Becoming a Ninja: The Founding Story of Public Goods
The original version of this post was published on the Public Goods Blog.
It wasn’t about the martial arts or stealth. Even as a child he was already thinking about healthy living.
“I had this idea in my head that ninjas lived this very modest lifestyle,” Hirsh said.
He imagined a small apartment with a clean, simple aesthetic, and only a few dishes. His mother, a yoga teacher, supported her son’s vision. She even found a ninja school in Japan.
Now picture a ninja walking into a Walgreens, a being of minimalism surrounded by excess and aisles of brands with loud colors. Later Hirsh would describe the experience as entering the “womb of an evil corporation.”
In stark contrast to being a ninja, Hirsh’s father wanted him to take over the family business, a leather goods manufacturing company that had been around for 100 years. Hirsh was interested in learning more about business, but he had trepidations regarding inheriting stewardship of the company. It would be years, however, before he would be confronted with that duty.
At 19 Hirsh started a call center business. In only two years there were 70 employees, and at age 21 he sold the company to his business partner.
Free from his management responsibilities, Hirsh began a period of wanderlust where he traveled around the world. After about a year he ended up in Shanghai. To better understand the world of business and advertising, he worked for an agency that adapted TV shows for the Chinese market. During his time in China he started to brainstorm ideas for sustainability and promoting eco-friendly companies.
Enter Mike Ferchak, who would eventually become the Co-Founder and Chief Operating Officer of Public Goods. Hirsh and Ferchak met at a bar in China, and they immediately hit it off.
“We were both there exploring the world and looking for adventure,” Hirsh said.
Ferchak had a background in engineering, product development and manufacturing. Hirsh’s personality captivated him.
“I had it in my mind that he was a natural-born salesman, and I was the opposite of that,” Ferchak said. “I thought we would be a great team.”
In the coming years Hirsh and Ferchak would remotely collaborate on several sustainable products, including an eco-friendly shopping bag. It was an exciting time to be in China, and Hirsh had thought about starting another company there.
Then he received a call that would alter his course for a decade. His father was thinking about selling the family business — unless Hirsh was willing to take the reigns. Hirsh felt ambivalent about the decision.
“I didn’t think going into the manufacturing sector in Canada was the best place to be,” he admitted.
And who could blame him? Manufacturing was one of the hardest industries to succeed in, and the landscape in 2006 didn’t grant any mercy. Jobs were being shipped overseas, and it was a constant struggle to satisfy the demands of big fashion brands.
During his time running the factory, Hirsh learned the disappointing truth about brands and why products are so much more expensive than they should be.
“I knew — and thought everybody knew — that the brands we love don’t actually make anything,” he said.
Most brands contract manufacturers to make their goods. Then they slap their name on the products and mark up the price so they can turn a profit. Distributors ship the products to retailers, and retailers sell to consumers. These parties need to make money, too, so there are more price increases.
“It means all the products you buy are making many companies a lot of money that’s totally unrelated to the cost of production,” Hirsh explained. “Best case you pay four times, usually closer to 10 times what it costs to make.”
Ultimately his knowledge of the industry was all Hirsh would walk away with. In 2014 the family business went bankrupt.
He needed a clean slate.
“I moved to New York, which was really easy because the bank took all my stuff,” Hirsh joked.
As he was brushing his teeth and looking around at the branded bathroom products in his apartment, he thought about how much he hated relying on shoddy products and going on runs to the store.
A question popped into his head: “What if you could push a button, and all of your basic toiletries would get delivered to you on a subscription basis?”
This idea was the seed that eventually grew into what Public Goods is today: a service that makes healthy, high-quality products affordable by shipping them directly to consumers — no distributors or retailers.
At first Hirsh named the company “Don’t Run Out” to emphasize the value of members being able to avoid running out of products and running out to the store. It didn’t catch on, though, and Hirsh realized it most likely wasn’t the best title.
Meanwhile the challenge was finding an investor for the project. Fundraising and startups was a new world for Hirsh. He was overwhelmed, trying to quickly grasp many new concepts.
“I didn’t even know the difference between an angel investor and a venture capitalist,” Hirsh admitted.
Hirsh pitched anyone who would talk to him. He even chatted with people on the street in Union Square, handing out free bottles of shampoo and cards, until a security officer asked him to leave.
No one said yes, though. In the wake of the massive success of Dollar Shave Club and similar direct-to-consumer brands, potential investors often asked why Hirsh wanted to sell more than one product. Surely founding a company that only sold toothbrushes would be easier than solving the problem of high prices for healthy products.
What investors had trouble understanding was that the Public Goods mission was bigger than being another Dollar Shave Club. Rather than only focusing on consumers who mostly lived in cities, Hirsh also wanted to cater to the rest of America, some of whom did not have convenient access to healthy products. It was about making every kind of healthy product affordable to as many people as possible. Razor blades and toothbrushes were only a fraction of his vision.
One of the largest consumer-focused venture capital firms told him the only opportunities were on the coasts. It seemed like the only way to receive funding was to sacrifice his vision, and he wasn’t willing to do that.
Luckily he had some friends and business partners to help him out. Hirsh and Ferchak were finally in New York at the same time, so they decided to work together again, this time in person. Ferchak started collaborating with Hirsh on a part-time basis but eventually joined him full-time as Co-Founder and Chief Operating Officer.
Hirsh raised $100,000 of seed money — $50,000 of which came from Ferchak — and the team launched the company as Morgans in January, 2016. That November they introduced the membership model that exists today.
But Morgans struggled a bit. Consumers did not connect with the brand as much as the team had hoped. Hirsh and Ferchak expected to spend the money they had raised, but they were not receiving any new funds. If something didn’t change soon, their adventure would be over.
In March, 2017 — right when Hirsh and Ferchak were nearly broke and feeling “despondent” — investor Skip Battle gave Morgans $300,000 for a 10% share in the company. Hirsh used the money to rebrand as Public Goods and connect with crucial advisors such as Kim Greenfeld, who had more than twenty years of experience at Whole Foods and Trader Joe’s. Greenfeld helped Hirsh and Ferchak connect with manufacturers who met their standards for high quality, healthy ingredients, affordability and sustainability.
A few months later the team made a move that would succeed beyond their wildest expectations. The first Kickstarter campaign for Public Goods had a fundraising goal of $20,000. Hirsh and Ferchak believed the best case scenario was that they would slightly exceed that goal.
Within 38 days of its launch, more than 10,000 people had backed Public Goods. This overwhelming support raised nearly $700,000, more than 30 times the original target. These statistics placed Public Goods in the top 0.2% of all Kickstarter campaigns.
The launch debuted the Public Goods brand of bathroom products such as shampoo and razors. These items weren’t even available to purchase yet, but people were excited about the idea.
“I was amazed with the response,” Hirsh said.
After the Kickstarter success, Hirsh received at least three emails a day from investors. Public Goods has since raised millions of dollars in funding from the 500 Startups accelerator, Yes VC, Listen and celebrity investors such as legendary quarterback Joe Montana.
Today Hirsh’s New York City apartment is full of Public Goods products. No more worrying about ugly brands and sub-par goods. He may not have become a professional ninja, but his home and lifestyle do resemble what he imagined as a boy.
“I always believed in him,” Ferchak said.
Bio: Joseph Rauch manages the Public Goods Blog, a publication about health, sustainability and people making an impact. Check it out for a wide range of topics: everything from controversial ingredients and composting to product reviews and the anti-fluoride movement.