In 2016, Frankie Layton had an epiphany: why was there not an environmentally friendly laundry liquid, free from harsh chemicals and excess packaging, that was also affordable, and actually cleaned your clothes?
So after years of working in marketing and advertising, and exploring the impact of non-profit work, Frankie founded The Dirt Company, turning her love of the ocean and passion for sustainability into a household product that could do it all.
Refill and return
“We sell laundry detergent on subscription, mostly direct to consumer. The whole objective of the product design is to reduce as much plastic packaging as possible, or keep reusing it,” Layton tells Duct Tape.
“We have an aluminium dispenser bottle that can be refilled through refill packs. The refill packs, although they do contain plastic, contain remarkably less plastic than a bottle, and because the laundry detergent is super concentrated, you’re looking at reducing the amount of plastic per load by up to 10 times. Then our customers send back their refill packs to us and we sanitise them, reuse them, and send them out again, so there’s a zero-waste component to our system.
“Our overarching mission is to make products that do less harm a better choice.
“If you’re buying something you’re having an impact on the earth. It’s not about creating no harm or being completely footprint-free, it’s about finding formulas where you can make a significant difference. If one per cent of the population started using our product, we would be saving 50 tonnes of plastic from being manufactured.
“At the moment, we do pay extra labour costs and processing fees. It’s not yet the most economically viable program, but rather something that we do as an innovation experiment.
“We’re looking at ways that we can make that side of the business more commercially viable. One of the ways is developing new products and getting slightly bigger baskets, another is getting people to buy and send back more at a time.
“When you’re trying to build a business that’s rooted in good values, it’s a lot more expensive. For example, an aluminium bottle at $2 versus a plastic bottle at 20 cents. You have to wear those costs and it gets tiring.
“So we look at what we’re going to do next and how it might make a significant impact. ‘Is this going to create a big enough change that we can justify the extra work, the extra time, potentially the financial heat it might involve?’ If the answer is yes, then we know it’s the right thing to do and we put it on the list.”
Looking out to sea
“I grew up in Melbourne’s inner eastern suburbs. I was into sciences at school, so I enrolled in a behavioural neuroscience degree at Monash, but spent a gap year working on superyachts in Europe, crossing the Atlantic Ocean from the South of France to the Caribbean.
“I had this idea when I finished school that I was going to start a foundation for youth that were struggling with mental health, but the owner of the boat that I worked on was a pretty successful businessman. I told him about my dream and he said: ‘That’s just the dumbest thing I’ve ever heard. How are you going to make money? What you need to do is to start a business. You need to make a lot of money, and then you can spend your money on things you want to do.’
“I do think that’s an old-school way of thinking, but it was one of the things that really stuck with me. If I want to do something good, I have to find a sustainable way to fund it.
“I returned from the gap year not only with a new sense of the relationship between enterprise and impact, but I’d also fallen in love with the ocean, and the images of floating patches of garbage left a marked impression on me.
“We used to just throw bags of garbage overboard.
“You’d have schools of dolphins at the front of the boat and just be chucking trash over the back. You’d see the trash even when you’re so far away from shore that they couldn’t send a helicopter if you fell overboard.
“I found myself somewhat lost when I returned to Australia to attend university. Searching for the fastest way to get a degree, I ended up with a Bachelor of Arts from Monash University.
“I have always had an interest in working for purpose, but that interest probably got shut down a little bit with the ‘you need a way to make money’ thinking, but the connection to the ocean never really went away.
“I’m just one of those people that’s an ocean baby.”
Loyalty in the laundry aisle
“The idea for The Dirt Company came from trying to shop for my housemate who had sensitive skin. I was looking closely at the laundry detergent aisle for the first time ever.
“I was always a liquid detergent person, but it really started to frustrate me that you would buy these big tubs that looked cheap, but didn’t have many loads in them and you’re just throwing out heaps of plastic. They didn’t have to disclose their ingredients on the label, and it was hard to lug home a two-kilo bottle on a bike. We couldn’t switch to powder at that point because it wasn’t great for sensitive skin.
“I also found the cleaning category particularly interesting because there were no brands that stood out to me; the whole category hadn’t evolved much.
“I thought there was a need being met across different brands in different ways, but not a solution that made me want to continue buying. There was just no brand loyalty for me in the detergent aisle.
