Carl Pradelli spent 18 months building a co-branded skincare launch with the Home Shopping Network, then watched it unravel when the contract manufacturer he had chosen on a referral produced a formula that was nothing like the one he approved. He explains why he now treats supplier selection as a make-or-break decision he refuses to delegate — and why he has stayed with the same manufacturer for more than 20 years instead of shopping every job for a better price.
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My guest for Episode #362 of the My Favorite Mistake podcast is Carl Pradelli, co-founder and CEO of Nature City, a direct-to-consumer nutritional supplements company he and his wife Beth started in 2002. Before becoming an entrepreneur, Carl spent 12 years in investment banking and private equity focused on consumer goods. He holds an MBA from the Wharton School and a BS from NYU.
His favorite mistake dates to the company's second year. The Home Shopping Network liked Nature City's skincare concept enough to propose co-branding it — effectively a joint venture with a company that had barely existed two years. Carl's team spent 18 months bringing it to market. Samples tested well with about 10 women. Packaging was designed. The launch date was set. For the first production run, they used a contract manufacturer recommended by an acquaintance of one of Carl's partners. Carl visited the facility and found real credentials — FDA certifications, inspections, everything he expected to see.
Then the finished product went to the same women who had tested the samples, and the feedback reversed. Carl requested the batch records without saying why, and they told the story: ingredients specified at five percent had gone in at one, ingredients specified at one had gone in at five. When he brought the discrepancy back, the manufacturer did not offer to remake the batch. They argued the problem was not as serious as he believed. Their accounting department later called about payment. The launch went ahead with second-tier products, and the project ultimately failed — not entirely because of this, but substantially so.
The lesson Carl draws is not simply “vet your vendors.” It is that a contract manufacturer is not a commodity, and any decision capable of making or breaking the business is one a leader has to do the diligence on personally, regardless of whose recommendation brought it forward. He has now used the same supplements manufacturer for more than 20 years. He could pay less elsewhere. What he is actually buying is that when something goes wrong — and over 20 years, something always does — his partner takes ownership of it.
We also cover why quoting every job to three or four manufacturers undermines product consistency, where fraud can enter a supply chain at the supplier, manufacturer, and brand-owner levels, and why Nature City's 365-day guarantee lowered return rates instead of raising them. Carl closes on how he handles mistakes inside his own company: he makes them weekly, maybe daily, and if you are not making any you are probably not trying. What concerns him is repetition, not error — and hiding, because a concealed mistake compounds.
Key Themes and What You'll Learn
- Why fixing the process outperforms telling people to be more careful
- Why credentials and certifications confirm a supplier is legitimate but tell you almost nothing about whether they will execute
- How to distinguish a manufacturing partner from an order filler before you place the order, not after
- What a supplier's response to a failure reveals — ownership versus argument — and why that response is the real quality signal
- Why competitive bidding on every job undermines product consistency and rarely delivers the savings it promises
- Where fraud and quality failure can enter a supply chain, and what visibility at each level looks like
- How Nature City's 365-day guarantee lowered return rates rather than raising them
- The distinction between a mistake made with good intentions and one made repeatedly
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Episode #362 Transcript: Carl Pradelli
Mark Graban: Hi, welcome to My Favorite Mistake. I'm your host, Mark Graban. Our guest today is Carl Pradelli. He is the co-founder and CEO of Nature City. They are a direct-to-consumer nutritional supplements company that he and his wife Beth started in 2002. Before becoming an entrepreneur, Carl spent 12 years in investment banking and private equity focused on consumer goods.
He holds an MBA from the Wharton School of Business and a BS from NYU. After more than two decades running a family business in a very competitive market, I'm sure he's got some great stories for us. So Carl, welcome to the podcast. How are you?
Carl Pradelli: I am doing well, Mark. Thank you so much for having me.
Mark Graban: It's great to be here. I'm going to lead by example. Boy, more than two decades with the business — not trying to short you there. I'm going to blame allergies for my mistakes and stuffiness today. There's a lot to talk about, including other lessons learned from your business later in the episode. But as we usually do here, Carl, let's get right into it. What's your favorite mistake?
