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- [00:00]
A
And welcome to the operators podcast. I'm here with Mike and Matt on our wonderful Wednesday as we do our podcast. And we're going to talk about something that is very apparent. We had. I was in Miami last week, guys, and I had to rush back to do the podcast because I wanted to show, if you're watching this on video, that I have a manufacturing behind me. And It's a big one, 280,000 square foot. And I want to talk because one of the most common things that I'm asked because I do have manufacturing in Mexico is why did you do it in Mexico? Why do you manufacture your own product? Do you make more money because of it? Is it awesome? Is it a pain in the ass? How does it help you? Are you an idiot for even trying it? I was in Miami with all these guys selling supplements, and they have like teams of like one, two or three people trying to sell their stuff. And I've got 1400 people in my company. So we want to talk through this. So everyone out there that has a business from one to a hundred million can decide if they want to get involved in a larger, vertically integrated type of a business. Now, I know, I know the answer
- [01:14]
B
is yes to everything. It's stupid, it's awesome, it's fast, it's just yes.
- [01:21]
A
Okay, so like, I did it in Mexico, you did it in Canada. Tell me about why and when and a little bit about this, because I know no history of this.
- [01:30]
B
I mean, my. My perspective is I just. I'm clairvoyant. I knew AI was coming eight years ago, and I knew that I wanted to be high asset and low obsolescence.
- [01:41]
C
That's it.
- [01:42]
B
I'm a fricking genius. No, that's not it.
- [01:45]
A
How many people do you have? Like, how big of it is? Do you go into the manufacturing every day? What do you do?
- [01:50]
B
No, dude. So our headquarters and our facility are actually separate by about, I think, eight miles. So there's people going back and forth all the time. We opened like office first. Manufacturing came, I think a year or two later. It was out of necessity. We just. Our category has got like a skew complexity and a planned obsolescence with phone models every year. So like the phone release cycle is brutal. Um, and that once we got into. Once I got into the business, this is like where ignorance is not your best friend. I got into the business and started to realize just how bad everybody's balance sheet was in this industry with inventory and how, like, this is how companies die. And that opening a Factory became a, an absolute. Like, you have to do this. Like, this is the only way this business works on paper. I've heard Mike say this before. We're like, if you can't make a business make sense in a, in a spreadsheet, it's probably not going to make sense in real life. Like, it just didn't make sense. I was watching like inventory grow. Apple would release a new phone model in new capacity, and you never knew which phone was going to sell. Well, of all the ones they released, same with Google, same with Samsung. So the whole thing was just such a mess in the backend that we didn't have a choice. And now we have a factory in Canada here where I live in Kelowna. And then we have a new one in Mesa in Arizona. So two factories at this point. And that's just, you know, growth demand gotta, gotta fill it somehow. But I think the cool thing is like, I think somewhere between like 80 and 90% of all of the product we ship now in North America is made here. And unlike a lot of companies, our resins are also American. So our supply chain is weirdly American. Like, we, we don't get a lot of things from outside of the U.S. wow.
- [03:51]
A
I mean, the necessity thing is the, the thing that jumped out at me because everyone's like, hey, why did you create North America's largest leather baked manufacturing? Is because I was just stupid enough to do it. And when we went to suppliers with all my demands, no one wanted to give me everything. I, I wanted a few of these to test, but with the ability to scale, I wanted the best prices. I wanted them to treat me like the king. And they're like, hey, you're one of many and we have no belief that you're actually going to grow. I was a guy in a garage calling people up saying, can you make for me? And they're saying, I remember being on my front lawn walking around pretending I was bigger than I was to people to try to get them to do this. So I started doing it out of necessity and, and then I grew out of necessity. Mike, what do you do there in Oklahoma other than run Oklahoma?
