Meet Matthew Bertulli
Co-founder & CEO of Pela Case & Lomi!
The Come Up highlights successful business owners’ & operators ‘come-up’ stories in an easy-to-read, written interview format. All content is transcribed from live interviews.
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For this issue: Matthew Bertulli, Co-Founder & CEO two companies: Pela Case and Lomi!
Pela Case/Lomi Quick Stats:
📊 Customers: 1M+
💰 Capital Raised: $25M
⏳ Time in Business: 7 Years
🛑 Times he considered quitting: 1x per week…every week, for the last 7 years.
Before Lomi & Pela Case…
I had bootstrapped and built my first company right up until about 2018 - an ecommerce agency - and then sold it to private equity.
That was about a ten year start to finish journey.
And in 2017, I met Jeremy, who was the original founder and inventor of Pela Case. I just loved the materials and the story and this whole ‘let's go after waste thing.’
Pela was pre revenue at this point - I just became the first investor, put a bunch of money in, and then ultimately, as I was selling my first company, my co-founders just elected me as the CEO.
Pela Case took off in 2018, and then by 2020 we started working on Lomi, with it really coming to life in 2021. And originally, we launched Lomi as a crowdfund to test if people would buy it, because let’s be honest - it’s kind of a weird idea right?
We didn't deliver the first Lomi until 2022 so it’s still early days and we really run two companies, even though they're both connected by this no waste idea.
Transitioning from agency to product…
I get asked this question a lot and honestly, man, they're both a shit sandwich you're going to have to eat no matter what...they both have good and bad aspects.
Service businesses - you can start with nothing, there's low capital requirements, and they're cash generating. You run them well, they make profit, but they're difficult to scale. They’re super people oriented, and scaling people is difficult.
Product is the opposite…
Hard to start, capital intensive, and in our case, R&D heavy, which is very expensive.
It's why we have investors - these businesses eat cash for years to get them going, but they do scale.
And honestly, I like both, and I miss the agency sometimes - the diversity in project types and huge variety of conversations I’d have on a daily basis. I'm so narrowly focused now on the product businesses, I don't get the same variety anymore.
It's why I do a podcast - just so I can talk shop and hear about things other than my own crap every day.
How Pela & Lomi came to be…
I grew up in a retail family, so I really knew a lot about product, supply chain, operations, lead times, and cash conversion cycles - all that crap. I’ve been around it my whole life, and because of that, transitioning from service to product was less jarring than I think it might be for a lot of folks.
I first invested in Pela while I still had the agency - about a year before we exited, and the original thesis was just to create products I believe in. A lot of agencies will go and try to make software products, usually motivated by the whole, 37 signals/Basecamp story.
I've seen it a thousand times, where agencies try to create a digital product - we were the opposite. We went and made a physical thing, because as an ecommerce agency, we knew how to sell physical things.
We didn't know how to sell software, and that's just the truth.
I knew how to sell physical goods, because I had enough exposure to it - we were behind a lot of volume as an agency - some of our clients were doing billions a year in DTC type revenue, so I think that part made it work.
When I invested in Pela, I didn’t know how to take it to market, I just thought it could be a cool little business, but it took off way more than I thought. Eventually it started taking more and more time, and my wife sat me down one day and said, ‘Dude, you are not Elon Musk. You're not allowed to run two companies. You're going to kill yourself just because of how hard you work.’
It was a come to Jesus moment, and I agreed with her.
And shortly after, I came into contact with the private equity group that would ultimately buy the agency, so it was very serendipitous. We didn't run a huge process. We just really liked them. And it worked.
The funny thing is now I have two companies again. I know… *laughs*
But as for the make-up of the business - there are three co-founders in the business.
Jeremy started it. He invented the Pela case — the physical product and material. Then I came in, and then the third co-founder was Brad. He came in about a year after me. Each of us brought different experience to it.
Brad is a product and supply chain guy.
I'm a marketing/sales guy.
Jeremy is a dreamer — he just thinks of shit to do.
So we sat down together and hammered out, Are we going to do this?
I was coming off of an exit…
Brad was coming off of an exit…
Neither one of us ever had to work ever again.
When you're in that position, if I'm going to spend my time on something, I want to like what I do, you know?
It’s not purely money motivated, but I personally am primarily a business-first person…there's a reason why I didn't start a charity.