A Co-Branded Skincare Launch with the Home Shopping Network
Carl Pradelli: So my favorite mistake — we were about a year and a half into the business. So now we're still early 2000s. And we got to know some people at the Home Shopping Network. This is back when home shopping was still in its heyday on TV.
Mark Graban: I still think they do pretty well, but probably not quite as well as they used to.
Carl Pradelli: So we got to know some people there very well. And they really liked an idea we had for a skincare line. And they liked it so much they wanted to co-brand it with us. So it'd almost be like a joint venture between HSN, Home Shopping Network, and our company, which sounded pretty good for a young company, right? We had barely existed two years before that.
Mark Graban: Yeah.
Carl Pradelli: So we worked on this project for the next year and a half to bring it to fruition, and as we were getting close to the launch date, we made some samples of the products, gave them out to about 10 women to try, got great feedback. Product's well-received. HSN was working on packaging. They did a great job coming up with a look for the brand. So it was all looking really good.
Choosing a Contract Manufacturer on a Referral
Carl Pradelli: So it came time to actually do our first production run of the product, ordering thousands of units of our hero products and different products. And we chose a contract manufacturer that was — well, let's put it this way. It was an acquaintance of one of my small partners.
Mark Graban: Mm-hmm.
Carl Pradelli: And I went down to check them out, and they had all the right credentials and FDA certifications, inspections, and they were real. But a funny thing — well, not so funny. A strange thing happened when we got the product. We gave courtesy samples of the finished product to the women who were kind enough to try the product originally. And we started getting feedback saying, “You know, this is feeling a lot different. My skin isn't moisturized like it was before. The wrinkles around my eyes — before, your sample really helped reduce the appearance of those wrinkles. Now I feel like they're looking worse.”
Mark Graban: Uh-oh.
What the Batch Records Revealed
Carl Pradelli: Yeah. So you hear it once, you're like, “All right. Well, that's just a one-off thing.” You hear it multiple times, you really start to get worried. So here we are on the eve of launching this big project. And I went back to the manufacturer. Didn't tell them that we were experiencing this problem. I just said, “You know what? Can I have the batch records for the product you produced for us?” That way we can measure, see what ingredients, how much of each ingredient they used, and figure out if they really made the right product without really alerting them to the fact that something may be wrong here.
And sure enough, Mark, they totally butchered it. Something that they're supposed to have put in, like, maybe 5%, they put in 1%. Something that maybe was supposed to be at 1% was in at 5%. A whole series of errors like that, which is why the product was performing totally different, right?
Mark Graban: Sure.
Carl Pradelli: So you could imagine what a disaster this was. And we couldn't lead with these products. We were about to go on air, but we couldn't sell them, so we had to go to our tier two products, if you will, to launch, which is not a great way to start. Long story short, the project didn't work out. It wasn't only because of this, although this was a big reason. Just some other things beyond our control.
The Lesson: A Manufacturer Is a Partner, Not an Order Filler
Carl Pradelli: So what do you learn from this mistake? Well, a lot. I mean, this could have been something that literally could have been worth tens of millions of dollars to the company. But a bad choice of manufacturer helped sabotage it, really. So it's not like I didn't appreciate the importance of a good contract manufacturer. But I guess I didn't appreciate how you could really make or break your business perhaps.
And going forward, I really wanted a manufacturer who was going to be more like a partner as opposed to someone filling an order, if that makes sense to you.
Mark Graban: Right.
Carl Pradelli: And I really want to make our choice of manufacturer a strength in the company, not something that keeps me awake at night. That's much different. Look, I know peers in this business. They'll basically quote out every job to like three or four different manufacturers, and whoever gives them the best price they'll go with. I hate that idea for a lot of reasons. But I will say, I've now been working with the same manufacturer for over 20 years now, and we are truly partners.
Mark Graban: And that's true with your core nutritional supplements business.