- [04:44]
B
Everywhere we turn right now there is some world changing AI announcement. And I think the trick for us operators is figuring out what's actually going to help our business. Is this stuff saving us money? Is it helping us grow revenue? Is it helping us grow profit? Like, where's the freaking roi? Jason, for Hexclad, tell everybody what is actually working for you guys?
- [05:01]
C
Yeah, look, I'm laser like focused on implementing AI wherever we can to just
- [05:05]
B
make us more efficient.
- [05:06]
C
Fulfill has been huge for us. Like, my team is constantly using Fulfill's new CLI tool and MCP features with Claude. They're now able to query Fulfill data. They, they can vide code up dashboards. I mean we get these awesome dashboards on operations and, and Fulfill continues to build things that are actually useful for brands. It's hard to see what kind of AI work is valuable and what isn't.
- [05:34]
B
Sure.
- [05:34]
C
Like there's so much out there, so much coming at us. But Fulfill seems to be giving us things we can really use to get more efficient. Well, I, I do occasionally try and sell drinkware as well. The we really started to look at manufacturing so we, we import. Our industry as I've described before, is like 95% of it's made in a very small geographic area in China. And this is not uncommon. You have these kind of cottage industries where all of the world supply of like we've talked about this before. Wuhan happened to have a ton of the world supply of wedding dresses. And so when Wuhan got shut down, it was like you couldn't get a wedding dress. You. And this is the same deal with stainless steel insulated drinkware. So there, there really weren't options. And that didn't bother us until Covid, because during COVID you know, the supply chain was an absolute disaster. Shipping rates went through the roof and it was as much about reliably having access to your product as it was even about cost. So I think depending on the industry you're in, it, it can be a cost play to vertically integrate, but it's also like a risk mitigation that if you can't get your product, then your company dies that way. And believe it or not, that's how some companies have died that they just weren't able to get their product for whatever reason. So we started looking at it in I would say 2020, 2021. We made a major investment, probably on the order of 5 to 8 million dollars. Happy to report we probably set most of that on fire trying to figure out, I mean, probably about a Miami townhouse worth of tuition paid in the manufacturing pursuit. And, and I think we, we learned a lot of the reasons along the way why it's difficult to manufacture in America. And it's kind of like when somebody comes to me with a business idea and says, I've got this idea, nobody's doing this. And I'm always like, well, good reason that, yeah, that means one of two things. It means that, you know, like you're just the smart guy that's the first one to have this idea or there's a really good reason why nobody's doing it. And it's like, turns out with drinkware there's some really good reasons why. Making stainless steel unsighted drinkware in the United States is very hard. So at this point most of what we do is, I would call it secondary manufacturing. And, and this is, I know Sean does some of this as well. This is all of the kind of ornamentation layer of our drinkware. We're laser engraving, we're UV printing, we're heat transfer, we're doing embroidery. And all of that stuff really plays out well with customization, chasing orders and different things. And so we've, we've learned a lot there, a lot of highs, a lot of lows. And I, I, I would liken, here's, here's the analogy I give. I would say building manufacturing is like building a two sided marketplace that it really can add enterprise value to your company if you're successful. It's just really freaking hard to do and you're probably more likely to fail than you are to succeed in it. And so for us, I think on the simple modern side, we haven't figured out how to do it yet. But the advances in robotics and technology make it very possible that it's something we look at again. And then we got into other things like electrolyte powder and stuff where vertically integrating would be, would be more tenable. And I think what we've learned over in that area is that whether or not you do it, it's very helpful in negotiating with suppliers. If you have a credible threat that you could do the thing, then it really changes the type of prices that they, they offer you and the type of automation that they're willing to do. And it kind of becomes their job to price their product and their offering in a way where it's just on the edge where it's not worth it for you to vertically integrate. And so that can be really helpful as well.
- [09:46]
B
Mike, in, in the insulated steel drinkware, out of my own curiosity here, what makes it hard to make in the us? Is it labor? Is it materials? Like, is it all the inputs?