I like business, so I like making money…
I like the whole game…
I like building things…
That's where I get lit up - in the construction of something from nothing. And then the ‘impact’ and mission just makes me feel good about it.
Some people are extremely motivated by the impact - I'm the reverse. I'm motivated by building a good business, and I like feeling good about having a purpose and a mission within that business. So that's my view, and I've got partners that are aligned in that.
We're at the size now where we have a COO who runs Lomi, and I have a COO who operationally runs Pela Case. I don't love operating day to day. I like creation. I needed to build some leadership and some infrastructure because I know I'm going to lose interest if I'm stuck doing operational work. Knowing the creative and thinker I am — I'm not Mark Zuckerberg. I'm not taking this thing all the way.
On future plans…
We have shareholders, so I want to take this to an exit. As CEO, I have a duty to my shareholders to provide a return, so I'm committed to that. I want to build something that lasts and something that has value and function. But keep in mind, both businesses are still super young. Lomi isn’t even three years old, and Pela Case has been around for just over six years.
When I go into a business, I commit to two seasons. A season is five years, so I estimate I’ll be around a decade..
I don't care what the news headlines say about exiting fast. I'm 43 now - I've been building companies for 17 years. and I grew up in a family of entrepreneurs so I know enough to know, it’s never get rich quick.
Every meaningful business I know was in the oven for a long time, so when I got into these two, I committed knowing full-well it’d be a ten year chunk of my life.
After that, I don't know. I take it one season at a time, and right now I'm in season two. I have a few more years until that season's over, and we’ll see from there.
On building a personal brand while building businesses…
I co host a podcast with three other guys called The Operators, and I have a daily habit of writing. I picked it up when I was building my first company. I realized that in order to think clearly, I needed to write.
So I just developed this system: every morning I write for anywhere between 30 minutes and an hour and a half. Half the time it's just verbal diarrhea. It's like clearing the pipes, but that daily habit has gave rise to a lot of content and thinking over the years.
And one of my board of advisors is a pretty big online writer. He was like, why don't you do it too? It's not going to take you much to start sending something out. So I started a newsletter last January. I did it for roughly 18 months with essentially no goals or ambitions, but I recently started investing a bit of money into it to grow my audience. I've got like 15,000 people on my list now, and they get an email every week.
But it's super low lift because it's genuinely just my thoughts from a writing practice I’d be doing anyway. I need to think about these things, so I'm going to write them down and I'm going to share them with people and they'll be valuable to somebody.
It's a cool business model… I've always been fascinated by media, and that's kind of like the itch I'm scratching with it.
The newsletter takes me an hour a week, total.
The podcast is another hour a week.
I show up with my three other co-hosts, and we talk.
And again - we’re having these conversations anyway, so recording them was a no-brainer, because they’re valuable for everybody. My thesis for both is that there's not a lot of content online from people who do the damn job. It's always creators.
Their full time job is to create content, not actually run businesses - that just pissed me off. I would bitch and moan to some of my friends about this who are big creators, and be like, I want to learn from people who have my job.
So I just said, okay, stop complaining, start doing something about it. So for about a collective two hours a week, I get to fix that and scratch that itch about learning about media and content.
And the funny thing is, man, it has really helped with recruiting talent for my businesses. The network that I'm getting now because I've put myself out there has been wild.
Honestly, I think I'll do it forever. I think the podcast and newsletter are my actual forever job.
My newsletter is not a big business. It's this tiny little thing. But I enjoy it so much that I could see myself doing it for 20 years. It’s the perfect kind of business:
you don't care about fast growth.
you have no expectations for it.
you have no reliance on it to make an income.
you can just do it to enjoy the process, which I have.
So I just keep doing it, even though financially it's a bad business.
My other big motivator is to provide a different look on what it is to run a company.
My newsletter is specifically geared towards what it’s like to do the job — to be an entrepreneur CEO. It’s not fancy, and I do think there's a need for more voices from real operators.
Our podcast is literally called The Operators, and it took off because it was fresh and different. My fear was that it would distract me from running my business, but the reality is, if I can't find an hour or two a week to do this, I'm actually a really terrible operator. Like, if 2 hours causes my productivity break, I screwed up somewhere else.
It's like when somebody challenges me on doing so many different things and says, Well, you lack focus. That's not true at all. I'm actually getting more and more disciplined with time management and how to actually focus my attention in areas that are high leverage and high value — which is the real game to all of this.