Carl Pradelli: Yeah, real good point. This was a skincare line, but the learnings apply to both supplements and skincare — both personal care products. But yes, that relates to the supplements. We've been working with the same company now for over 20 years. And sure, could I pay probably less somewhere else? But you know what? I have peace of mind that every time I test one of their products, it passes. Anytime there is a problem — and look, there's always going to be something that goes wrong, right? Along the way. You work together for a long period of time, something's going to go wrong. But does the party you're partnered with take ownership of that mistake?
When a Supplier Won't Own the Mistake
Carl Pradelli: Because I will tell you, the skincare manufacturer — to make things worse — instead of saying, “Geez, we really messed up here. We're going to remake the product as quickly as we can,” they tried to convince me how it wasn't as bad as I think.
Mark Graban: Oh. So you beat me to the follow-up question. It seems like in a lot of cases you would get a refund, or they would stand by their work. But you're saying no, they said it's not that bad. Did you throw the actual end user comments back at them then and say, “Well, no, the customers are saying this is not just a tiny difference in the product. It was a huge difference”?
Carl Pradelli: Yeah. No, exactly. Once we went back to them and said, “Guys, you didn't make our formula. And here's how we figured this out.” And that's when he said, “Well, it's not really that bad. Here's why.” It's like, “No, no. This is really bad. You're killing a business I've been working on for the last year and a half that just about was supposed to launch.” Now if you really want the icing on the cake, at some point one of their accountants calls us looking for payment on an order. It's like, “You've got to be kidding me. This is a joke, right?”
Mark Graban: Well, at least they didn't make you pay up front. That's what I was kind of worried about.
Carl Pradelli: Yeah, no, we didn't have to pay up front. But look, as you can appreciate, it was a horrible experience. And something I vowed I was never going to be in that position again.
Due Diligence You Can't Delegate
Carl Pradelli: You also learn — I relied on somebody else, which you have to do in business. You have to rely on other people's expert opinions, if you will. But when it's a key decision like this, you've got to do your due diligence yourself. Anytime there's anything that could make or break your company, you've got to be involved, and you actually have to do your due diligence yourself. And lesson learned. Lesson learned.
Mark Graban: Wow. Well, indeed, lesson learned. And I appreciate you sharing that story, Carl. There are a lot of different layers to the story about maybe not just picking a vendor because you know someone who knows someone. I wonder if HSN — because this was a big loss to them. I mean, to them it was maybe one of many products and partnerships, but still it sounds like it was really material to them. I wonder if they try to prompt entrepreneurs they're working with to have certain guidelines, or at least a protocol, or things you need to check out in advance in terms of selecting a partner. Or perhaps just making that quality check a routine part of the process after the first part of a run happens, if that's possible.
Carl Pradelli: You're spot on. You're absolutely correct. And they did have that as part of the application, if you will, working with them. We had to show all the credentials and the experience and insurance and all these things you would expect. So, but look, at the end of the day, you can't treat something like this as a commodity. And I just thought, okay, you give somebody the formula, the materials. They're registered, they're credentialed. They just make the product, right? It's made to order, if you will. But it's actually for businesses, for products like this, and probably I'd say most things, it's a lot more complicated than that. And the decision you make could either make your business or destroy your business.
Why the Cheapest Supplier Is Rarely the Cheapest
Mark Graban: Gosh. I want to follow up. You talked about this common practice of putting the contract work out for bid. I would take issue with the standard practice of choosing the cheapest supplier, because that doesn't always save you money over time. Any reactions or comments on that first part of what I was going to add?
Carl Pradelli: No, I mean, it's a wonderful insight. And look, you have one thing go wrong like this, or your returns spike, or heaven forbid, you have a health issue — that dime or 15 cents you save per bottle is going to evaporate pretty quickly. So I can tell you, I've had countless people come to us over the years and say, “Look, we can save you money.” And it's like, well, you know what? I don't know if you can or cannot, but I really doubt it over the long run.
