Bonus Episode: Scaling Without Running Out of Cash with Aaron Schwartz

Aaron Schwartz is a DTC business builder, investor, and advisor to some of the most innovative commerce tech companies. With a sharp eye for scaling brands and solving complex operational challenges, Aaron has played a pivotal role in shaping the future of Ecommerce.

Before founding Orita, Aaron built a $1M+ watch brand on Shopify, co-founded Passport Shipping to simplify international logistics, and served as the president of Loop Returns, helping brands optimize their post-purchase experience. His hands-on experience across shipping, returns, and AI-driven customer insights makes him a trusted expert in the DTC space.

Today, as the founder of Orita, Aaron is on a mission to help brands unlock the power of their customer data. Orita uses AI to analyze millions of data points, enabling brands to make smarter, more profitable marketing and retention decisions. By focusing on machine learning-driven personalization, Aaron is helping DTC brands move beyond guesswork and into data-backed growth strategies.

With degrees from Columbia and UC Berkeley Haas, Aaron brings both academic rigor and real-world experience to the table. When he’s not revolutionizing the Ecommerce industry, he’s a dedicated father of two—and pretty funny when he’s not in business mode.

In This Conversation We Discuss:

• [00:42] Intro
• [00:56] Building smarter customer insights with AI
• [02:48] Switching from brand to SaaS
• [05:18] Focusing on customers before scaling up
• [07:04] Solving data problems for brands
• [08:41] Using machine learning to predict customer behavior
• [11:04] Updating customer data daily for better marketing
• [14:18] Investing in AI-powered customer insights
• [16:33] Filtering out the wrong customers
• [17:12] Using AI to boost retention
• [18:34] Finding hidden revenue in your email list

Resources:

• Subscribe to Honest Ecommerce on Youtube
• Grow sales from existing customers with AI optimization orita.ai/
• Follow Aaron Schwartz linkedin.com/in/aaroncharlesschwartz

If you’re enjoying the show, we’d love it if you left Honest Ecommerce a review on Apple Podcasts. It makes a huge impact on the success of the podcast, and we love reading every one of your reviews!

 

Transcript

Aaron Schwartz

Never focus on growth. Focus on delighting your customers and then start building the processes around that. But building everything else without making sure you've got something that people want is just a waste of effort. 

Chase Clymer

Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game. 

On this podcast, we interview founders and experts who are putting in the work and creating  real results. 

I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.

Let's get on with the show.

Chase Clymer

Hey everybody, welcome back to another episode of Honest Ecommerce. Today, I'm welcoming the show Aaron Schwartz. He is a direct consumer business builder, investor, and advisor on a ton of Ecommerce tech companies. Aaron, welcome to the show. 

Aaron Schwartz

Thanks, man. Thanks for having me.

Chase Clymer 

Alrighty. What wasn't included in that introduction though is what are you up to now? So let's just get that out of the way. Where are you working now? What are you working on? 

Aaron Schwartz

Yeah. I'm one of the co-founders of a company called Orita. We help brands understand who their most engaged customers are, who's not engaged. It's not super sexy as a company. We don't have any whiz-bang apps. We've got a lot of machine learning engineers working under the hood to help folks understand it. And they make more money when they work with us. So it's pretty good. 

Chase Clymer

Absolutely. And we'll definitely circle back there and talk more about it. But I always like to let our audience understand the history of our guests when we're doing these bonus episodes. And honestly, just why you should listen to them, maybe. So I guess like when did you first get into Ecommerce? How did this become your career? 

Aaron Schwartz

Yeah, man. I've been around for a while. You can see the gray hairs. 

Chase Clymer

I'm working on them. 

Aaron Schwartz

Yeah, you'll get there. In 2010, I started a consumer brand after business school and it was truly meant to be a three-month project. And then it turned into a seven-years full out. It was Weebly, then Interspire, which was BigCommerce, and we became a Shopify brand of earlier vintage. 

The brand was called Modify. We scaled very quickly. It ended up being print-on-demand watches and sports licensing and all the things. And then in 2017, I switched over to the commerce tech side. I very much do miss being a brand owner.

Like every Black Friday, Saturday, Monday, I very much miss it. I know it's hectic and stressful and all the things, but it's also really fun. And I co-founded a company called Passport, which does international shipping for God knows how many brands at this point, like over a thousand. 

And I've kind of had this winding career since 2017, where I'm like an investor in a bunch of companies, like the smallest investor, right? Small checks, but still fortunate to be in the rounds and then advisor, founder of a couple of companies. And then I was the president at Looper Terms, kind of is the return solution for the Shopify ecosystem. 