Conventional wisdom says that if you're going to do something, go all in, especially if you’re an entrepreneur in business.
And I believe that.
You should go all in.
But there's also context, right? I've built and sold a company. I don't need to be doing this. All of this is a choice, and my motivator is fun.
That's it. One word - Fun.
If it's not fun, I stop doing it because I don't care. I don't need the money. So that’s what I tell everybody: I'm focused, but I also need to have fun.
On the raising money & crowdfunding…
There's so much risk - we invested our own money in Pela Case to get it going.
Combined, I bet you we have seven figures of our own cash into the business at this point.
Then Pela Case started to grow, and we raised like $5 or $10 million.
Brad and I are bootstrappers - we both bootstrapped our first companies before we got out of them, so we had no intention of raising any money initially, but lots of VC's started reaching out when they saw it going viral.
We raised money because we thought there were a lot more products to develop, and we wanted cash for R&D and product development. If you don't take in money, it takes a long time to bootstrap that kind of company.
So we had Pela Case, and we used some cash from that business to invest in the initial development of Lomi — to get it to a point where we could test the idea in the market with a crowdfund.
And I think that initial crowdfunding campaign for Lomi did about $7.5 Million dollars in 45 days, so it wasn’t a small launch!
We didn't expect that, though - when we originally pitched the idea of Lomi to our board, they told us we were nuts. They were like, This is a stupid idea…Focus on the Pela…
Because even to get the crowdfund ready — to do all the lead gen, the marketing, and prep the market for the launch — I think we spent $300k, so it wasn’t without risk. You're deploying capital without knowing if it's going to come back to you.
And even after that $7.5 million on a crowdfund, so many of those crowdfunding businesses die that most investors won’t put anything into it until you’re a bit more proven.
Even though we were accomplished entrepreneurs who had built businesses, most of them were like, No chance. You guys don't know anything about making a device. It's so much harder than you think it is. That’s why it's called hardware.
And they're right.
It's so freaking hard and expensive, and we screwed up so much.
We were getting better and better every month, but even after all that, most investors still weren’t interested.
So, we did the crowd fund in April of 2021, we brought the product into homes in March of 2022 —so a year later, basically — and then we didn't get a round of funding done until August of 2022. It took a long ass time, and we ran on fumes for a while. We had to try to figure out how to scrape together small checks from investors just to keep the whole thing going.
It was not a glamorous process…
On success metrics in a product start-up…
Every business model, has it’s own unique metrics of success. Any business that I know — that is well run — has figured out what the input measures are. They've got a sense of what things they need to look at to tell them how the business is going to do over time. For us, gross margin is a big one, and LTV is another one.
Because we’re in these early R&D cycles of the category, we’re really focused on improving contribution margin and gross margin in the business.
So if that's expanding over time, then we know that the profitability will be there.
Pela Case needs to be first order profitable — that’s non-negotiable.
Customers come back every three years and buy, so it's a very long repeat cycle for that category, but Lomi is a device plus subscription business, so it's very much an LTV business. And with any kind of device, the first three to five years, your margins suck.
Because you're just figuring out how to stand up the supply chain, reduce costs, and improve quality, you're trying to do a lot of things all at the same time.
Each of those things are in conflict with each other, but you still have to do it— it's not a choice. But there are all kinds of other metrics, especially in a Lomi-type business, where it's about users and retention.
There's a lot of leading indicator measures that we look at to know directionally where we are:
Do we have a repeatable way to acquire new users?
What channels are we in?
Which markets are we thinking about?
Where is this going to work best?
What's the business model?
Should we sell the device?
Should we rent the device?
There are so many ways to approach this business as opposed to a Pela where it’s so straight up, I sell a phone case, kind of operation.
Those are easy businesses from a financial model perspective, Lomi is a different animal.
On reworking Lomi’s business model…
Device businesses are terrible value…their enterprise value sucks.
If you look at appliance companies, they trade for less than 1x revenue, so we started to look around at people who have built device-based companies for our board of advisors. People like that can really help you with valuation, enterprise value, and customer experience.
And when we launched Lomi, it was like, okay, number one, prove that people will buy the thing.
But after we proved that, it was like, what's the actual business model here?
Because just selling devices is a terrible business, it's hard to do, and you need a really big scale to make it work. So we figured it out as we went. There was no intention there.
On brand positioning…
With both businesses, we created a category…
When we launched Pela Case, the whole category of mobile accessories was about protection and durability, meanwhile we showed up and were like, ours are compostable - they literally melt into dirt.
