How Cobalt Co Is Connecting Creators to Vetted Suppliers with 2,500 Suppliers on Platform (Interview with CEO Elle Shelley Black)

Introduction and Elle Shelley Black's Background

Nathan Latka

00:00Hey, folks. My guest today is Elle Black, a serial entrepreneur. She launched her first company during her junior year of college and then built and sold her second company by early thirties. Today, she's building cobalt.co, which helps creators connect to vetted suppliers. Elle, you ready to take us to top?

Elle Shelley Black

00:14>> Let's do this.

Why Helping Creators Find Suppliers Matters

Nathan Latka

00:15Alright. Do you have some horror story here? Why is helping creators find good suppliers important to you?

Elle Shelley Black

00:20>> Oh my gosh. I have so many horror stories. Actually, just ask anyone who's ever tried to launch their own product. And I'm talking about things as easy as candles, jewelry, etcetera, etcetera. There are so many brilliant ideas that creators have. Getting them out of their head seems to be the easy part, right? Everybody has Figma, everyone can spin up a design. The hardest part is finding a supplier or a manufacturer that actually one, wants to work

00:46>> with you and two, can actually make your product and three, is not in China. And so that's the problem that Cobalt is solving. We're bringing manufacturers and suppliers from The US, Canada and LatAm to one place, vetting them and making it easy for anyone with an idea to launch their product by working directly with suppliers.

Nathan Latka

01:06I want to make candles that smell like coffee, so I don't have to drink as much coffee Who to preserve my would you recommend that I use right now?

How the Platform Works: 2,500 Vetted Suppliers

Elle Shelley Black

01:13>> Well, have, so we have over 2,500 suppliers in the platform. And when a creator wants to do that, it's very easy to search for supplier based off of all of your unique requirements. So what we learned about creators, and quite frankly, about the world that we wanna create is that who makes your products really matter? And so as we're vetting our suppliers, we're pretty picky about who we let in. We like suppliers that have humane working

01:40>> conditions that are in The US, that are vegan, that are organic, that are supply chain transparent, that are family run, that are proven, that have unique products that aren't just another product that you're going to find on Amazon. And so, really, how you find the right supplier for your coffee scented candle, we've really made it easy for the creator to decide how much they care about those factors. And then sort and find and connect and chat

02:09>> and order samples and get your product made all in one place.

Nathan Latka

02:12Interesting. Okay. So it was obviously a marketplace motion. You just mentioned 2,500 suppliers. What does it mean? Like, is it a lot of work for a supplier to get onboarded? And if it's not, like, do you convince them to get onboarded when you don't have a lot of volume yet coming from creators?

Low MOQs and Drop Ship Fulfillment Model

Elle Shelley Black

02:23>> Oh, I don't great question. So what's unique about Cobalt is that we offer low MOQ suppliers. MOQ is the thing to know that's minimum order quantity. And that's really the question that everybody asks. Okay, I want to launch a product. How many do I have to buy in my first run? And low MOQ suppliers are pretty hard to find. And so, we've done the hard part of aggregating all of these suppliers, negotiating price points, negotiating terms,

02:48>> getting them into the platform and offering low MOQs for creators. And so, low MOQs are to the order of 25, right? You wanna do a custom CBD bath bomb, you can do 25 at, you know, $7.50 a bath bomb. It's completely drop ship end to end fulfillment. You never touch the product. You actually work directly through the platform with the supplier to get the product delivered, to get the product made, and it goes

03:14>> directly to your customers. All without leaving your house.

Nathan Latka

03:17How many creators are signed up to date?

Creator Waitlist and Current Customer Base

Elle Shelley Black

03:19>> Yeah. So what's fun about Cobalt is we're still in this like waiting period. Right? And we're we're still building all of the infrastructure. We have over 77 waitlisted creators. We're slowly getting people off the waitlist. And, know, for everybody who emails me every day, I'll get to you, I promise. But just like to show people how easy it is to actually launch your own brand. That's really the magic of what we're doing at Cobalt.

When Did Cobalt Start Building

Nathan Latka

03:46When did you start coding this, Elle? When did you start getting all this together? What year?

Elle Shelley Black

03:50>> We started doing it actually right before COVID.

Nathan Latka

03:55Okay. So like '20, late twenty nineteen ish?

Elle Shelley Black

03:57>> Late twenty nineteen. Yep.

Nathan Latka

03:58Interesting.