Same thing with ingredient suppliers, too. In our business, one of the things you may notice reading about us is we don't work with generic ingredients. We only use what we call branded, scientifically studied ingredients in our products, which cost more. But they're also generally going to perform better, and have better safety profiles. So people all the time are saying, “Well, I could save you so much money.” I'm like, no, that's not what we're about. And it's really not what our customers expect. And frankly, it's not the promise we made to our clients and consumers. So cheapest is definitely not always best. Especially when you have something that's related to health.
Regulation, Low Barriers, and a Flood of New Brands
Mark Graban: Well, there's that, and I think as you're touching on, there's the brand promise. There's just what the quality level of your product is. I've got one more question to come back to with the skincare products business. But help us understand a little bit of the dynamics, or the competition, in nutritional supplements. It sounds like you're maintaining a higher standard than the bare minimum for an industry that's not FDA regulated the same way pharmaceuticals would be. Tell us a little bit more about that and where Nature City does more than just what's required, it seems.
Carl Pradelli: Again, another good observation. Supplements are regulated in the sense that there are plenty of FDA regulations. Of course, we've got to comply with FTC regulations, a whole bunch of state regulations. The main difference between, say, us and pharmaceuticals is you don't need pre-market approval to sell. That's the big distinction.
Mark Graban: My mistake. I stand corrected. I didn't mean to imply completely unregulated. It's a different — there's not the approval process of all the phases of FDA pharmaceutical approval.
Carl Pradelli: No, Mark, I think you characterized it properly. It is a different standard of regulation. That is really the big distinction — the pre-market approval, before you start selling. So for anyone who has some money, it is a relatively low barrier of entry to start. You can just go to one of these contract manufacturers and say, “I want a product like this.” Get a quote. If you have the money, they'll make it for you, and then you go out and sell it.
So what we've seen in the last — especially this has exploded in the last 10 years, which probably coincides with the proliferation of platforms like Amazon certainly, even Meta and now TikTok — you have a lot of people getting into the business for the wrong reasons. So they're really good and expert and exceptional at getting eyeballs on these platforms. And they're like, “All right, what can I sell these folks? Oh, supplements is a good category. It's growing. It's easy to get into.” And next thing you know, they're selling supplements. So on top of the regular competition, you have a lot of people doing it for the wrong reasons, because they think they can make a quick buck.
Mark Graban: Or they're leveraging their celebrity, or the social media form of celebrity, I guess. So they have a following, they're an influencer, what have you, and they think, “Oh, well, I can cash in a little bit on my followers.”
Carl Pradelli: Yep, that's another thing too. Absolutely right. You have people who are either technically really good at driving traffic or just have a following, and now it's like, “All right, how do I monetize this following?” And that's really what's happening. So look, you have a lot of products out there for sale that I would not recommend you use, or would recommend you be very cautious about.
So we really just try to stick to a couple of things that we try to differentiate our brand with. And obviously it starts with the product and what we put into the product and how we choose our ingredients. Most of these folks we're discussing, they'll just say, “Look, I just want some type of product with green tea,” and you choose the ingredients, and they could care less where the ingredient comes from, where it's sourced from, what its attributes are. They just want something that passes the label test, and is hopefully not too expensive, and they can go out there and start marketing it.
Quality Beyond the Label Minimum
Mark Graban: Yeah. And there's perhaps that bare minimum, that legally this is what it says on the label. But as with all things — I'm going to make a parallel. A $3 bottle of wine is legally wine the way a $30 bottle of wine would be, and chances are the $30 bottle is higher quality and doesn't have additives and probably tastes better.
Carl Pradelli: No, it's a great parallel. I'm trying to think of a wine brand that you might be able to relate to, but I can't think of one off the top of my head. I don't drink as much wine as I used to.
Mark Graban: Well, choose a different product category if you want.
Carl Pradelli: Yeah, no. But the point is, look, we don't want to be the most expensive product out there, but we want our quality to be the same thing as being that most expensive product, if that makes sense.
Mark Graban: It sounds like you're not going after customers that are just going to buy the cheapest. There's always somebody cheaper, I assume.