So it was like,
Who the hell is going to value that message?
And how do we acquire a lot of customers?
Are there a lot of them out there?
We had to give people a really good reason to buy it. It’s really hard to build a business on a vitamin, right?
Diet pills are better than vitamins.
Don't sell salad. Sell chocolate. Sell something that's tasty.
For Pela case, we figured we could sell against the existing establishment.
Selling against things that are made in really poor labor conditions…
Most phone cases are cheap…
They're the most polluted thing on the planet...
There's a billion and a half of them that end up in landfills every year…
So we really painted this picture about microplastics and health. Like, you're holding this thing in your hand, you're touching your phone 3000 times a day, so why are you so okay with holding it to your face and letting your kid chew on it?
When we raise awareness to it, people get it…
Lomi started out with this question of like, what if you could change the world at the push of a button?
But that evolved into what if you could get rid of your garbage at the push of a button?
We really focused on the chore that is trash. And even to this day, we push the notion that if you love to cook, let Lomi do the cleaning. It's like composting, just easier.
We really try to go after reasons the product will make a person's life better as opposed to telling them they should buy it for altruistic reasons.
If you want to build a business, you need to learn how to be good at marketing.
It's really your number one job, and the foundation of that is to find the incentives for people to buy your product and the needs and desires that your customer has. You have to lean into those. So for both products, we actually take a very non eco approach to the market.
On best marketing channels…
Pela Case is very advertising heavy. Facebook, Instagram, YouTube, Google — all that stuff. We're very good at advertising and have been for a long time, and a lot of that comes from my agency days. I really knew how to do that well. So we're strong on the creative side. We're strong on an understanding of how these ad platforms work.
Lomi started out that way, but we also do a lot of Costco roadshows — demoing the product in person. We do a lot of B2B, Selling it to multifamily operators and cities. It's a different approach to market with that product. Even here in Kelowna, we operate a local pickup, so you can just sign up for Lomi here in Kelowna for $30 a month, and as you fill your bucket of dirt, we'll come pick the dirt up if you don't have a use for it. We also focus on long form video. Writing good scripts that tell a story, that get people engaged, and we just use paid advertising to distribute them.
Biggest challenges to date…
One of my bigger struggles is having a board and investors that I have to regularly communicate with. I'm used to just communicating to my team. It's nice to have some external accountability and it’s a cool forcing function in that regard, but the administrative part of it is a pain in the ass.
Before this, I never had to write a damn board update or do a presentation. That’s something that myself and my business partner would do over a drink. It’d be like, Ok, how'd we do this month? Pretty good? Great. Done.
That aside though, the biggest challenge by far with Lomi is capital. As everybody knows - the interest rate environment just got destroyed. It's been much more difficult to raise money, and we're a big bet. We're trying to build a multibillion dollar kind of company. Waste management is like a $2 trillion industry that hasn't changed a whole lot, so trying to go after that and raise capital for it is very ambitious.
And if I could jump back to the agency business, the biggest challenge I had scaling the agency was training…
There is no such thing as a good agency - there are only good people and bad people in agencies. So, your job as an agency owner is to train and build good people. And I think if I was to go back and do it again, that would be the number one area I would spend time on, and I would probably build a much smaller agency. Like, I would cap it at about 30 people and probably never go above that.
In every business, people are your major leverage, but they’re also your biggest problem, for sure.
Best business resource…
There's a paid newsletter called category pirates. Two of the founders, Eddie and Chris, are on my board of advisors now. That's how much I loved that publication. It really changed my thinking on what we do. Up until that point, I had no idea that I was creating categories. It’s about $250 a year, and I think it’s one of the best things you could spend money on.
On building another company when you don’t need to…
Every week, I think about it. I could just create content, help other people out, and be super content and do that.
But I'm 43 years old, and I feel like this is probably going to be my last big swing.
I wanted to take one really big one, you know, where I wasn't playing it super safe, and I was flying as close to the sun as possible, knowing full well that there’s a very high probability that this all fails.
I think that's why, because I know I have the ultimate safety net even if it doesn’t pan out.
That’s it for issue this issue!
If you want to learn more, follow Matthew on LinkedIn, and if you’re building a business of your own and need some support, we should chat!
Read past issues here:
Interview by: Alex Tribe
Edited by: Angus Merry