Questions with Benjamin Stern, (former high school startup) Founder and Head Honcho of Nohbo, featured on Shark Tank
Ben Stern, from sunny Melbourne, Florida, came up with Nohbo in a high school biology class after watching a documentary on the damaging impacts of plastic bottles on the environment. Months later, Ben was weighing offers on Shark Tank. After securing a deal with Mark Cuban, Ben brought on a team of chemists poised to develop Nohbo Drops: the world’s first single use water soluble pods encapsulating personal care products. The governor of Florida at the time commended Ben with a Young Entrepreneur Award for the innovations developed.
He has spoken at MIT, Yale, the Natural Products Expo West, and has been featured in Forbes, The Huffington Post, The Daily Mail, Business Insider, among others. Fast forward to today, Ben manages a team of beauty and personal care experts hungry and vision driven to eliminate plastics outright from an industry drowning in it.
On April 3, 2021, Benjamin joined TeenTechSF and Bentley Design Thinking Engineering Club for the final event in their joint speaker series, answering questions about being on Shark Tank, having Mark Cuban as a partner, the importance of networking and R&D, and what it’s like working behind a company with a sustainability-driven ethos.
Q: What was the whole process behind getting on Shark Tank like? Is there some sort of process or application you have to complete beforehand?
A: There’s two ways to get on Shark Tank. You can do an in-person interview, or the way I applied was there was an email submission link. I sent an email in December, just a two sentence email. I was never one to emphasize my age; I find it cheezy when young people go on and their first sentence is “I’m sixteen”, and I cautiously and adamantly avoided that. I submitted the idea to them in two sentences, I didn’t have a product at that point, but six months later I got a call from them at 6 or 7pm out of nowhere, and they said they were interested. There was a lot of back and forth. We worked with their producers, and they kept on telling me how they were cutting people all along the lines to get on the show. It was a very competitive process to get on the show. So my trick was always to respond back to the producers really quickly, giving them time to review your application, but following up in one month if you don’t hear from them, staying on top of them as well, and really displaying lots of energy. They love personality; that really drives viewership. Then in September, I flew out to Culver City, California — it was during a school day — so I had to get a child work permit at sixteen. And I was just reading for four hours before my pitch. Then I go up there on the stage, and they make you stand there smiling for two minutes as they re-adjust the cameras — it was a very nerve wracking experience. The whole pitch was 45–50 minutes. I got an offer from Mark Cuban, Robert Herjavec, and Barbara Corcoran. I decided to go with Mark — he was the best suitor I felt. Six months later, we closed the deal with him, it took some time, you don’t close on set. Shark tank is a lot different than the venture capital world I feel: the deals are structured completely differently, the expectations are structured completely differently. It’s ultimately difficult to pitch the next Oracle (as they say) on Shark Tank, so ultimately you’re going in there for Angel investments and small entity businesses, and a few of them happen to take off. I guess the best example is Ring, which was sold to Amazon for over a billion dollars. We’re a very close-knit group with the Shark Tank crew and alumni, and it was an amazing experience that brought a plethora of not only media & PR, but also a lot of help from Mark, who I work with pretty actively still. I’d say he’s a very vocal and active partner.
Q: What is working with Mark Cuban like, and what is the best piece of advice you’ve received from him?
A: Working with Mark is very rewarding, personally. You learn from someone who is extremely sharp, extremely driven. You meet him and can tell why he is who he is. You can give him a math question and he can solve it in half a second — that’s the kind of guy he is. He’s always the last one to leave if he’s at the gym, for instance, that’s his personality. He needs to be so competitive — it’s very admirable, it’s very hard to keep up as well. Working with him can be demanding — there’s a lot of updates he likes and he requires — weekly updates, which is less traditional than other venture rounds, but he has given a lot of good advice. He’s bridged me when I needed the money quite a few times, he’s given me his accounting staff team and digital ad team to help with marketing. The best advice he’s given me is “sell, sell, sell”, and some of our investors contradict that philosophy. I gravitate towards it somewhat. Mark is a believer that sales cure everything — that if you’re in a rut, you can show that traction — it will pick you up a lot more than investing in IP or other matters. I’t really his on philosophy — I don’t think it carries over to every industry, but I think for being in the consumer goods industry like myself, it was one way for me to survive by selling and then using in-bound accounts & receivables to leverage [what we had], and so it’s the only way I survived.
Also I think one more thing…Mark tends to believe that…he pushes entrepreneurialism very hard, but he also doesn’t think it’s for everyone. There are some people who are driven to go more traditional routes, some people he advocates for riskier routes; I think it depends on the person.
Q: When you were going into the pitch for Shark Tank, did you have any expectations for what would happen on the other end? Did you already have any Sharks in mind that you wanted to invest in your company?
