❯ Reflections on Woven: An Unwinnable Business Model

My foray into ice cream started with a Target run. It was the typical Target experience: walk in planning to spend $20 but the till at the end totals $100. In this case, replace $20 with "Box of Diapers" and $100 with "check-out-this-super-sale-ice-cream-maker", and you'll have the whole origin story behind Woven ice cream.

Little did I know this max two-quart, Joanna Gaines-inspired machine would churn out epiphanies alongside the ice cream.

FINDING A SUPER POWER.

How do you find out what you're good at? Ship a few dozen pints of ice cream to real customers. Work the entire process, from buying the sugar and milk you churn to creating the brand and reconciling your financial records. That's enough. My first batch was thirty pints for ten customers and it was readily apparent where I had a knack for mastery (speed plus excellence).

Two super powers bubbled to the surface: market insights and scale.

Market Insights: I find customers endlessly fascinating and competition refreshing with a dynamic, compelling energy. Market knowledge has countless applications; I ended up using it primarily for pricing and flavor development. I chose to go with a flavor portfolio that gave the brand a broad range: tables stakes (Triple Chocolate), gourmet and seasonal (Snickerdoodle) and differentiated (Blueberry Waffle).

Scale: Doing more with less. Perhaps it's a bit cheeky to talk about scale for a one-man operation of ice cream. However, since I owned the entire production, I had to create (or find) the right tools and processes to hit all my delivery dates. Paying attention to scale meant I understood my efficiencies and bottlenecks and could effectively whip up a process, plan, or tool to "automate" the work.

REFLECTION ON AN UNWINNABLE BUSINESS MODEL.

Along the way, I named the brand Woven. And Woven ice cream has a problem: I couldn't win with the business model I had. The solid margins would only ever go down.

LET'S TALK STRATEGY FIRST

Woven's strategy rested on two pillars: luxury and scarcity. I considered the premium brands of the world (Talenti, Graeters, Jeni's) to be my competitive set and aimed to outdo their products (since I certainly wasn't out-producing them in my kitchen). I told people Woven was limited batch, limited run and opened up ten orders with three pints per order, $10 per pint. For those keeping track at home, a Woven order was $30 and brought in $300 total.

That's a pretty penny for a pint, but those ten slots sold out in less than a day. The strategy worked (and being locally churned certainly helped).

THE BUSINESS TRIAD: MARKET, OPERATIONS, CAPITAL

Lia DiBello has proposed a mental model for business as a triad composed of the market, operations, and capital. Let's review how Woven did each in leg of the triad.

MARKET: EXTERNAL INFLUENCES

Who doesn't love ice cream? The Market was an easy win for Woven. The market research I did gave me a window into the competition and customers to practically position Woven. I took distinctive brand assets seriously and made it as easy as possible to remember and buy a pint. That meant there was enough awareness and buzz that my customers weren't just friends and family.

OPERATIONS: INTERNAL INFLUENCES

Luckily, a single-person business takes a lot of the complication out of Operations. One area I spent time in was evaluating what operational assets I had available to me. For supply chain, I had an advantage: my family owns a produce company and regularly stocks all of the ingredients I needed. Reduce cost? Yes please, sign me up.

A surprise in Operations was how satisfying it was to source and find the right materials that match the intended brand and product's positioning. It all clicks together when your packaging shows up.

CAPITAL: FINANCIAL ACUMEN

The stories behind Ample Hills Creamery show how one weak leg of the triad knocks the others off balance. The founders sound excellent with a strong Market-first orientation, but Ample Hills went from a $40MM valuation to bankrupt primarily because of their lack of Capital expertise.

Capital is Mike Tyson in the boxing ring—everybody has a plan until Capital shows up.

The current strategy of Woven is to drive pricing power. The logic goes that scarcity drives down supply and demand up, so I can charge more than established, premium-priced brands (like Jeni's or Graeters). To grow, I'd have to open more space for orders. Less scarcity means pricing power would disappear. The next phase of growth (say twenty spots instead of ten) would be much more tenuous. I built Woven for a small scale operation, but a limited long-term capital model meant Woven is boxed into a corner for options to grow.
Long-term, I couldn't win with Woven's existing business model.

It's a tricky path to navigate towards a new business model: distribution might increase with a DTC model, but the unit economics wouldn't make sense without much higher production. The existing margins meant I could spend dollars on post-purchase tactics for awareness, exclusivity, and word-of-mouth. When I modeled out lower prices, the reduced margins meant those tactics were nixed, and it doesn't take a strong imagination to see that growth would be harder to come by as a result.

If I could add to DiBello's model with practical application, the triad isn't created equal. Capital has the strongest gravitational pull of the three. At the same time, while I think Capital is great as a constraint and tool, it'd also be a mistake to let it be the main driver of the business. Operations makes it possible to deliver and Market adds the soul, turning a product from bland to compelling.

Snapshot:

It was awake-but-bleary-eyed late. Mom and I walked into your room to find you already past the point of hysterical, nearly sick from sobbing. Calming you down was hard and as you sat with Mom in Big Chair. I had to get to eye level.

"Look at me," I said, and (amazingly) you did.
In the dark, I could still see how your eyes were searching for an answer. An answer and guidance for calm, peace, and dry eyes.
"Clark, we can calm down by taking a big, deep breath," I said, and (amazingly) you did.

Before this moment, I had realized the gravity of being a parent—once, then forever.
At this moment, I realized the power of being a parent—always.

Striving for better,

Justin Pichichero