Chase Clymer

Absolutely. I know I got to ask you, and I think I'll get a real answer from, is the grass greener on the other side? I think that everybody in SaaS wants to be in product and everybody in product, like, you know, and the brand world wants to start a SaaS app. 

Aaron Schwartz

It's a good question. I mean, my other side was like, do I become an investor or not? And I started writing checks. I realized, like, I don't think I'm a very good investor. I love founders and I'm super optimistic and I assume things will work out.

I don't think I have any good insights or not. In terms of switching from the brand side to the SaaS side, dude, they're both hard. I think the biggest thing is if you're talking to a founder and she's going to start something new, it doesn't matter what you're starting. 

Commerce, non-commerce, tech, a fund, a brand, it's just hard. It's all consuming as a founder. Obviously, you know that. And so I think it's just different pain points. With the brand side, your inventory is going to make it on time? 

Do we make the right merchandising decisions? Should we discount or not discount? Like there's unlimited questions to ask. Who actually wants to hear from me? Who doesn't? How do I grow? How do I not run out of cash? On the SaaS side, it's super painful. 

Like we'll be like, hey, look, here's your results. It's 100X ROI. And you've agreed to it. I've agreed to it. And then you come to me and you're like, yeah, but we need to cut our software budget. So we're not going to pay more. And it's like, well, if we disappear, you lose $100,000. You won't pass $4,000 for that.

It's the same sort of thing where it's different problems, but you've got to be creative and figure it out. And it's a grind, man. Even as we're scaling so quickly with Orita. It's like every day, there's a fire to fight. And then you have to make that decision. Do I fight it or do I let it burn? I don't know. I think grass is never greener. 

Chase Clymer

Yeah. And that's kind of my thought. It's just like there's no right or wrong way to build a business and no right or wrong industry to get into.

You're not building a unicorn. I don't think anyone listening to this podcast is going to build a unicorn. 

Aaron Schwartz

We're fighting the good fight. 

Chase Clymer

I know. But you can build an amazing company though, right? 

Aaron Schwartz

Yeah, man. That's right. We're building a company. I mean, I tell every employee who joins us, I'm like, look, we're not going to run out of cash in 6 months. But your options are eventually going to be worth zero. 

Because I have ultimate belief in this. I don't need to be doing this right now. Exhausted. We've got two kids. There are a thousand things that could be done. I believe it'll be a monster company and super impactful. Odds are against every single business being successful. 

Chase Clymer

Absolutely. But I wasn't necessarily saying, Orita, or your company, I was just saying people listening to this, right? It's like you're not making odds. You're not making the next Facebook or the next Tesla, right? Odds are you're going to build a sustainable business that's going to make you a lot of money though. 

There's so much money to be made out there when you just focus on problems that need to be solved and let your customer tell you what they want to do. And so I don't know where I was going with this, to be honest. But I just think that oftentimes people get caught up in preparing for growth before they even have product market fit. 

Aaron Schwartz

No, man. I mean, I think you're spot on. I kind of made that comment earlier about how I miss holidays. Throughout the life of Modify, we wrote a handwritten note to every single customer. And like, not a lot of companies do that and that's cool, but I never saw that. We were pumped about it, right? 

We were like Zappos fanboys back in the day. And the idea was not like, cool, here's this note, but it was literally to make it as easy as possible for somebody to tell us why we sucked. So there was a note and there's a business card with my email and my cell phone number up front. 

And then eventually as we scaled, it was like more of a company line, not my personal self. But the idea was like, tell us how to get better. And I think if you're starting your business, if I started up in like, cool, how do I get to 10 million sales or 100 million in sales, we would have never gotten to a million. Right? 

But we got to the million by getting a ton of feedback and getting punched in the face a lot and then being like, oh, actually, this is the thing that's working. Or there's this green shoot of some positivity over here. Why don't we go explore this part of the market and then see it and say, yeah, like never focus on growth. 

Focus on pleasing your customers. Then start building the processes around that, but building everything else without making sure you've got something that people want and it's a waste of effort. 

Chase Clymer

Absolutely. Let's talk about how the idea for a kind of Orita came about. 

Aaron Schwartz

Yeah, I was actually pretty lucky. I kind of hit a point in my career where I'm like an advisor to a bunch of these kinds of commerce tech companies. One of the companies is called Fairing, which used to be called Enquirer Labs. They serve like four or 5,000, I don't know how many Shopify brands, right? But it's like zero party data, go get survey information. Brilliant team.

