Riches in the Niches With Former Dropps CEO Alastair Dorward

Fred Schonenberg
Hello everyone and welcome to the VentureFuel Visionaries. I'm your host, Fred Schonenberg.
I'm so excited today to welcome Alastair Dorward. Alastair is a serial entrepreneur, most recently the CEO of Dropps, which is a pioneering home care brand, redefining what clean means for people on the planet. 

Under his leadership, Dropps evolved from a direct to consumer disruptor into a mainstream omni-channel brand, proving that sustainability and scale can actually thrive together. Plastic-free packaging, bio-based formulations and a bold mission to eliminate single-use waste, Dropps is setting up a new standard for conscious innovation. 

Alastair is a veteran brand builder. He was the founding CEO of Method Products. He spent his career transforming everyday products into food, personal care, household categories through purpose and design. While leading Dropps, he's led the charge forward to a future where performance, sustainability and beauty work in perfect harmony. So I'm so excited to talk to him today about all that he has built.

If you're a brand builder, a sustainability leader, an innovator at a large company or an entrepreneur, thinking about how to transform legacy industries, this is the conversation for you. Alastair, welcome to the show.

Alastair Dorward
Fred, thanks so much for having me.

Fred Schonenberg
So I would love it if you don't mind starting by sharing your journey from any point at the beginning up until Method, Dropps. I'm just curious what drew you into this world and the idea of building and scaling these purpose-driven consumer brands.

Alastair Dorward
Thanks, Fred. Look, I've become a huge believer that fundamentally business can be a tremendous agent of change for the good, right? But there's been a journey to get to that point. So I grew up in Scotland and started life as many sort of insecure overachievers in the world of management consulting. 

I started my career with a great firm, Bain & Company in London and San Francisco. They've sent me to business school in Seade, which is in France. And you know, kind of that master of the universe, think you know everything. My best, I think, entrepreneurial education came when I had the opportunity of beginning a launch of a UK brand called Covent Garden Soup in the US. And funnily enough, you had one of my former colleagues, John Stapleton, on the podcast just a few weeks back. He's a great guy. 

So my great leveling experience coming from Bain was to drive a refrigerated soup truck five days a week because the soup is perishable in these milk cartons. And I went round a dozen stores a day delivering soup to the back door of local grocery stores at five, six in the morning, working with these receiving clerks, getting products merchandised on shelf. And then at the weekends we'd do demos, right? Product demos in store. And there is nothing better than to ground you in what the consumer is thinking, what the realities of the retail shelf are, than actually being in that foundation.

So to me, that was my kind of accelerated business school experience and really kind of sparked my love of entrepreneurship. And it was while running that US soup company in its early days that I got an application for head of marketing from a young man called Eric Ryan. Eric went on to found Method, Olly, Welly and many other brands. And I called Eric immediately and said, I've got bad news and good news for you, Eric. The bad news is you're an agency guy and I need somebody from a brand management point of view. But the good news is your cover letter was incredible. We've got to meet, we have something really in common here. 

And long story short, Eric's act of revenge was to invite me to become the founding CEO of his business that he was founding with Adam, which was Method. And working together with these two founders, we built Method from zero to a hundred million plus in revenue over eight years. And that was an exceptional entrepreneurial journey for me and a real privilege to work with exceptional people on that path. 

Along the way we met, Adam Lowry introduced us to this remarkable leader in sustainability, a gentleman by the name of Bill McDonough who had written the book Cradle to Gradle with his partner, Michael Brungardt, who is a chemical engineer. And for me, that really crystallized the role of sustainability within business. Previously, Scotland's the most beautiful country in the world. I'm a bit biased, and so a nature lover. But in the 80s and 90s, for me, the environmental activists were super anti-growth. They were really militant. And I just couldn't get my head around that. 

