This transcript was generated from the episode audio and may contain minor errors.
[Music]
What's up, what's up? Welcome back. This is "SciDasil School." I'm your host, Chris Guillebeau, beginning a brand new week here. That's something I forgot to mention in yesterday's weekly recap. A few days ago, we published this month's extended cut.
Now the extended cut is a special episode, apart from the daily story, where we take a deep dive into a specific topic. That topic is suggested by you, the listeners, and over the past few weeks, I've been getting so many questions about marketing. So in that extended episode, I shared a four-step plan, four strategies you can use when you're trying to get the word out about something for the first time. Now that episode should be available in your regular podcast feed, however you listen to the show, whether it's iTunes, Stitcher, on the website, something else, but just in case you missed it, you can access it online at scidasilschool.com/marketing. And that page also includes a bunch of notes from the episode itself.
If you want to hear all the extended cuts, just go to scidasilschool.com/extended. All these episodes, of course, are completely free, just like the rest of the show. So now for today's story, it's all about a New York-based consultant who brews his need for energy into a tea delivery service, offering his customers a chance to discover new varieties each month. I'll tell you all about it right after this. [Music]
As a cybersecurity consultant in New York City, 26-year-old Nick Erich had to consistently work in tents, 14-hour long days.
To stay alert, he had tried almost everything. For some reason, he didn't like the taste of coffee, so he resorted to energy drinks and soda for caffeine, but these caused crashes and headaches. He started looking for a healthy replacement, one that would be low in sugar and easy on the stomach. Though his sister Liz had suggested tea, Nick was skeptical, but after doing some research on its health benefits, he decided to give it a shot. To his surprise, after just a month of drinking tea, he felt more focused and more productive.
And with that, he was hooked. He began drinking several cups of tea a day, alternating between hot and iced. But when he started searching out his new fix at his workplace, he was underwhelmed by the selection of old, sad teabags. Meanwhile, at the grocery store, he had the opposite problem. He was overwhelmed by the selection and the price of tea on the shelves.
Simply to sample a range would require a big investment. And it also forced him to make a lot of decisions. Nick was no stranger to launching income-generating projects. At the age of just 12, he had started his own landscaping service. These days, even as a full-time employee, he often spends his weekends advising startups on improving their products and services.
Therefore, it seemed natural to him to come up with a solution and possibly a side hustle for his steep tea dilemma. He decided to try creating a subscription service to curate a personal tea experience for others. The idea was to take the hassle out of sourcing tea and to add diversity, no pun intended, by sending subscribers monthly boxes of three hand-picked teas that differ in type, taste, and caffeine level. He called his idea "varieties," aptly combining the words "variety" and "tea." Nick enlisted his sister and some friends to help launch the venture, and he officially put it forward in October 2016. To make it happen, he had to map the market, learn the logistics of a subscription box service, and, of course, taste lots and lots of teas.
Fortunately, the startup costs were very low. Nick paid for a web host and a web developer, and he pre-sold the first round of boxes to friends and family based on a prototype he created for $85 in order to get an understanding of his customer base before investing further. Nick says that getting feedback from people he didn't know, or at least didn't know well, was the most helpful in propelling his idea along. He mentioned that it's impossible to know what people will want while brainstorming at a whiteboard, so pushing the product out was a priority for him. Soon after, he celebrated when he registered his first sale from a stranger.
He knew it was a milestone to be growing past his own circle of connections. The project has also been helped along by some creative marketing. Nick has tried Facebook and Instagram ads, worked with influencers to spread the word. He's also posted short videos, trying to make them funny and to negate the idea that sipping tea has to be proper. Variety's offers both ongoing subscriptions as well as gift packages for one month, three months, and six months.
The cost ranges from $24 to $110. But the second goal is to have customers find their favorite teas, and then reorder larger quantities of them. While the project is new, it appears to be on the right track. Last month, Variety sent out 237 boxes, and they've been growing about 48% month after month since starting last fall, with profit margins of about 45%. However, at this point, Nick still isn't taking any profit out.
Even though it's making money and financially sustainable, for now, everything gets reinvested, so that he can keep building the business. His focus right now is on actively growing his subscriber base. This month, he also launched a new option, called $10 Tea Minis, to make premium teas accessible to more people. Nick's endeavor has been guided by the classic proverb, "A journey of a thousand miles begins with a single steep." Since his startup costs were low and the project is already profitable, this caffeinated adventure is already a steamy success. [Music]
So I first told you about the subscription box business a couple of weeks ago, with this feature on a guy who sends candy from Japan all over the world.
And here we have something similar. It's a food item, or a drink item in this case, that Nick is essentially curating, putting together and sending out. And it makes for a fun gift item for someone you know who's a tea drinker, or just anyone who wants to try something different. Now, as I said in that previous episode, I think, when this kind of project works, it tends to work really well, because the income is very predictable. Once you get to a certain number of subscribers, you kind of know what things are gonna look like next month, or three months, or six months from now.
And you can make projections based on how many people will sign up, as well as what the churn rate is, which just means the rate of unsubscription, or the rate that people stop paying for the service. So here with varieties, it sounds like they have a minimum of $5,000 a month in revenue already, which of course is fantastic. Nick mentioned that he's seeing 48% growth every month, and that's definitely not normal in the long term, but it's also not unusual when you're starting out. 'Cause if you have 10 subscribers one month, it wouldn't be strange to go to 14 or 15 a second month, and so on. So that is the beauty of this kind of model, especially if you pick the right product or service to start with.
And like so many of our stories, Nick came to this endeavor based on his own story. He had a hard time staying focused and productive when working those long days, but he didn't like coffee, and energy drinks made him crash. So when he discovered tea, it made a big difference for him. And now not only does he have this successful side hustle, but he's also an evangelist or an ambassador for something that has improved his life. So you may not wanna go out and start a tea subscription service.
You may not have the exact same situation. In fact, you probably don't, but maybe there's something that's affected your life in a similar way. And that might inspire you. That might give you an idea. And of course, I hope you don't stop with an idea, because inspiration is good, but inspiration combined with action is so much better.
If you'd like to see the show notes for today's episode, learn more about varieties, just come over to sidehustleschool.com/114. And as I mentioned at the top of the show, if you wanna catch up on last week's extended cut, all about marketing, a free four-step plan for you to help spread the word about your idea when you have it, just go to sidehustleschool.com/marketing. Thank you for listening. As we begin a new week, I'm Chris Guillebeau. This is Side Hustle School.
I'll be back tomorrow. [Music]