And one of the founders of that, Matt, connected me with these two guys, DB and Zach, who are both machine learning engineers and had been doing a consulting business for years helping commerce brands. 

So they worked with Tuft & Needle. They helped a same day delivery company with their routing. I mean, like if there was a hard data problem, these two guys can have solved it. And they're dumb. They should have been like OpenAI or Meta or Uber, but they're like, no we're gonna keep fighting the good fight in commerce. 

Anyway, late 2023, they figured out what the product was, which was like, oh, brands use rules of thumb to figure out who to message and who not to. And they're sitting on tens or hundreds of millions of data points that could help them do a better job targeting. 

And so they figured this out. And then Matt from Fairing connects to me like, hey, Aaron Bean, advisor of these guys, helps them go to market and fundraising. And literally a month in, they asked if I would join as a co-founder. And I was like, you know, it was hard because of the kids and my wife has a super intense job.

And we spent a couple months where I basically worked for free as a co-founder to figure out if this was really the right fit and do it. It's been awesome. It's been a year. It's been a sprint. I don't sleep as much as I used to. I'm more stressed than ever, but I'm loving it. Yeah, that was the founding. 

Chase Clymer

All right. So the product, dumb it down for me, as a layman. What does it do? What does this machine learning do on top of my data? Which I'm just guessing. You're going to plug into Shopify and maybe some of the other things I use. And then tell me what. 

Aaron Schwartz

Yeah. So the more important piece is plugging into Klaviyo or Iterable or Braze. So think like your ESP. Soon we'll be doing SMS. We already do direct mail. We partner with PostPilot, but we don't, it's not that we don't care about the platforms, but we're platform agnostic. And then we get to be a brand's data science team. So most of our brands are like the Perfect Gene or Psycho Bunny or Tracksmith or Caraway. So I like awesome brands.

Some of whom have like a full internal team think about their attention marketing. Some use a third party agency. They all use software like Klaviyo. Let's just do that because it's simple. And our job is to compliment them. 

So we are their outsourced machine learning team. What does that mean? Any of those brands have literally 500 million data points about their customers. I don't just mean like, did they click? Did they open an email that they purchased? It's like, did they start a return? Did they leave a review? Do they check their loyalty points? Like all this data flows in.

We're really good at building models around all that data. And so what a generic brand does is they use a rule of thumb. They say, look, if somebody clicked in the last 90 days, send them an email. There's so much more insight you can get, which is like, actually, there's somebody clicked 91 days ago who's ready to buy more ready than somebody clicked two days ago. Make sure to send her that email. 

And like, that's what we do. So we help you understand who's like got a screaming signal, yeah, send me an email right now. Who are the people who are going to buy independent of you sending an email? Like, don't waste the send.

Then who are the people who are completely unengaged? There's this one other piece that's cool for bigger brands. If they've cleaned their lists, which every brand does at some point, like, hey, we'll do a sunset flow. 

We'll give 90% off. And if people don't buy it then we're never emailing them again. There's actually an insane amount of revenue to be found from the people who were dead contacts or were clean before. And so we actually monitor all those and then we reactivate those people too. And for some of our brands, we had a call this morning where we found 700k, not an exaggeration like the last three months of incremental revenue. 

Now it's a big brand, right? So it's like, it's percentage points of growth, but it's like literally finding revenue for them. So it's really complex under the hood. But for the brand, it's like, email, don't email. That's the decision. 

Chase Clymer

Yeah. So the one thing you said is like, you know, the rules of thumb, which I would say, yeah, that is absolutely the way most people work. Maybe there's a little bit more fuzzy logic behind the buckets to which these emails or these. 

The emails belong to real customers or potential customers. There's fuzzy logic behind these buckets and then the buckets power flows the normal way that your email platform might do it. 

Aaron Schwartz

Yeah. So I mean, I think about this way, if you use a great agency or you've got the internal team, you can go figure out today who is my most engaged audience, like literally today. And it might take you a couple hours of work.

The challenge is tomorrow, you'll have new data, right? Because consumers will engage or not engage. And let's just say we do this analysis and we get to, I start my current consultant, you start what, like we could go build an awesome analysis. 

And we're like, actually it's not 90 days, it's 84.6 days. So anybody who's clicked 84.6 days ago, that's our engaged person. Tomorrow, we're a day further from Black Friday, Cyber Monday, or we're a day closer to a new product launch. 