But Cradle to Gradle basically defines that if you design your business, your product, your service the right way, where waste equals food, you can have unlimited growth and have a controllable impact on environmental issues. So that whole notion of Cradle to Gradle and Bill's inspiration really stayed with me for the last 20 odd years and has been a foundational part of all my work in kind of food, personal care, and now back in the household at Dropps. So that's really the arc of the story in a couple of minutes. 

Fred Schonenberg
I love it. And I mean, I can viscerally see you driving the truck, right, and going and doing the demos of soup with the consumers. And you said it, like, it's almost like ground zero to get with the customers, understand what they're looking for. 

We run an accelerator with the California Milk Advisory Board where it's dairy startups. We're in year seven of this thing. It's something like 60 or 70 startups that we've kind of shepherded through this. And they're at that stage where they're doing the sampling and demos in the different stores. When they get some sort of traction in that store, they're there and like, boy, oh boy, do they know what's next? Like they're on the ground talking to consumers. And I feel like everybody should have to go through that before they launch. 

Alastair Dorward
Absolutely. And in fact, I think every executive needs to do demos every year in stores to stay close. I completely agree with that. 

Fred Schonenberg
I love it. And I love the cradle to cradle story because one of the things, we have an interesting vantage point in that we kind of get to talk as some good management consultants do, right? With like a C-suite when nobody's looking. And one of the things that's very interesting is they all like the idea of sustainability until they see what it costs, right? 

And there's this moment of that friction you talked about where you have the environmental activists that are almost militant about growth. Do that less, less, less, less. And then you have a C-suite executive of a public company who's like, I am very interested in it, but by the way, I need to make profit. And I think what you're talking about is really interesting because it bridges those two worlds together.

Alastair Dorward
Exactly

Fred Schonenberg
You've now led multiple sustainability focused companies in different categories. Are there any core principles that have guided your approach to building these brands that balance that environmental impact and the growth piece that you could share?

Alastair Dorward
Look, I think it starts with the consumer and it starts with looking for potential contradictions or potential market failures that are underlying the category. I'll give you a couple of examples. So in the early days of Method, we observed that design was just becoming such a fundamental element of culture. And the design of one's home after one's own personal apparel style was such an important reflection of your individuality and personality. And yet the brands that were used to maintain the home were so ugly, you had them under your sink. 

So that was a moment of insight to kind of see what if we were to apply elegant design to a category that's completely devoid of it. You could just completely elevate and change the way the consumer thinks. Similarly, it drops. I think if you look at the personal care category, maybe 30% of the category and growing is in the sort of better for you world, varies by sub-segment. But in the core worlds of efficacy driven categories like laundry detergent and auto dish, the penetration of sustainable brands is tiny. It's like three to 5%. 

Why? Because historically there's been an efficacy trade-off and or a premium. And so that's really where drops have come in with this elimination of that trade-off. Finally, a sustainable brand that delivers the efficacy of Tide or Cascade without a premium. And so the sustainability element, the human health element is kind of the free prize inside. So I think job one is to look for that disconnect or that unmet need in the category. 

Then the second point, I think you have to elevate the consumer experience. It's impossible to compete on price in categories driven by the large incumbent, unless you can deliver a better experience. I think the Method example of liquid hand wash was a classic case study where the category previously dominated by soft soap and dial products called 199. And for so many people who care about what their guest bathroom looks like, applying a little bit of design, the teardrop shapes and elegant fragrance completely changed the consumer experience.

It's category arbitrage. You're taking something from home decor into a highly commoditized liquid soap category. And as a result, opening up completely new parameters for price point and completely new demand. Method actually increased the penetration of liquid hand soap within the category. So looking for ways to elevate consumer experience, I think is a critical element as an insurgent brand. 

I think the third trick and approach I've found to be fruitful is to actually look for niches, right? The kind of the riches are in the niches is kind of a little bit of a saying we had at Method where there are certain segments where for a large multi-billion dollar kind of global player, probably too small for you to look at and spend much resources on. But for an entrepreneurial business, it could be very, very attractive and perhaps become a huge source of revenue growth. 

