is now critical to our success.” We were really positioned in a great way to just have those conversations early on and help a lot of our partners that we were talking to who needed some of these things. And it helped that we had been investing in video production to the past two years, built a great team off of Oliver Salk, one of my great friends and coworkers now. He's just exceptional and he's building our video production team. We've made the right choices. That we invested in all of our equipment and we invested in our studio in downtown LA. That’s afforded us the privilege and freedom of not being constrained to rentals or venturing out. We could do things really safe and protected in LA under our roof. So that was advantageous. Rob: You mentioned your columns in passing. What are the columns, where should we go to find those, if we want to kind of read some of your perspective, are there? Lucas: Yeah, I think the most informative one is going to be my entrepreneur column. So just going to entrepreneur.com. Honestly, searching anything about e-commerce . . . coronavirus, I'll probably pop up. Rob: Excellent positioning there. Lucas, as you reflect back on the journey so far with Darkroom, what are some things you have learned that you might do differently if you were starting over from scratch today? Lucas: That's tough. I don't know that I would do to anything differently per se, because they've all been pretty critical building blocks on the journey. One thing that agency founders need to understand is building an agency is incredibly tough, it’s really difficult. There's so many, and there's so many different things that go into it. Figuring out how you're going to be set up for scale is one of the early challenges I think, beyond getting clients and doing good work and all of the other things that just go into making a profitable service business. I think people sometimes underestimate the difficulty associated with it. One thing that I would have maybe done differently is, and it's tough to really say this, but I'll give you my thoughts. One thing that I may have done differently is literally just focus on one vertical so quickly. It took us a little while to adopt this e-commerce-specific focus and change our messaging and our core competency towards this one vertical. It's no secret, I've been working in e-commerce for a while. So has Jackson, my co-founder. We both started fashion and apparel e-commerce businesses, that’s how we met – that’s how we started collaborating. But when we started our agency, we were doing work for everyone . . . we didn't actually hone in on that demographic and really become specialized. And I think there are two ways to build an agency. You either really become specialized and understand your customer and when they come to you, you're like, “Hey, we've done this for many other brands just like you and we can definitely do this and accomplish what you want.” That makes your sales process so much easier with that specific client. Or you can say, “Hey, we do everything and you're going to have a much lower conversion rate because they're going to be competing against the other agencies that are being specialized. But you can say, we're going to learn it, you get the benefit of us doing a lot of different things and having competency in a lot of different areas and we want to be generalists.” But that, I think only takes you so far unless you're a behemoth of an agency. So, I may have become specialized a little bit sooner because as soon as we started doing it, we started to scale at a crazy pace. But again, it was part of the journey. We needed to figure out what we liked, what we were really good at, where there was opportunity, and white space in the market. For us, that just came by looking at the competition in the e-commerce DTC agency space, which now we're scaling. I think other people look at our brand compared to some of our competitors, and these are just our competitors right now and it's just a no brainer. Rob: It's so critical. You mentioned earlier the fit, you feel like you found with your service offerings in the market and especially in startup world, they also talk about South sort of a founder market fit. And I think the journey of a lot of agencies that do well is using the market as sort of a painful tool to figure out who you are. And oftentimes, you know, it's almost like you wish there was a personality test you could take up front to help you see “Here's who you are. Here are the vertical markets that fit you. Here are the service offerings that fit you. Here are the things you wish someone could tell you.” But it seems like quite often you have to just learn some lessons along the way. Lucas: You got to just figure it out and the only way to figure it out is by doing it and screwing up and realizing, “Oh, this isn't going to work.” When that happened, it was so many different times that now I can get on a call with someone who's vetting us and describe my service and describe why that service is better than every other agency who hasn't figured it out yet. And when you're speaking from experience and just empathizing with the customer, you know, it makes your life so much easier. It's not a sale anymore it’s just, you're providing them with a service that they genuinely really need and would be better than any other service that they engage in. And that's what a lot of my job has been. it’s been making sure the services are as value-packed as possible and building out each vertical individually. So, the branding service, the technology offering.  The technology offering is one of the best out there in the e-commerce space, because there is so much BS and noise coming from development agencies who are just flat out lying. And it becomes a really big vulnerability for a lot of e-commerce brands who engage with other agencies or freelancers or whatever it is, and they don't have consistent support. So, the development offering, that's something I've been working on past quarter. Video production, same deal, just building that engine, building it out from our foundation and making it really value-packed. The amount of deliverables and hands-on content you get from our production department right now, it's unheard of. I've had other production agencies, or honestly, some of our hires who've come from other production agencies and they're like, “Wow, you're offering this? This is crazy. How are you doing this? We should be charging more.” And I'm like, “No, I want this to be value-packed. I want to deliver crazy value to our clients.” So yeah, it's just really being detailed about the services and knowing what's going to work. Rob: Sure. Coming from a development background myself, I can imagine. It seems like in all three of those initial disciplines you mentioned in branding and technology and video production. Lucas: [Inaudible 28:42]  Rob: Yeah. There's a potential high element of trust, like a lot of those things don't really work until they're done. And you can show progress along the way, but I think people have probably been bitten in all three of those areas by someone taking their money and not giving them a finished product. Lucas: Yeah. Especially in development, right. That's just always happening. Or it's like, you know, four months in, when you're supposed to have a delivered product, it's like, this is going to take a long time. Like this is going to take required 10,000 more dollars or timelines shift, or your code is just crap . . . there's so many different things that could go wrong there. And that's just all about trust, right? So now we're at a place where we've got dialed-in processes that are cut and dried. It’s like, “This is how it's going to go.” You can see it in all of our work products. You can see our portfolio and especially in the e-commerce space again, where I feel like there is a lack of creativity unless you're paying top dollar for it. Unless you have a great creative idea as a founder and you can get it done and know how to piece these things together, which is always the case and it has been the case for a while. We'll deliver a website. People would just be like, “Wow, this is incredible.” Some of our web work is we go above and beyond. Rob: Lucas, when people want to find you and connect with you and with Darkroom – maybe see that portfolio as well – where should they go to find you?  Lucas: They can go to LinkedIn. Type in Lucas DiPietrantonio, or check out Darkroom’s website, darkroomagency.com. Reach out to us. You can reach out to me via email Lucas@Darkroomagency.com. I'm usually pretty responsive and try and reach out to everyone or get back to everyone who reaches out to me.  Rob: Super legit. Well, Lucas DiPietrantonio, thank you for your time. Thank you for sharing the story of Darkroom with us. Be well. Lucas: Yeah, Rob, thanks so much. I appreciate you having me on here, it was fun.  Rob: All right. Thanks. Thank you for listening. The Marketing Agency Leadership Podcast is presented by Converge. Converge helps digital marketing agencies and brands automate their reporting so they can be more profitable, accurate, and responsive. To learn more about how converged can automate your marketing reporting, email info@converthq.com or visit us on the web at convergehq.com.
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