Carl Pradelli: There's always going to be cheaper, and someone who's fixated on price and looking for overnight miracles — that's not going to be a good customer for Nature City. But we love educated customers, right? Who spend time investigating what's in our products, who understand why we chose certain things and excluded some other things. And they're more likely to have a much greater lifetime value as a result, because they're going to stay around. And then you've got to provide a good value. So that's a thing we do. For the quality we provide, we want to make sure we're providing good value, and that's really our sweet spot.
Why Consistency Suffers When You Shop Every Job
Mark Graban: The other thing I wanted to come back to was, you said earlier you don't like the idea of constantly putting something out to bid, a company constantly changing suppliers because they're saving a fraction of the cost. Or maybe somebody gives you a good price to switch and then you find someone else who gives you a good price to switch later. You said you don't like that idea. Tell us more about why you don't like that idea.
Carl Pradelli: Well, look, I think one of the keys to good products, especially if you have long-term customers, is consistency of the product itself and the quality. Chances are if you use multiple manufacturers, over time there's going to be different nuances in that product. A lot of times the raw material's going to be sourced from different places. Or they may use a different grade, or a different type of capsule. There's a lot of different things.
And sure, you could specify if you really care about this stuff, but I would say if you really care about this stuff, you're probably not shopping your product all the time. Again, it comes back to a lot of those folks are just looking to satisfy the label legally. We want X number of milligrams, and that's all we want it to say, because that's what's important for us in marketing. And that's what they do. But really, to answer your question, the short thing is consistency of quality is hard to maintain when you do it that way.
Mark Graban: Sure. And if somebody is buying something that meets the bare minimum standard with the regulations and business practices that are in place, is it fair to say that the biggest risk somebody might face as a consumer is a product that's ineffective? I mean, it's much more rare when there's a scandal where something is dangerous, but I guess that does happen, sadly.
Carl Pradelli: It can happen, but I agree, rare is a good way to characterize it. But I think the biggest risk is you're just wasting money. Maybe there's an opportunity cost there too, because you could have bought a real product that might have delivered. I will tell you from a supplement business owner standpoint, the risk to me is a customer thinks supplements don't work, or that particular type of supplement doesn't work. So for the consumer, they missed out on potentially an opportunity and they now think the product doesn't work for them. For us, it just taints the category.
Heavy Metals, Plant Proteins, and Ingredient Sourcing
Mark Graban: Yeah. Does Nature City do, let's say, protein powder?
Carl Pradelli: Not currently. We have in the past and it's just not a good category for us.
Mark Graban: Okay. Well, that came to mind because I remember seeing articles about how people who drink protein powder shakes all the time have to be careful that sometimes the cheaper stuff may have levels of heavy metals in it, that some brands are much more careful about testing for. It's back to the quality of the inputs and making sure it's not going into what they sell with levels that could cause a problem.
Carl Pradelli: Yeah, you're correct. And that issue has really become more prominent with the emergence of plant-based sources of proteins. So, like, for example, rice proteins — I think arsenic is a concern, right? Because you're using a lot of the material. It's not like you're just having one serving of rice. You have a lot of rice that's going into making a 20-gram protein serving. Maybe with pea protein or some of the other vegetable proteins, maybe it's lead or aluminum or something.
So it's a challenge, because consumers really want the higher levels of protein. I think 20 grams is probably considered the sweet spot right now for a serving. And to do that you've got to use a lot of plant material, and whatever grows in the ground is going to contain these substances. Doesn't make it necessarily a bad product, or a bad source for that ingredient. It's just grown in the ground and you're using a lot of it. So yeah, that's what's happening there. It's become an issue for certain people, sure.
Where Fraud Enters the Supply Chain
Mark Graban: What other advice would you have for consumers about being careful and checking quality? Making sure that they don't get something that's not just subpar but fraudulent. What are some other mistakes that consumers can avoid?
Carl Pradelli: Great question. Love this question. So fraud happens at every level. It happens at the supplier level, where a supplier is supplying something that is fraudulent or adulterated or just a bad ingredient. It can happen at the manufacturer level, where someone doesn't put in what they're supposed to, or figures out some other way to make a product that's not what it's supposed to be. And then you have the brand owner themselves who is doing things for the wrong reasons and selling product that is clearly fraudulent, or just a bad product that you wouldn't want to take. So that's the challenge for consumers. It could happen at every level.