Elle Shelley Black

03:59>> And then of course COVID happened and we got lucky. Cobalt got lucky because of everything that happened with COVID. What ended up happening is suppliers that used to not be willing to work with, you know, smaller brands, creators, because trade shows aren't happening, because market isn't happening, because of supply chain problems in China, all of a sudden suppliers are totally willing to work with lower MOQs. And so, we're again aggregating all those suppliers, doing the heavy

04:31>> lifting, doing the research, doing the vetting, doing the negotiating on pricing, doing the contracting pieces, all the stuff that's really hard and makes it impossible for anyone to get started doing their own product. We did all that for you. And we're putting it right into the platform to connect directly with the suppliers.

Nathan Latka

04:45Got it. So I totally understand the product. I wanna understand how you're building now today. So it sounds like your pre revenue, when is launch? When do you get your first paying customer?

Elle Shelley Black

04:52>> Well, so yeah, great question. So we've been having paying customers, it's just not in an open marketplace where anyone can do it. So we're vetting our customers and making sure that we can make them successful.

Nathan Latka

05:04Okay, how many customers do you have today?

177 Paying Customers and Repeat Launch Rates

Elle Shelley Black

05:07>> We over the last year, we've done over 177 product launches.

Nathan Latka

05:11Oh, wow. Across how many creators?

Elle Shelley Black

05:14>> 177.

Nathan Latka

05:15Oh, it's one to one.

Elle Shelley Black

05:17>> Yeah. Well, right now it is. Yeah.

Nathan Latka

05:19Interesting. Why don't mean, if if you do one with one creator, don't they wanna come back and do another one a month later?

Elle Shelley Black

05:25>> They yes. You are exactly right. They do.

Nathan Latka

05:28But why is it a one to one ratio? Why why haven't creators used you more than once over the past twelve Oh, no.

Elle Shelley Black

05:32>> No. No. No. No. So sorry. I thought you said how many customers do you have? So we've done a 177 customers that have launched their first product. 36% of them have launched a second product. And of that 36%, another 80% have done three or more.

Nathan Latka

05:46Oh, got it. You said a 177 product launches. Was not got it. Got it. How many how many product launches over the past year?

Elle Shelley Black

05:54>> Oh, boy. I'd have to I I know the percentages in the funnel. I'd have to go back and get you.

Nathan Latka

05:59What was Just don't name the creator, but I'm just curious. What was like the best, if you can share, what was like the best selling thing? Is it a bath bomb? A CBD bath bomb?

Elle Shelley Black

06:06>> You know, it's sort of it's sort of defend This is what's fun about this conversation. It depends on how you define best selling. Do you define it based off of quantity or do you Yes. Define Let's use quantity. Well, let's let me let me pressure test that with you. Right? Because what we actually really care about is that the creators and the emerging brands are capturing as much brand value as possible.

Nathan Latka

06:29But how do you measure that outcome on?

Elle Shelley Black

06:31>> Based off of how much the creator can sell the product for.

Nathan Latka

06:34Okay. So, what's Okay. So, let's do that. What's the highest price point thing you've sold?

Elle Shelley Black

06:39>> For a product? We've sold products that were up Well, creators have sold products that have come out of the platform for up to $150 and products that they sourced for 30% of that. Can do

Nathan Latka

06:50the Oh, math interesting. On Yeah.

Elle Shelley Black

06:51>> Yeah. So, that's what I mean, right? The example that we like to give here because it's easy to understand is Jenner, right? Kylie Jenner has a baby. What does she do? She launches a baby product line that has a bubble bath in it.

Nathan Latka

07:05Is Kylie a customer?

Elle Shelley Black

07:07>> No, she's not a And if she was, I couldn't tell you.

07:13>> But she launches this, it's basically essentially the same product as Johnson and Johnson, you know, the bestselling Johnson and Johnson baby bubble bath. It's the same amount, six ounces, but it has her name, her brand and a little bit of a different fragrance on it. Otherwise, the formulation is nearly identical And she can sell out in twenty four hours and sell it for 2.5 X more than Johnson and Johnson sells it for. That's the future. And

07:37>> that's what we're doing. So, you talk about, when you talk about like where is the value? You know, in my mind, it's the fact that Kylie Jenner can sell out this product for two and a half more than Johnson and Johnson can.

Nathan Latka

07:47I understand it. Yeah. Trust me, the reason we had you on, I get the space. Like, I love the space. I just wanna understand like how you are going to win the space. Right? So talk to me a little bit about how what you think your revenue model is here. How do you make money?

Revenue Model: Free for Creators, 8% Supplier Fee

Elle Shelley Black

07:59>> Oh, our suppliers. So it's free for creators to use and the suppliers pay an 8% transaction fee.