- [09:59]
C
Is it steel is a highly political material. So in fact, even just this last week there was some Updates to the 301 section of 301 stuff from the White House. You do still have some significant steel industry in America. I would Say that China has been guilty of dumping. And so there have been points where they just made a ton of dumped on the market. And, and so it's, they really do have access to lower cost steel. That's a piece. But the overriding thing that you learn is that like we probably have, I don't know, 10 major ingredients. We'll say like kind of pieces or different things. We need, we need silicone, we need pp, we need powder coating, we need steel, we need. And, and then on top of that it's probably a 30 step process to make these things. And so a really good example that we ran across silicon. We use silicon in our stuff and it was like, well okay, we could buy it from China. Don't love that because we're doing a bunch of colors and, and still have this dependency on China. What if we made the silicon here? And we, we kind of pulled on that thread. What we learned was even if we bought a silicone injection machine and made the silicon here, we couldn't make it. Even, even if you didn't include the cost of machinery, we couldn't make it for what China was selling it for. And nobody really knows why that is. You know, obviously there's some kind of subsidization or something going on over there. And this is, this is kind of part of the reason why China has become such a juggernaut in manufacturing is that they have all these cottage industries and a lot of them are at prices that you just really cannot replicate in the US and so one of the issues you have is it's like, well, I don't know that a lot of the cost saving isn't there. But then there's this other issue going on which is if you can get 80% of your stuff reliably here, but 20% of it still has to come from China and you still have all of the dependencies, then how much are you ahead by making 80% of it here? So it's complicated is is the short answer. And uh, I think there's a. We're at a unique moment in time. I'd love to talk about this as the conversation goes on because I do think we're at a unique moment in time with what's going to happen with robotics where some of this stuff could change. But obviously China kind of won this era of manufacturing by and large, especially in, in kind of durables.
- [12:39]
D
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- [13:24]
A
There is something called China Math and I saw Matt, your eyes just like go, what? How can we do everything like this and they can still beat us on price? There is something weird and you can call it subsidization, you can call it whatever you want, but it's expensive to have labor in China. It's expensive to ship things into China. It's expensive. I'm really lean. And some things they can just make astronomically cheaper than we are. And I'm like, how can you possibly do that? And I don't know. But I would say this. There are such problems in manufacturing in the United States. And part of it is our attitude, I believe, that you set something up and then you manufacture and, and theirs is they make all their money on manufacturing, right? They're going to make it and they got to have a margin somehow. They got to make some money. So they're always trying to get better, penny by penny, dollar by dollar. In US we set up manufacturing, we're like, hey, that's pretty good. Like, we can make that thing for 20 bucks. Let's kick that in for a couple years. I heard Mike on the operators podcast one time say about every year he goes back to China, they have new machines, new doing new processes, making it more efficient. Is that right, Mike?
- [14:42]
C
Yeah, the. I'm going to pull up this stat. But if you look at robotics installed worldwide, it's fairly shocking because China, I think that the perception for a long time is that China and some of these developing economies, what they did is they threw people at the problem. And maybe that was true for an era, but what's true today with China is that the. They're throwing robotics at the problem. And so what, what is kind of a narrative violation and also should give people, should wake people up, is that China is installing robotics. I. I will pull the stat. But I believe they installed about as much robotics as the rest of the world combined last year. And so they clearly have a vision for the future and that it's going to be robotics driven. So early on. There's a great book, we've referenced it on here before. Go and buy it if you haven't read it. Called Apple in China. And it talks about how Apple as a company helped China to develop into the manufacturing superpower, because they certainly weren't when Apple started making their things there. But the thing that I think you can't listen, game recognizes game and China didn't have a great hand 30 years ago and they have maximized that hand. And, and even if our countries are somewhat adversarial and there's some ways that they do things that I don't agree with as an operator, I look at it and I'm like, it's pretty amazing. Like, you were basically all you had was cheap labor to throw at things and you have worked your way up the value stack. And so like, yes, like, when I go over there, what I see is almost fully automated production at this point and, and it's impressive. And I think that my, my personal view on the technology side is what makes this moment in AI so interesting is not the software. If you're, I mean, if you're in consumer goods and you think the most interesting thing about AI is the software and the ad creation. I disagree. I think the most exciting idea is that when the robotics and the AI come together, like, fulfillment is going to totally change, manufacturing is going to totally change, product development is going to totally change. And, and my sense is we're probably a year or two out from that and, and that there's going to be fortunes made and the beginning of the
- [17:04]
B
change is like within the next 24 months.