So how do you deal with the supplier issue? That's why we focus on these branded ingredients over generics, because their names are on our label too. Not only is it on the label, you see the logo of the branded ingredient supplier. So they're on the hook too. A generic ingredient — no one knows who supplied it, no one cares. You're not at any risk. But if your name is on the label and in our advertising, then you have skin in the game.
Manufacturer — this is where people sometimes don't really — it's harder to figure out. We list our manufacturers and tell people who they are, and they can go research them themselves. We call them the hidden heroes of the supplement product process, because if they don't make it correctly, it doesn't matter what ingredients you purchase, it doesn't matter what intent I have as a brand owner. Things could really go awry quickly at the manufacturing level. So that is really important.
US Manufacturing and Knowing Who Made Your Product
Carl Pradelli: We really emphasize the importance of USA manufacturing on top of everything else. That's another challenge we've had in the last 10 years, Mark — the influx of products made overseas. You could speculate where I'm talking about, but big, big problem. And then that leaves the brand itself.
Mark Graban: Well, I'm curious. Why is — I mean, it's just lack of regulation in other countries?
Carl Pradelli: Yeah, pretty much lack of regulation and lack of accountability, I guess. That's really what it comes down to. You order a bad product, you're going to go chase the person somewhere in the middle of wherever — China or wherever, pick a place. And again, they don't have the standards we have here. I shouldn't say all international, but a lot of places don't have nearly the standards we have here.
Mark Graban: Or the legal system protections, perhaps.
Carl Pradelli: Yeah. Well, but even just from a manufacturing practices point of view, and how things are tested, and how the process is managed to ensure you get a quality product. At the end of the day, it's just made how it's made. And it comes in on a boat, gets imported, and next thing you see it's online somewhere or in a store somewhere. So it doesn't mean every product made overseas is bad, but your chance of having a bad product goes up exponentially that way. So I would definitely try to focus on USA manufactured products from some of the premier manufacturers, to really protect yourself.
Knowing Who the Brand Owner Is — and Why They're in It
Carl Pradelli: So the last thing I was going to make, Mark — we talked about supplier, we talked about manufacturer, and then there's the intentions of the brand owner themselves. Why are they doing this? Why are they in this business? My wife and I tell our story and why we do this, and we make ourselves very visible to anyone who wants to talk to us or interact with us. We just want to show people we're real and what we're doing and why we do things. If someone's not willing to share who they are with you, it makes me really question what they're doing and why. So I think getting to know the brand owners is really important.
And frankly, unfortunately, here's something else that also happens in our industry a lot. You have great founders, great entrepreneurs who build the business, and then they sell it. Nothing wrong with that. That's a great thing. However, the new owners have a different idea of how to run that business. They may say, “All right, how can we expand margins here? How can we do things a little differently to make some more money?” And then the brand is different. The products are different. So it's almost like you have to be wary of that too.
So there's definitely a lot of things you have to be careful of. It's your health, so I think a little extra time figuring out what products to ingest is important and worth it. And that's why we try to provide as much education about our products, ourselves, our process, and who we work with, just so you can make a good decision.
Leaving Private Equity to Start Nature City
Mark Graban: Yeah. Well, speaking of decisions, I would love to hear your story of why you and Beth chose this business. Again, your background in investment banking, private equity — I'm sure you were exposed to a lot of industries, a lot of businesses, a lot of different things you could have done. Why Nature City?
Carl Pradelli: Yeah, it's a great question. And I've got to tell you something. If 25, 30 years ago you ever told me I'd be living in Florida running a supplement company, I would've bet everything I had that was never going to happen.
So really what happened — I was, as you mentioned, in the investment banking, private equity world. In that business, you kind of have what they call these golden handcuffs, where your compensation — you get a big bonus, but it kind of vests over a period of years. So each year you're getting money that's going to come to you in the future, or it's in stock or something else.