And so I think the little example of granite cleaner for Method would be a classic case where the category is pretty small. It's a few hundred million, probably not worth a giant player getting into, but Method established, with beautiful elegant packaging and fragrance, a strong market share there. And similarly at Dropps, we've identified the odor eraser category, an additive as a huge opportunity for unmet need. And it's one where we've got a breakthrough product that delivers, actually it's our first eco superior product outperforming OxiClean by third party estimates. So the riches are in the niches is another kind of approach for entrepreneurs to find opportunity.

I think the fourth principle that is fundamental is margin, right? There is no mission without margin. And if you do the other things right of identifying an unmet consumer need, elevate the consumer experience, and find a niche that's underserved where you can establish a competitive underbelly, then margin can evolve. And without margin, you cannot build, you don't have the room in the P&L to invest in brand and invest in the awareness element.

So these are some learnings that didn't come from business school or my time at Bain, they came from mistakes I made along the way and things that did work out for me. So these are some of the things that I would say are commonalities certainly in my experience of things to look for on the journey. 

Fred Schonenberg
Now I can think about it as like, it's the name of the title of this episode gonna be riches in the niches or no mission without margin because they're both just great, great dimes to drop into this.

Alastair Dorward
There's slogans, yeah. But I think they stay with you, right?

Fred Schonenberg
No doubt, no doubt. I have one question for you, thinking about maybe Dropps and maybe the sound Method started, I'm not sure, but drop started as a direct to consumer pioneer. We noticed that this sort of shift into retail and a lot of startups that we've seen over the years in food and beverage and other CPG, that's like a critical moment slash decision. I'm curious what prompted that shift and if there were reasons and timings of when you made that.

Alastair Dorward
Look, there was an era where digitally native brands could just grow like a weed, customer acquisition was inexpensive, and the CAC LTV ratio was super healthy. And I think there was a swagger for a period of time that why bother with retail? We can just build higher margin, higher growth, greater capital efficiency brands that are digital only. I think iOS 14 and other factors during COVID relating to the cost of shipping shifted that paradigm to one where you actually need to build an omnichannel business. 

And I think there's a huge advantage starting with DTC. You have a tremendous proximity to the consumer. At Dropps, there's hundreds of thousands of subscribers and the subscription driven business is a beautiful thing. You have tremendous intimacy with consumer preferences and choice. It's a great testing ground for new innovation. But for Dropps at least we recognize that 80% of our consumer base actually preferred buying their products at their local store, whether that's a Target, a grocery store, or a club.

And so we recognize that not everybody wants to be on subscriptions. There was a lot there for some consumers, there was a bit of subscription fatigue in fact. And so there was an imperative to continue the growth phase by really embracing an omnichannel model. But I do think this experience for brands that have a tribe on DTC, have strong Amazon rankings and proof points actually gives an advantage before you hit the retail shelf. You have an audience that's already huge followers of the brand that can then bring to the retailer. They love that.

And I think Amazon riskings are a very objective way to de-risk. Amazon rankings I think are possibly more important for insurgents than Nielsen data in the early days. It gets you the right to play on the shelf. So I'm seeing that as a very important theme for growth brands. And those that do it right, I think are gonna do really well. 

Fred Schonenberg
I wonder if I could flip the riches and the niches on its head a little bit. As you've taken these insurgent companies in big legacy industries, right? Where there are big players. I'm curious if you flip the script and the head of Unilever or P&G called you and was like, how should we be thinking about innovation? What can we learn from you in terms of growing our pie, right? Because they are obviously always in growth mode, but oftentimes are thought of as too big to fail and all the innovators' dilemmas and things like that. I'm curious what advice you would have for those bigger players.