- [17:07]
C
Yeah, you look at like Brett Adcock and some of the videos he's posting, you know, just the robotics is clearly getting really, really good. And then imagine dropping the latest version of Claude, the latest version of ChatGPT, inside of it, where it's basically like a genius and it, it has access to the physical world. And then you're like, okay, now I'm going to turn you loose and figuring out the most efficient way to make this bottle and you can go through a million iterations and it's like, oh, yeah, like that's believable. And I think that that's where we're headed in short order.
- [17:41]
B
I think though, like, and I've listened to Curtis talk about this with, with Portland leather, that if you're going to get into manufacturing, you need to get comfortable getting really into it. And that is, you also need to understand all of the inputs have to be comfortable going very deep in the supply chain because there is a fragility to it, which Mike just called out. Like, we know every input in our business and we build direct relationships with all those people and we're looking for secondary and third backups. Like, we're, it making things isn't just a, like, I'm going to buy some machines and I'm going to do the finished good. If you're going to do it, I think you kind of have to look at like, how China, how does China do this so well? The one thing that I would caution people on is the political and monetary system that China has. Like, they are fully aligned as a nation. And that's where this whole idea of like subsidizing even it, it's like, don't take that literally. That word is not a literal word. It's that like the entire system is built to support this set of objectives. And it's, it's, it's dictated. It's like, no manufacturing is important. Everything will be set up for you. Like, the banks will be friendlier, the labor will be cheap. We'll provide everything. We'll give you cheaper real estate, cheaper power. We will just like set the whole system up to allow you to succeed in this one thing. And in the usa, it's a free market. The whole system doesn't give a. It is like chasing the most efficient turning of a dollar. Right? And that may not mean that it's good to make things here.
- [19:25]
A
You know, I, I, I often think that I'm, I'm proud of our manufacturing. Like, there's nothing I like doing better than bringing people in. And what you see behind me is a very small portion of it. It is enormous, right? So I bring them into one little door and then you go, and you go to bigger and bigger. It's like Willy Wonka. People love it, right? And I'm so proud of it. But it's a pain in the ass. It really, really is. And I think we can match China with what we do in our manufacturing in terms of price. But China will not get beat. They will actually go out. And now they're using Bangladesh and Cambodia and other labor because their labor is higher. And here's the materials and here's our sourcing. And they thought that, well, now they need to beat us. So they go out and they own the factories in these other countries where they're paying a couple hundred dollars a month for labor rather than what we pay, which is a lot, lot more, right? So they're, they, they live and die on manufacturing. They've got to make it work. So they're going to figure out a way years in advance to put the time and the money in order to do that. And I don't think of China as adversarial, although it is. I understand that, but they're all into manufacturing. I'm in Leon, Mexico, and if you want to know, manufacturing gone wrong. They've been doing it for 50 years. And what they do here is they work with the United States. And somebody from the United States comes in and says, will you make our product for us? And they say, yes, we will. And all of a sudden they're building it up. They're building it up. And then demand goes down in the US and they stop buying. And what happens is that business goes out of business like they just get killed. There's a company, I'll just say it out loud. Fry Boots. Fry Boots is a 100 year old company, right? They have twice went bankrupt here and take millions of dollars from the people down here, just crushed. And then they come back three months later and said, hey, guess what, we sold to somebody else. We're still Fry Boots. But now we want you to make again. We're not gonna pay you back the $4 million that we owe you, right? So the manufacturing here doesn't have the support of the government. They don't have all of these windfalls. They're just people trying to make things. They're not as good and they're not efficient. So I had to come in with my entrepreneur mindset and say, how do I stabilize this manufacturing so that I have the right product to sell at the right time? Cause as an entrepreneur and a marketing, that's all I care. Give me the right product at the right price at the right time.
