This week on the Scale Academy Podcast, Elle Shelley Black, Co-Founder and CEO of Cobalt, joins Ned Arick and Hilmon Sorey to share ghost stories and talk about the genesis of Cobalt and how she has scaled it to what it is today with the help of underestimated investors.
Elle concedes that it was actually an accident that 85% of Cobalt’s investors are from underserved backgrounds, but this accident soon became very intentional. Elle herself is very different from most founders- she is female, she did not go to an Ivy League school, she is not a coder- and so it just fit that her investors came from underestimated places, just like her. When Elle was creating Cobalt, she tried to think of how she could create more access for more people to Venture. In Elle’s words, “How do we empower anyone who wants to be an investor to come and try to be in this world too?” Find out how this journey continued at 20:03.
As part of her journey with Cobalt, Elle has decided that she will consider it a success just by doing things differently and showing a different path because it shows people that it can be done differently than what is traditional. Elle also explains that they are trying to turn Cobalt into the ‘Alibaba of the Americas.’ They are focused on de-globalization and providing opportunities for suppliers in the Americas only by aggregating everything into one place and making it easy for independent retailers to discover, customize, and shop. Continue listening at 25:13 to learn more.
Incremental Innovation on Existing Products
Elle explains that there are two different macro world views on how to develop a product- the Western way, and the Eastern way. The Eastern way imagines innovation where you take something in existence and refine it, also known as incremental innovation on an existing product. When Cobalt talks about customization, they are referring to taking an existing product from an existing supplier and customizing it the last 20%, and capturing the value at the brand level at the end. Listen at 27:21 to learn more.
Brand Experts or Product Experts
Hilmon poses the question to Elle (because of the incremental innovation, or customization that Cobalt offers) that people buying from the marketplace don’t need to be product experts, they just need to be brand experts, correct? The answer is ‘No.’ Elle takes a broad look at the US retail market as a whole. It is a $4.4 trillion market. She then goes on to break it down into submarkets, one of them being independent retailers. These further break down into three subcategories, which Elle explains. These independent retailers make up over half of the overall retail market, and “...what do they need to do their $2.2 trillion in sales? Products.” So in a way, people buying from the marketplace do have to have at least some product knowledge to go along with the brand knowledge that allows them to customize the products. Learn more at 29:28.
Capturing Both Producers and Consumers
Elle explains that in order to solve the cold start problem, they built a flywheel and leveraged technology. First, they began ingesting and organizing all of the wellness suppliers in the US, Canada, and Mexico. They then wrote an API and create and auto-populate seller stores. They add products to the seller stores in the Cobalt marketplace and then show it all to buyers and drive them in through growth tactics. Continue listening at 31:42 to learn more.
Pivoting to the Next Chapter
Elle had been building crowdsourcing platforms and challenges for 5 years for some very large organizations. During that time she realized that she was accumulating ideas and designs from engineers and designers all over the world and she wanted there to be a place where anyone with their idea could develop it without being dependent on winning prize money or getting a corporation to sponsor it. This is where the original idea for Cobalt began- it would be a gig community of designers and engineers all over the world that would be pointed at corporations to hire and to develop more products faster. They launched on March 1, 2020. And then covid came and Elle never heard from any of her big pilots again. Continue listening at 35:14 to find out what happens next in Cobalt’s journey through covid.
Capturing the Value
As a founder, Elle explains that your number one job is to create, preserve, and increase value, and she is incredibly proud to have created and preserved as much value for her investors as she has. For Cobalt, Elle believes that it is easiest to capture the value on the supplier side because they are just creating tools for them by lowering the barrier to entry to make it easy to bring them buyers. Continue listening at 42:38 to find out Cobalt’s three-fold plan to capture the value points and scale the business.
The Platform Setup
Elle explains that the platform is set up for two main product types. Some need suppliers, some need prototypes, and then there are products you can customize; Cobalt offers all of these. And there is a natural relationship between the three because there is only so much you can sell of one product so many times, so the customizers end up shopping the marketplace for a new product to put their name and brand on and go to market with that. Learn more at 48:26.
The Best Advice
At 52:05, Elle offers two pieces of advice: The first is to make a goal to get to “No’s.” If you make it a goal to get a certain amount of investors who say “No” to you, then it becomes ‘win’ to get a “No” so it doesn’t bother you as much. You are wired to win. The other piece of advice is to get as much sleep as you can, work out as hard as you can, and drink as much water as you can. Because if you are not taking care of yourself and your body, you will break down at some point, no matter any of your other circumstances.
Anyone who wants to get in touch with Elle or go to Cobalt, go to cobalt.co or reach out to Elle directly on Instagram at @Elle_Shelley_Black.
20:03 Underestimated Investors
25:13 The Strategy
27:21 Incremental Innovation on Existing Products
29:28 Brand Experts or Product Experts
31:42 Capturing Both Producers and Consumers
35:14 Pivoting to the Next Chapter
42:38 Capturing the Value
48:26 The Platform Setup
52:05 The Best Advice