A: I wanted Mark to invest in the company — he just was extremely impressive. When I was 12, 13, 14, I used to watch the show religiously. Every night I watched two or three episodes before I caught up, so…[the show] really inspired me. I remember discovering Shark Tank…I always used to write down a billion ideas, and to see a show that was based upon that inspired me. Being on the show — I went on with a valuation that I…Shark Tank is a great opportunity to start out, it’s a great opportunity for small entity businesses that don’t plan to fundraise much ongoingly. If you plan to continuously fundraise — if that’s in your model where you need a lot of capital, it’s sometimes not the best route to go because your valuations are slim, and probably an eighth going on the show. So it’s very difficult to get competitive valuations, and because of that, you sell so much so early on, it can be very difficult early on, and we faced our own challenges getting Shark Tank deals early on and facing a more sour tone for future fundraising rounds. My company needs a lot of money to go because we’re so invested in IP and R&D that we build value by partnerships with large CPG (Consumer Product Good) companies — think of Unilever, Proctor, and Gamble — and that’s a costlier pursuit to sign on to these larger contracts. For a lot of food-based businesses where they have existing accounts receivables and they can survive without giant influxes of capital, Shark Tank is a fantastic route. It just depends on the business.
Q: To that end of working with CPG companies and networking, what advice do you have for networking and making relevant connections as a startup founder?
A: You can make connections in your industry and you can make connections with people that inspire you. When I was sixteen, I went to the NextGen Conference, an entrepreneurship conference, and I met some of my closest friends to this day. They’re all focused on their own business ventures — some have failed, some have gone on to sell millions of dollars worth of product. So just being around this crew is really inspiring, it has no relevance in my specific industry though. I go to consumer trade shows — the biggest one is the NYSCC — just because there’s a lot of industry experts and industry buyers you can come in contact with. Building out a strong LinkedIn presence is also really important; I think I get a lot of inbound leads through LinkedIn. I would say one mistake I made early on was not staying organized and setting up a CRM (Customer Relationship Manager). Basically, we had so many inbound leads — 700+, that I didn’t know how to categorize them, I didn’t know how to handle them. Keeping everything on an Excel spreadsheet is extremely hard to track. So we created — in the past year — funnels for sales and that’s really how I’ve been able to manage and survive so many inquiries…Check out conferences to inspire you, such as NextGen Summit or Forbes — it’s not about the conference or the speaker, it’s about connecting with people after hours and learning and getting inspired by them, because that can push you towards your next venture. Once you’re in your venture — once you’re in-depth involved — go to trade schools and I assume a lot of CES — there’s a lot of options.
Q: Now that you’ve gone through Shark Tank and multiple other financing rounds, could you tell us what a typical pitch and financing round looks like for a startup? In what ways is a typical financing round different from the round you had on Shark Tank?
A: I come from Melbourne, Florida — it’s not San Francisco — it’s a bit different to fundraise. I’d argue it’s trickier to if you’re not in one of the main cities…because you can only attract the best talent of the city that you’re living in. Raising through Shark Tank — it’s a pitch — you sell people based on emotion on the show practically. There’s a much smaller check sizes and you’re giving away much larger chunks of your company, you raise typically in convertible notes, they’re typically priced around…I think it’s exactly what you would think of a small investment and a small company. That’s how Shark Tank works. In terms of real-world investing, for me it was near impossible. Basically I was in a rut — I leveraged all of my contacts, I spent weeks and weeks and weeks creating custom cold emails…, and eventually people wanted to help me out. So I reached out to one VC who said “I don’t invest in seed rounds, but I like what you’re doing so I’m going to connect you with a fund we’ve invested in” — this one was called SaferMade — they were a small probably $15M fund in Connecticut and San Francisco, and basically SaferMade offered me a terms sheet, things went a little sideways so they pulled that term sheet back and gave me one connection, the connection that they introduced me to offered another terms sheet but it was a much more strategic investor and they couldn’t get it past their board, but SaferMade re-engaged and then they introduced me to another fund — it was a really complicated process that lasted me nearly a year and a half, and it took well over when we got the first term sheet signed — four months to close — which I would say is longer than normal but not horribly longer than normal.
It’s a whole different ballgame working with VC’s. The one thing I have learned, though,…is you can show them any materials like the perfect pitch deck,….but it’s about telling a good story, and getting an advocate on your side with whichever investor you’re talking with or whichever Shark you’re talking with because they will drive this investment home for you if you give them a good story. It’s not about how cool your idea is, it’s about how much they believe in you from the beginning based on what you’ve been through, what you’ve accomplished, how your mind is, how you think — that’s the thing I think investors really gravitate towards. It’s the people, not necessarily the entity.
Q: How do you use your product?