Alastair Dorward
Look, I think they're in a tough position. Many are struggling to grow faster than inflation. Price increases are no longer the way to go. Unit volume is challenged. You're seeing a lot of spin outs and other major corporate restructuring and some M&A at a big level. And fundamentally their problem is they have little incentive to change, right? They have a strong legacy cashflow machine that is predicated on past consumer preferences, deep supply chain efficiency. And they're really, really good at that. 

But I think you go to a place like Expo West and the one word is relevancy, right? A lot of these legacy brands, they're less relevant to today's consumer and even less for tomorrow's consumer. And so my advice would be get comfortable with cannibalizing yourself before the insurgents do. And inherently that's a heck of a risk, right? Does a brand manager get promoted by making that recommendation? I don't know, tough conversation. 

So M&A is a place to go, but there's a lot of treachery there, a lot of overpaying. It's a mixed record of buying insurgents. I think frankly, private companies have it easier. Some, a player like SC Johnson, not subject to quarterly earnings and short-termism. So I think that this world of corporate venturing is interesting because you can actually have it both ways where you're able to hold your legacy brands, but start to play with new brands and creating a stable of a business unit that has a stable of insurgent brands in it, I think is a very interesting way to build that. 

So I would lean into that and I'd say, some players Unilever, Pepsi, SEJ have done that well, but get comfortable with the necessary cannibalization of your core business, or you don't wanna be a Kodak. 

Fred Schonenberg
Oh yeah, I think… I've never heard of it as comfortable with the cannibalization because we've sat in meetings where we have a better mousetrap, and we've seen the head of R&D or product, or whoever it might be, go, "Well, I think that's gonna erode this thing that we already have out there." And we're like, "Yeah, but it's better." And it's like, "Well, but this one makes a lot of money, right?" That the cash machine is very hard to walk away from or challenge. And so I'd like that idea of being comfortable with it.

And I agree with you. I think that corporate venture capital, this idea of whether it's investment to partnerships, commercial partnerships, right? This, like testing what's outside of your own four walls and enabling it in a way that gets you closer to it, is a very interesting pathway to combat this.

Alastair Dorward
But it has to be structured culturally the right way, right? You have to have a degree of independence, hold a minority position and nurture. The rules of engagement that apply to a large legacy brand simply do not apply. And so culturally it has to be a separate stable.

Fred Schonenberg
Yeah. Could not agree more. Curious if what you're seeing in terms of like the broader trends within this sort of consumer sustainability space, are there places that you're excited about or where you see the puck going in the next couple of years? Cause I almost feel like sometimes there's like waves of, Expo West is a good example. Everything is better for you. And then the next year it's everything's protein, right? I'm curious if there's anything you're seeing in your tea leaves.

Alastair Dorward
Well, I'm not gonna predict the next way based on protein products. These are in segment by segment fat, but at a macro level, what I would say is that the stage has just gone from natural channel to all channels, right? And it used to be just about whole foods. When I love what players like Thrive Market are doing. I think what's happening at Sprouts is pretty remarkable. So there's an acceleration in what has been the natural foods community. 

And I think what I love is the idea of building directly to these retailers, as opposed to through the kind of distributor model where you actually and the consumer ended up paying more. So I think that's one theme within that natural world, but broader than that, you go to retailers, whether in Bentonville, Minneapolis or in Pacific Northwest, sustainability is a mainstream criteria at Walmart for so many categories. So I think that is really encouraging brands to be courageous, to really play in the larger waters. 

Those that are able to be successful there have to demonstrate high repeat purchase, right? There are so many disappointing experiences with sustainable brands that they are one and done. But if you can deliver repeat purchase and loyalty and see that turn rate grow and build as we have done at Dropps, the trick is to eliminate trade-offs. 

And I think that's been the historic legacy that's held sustainable brands back. That in order to embrace this brand, you've been a bad consumer, you've been guilty. It's almost a penance to use this brand that doesn't taste good or doesn't work well. That's a very limiting brand proposition. And so brands that can finally eliminate an historic category trade-off are gonna break through. We're doing that at Dropps. 