Nathan Latka

08:06Okay. Interesting. What does that mean?

Elle Shelley Black

08:08>> Okay.

Nathan Latka

08:10So they pay 8%. So if I let's stick with my coffee candle example. If you find that supplier and I'm gonna pay that supplier $10 to make one coffee candle, you're gonna make two you're gonna make, what is that, 20¢ on that $10 sale or that purchase?

Elle Shelley Black

08:25>> Yeah. This goes back to the minimum order quantity, right? So, the minimum order quantity is, let's for easy numbers, let's say it's a thousand dollars, right? So, a creator is gonna place an order for a thousand dollars in the platform. That order is gonna go to the supplier and the supplier is gonna pay us $80 because we gave them a customer.

Nathan Latka

08:47Got it. Okay, cool. So, that makes perfect sense. Talk to me about how you funded the business. Have you bootstrapped or you decided to raise?

Funding: Venture Backed and Seed Round in Progress

Elle Shelley Black

08:54>> Oh, yeah. We're venture backed.

Nathan Latka

08:56Okay. That means you're giving up equity. So dilution is not a fun thing. So why'd you decide to raise?

Elle Shelley Black

09:01>> Why did we decide to raise? Well, this is a venture scale product. Yeah.

Nathan Latka

09:07Raising capital means you're giving up equity. Ownership is the most important thing anywhere. So, there's got to be a great strategic reason you decide to raise. That's what I'm trying to dig here and understand.

Elle Shelley Black

09:15>> Well, I mean, it depends on how you look at it, right? Strategically, there are certain products that are right for venture, a product where you need to grow really fast and there's gonna be a clear winner in the market and you need a lot of money to get there really fast, is a venture scale business, and that's where Cobalt fits. To get all of those suppliers onboarded and to build the back end infrastructure of a marketplace

09:42>> that's complex like this, you couldn't actually bootstrap it. So it is a venture scale product. And for that reason, we opted to do venture.

Nathan Latka

09:50Okay. And how much did you decide to raise?

Elle Shelley Black

09:54>> Well, I mean, that's a great question. We're doing a seed round and we're still in our seed round, so we don't quite know what that's gonna look like yet.

Nathan Latka

10:02Oh, I see. I see. Okay, cool. Yeah, there's a lot of people right now that are sort of letting their seed rounds roll because if you find more strategic people, you want to be able to let them in quickly.

Elle Shelley Black

10:10>> Yeah. Cool.

Nathan Latka

10:12Okay. So, so you're raising capital. Now, are you sole founder here or do you have co founders?

Elle Shelley Black

10:17>> I have a co founder.

Nathan Latka

10:18Okay. How did you guys get together? How'd you meet?

Elle Shelley Black

10:21>> Well, we're in San Francisco and we're in the tech space. We're both serial entrepreneurs and we've done a bunch of startups previously. And we came together through the space through networking and knowing people in the space.

Nathan Latka

10:35Okay. And so, you're doing these, you've done these 177 product launches, or sorry, customers that have launched many products to date. When do you think you'll open up the thing where it's sort of a push button, touch people When? Without

Elle Shelley Black

10:46>> Service? Self-service?

Nathan Latka

10:48Yeah. When is that going to open up?

Self-Service Marketplace Launch Timeline: Q1 2022

Elle Shelley Black

10:50>> Yeah. Q1 of twenty twenty two.

Nathan Latka

10:53Okay. And what is left to do before you can open that up? Is it something on the supply side, the back end you have to keep building?

Elle Shelley Black

11:00>> Yeah, so if you think about a product that's comparable to Cobalt, it's easy to think about Amazon, right? In order for Amazon to scale, they had to put all the infrastructure for the stores. And so, each seller on Amazon has a seller store, they have all the infrastructure that they have to create, they can set up their seller store, they add their products, they add their SKUs, they do all of that. That's all of the tools

11:19>> that we're building right now on the supplier side.

Nathan Latka

11:22As you get to the point where you can release that self-service in Q1, at some point you want to say, you know what, we don't want to raise more money at this current round because it becomes very dilutive. It looks like based off Crunchbase, you guys have raised 2,800,000 to date. What would you cap that at? Like, would you stop it at 3,000,000 no matter what, or would you let it keep rolling for however, you know,

11:40however long?

Elle Shelley Black

11:41>> Well, where we are in the business, the way venture works is we're just getting to the end of our seed round. And when you get to seed, sort of like, seed is considered, you're trying to find product market fit. Once you have product market fit and you can show scalable, repeatable, you understand the economics of the business model, and it's really easy to understand how to grow and scale next, then you go to an A round

12:03>> or a growth round.