Like literally the brand is changing and the content strategy is changing and the motion dicing is changing. And by the way, all the consumers are changing. So it's like an impossible task. 

Chase Clymer

It's also seasonal too, if you've got a sunglass brand. 

Aaron Schwartz

That's it. It's not just spring, summer, winter, fall or holiday. Like some brands have a really big back to school. Some have a big mother's day, some have a big father's day. So, quote unquote, seasonality also varies by brand. And it's even within BFCM, do they start two days earlier or two days later? And so it's an impossible task for somebody to model out who is engaged and who's unengaged.

Unless you use machine learning and unless you like to literally refresh those models every single day. So that's why it's not like people are doing a bad job. I again, random brand, like nine years of sending emails. 

And I'd be like, I know Chase hasn't clicked on the last 14 year old emails. But my god, this email, it's awesome. There's a discount. It's the best graphic we've ever created. Trust me, guys, he's going to click on this one. 

Chase Clymer

I'm the bane of all email marketers. 

Aaron Schwartz

If you click spam, you're the bane of all.

Chase Clymer

No, I never do spam for email marketing. Unless you don't have a subscribe button for some reason. There's a very specific brand that I want to call out but I won't. But I also run an agency and I'm signed up for a million newsletters for inspiration. 

Aaron Schwartz

Dude, It's a really interesting test case. Let's say that we get a brand's deliverability high, which is something that we do, which means like, cool. Now we're sure that the email is going to land in Chase's inbox, not in spam.

The brand has the best creativity in the world, and they're launching a new product. You may not buy because of email, and you may not buy because you just never take action, it goes in your promo, you're busy, you just don't. 

But guess what? You might buy because of text, or you might buy because of direct mail. And so the idea of, and you'll see us, we've already added direct mail to our, right? It's easy to talk about email, but we've literally already added direct mail for a bunch of our brands, and soon it'll be SMS.

The question isn't like, what does the marketer want to do? It's what Chase wants? When do you want to hear from a brand? Right? That is the question that we're trying to solve. Because the marketer is always going to be like, yeah, I got some hot shit. Let me send this right now. But it's like, you know, it may not work for you. 

Chase Clymer

It sounds like this product sounds amazing for retention marketing for contacting people that you have their contact information. Right? Now, it seems like you need to have some data and data points. 

Is it the size of my overall list where this starts to make sense and it's a value add-in to me? Or what are some of those factors I should be looking at where exploring a software like this might make sense? 

Aaron Schwartz

Yeah, it's a good question. First of all, we do a free audit for everybody. We will literally ingest the data, build a custom model, truly brand by brand. If you're a brand with sub brands, we'll build a custom model for every sub brand to show you if we can actually be useful or not. 

We aren't useful to everybody. So at our website, you can go do that. What we see is like, it's less about the quantity of data, more about the history. So you made the comment about seasonality before. It's insane for us to tell you what to do come January 15th, if we've never seen your business on January 15th before. Because then we're just coming back with rules of thumb. So we care most about you having a year's worth of data. 

And then on top of that, the real minimum is probably 50,000 subscribers. We have some brands that have 10,000 or 30,000. But if you think about a big data product, which is what we are, more data is definitely better. 

So we create way more value for Caraway or Addicted than we do for Psycho Bunny. But we still create a ton of value for all those guys. And we can go upmarket much easier than down to like, somebody's been around for three months. 

Chase Clymer

No, that makes perfect sense. You need the data. And that's even something that when people come to us and they're talking about conversion rate optimization, I was like, it's gonna take us two months to do a statistically significant test. 

You guys just aren't ready, unfortunately. Go take all this money that you want to spend on us and go buy more. Go spend it on ads. 

Aaron Schwartz

It is funny even talking about this statistically significant stuff is like we always have a whole locker. We've got a 10% whole locker. We show off A-B tests. We're like, look, the people who we removed, separate from this whole locker, clicked at one tenth the rate of everybody else. 

And some people are just like, well, we don't buy it. I think for us, it's actually like we just need to go with a slightly bigger company because they will see this and understand the value of that. 

Chase Clymer

Yeah. It is unfortunate. Even a few years back, every opportunity, every customer, there's money to be made. Yeah. And I think as you just get more mature in business, it's like not every customer is not a good customer and you only want the good ones. 

Aaron Schwartz

Dude, if I brought my brand to you, you would have fired me so fast. Because I was literally that pain in the ass merchant where I'd be like, Chase, I get it, but I know it. 