I look at the world of protein bars. I'm a big fan of Barebell. It tastes like a candy bar, high protein, and they're just growing like a weed. In the beer category, Athletic Brewing has done a remarkable job of making a non-alcoholic beer taste like a great beer. So I think these are examples of, if you can eliminate a category trade-off, you can unlock new levels of category growth. And I think sustainable brands that still have some type of trade-off associated with them are gonna be a roadkill. You just can't get there. 

I think in the AI world, the theme creates a huge opportunity in the world of agentic search, right? Where I think it can level the playing field. And instead of 2 or 3 keywords being typed into Google search, your consumer is probably putting 20 to 25 words that are the parameters for their sensitive skin needs, whatever their very specific needs are. And agentic search is now gonna actually be able to take true data, credible authorities, so that they're serving up brands with genuine foundation. So it's gonna sweep away some kind of greenwashing. And so I'm really excited by kind of cradle-to-cradle certification, as an example, where brands that have deep foundations that are genuinely there will be served up through the next models for search. 

So I'm excited that sustainable brands that have true foundations, verifiable data, can actually see themselves being catapulted in this new era. So these are some of the themes that I've been thinking through just in the last sort of six months talking to people a lot smarter than me. 

Fred Schonenberg
Yeah, you know, what's funny is I would love to keep talking about that because we are very deep into the agentic search space and looking at it. And you're the first person who has brought up the idea of it as a positive. Mostly because we've been talking either to startups who are trying to work with giant multinationals or to the multinationals who are saying, "Hey, wait a second, like the Google thing was working for us. We had figured that out, and we can overpay and get the results we want." 

What is this new thing? Now you said certified info, which is the big gap right now, right? A lot of these LLMs are trained on Reddit information or YouTube. But as that becomes, obviously the money in an open AI is making sure it is validated. So I think we're gonna get there and I think it's a huge opportunity for startups and brands that are doing the right thing to find those niches and find their consumers or vice versa, right? The consumers can find the brands that are right for them. 

Alastair Dorward
And the critical thing is to clean up the data, right? Because if you've got, it's garbage in, garbage out. And so structured, verifiable, data sources are what's gonna be the key, and there's some great little players like Novi who are doing it, Kimberly Shank there's doing amazing things to help transform that world. So I'm an optimist in general, but I do think that this model can improve access for consumers for better for you brands. I think that's a fundamental opportunity that this represents. And therefore, it levels the playing field for emerging insurgence that have a truly fact-based position.

Fred Schonenberg
Well, Alastair, this has been fantastic. I want to get you out of here on this. I know, on a personal note, you’re moving into a senior advisory role at Dropps. Do you know what’s next for you? Do you want to share that? Or are you staying within this sort of reimagining what’s possible for every day products, space, and driving change or have you not told anybody yet of what you’re doing?

Alastair Dorward
Well, it’s still emerging. It’s still very much wet cement. But what I can say is that I love working with founders to help them accelerate and transform what they’re doing. Better for you spaces that I am staying at, I love the food category, I love personal care beauty, baby, and household. There are quite a few founders I’m working with right now to figure out the right model whether working individually or as part of a platform. 

But certainly the mistakes I’ve made over the last 25+ years are the most important lessons that I’ve learned. The scars and the skinning of the knees, I think, can help me work with founders to avoid another mistake that’s around the corner for them. So it’s a little bit of pattern recognition that I think I can bring to these folks so when I finalize what’s next I’ll let you know, Fred.

Fred Schonenberg
I love it. Well, we’ll all stay tuned and you just gave me another potential name for this episode. Wet cement feels like a great one also but I think we’re going to go with the other ones. But thank you for your time today and everything that you’re doing to spark change in the world. It’s very exciting and I appreciate you sharing with us. 

Alastair Dorward
You got it.