The company I worked for was sold in 2000, and everything I had vested at that point. So all of a sudden everything was current, so I really had a decision to make in my life. And I really had this entrepreneurial bug, and so the question was, do I want to start over at another firm and start the clock again, or — now I'm in my mid-30s at the time — do I really want to take a shot at running my own business?
And when it came to supplements, I really was excited about them and what they could contribute to the healthcare picture going forward, but I found shopping for them a miserable experience. I found going to those stores intimidating. You're just surrounded by bottles of pills. What do you get? The information folks in the stores had was pretty much superficial. Who do you trust? Who do you believe? What do you do? So we said, we think there's a better way to do this, and we kind of just wrote down how we'd do it differently. And that was really the thrust of our business plan. So we gave it a shot, and we're still here.
We made many mistakes. I could probably do four more episodes of My Favorite Mistake, Mark. We've done some things right too, and really it comes down to — we just said, “Look, we're going to treat our customers like we like to be treated ourselves.” Really that's our compass. That just drives us.
Empowering Employees to Make Customers Happy
Mark Graban: One thing I think that stands out that's interesting about Nature City — you talk about how team members are empowered to make customers happy. So you're talking about treating people the way you would want to be treated. What does that look like in practice? Are there certain guardrails, or do you leave it to judgment where, well, if there is a mistake, we learn from it in terms of what we did to make that customer happy?
Carl Pradelli: Yeah. Over time, one thing we've been really lucky with is our employee retention has been really, really strong. So most of the folks working for us have been with us for a long time, which makes it easier to be comfortable they're going to make good decisions. Frankly, sometimes they put in their own guardrails where they feel like someone may be trying to take advantage of us, and they wouldn't be as generous as I might be with the client.
Mark Graban: Well, they're committed to the company, right?
Carl Pradelli: Yeah, it's okay. You know, when they just feel like, “Oh, this person just wants something free. She always calls and says her order was one pill short in six bottles.” And I'm like, “Look, we have no way of knowing. She's been with us for six years now. Let's send her another bottle. It's okay.”
So really I just say, look, your job is to make them happy. Do everything you can. Obviously if it's a big thing, let me know, but you make the decision how to put a smile on that person's face. And you know what? I think at the end of the day, even though you have some situations like this where maybe you gave away some product that you didn't have to, I just think it builds loyalty to the brand. And I think it pays for itself pretty easily.
Mark Graban: So look at that as an investment instead of just a cost.
The 365-Day Guarantee That Lowered Return Rates
Carl Pradelli: Well, yeah. Let me give you another example. When we first started this, people were horrified. So we have a 365-day money back guarantee. Not too many people have a one-year guarantee, especially in this business. Most people, it's 30 days if they have something, maybe 60 days if you're lucky. And everyone was like, “Oh my God, people are going to request all these refunds.” And I said, “I think just the opposite's going to happen.”
And I was proven right. Our return rate actually went down. We initially had 60 days I think it was, and we went to 365 days, and our return rates actually went down.
Mark Graban: Huh.
Carl Pradelli: And why is that? Well, first of all, it encouraged people to buy more initially. So instead of maybe buying one or two bottles, they bought six. Gave the product a true test, and discovered it seemed to be helping them. And they liked it. And as a result, instead of returning it they reordered it.
And just practically, Mark, when you have a 30-day guarantee, a lot of people don't open up that package for like two weeks. You know how many things you order and it just sits there because you get busy.
Mark Graban: Yeah, you're busy with everything.
Carl Pradelli: So now you've got to start taking this product, and you're looking at the clock like, “Wow, should I return this thing? I don't know if it's going to work. And there's only like 10 days left before I have to call and return.” So for all those reasons, we just said no, we're going to have a one-year guarantee. It shows how confident we are about our products. And it's just another business practice that's a little different, maybe counterintuitive to what some other folks do. But I think it's served us pretty well.