A: We offer these little tear drop-shaped pods, you take it in the shower — we offer it in…canisters for our hotel partners, with a cover made of pulp, and the user cups it in their hands and their shower water for around 5–10 seconds. The outer film…melts, and the inner contents lather (or cream if it’s a conditioner) and apply it to your hair. The way it works is that we have an inner chassy, an inner liquid, that has no water in it…Water-soluble film melts only with water and not alcohols. It melts the film and lathers its function and then it washes away.
Q: Your initial vision for Nohbo was probably very different from what it is now. How were you able to go from an initial idea to actually creating a product, and how did you figure out the materials that you wanted to use?
A: Earlier on it was about the necessity to create a prototype and a proof of concept, and I was in a rush because Shark Tank was coming and I needed to commercialize something…That would be throwing hundreds, possibly thousands of dollars down the drain. So what I did was I commercialized our first product — the Nohbo Ball — and it took me about eight months to actually ship out product after we started accepting preorders. To this date, I don’t think I’d ever do pre-orders again just because things go wrong and noisy customers can be really frustrating for small teams who have to deal with that “brutality” or the public. When I opened up the factory in 2017, I brought on a full-time chemist, and now we have a team of four internal scientists working on everything from water-soluble film innovations and innovations in…essentially waterless shampoos, waterless conditioners that can be housed in pods. Pods are somewhat of a technical challenge because water-soluble films, the polymer films are very reactive, and alcohol tends to be very volatile so you have to do lots of testing to commercialize the product and make sure it’s not going to pre-dissolve the product in four months or six months, etc.
Q: After you’ve created the product, how does fulfillment and distribution work?
A: We’re vertically integrated — we do self-fulfillment, so we have a fulfillment center in our factory in Melbourne, and we set that up because I had a colleague that had a fulfillment center and [we were able to use it]. We set up all the tools in this little ship station with Shopify integration, inventory management, etc. As far as distribution goes, we really have one major distribution partner, and that’s in the EU. That took probably four months to close a deal with them where they committed to purchase minimums that led to exclusive distribution for hospitality in Europe.
We have a lot of distributor requests where we’re still trying to sort them out with our CRM and vet these new leads, but we’re still hiring for our sales role to help fully lead that effort, so I can’t speak much on how you close with other distributors other than the singular one we’ve closed.
Q: What are the main marketing channels that your company uses?
A: For marketing, we’re launching a new affiliate program, but most of our marketing is through Shopify, retargeting through drip, email campaigns, this thing called Live Cover which texts people, so if they abandon their checkout there’s all sorts of tricks and tools. I’m not sold on influencer marketing but we’re trying a new tactic soon with these affiliates. I would say most of our marketing and industry targeting existing customers through email campaigns, and SEO and adwords.
Q: At what point did you incorporate your company and when do you think is the right time to incorporate?
A: Well, incorporating a company is easy. I did it alone when I was fourteen, I just went on how to form an LLC and it worked. We converted then to Delaware. Forming companies is easy, you can do it in an hour or two. I’d say the harder part is naming the venture entity because we fortunately haven’t for Nohbo, but for this new offshoot we’re doing…, we went through probably ten different names — we hired agencies, lots of different trademark issues, ideally you don’t want to form a company and have to pivot over something little like a name…and change all your marketing materials, and your context will have to learn a new name for you. So I recommend just for practice,…in Florida it’s $125. Spend the money, form a company, and then try and get some structure built on it. The product is irrelevant so early on because it’s going to change.
Q: How did you decide what to charge for your product?
A: Pods, in general, are two to three times more expensive than their liquid competitor — whether it’s laundry, tide pods, or whatnot — the thing they have going for them though is that they have people who love the convenience, the portability, the massive adaptability. In the US, Tide Pods launched in 2012, and in 2016, they comprised 50% of the US market. So they do have a lot of advantages — convenience is probably the major one. But there’s variety of advantages to using pods in general. We came across our pricing — we did sensitivity analysis, pricing models, things of that nature — ultimately, it’s a give and a take with distributors to what they whittle you down to and negotiate you down to. I would say with direct to consumers there’s a lot more leeway, there’s still sensitivity involved…When you’re selling direct to consumers online, the cost per customer acquisition can really be high, so it doesn’t make sense to necessarily sell a bundles of less than $30 final at checkout, so we tried to create bundles that elevate that price tag to a $30 range so we can actually make money through these channels. The benefit of being a DTC product that is consistently, that consumers will continue to order on a daily consumable, is you drop your cost per customer acquisition based on re-orders, so re-targeting existing audiences is the best form of marketing and lowers your conversions and lowers your cogs, in turn. So we don’t prefer to target new customers, we prefer to target existing ones.
Q: How much help and assistance has the State of Florida been to your company, and in what respects?