“At the same time, Who Gives a Crap had just launched and they were doing a direct-to-consumer offer. It was really smart. A product that you know you need all the time that you might as well get delivered to you.
“Their success really lowered the barrier of entry to the category because you didn’t need to have a distribution deal with a supermarket to find your own customers.”
My product is better than yours
“After six to eight months of exploring gaps in the cleaning category, I decided to focus on laundry detergent.
“It’s not our long-term plan to only offer detergent, but I really believe in the minimum viable product and lean startup and all the rest of it, so laundry detergent is where we’ve started.
“I spent 12 months writing business plans, making brand ideas, and basically just fluffing about. I kept trying to find reasons why it wouldn’t work.
“Once I had solutions for all of these reasons, I felt that I had a strong idea.
“We started thinking about what makes us really fall in love with a product. We needed to present several points of interest to capture a universal appeal: convenience, a feel-good factor, an appealing design, ease-of-use, and a great performance standard.
“I ended up making a spreadsheet called ‘Why My Product Is Better Than Yours’. I went through all the competitors and tried to find true reasons why my product would be better than them. I used Amazon reviews in the USA for any kind of international products that I was looking at. I used Choice and Product Review Australia for local products.
“That’s also how I formatted the brief for the formula. The chemist told me that he’d never met anyone that came with such a thorough brief of what they were after, that usually, people come with things like: ‘Oh, we’re going to do an eco-range, can you do that?’
“I came with a full list of who it needed to beat on each specific claim.
“I remember he came back and said: ‘Look, we’ve hit everything here, except for grass stains. We’ve underperformed against this person on grass stains, but everything else is good’. And I was like: ‘Nope, this has got to work for everyone, take it back. We need it to hit grass stains.’”
The counterintuitive price of growth
“We started growing really quickly between June last year and February this year, like 30% every month.
“I did not anticipate the pressure that put on the cashflow.
“We had to buy some of our products with up to 12-week lead times, and because we hadn’t been around for more than a year, and had a slowish first six months where there wasn’t much business at all.
“Our suppliers had come to think of me as another person with a startup that probably wasn’t ever going to get it off the ground. So they weren’t in a hurry to put us on great trade deals; they weren’t going to give us product before we could pay for it.
“We have this model where the first purchase comes at a very low margin for us, so we have to wait three months on average for the customer to come back and purchase their first profitable basket.
“I remember thinking, ‘I can’t believe this, we’ve just hit $30,000, $40,000, $50,000 and so on. Where’s the money going?’ There was progressively more money coming into the business, but there was no money to pay for anything. I really underestimated that cashflow lag and that growth is expensive.
“I remember we had a slower month in February this year, and I said to my business partner, ‘Oh, we’re not going to hit our growth target this month, but in other news, the bank account is looking really great’. It’s so counterintuitive.
“I didn’t actually realise that we had to be earning around $70,000 a month to be able to cover costs. I didn’t have any notion of that. I thought I was going to start the business with $30,000, we’d buy stock and we could use some money from our first sales to buy our second stock. But you’re not buying for the next hundred customers, you’re buying for the projected thousand in three-months’ time.
“We’ve bootstrapped the business. I think if you want to go the VC-funding route, you’re accepting that you’re on a certain course to grow and grow and grow. I’d prefer to be sustainable in our growth. We’re not slow-growing, but we’re not unicorn level, and we still spend such a small amount on marketing.
“I like that because it means we feel everything and we grow at a certain pace. I’ve got a business that I want to hold on to, that I want to use to create a great lifestyle for the people that are involved in it, and I want to stay true to this vision with the flexibility to execute however we feel.
“That may not always align with the most financially strategic decision and I want that to be okay, and that’s why funding scares me.
“I don’t think that there’s many VCs out there that would be tolerant of that behaviour, but I could be really wrong. That’s why it’s not out-out, it’s just that I don’t aspire to have that level of growth.
“If it happens, well, that would be awesome, and if it would happen on our terms, that would be the best. If it happened, but not on our terms, that would be the worst.”
This article was first published in Duct Tape, a publication by Startup Victoria and Victoria University, and has been republished with permission.
You can help keep SmartCompany free for everyone to read
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany Supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.
And it’s not all one-way traffic either. SmartCompany Super Supporters get to dial into our monthly editor’s meeting and attend a monthly, invite-only webinar with a big-name entrepreneur.