Mark Graban: And I guess there's always somebody who might abuse the system. You hear stories sometimes of people who are maybe abusing Costco's generous return policies. And maybe it comes down to a positive takeaway that most customers, most people out there are going to do the right thing.
Carl Pradelli: You have to operate that way, and people absolutely have taken advantage of us. I'm not going to give examples because I don't want to give people ideas. But they do. And you know what? You're absolutely right. You've got to believe that people are good people in general. And if someone does something to screw you, you fire them as a customer and they never buy from you again, and you move on. So you don't penalize everybody else for the sins of a few. So that's how we approach it.
How Carl Handles Mistakes Inside His Own Company
Mark Graban: Well, and maybe one final question, Carl. As an owner of a business, and you mentioned earlier, things go wrong — one of the core themes here on the podcast is we're all human, we all make mistakes. Business owners make mistakes. Podcasters certainly make mistakes. Employees make mistakes. What's your philosophy on handling a situation where an employee makes a mistake? Or what would you coach other leaders in your organization to do if somebody says, “Hey, I made a mistake”?
Carl Pradelli: Yeah, look, I make mistakes every week, maybe every day. So if you don't make mistakes, you're not trying, really. That's the way I approach it. And it comes down to — the thing that irritates me, Mark, maybe this is a different way of answering it: if you keep making the same mistake over and over again, we have a problem. But if you make a mistake because you had really good intentions and you just made a bad decision, okay, we'll live with it, you learn from it, and you move on.
So I think there's a big difference between making a mistake just because maybe you're being kind of lazy and didn't want to do something, and one where you really had good intentions — maybe you were trying to help a customer, and you just did something that was wrong.
We don't want people to hide mistakes, because sometimes you compound the problem. So we want people to just feel comfortable that they can come to us and say, “Hey, I think I messed up here.” We talk about it and we work through it, learn from it, figure out how we could change our process and make it better.
And you have to do that. You can't drive yourself crazy expecting everybody to be perfect all the time, because you're not perfect. And you also can't anticipate what's going to happen every day. That's a challenge too. It used to drive me crazy to come to work every day and have to deal with things I didn't think I was going to have to deal with, and I couldn't do what I had on my agenda for the day. And finally you just say, “You know what? You've got to expect the unexpected and deal with it as it comes up.” And that's the same thing with people making mistakes. It's part of life and part of the deal.
Fixing the Process Instead of Saying “Be More Careful”
Mark Graban: Yeah. And I like what you said there, especially about the idea of, well, how do we truly learn from it? I think some mistakes get made because somebody didn't know some piece of information. Well, that can be addressed a lot of times. Okay, well, now you know. They're very unlikely to make that same mistake. But when you talk about looking at the process, that's music to my ears, because that's so much more effective than just saying, “Yeah, well, be more careful.” It's sort of like saying, “Well, hey, be less human.” I think the conditions that you describe make it more likely that there's learning and the mistake doesn't get repeated.
Carl Pradelli: No, that's the goal. That's the goal. And I think one thing, as we kind of got into more this digital world, and even some people working remotely at times — sometimes we don't document the processes as well as I think we used to. If that makes any sense to you, Mark. And that bothers me a little bit. Because it's hard sometimes to remember everything you're supposed to do and how you're supposed to do it each time. It's nice to have something to refer to, to help you out. So that's something hopefully we're going to try to get better at here at Nature City.
Mark Graban: Yeah. Well, there's always opportunities to improve. There's always opportunities to learn from mistakes. And Carl, I'm really grateful that you shared the story from the early days at Nature City. And unlike my mistake in the intro, I'm glad you survived more than two years. That mistake didn't keep you from growing and still being here over 22 years later. So I'm glad that you're still here and glad that you joined us today.
Carl Pradelli: No, I really appreciate having the opportunity, and hopefully it was helpful to the viewers.
Mark Graban: Yeah. Well, I hope so. So again, Carl Pradelli, co-founder and CEO of Nature City. You can check out their website, naturecity.com. That's our — no mistakes with the web address. That's an easy one for people. Naturecity.com. Thanks again, Carl.
Carl Pradelli: My pleasure.