Nathan Latka

12:04Elle, sorry, we feature some of the top SaaS founders in the world on, Amit from Gong was on right just before you had a 100,000,000 run rate and he's raised $500,000,000. My audience totally understands what it means to raise capital. What I'm understanding specifically is how you're managing dilution with your co founder and your pre seed round.

Founder Philosophy on Equity and Building Big

Elle Shelley Black

12:20>> I don't understand what you're what what are you asking me? Are you asking me how the cap table is structured? What do

Nathan Latka

12:25you I'm asking you how you personally think about preserving your ownership in a business that you think can be really big.

Elle Shelley Black

12:32>> I mean, look, everybody has a different perspective on this. I think that my job as a founder at this stage is actually to prove the market, get the economics right, and build a really big business based off of a really big opportunity. I'm personally not focused on preserving my equity. And actually, I'm doing the opposite. I'm focused on creating as much value for my investors as possible. And that's what I'm focused on. When it comes to

13:01>> preserving equity, it just depends on how you want to look at it and what your goal is. When I look at how I'm building Cobalt, which is very different way than a lot of other people, and there are many ways to do it. You know, I believe if you build a really big business and you make a lot of people a lot of money, then everybody wins. And that's actually in my worldview. And even that's why

13:21>> we're building Cobalt. So more people have more opportunities to make themselves entrepreneurs and to win really big. So I don't sit there and think about how can Elle can preserve the most equity in startup. Think about how can I create a million millionaires? How can I create, you know, 10x returns for my investors, and then help a whole new breed of entrepreneurs create 10x returns and have financial freedom?

Famous Five: Books, Tools, and Personal Life

Nathan Latka

13:41I love that vision. Let's wrap up here with the famous five. Number one, what's your favorite book?

Elle Shelley Black

13:46>> Man's Search for Meaning, Viktor Frankl.

Nathan Latka

13:48Number two, is there a CEO you're following or studying?

Elle Shelley Black

13:54>> Well, I'm kind of a nerd and I love all of the startup CEOs. And so I've been following everything that's happening. Who am I into? I'm into retail brands. So I'm really looking at a lot of those, but I can't think of any particular CEO that I'm following or studying right now.

Nathan Latka

14:11Number three, what's your favorite online tool for building Cobalt?

Elle Shelley Black

14:16>> Oh, Canva.

Nathan Latka

14:18Number four, how many hours of sleep do get every night?

Elle Shelley Black

14:21>> Oh, I think about this often actually. It's funny you should ask. So my sleep schedule waxes and wanes, and I actually say it like that. On short sleep nights, do four to six, and then I have like longer sleep nights where I need eight to ten. And it really depends on what I need to do the next day to actually figure out my wax and wane sleep schedule.

Nathan Latka

14:39All right, and situation, married single kiddos?

Elle Shelley Black

14:43>> I'm married. I got married during COVID and Oh, congrats. Thanks.

Nathan Latka

14:47Any kids or no?

Elle Shelley Black

14:49>> Yeah. We have a he my husband has a daughter, a 17 year old daughter. And so I have a stepdaughter.

Nathan Latka

14:53Oh, very. That's so cool. Okay. And do you mind me asking how old you are?

Elle Shelley Black

14:56>> Yeah, no, not at all. I'm 39.

Nathan Latka

14:58Okay. Take and the reason I ask is take us back to your twenty year old self. What's something you wish you knew?

Elle Shelley Black

15:03>> Oh, I have this very funny story about a lot of things that put me on different trajectories when I was right at that age. And the advice that I would give my 20 year old self is actually the same advice I'd give everybody every day, which is it's going to turn out better than you imagine, just keep going.

Nathan Latka

15:19Guys, there you have it. Cobalt.co wants to help hundreds of thousands of people create millions for themselves launching their own products by making this very easy to understand your supply chain, find people that treat their workers ethically, build your own products quickly with very small minimum order values, which is what all of us care about when we're getting started to minimize risk. She has over 2,500 suppliers on the platform and over 77 creators on her

15:40wait list, but she's already done 177 launches with creators over the past twelve months to test this space. The highest product selling through the space, $150. We love that. That's brand value as she talked about it. They raised $2,800,000 to scale this thing today, Looking to grow big in the next twelve months. Elle, thanks for taking us to the top.

Elle Shelley Black

15:55>> Yeah. No. It was perfect. Nathan, you nailed that. One

Nathan Latka

16:00more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on three hungry buyers. They try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday one p.

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