If it was an app, I'd be like, I'm paying $50 out of my pocket. You're like, where's my service? So I'm very empathetic. 

Chase Clymer

Well, so you mentioned that it's for retention and some people outsource this to a third party agency. I know a lot of agencies listen to this podcast. Is this a tool? That they should be putting into their repertoire for using their managed brands? 

Aaron Schwartz

The safe answer is to say yes. We partner with 60 or 70 Klaviyo agencies. I think we've got a dozen of the master elites, the top tier. The way we think about this, I think the agencies who know us, who've actually spent time going through an audit and seeing their customers is like, we're a cheat code. 

We're a machine learning team. If you're an amazing agency, what are you great at? Well, you're great at creative, you're great at strategy. You're probably not great at machine learning and data science. You might have a data scientist on staff, maybe. 

And if you do, like, this isn't probably the first problem that she's solving. There's plenty of other ones. And so we think about our role as kind of being like, you're a student in high school math and like you get to bring a TI-83 calculator and everybody else's paper and pencil. 

That's why agencies like us, we don't replace segmentation, we're additive. We're like, look, if Chase clicked a week ago, the agency's going to find them, the brands going to find them, we're going to find you.

The last time you clicked was 280 days ago. We're the only ones who are gonna find you without screwing up everything else by saying, including everybody who clicked 280 days ago. 

Because you can't possibly do that unless you're using machine learning. Which again, I'm a history major in MBA, so discount me, but one of my co-founders of PhD, one semester, we're actually good at that side of the house. 

Chase Clymer

What are these, I'm a brand, we're doing great, we're approaching eight figures, we've got well more than 50,000 subscribers, right?

And we like to already sound cool or something like already to sound cool. Like what they like and what I like to install. You guys just say here are some signals and I need to do stuff. How's it working? 

Aaron Schwartz

I got you. No, it's easier. So we will. I'll talk about our email product. Right. So think about us adding a layer of data science on top of your play video is very way to think about it. Two different products. The first one is like a CRM manager's dream. You give us the data, we give you a list every single week. It's called our audience's product, our read and grow audiences. And we will give you a list and you email them and you will make somewhere between 2% and 8% incremental revenue. 

The fact that we give you a list of 100,000 people, a lot of those people are already gonna be on your list. I mentioned, Chase clicks a week ago, you're on our list, you're on their list type of thing on the brand's list. But we're really good at finding incremental revenue there. And like if we get that list, it is extraordinarily performant. 

You have to take a step of literally clicking a button to add a list to a send you have. You don't need to create a new send, just like put it into whatever campaign you have going out, you'll make more money. 

The second product is a CMO's dream because it is about building a profitable email program. This works as a background tool. We literally will be like, hey, there's a lot of signal that says Megan's not engaged, put her on, do not disturb. So even if the brand wants to email her or read a saying like, look, you want to email her, but like all of the signals around her emails, like she's not going to click. 

So like don't waste the send or she might click spam, which is super painful. Or she might click on subscribe and like you're wasting her as a possible future buyer. And so that is a background tool that works. 

The reason I say it's a CMO's dream is like, you actually might make a thousand bucks less this week in order to make 2000 bucks more in one month. Right? Because you send a few people. So you save on subscribers and you improve your deliverability, which means more like it hits more inboxes so more people can buy. 

And then guess what? You're probably going to reactivate Megan in a month or whenever the signal says, this is the highest likelihood. For both of these, we've tried to make it this extraordinarily complex under the hood. It is hard to do what we do, but extremely easy for brands. 

Truly a set-in for a good product if you want it to be. There's expert mode, there's all this other stuff you can do with it, but we've made it for the meets, the history majors who started a brand on a lark who are not that good at data. I have enough other decisions to make. It's like, good, I don't need to think about this. It works. And so that's the conceit of the business. 

Chase Clymer

Absolutely. And speaking of easy, if I want to get a free audit of my email and see if this is a good idea for my business, what should I do? Where should I go? 

Aaron Schwartz

Yeah. So the brand is Orita. So orita.ai. You can go to orita.ai and click on the top right corner, or you can go straight to

Literally, we're a Klaviyo partner. So you can click OAuth. It will take a minute. It will take us time. We are building a custom model. We'll jump on a call. We'll walk you through the audit and then we'll see. But that's it. 

Chase Clymer

Awesome. Aaron, thank you so much for coming on the show today and sharing all those insights. 

Aaron Schwartz

Thanks, man. This was fun. 

Chase Clymer

We can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes. 

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Until next time!