A: They do encourage small businesses and entrepreneurship — I think even though old governor Rick Scott has a young entrepreneurship award that drives publicity and helps you out a bit, I don’t know if the new governor has something like that, but I got that one a while ago. Florida’s not necessarily a hotbed for venture capital. Except if you’re in Miami, it’s not necessarily a place to attract great talent. I like Florida a lot, I think it’s a hidden gem, but the whole world doesn’t necessarily see it that way. The cons to Florida is, in my industry at least, is that they hyper-regulate consumer cosmetic manufacturing. Florida’s one of five states that regulates the making of cosmetics, the manufacturing of cosmetics — most states do not, so we’ve been fined over menial things. As a business-friendly state goes, I suppose it’s friendlier than most but for fundraising it’s not a great state to be in. I’ve been criticized for living here, and I’ve been asked to move by some venture firms, to more startup-friendly states.
Q: How did you balance school and Nohbo? Were there any productivity tools that you used to stay focused? Any tips on managing your time and staying productive?
A: I think it’s very difficult to excel at any two things at once, whether it’s school and business or whatnot. Peter Thiel has the Thiel Fellowship, I recommend it if you’re starting off to apply, they have an outstanding community that really helps foster your pursuit of your own innovations and ideas. I would say that good time management is how you balance anything… Also I think one thing that’s not spoken enough in a lot of startups is there’s also a lot of lag time on occasion — time where you don’t know what to do necessarily — empty, black space where you just have no idea and feel stuck waiting on something or someone. What I usually recommend in those situations where you feel like you have to wait on other people is to utilize that time accordingly and start modeling at different situations. I’ve fallen in love with Excel because you can find a way to get ahead and really learn your business and learn your venture so well, and really get five steps ahead on your business early on, and just use that time accordingly.
Q: What impact has COVID-19 had on your company and the industries that you’re in?
A: Our largest hotel distributor almost went bankrupt, it was pretty, pretty brutal. I closed a $3M fundraising round hback in March of last year….probably a week before the market crashed. I was on my hands and knees thinking everything would close, as everything I pitched was hotel-derived. Fortunately we have an amazing group of investors who believed as well as I did that the market would recover. Sales halted,…caused a whole ruckus, but it also allowed me a lot of time to improve the product, grow out our R&D team and scale new innovations. We also launched a slip-based product, it’s a single sheet of film acts like a Listerine breath tab. It contains soap, so you just use it to replace soap, and it’s more of an on-the-go type product, which has done quite well in terms of the COVID economy.
Q: How do you center your company around a sustainability-driven ethos? Are there any special company practices that you have at Nohbo?
A: We like to live by our ethos, and in the office we don’t really have plastic. We all volunteer at least 10 hours a year in terms of beach clean-up, we try to exemplify our message of eliminating single-use plastic waste through a variety of means. And we are trying to become a B-Corp as well. A B-Corp is a company that pledges to do good in the world through a variety of means. It’s a very rigorous certification that certifies you’re doing well in the world, not just for profit.
Q: How do you convince users to change their habits if they’re already used to using single-use plastic?
A: It’s a challenge we face. I’d say good instructions. Ultimately people who want to choose and they gravitate towards more sustainable options because it creates the least amount of turbulence and disruption. We invest in packaging solutions that make our product easier to use, easier to understand, and we try to minimize the change wherever possible. There is a change where showering with a pod is not the same as showering exactly with a bottled product, but we want people to have the same experience. We want people who enjoy the experience — there’s a wow factor to something melting on your hands under shower water. We give them that and we want them to have the same experience as using their favorite shampoos, favorite fragrances, etc. So it’s minimizing the change and not having them make sacrifices for using a more sustainable product.
Q: What were some of the most difficult problems Nohbo has faced, and how did you get past them? What motivated you to keep going?
A: I would say that the most difficult challenge for the company was fundraising in a consumer product goods space in a non-techy state. That was extremely difficult. The most pressing challenge for me that I had to learn was, I used to be very timid in the office. I had trouble encouraging people and incentivizing people to treat this company as their baby as well, so I’ve had to almost foster a culture recently where everyone is so invested in what we’re doing, and more so a do-good nature, an altruistic nature, and that was a change from more focused on solving a problem and cracking a tough challenge, so I’ve had to change the way I think I lead there.
Q: If people want to learn more about Nohbo, or if they’re interested in buying your products?
A: Nohbo.com and you can reach out to me! My email is benjamin@nohbo.com. So no H B O, which is an acronym and compressed word for No Hair Bottles. Come check us out!
Watch the event recording here! https://youtu.be/7oNidJEkh-U
To check out the registration page for the TeenTechSF x Bentley DTE Speaker Series, which featured several more young entrepreneurs, visit ttsf-dte-speakers.eventbrite.com!