- [22:09]
B
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- [22:29]
A
Mmm.
- [22:30]
B
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- [22:53]
C
Well, and that's what. I would love to hear it, Curtis. Like, because I. I think you're underselling just how dramatically you've been able to use vertical integration to create enterprise value. Like, I think. I think you're an example where you're the. The value of your company is just significantly higher because of your vertical integration than it would be otherwise. And I'd love you to talk about that. You know, I. I know I'm asking you to kind of brag on your own company, but, like, because of your cost structure, my understanding is you have an unbelievable value proposition that leads to a cult, like following. So can you just share some of how becoming vertically integrated has made your brand such a powerhouse?
- [23:34]
A
Oh, I think I can talk about myself. I usually don't, but thank you so much, buddy. I appreciate that. Oh.
- [23:40]
B
Challenge accepted, Mike. Challenge accepted.
- [23:43]
A
How dumb I am is. I had my own manufacturing before I knew the word vertically integrated, right? Like, I had no idea. I started making in a garage. So then we moved to manufacturing in Portland, and it was just like, I need product to sell this weekend. I need it today. I need it right now. When we came to Leon, we were blown away at what was going on. We. I knew problems were coming in 20, 18, 19, in somewhere in the supply chain. I knew we were growing so fast I had to break free, but I didn't know what it was. So I spent a lot of time in Lyon setting up the potential for manufacturing, and all of a sudden, Covid hit, right? And we had just started setting up the foundations. So we got a thousand square meters, 10,000 square foot. Just a little, little place. 10,000 square foot, five machines in the corner. And we just started to build and build and build. And now, as somebody, and I know we're talking on operators podcasts to people who do a million to 10 million, and they're like, well, I need to make a decision of what I do here. I didn't make a decision. The decisions made me go all in and say, if I want to win this game, how do I do this? And I'm going to make manufacturing the right decision. I didn't start manufacturing and question it every week. Like, does that make sense? I don't like say, oh, maybe I shouldn't have done this. I say, how can I beat people? And we go in. So we got the materials. I have 5 million square feet of leather in my facilities right here. 5 million square feet, that's a crazy amount. And the reason I have that is I learned that it doesn't matter if I can make a product fast. I have to make the right product in the right leather and the right color, right. So I can't just paint it like you do on, on a mug, right? You, you have to actually have that leather. I became where I was able to take my marketing in the United States, Mike. And they became this pull system. They're just always saying more, more of this, more of this. And I found myself spending 80, 90% of my time in Mexico feeding the beast of marketing, right? Like they just want that product. And the numbers cycle on everybody. We have a product right now that we projected we would sell a hundred thousand of that bag for this year, right? And after January was we were going to sell about a hundred thousand of that bag. And after February we were going to sell a hundred thousand of that bag. We did a TikTok. We started doing $100,000 a day on TikTok and guess what? They all sold the same bank. Now we're projected to sell 500,000 of that bank.
- [26:32]
B
That's the advantage, Mike. That's the enterprise value. It's that Curtis, Curtis can follow the consumer demand and in, in a traditional supply chain you are trying to predict it. So like Mike, in your case, Simple Modern has long lead time abilities to project volumes because you're working with Target and Amazon and they're buying and they're like, you're probably planning out, I mean I'm going to guess like 12 months, something like that, right. Whereas in D2C, the reason that owned manufacturing can be valuable is what Curtis is saying where it's like I, you never really know what the consumer is going to want one month to the next. The Oscars can show up and completely change fashion. The, the somebody could drop. Like one of the Kardashians can say this color is the new color. And if you, there's no way you knew that was coming. Like Curtis wouldn't know that all of a sudden his most popular color bag is because, you know, Kim decided that gray is going to be 2026's color. Like that's the issue with a lot of categories. That's the same issue that Pila has. We're trend followers I'm not so big that I make them right. And the, the preferences are where the demand is. And, and then funny enough, it's how algorithms work. Like what Curtis is describing. This is why, like it's so smart that you do this, Curtis. It's like Meta and TikTok are just going to satisfy what the consumer wants. That's just AI. If we've all used these chats, like they're really good at telling us that we're awesome. So like these AI things are just going to say straight up, like, this is what's popular. How do I serve more to it? Curtis, you could just supply it and a traditional supply chain could not. They'd be four months waiting.
- [28:16]
C
Well, I was just going to make one distinction which I think is important, which is that whether or not you use molds in your business is a big deal for two reasons. One is that 80, 90% of the world, the world's molds are made in China. And so like, if you need tooling, you're going to have to go through China. And tooling just takes a while. It's just like a multi month process to get a good tool made and functioning properly. So Curtis can stockpile leather and then be like, hey, I can have that leather sewn differently next Tuesday if I want to. And we have to design it. But he has more flexibility. Whereas with me, if I want to change a lid, it's like, well, it's three to four months minimum, you know, and it's like I've got to get a tool made and then I've got to ship it, you know, from China to here. And so that was one of the things that we ran into, is that if you have a business that requires molds to make a thing, then it has to be a product that's just not changing at all. You can't be. It's really the opposite of what you're saying, Matt, which is you can't be trend, trend based at all. And unfortunately hydration is more trend based because if there's any amount of changes then it kind of cooks you. When you're using molds now, when you're doing, I think consumables, when you're that have ingredients that can be mixed differently and when you have soft goods, I think that there's more opportunity to do exactly what you're saying and fast following and that's another way you can unlock value. I think what we're getting to is that there's several different ways you can unlock value here. And one of them is that you make your business more valuable by de risking having all this exposure to other governments and other countries. One way is that you can unlock better economics potentially by being vertically integrated. One of them is that you can fast follow demand more quickly and stay in stock when other people can't. But the, the main thing I'd want people to hear from me is that I think making good decisions here is highly contingent on understanding your product category. And that was probably where I misstepped, is that I was. I didn't understand that my category was still moving around so much that it was going to be hard to be like, we're just going to make a gazillion of this one thing. And it's like, well, if the market doesn't move at all, that would work great. But it did. And so it was not as effective as I'd hoped.
- [30:36]
B
The. I mean, Curtis, I don't know if you've done this, but like 5 million square feet is 87 football fields. Yeah, right. It's like, it's almost the size of the Pentagon.
- [30:47]
A
Yeah, do it.
- [30:48]
C
Hide by.
- [30:48]
A
Hide by like how much that is. No, it's if, if you actually I. What we use in leather in a year. I figured it out with AI one time. If you take a semi truck full of leather and take the entire truck and turn it up like this, it would be like 56 empire states tall of trucks full of leather. Like it's literally crazy amounts of leather. Right? So it is a commodity that we use and it's something that gets thrown away. I want everyone to know that like this leather gets thrown away if you don't make it into something. Now the one thing I do want to, because I love the thing. The reason I was a big fan of the operators podcast before I ever started coming on here and I'd watch it and I'm looking for those one or two things that really, really help me. And the one thing I want to tell everybody watching is I did not start manufacturing think I was going to build this. I wanted product for three or six months in the future and I wanted to solidify it. I was making quarterly and yearly decisions, not five and ten year decisions. Right. There's no way that I, I did this. The neat thing is in Mexico it's very modular, like Legos. You actually have a warehouse and when you're done with that one, you knock a hole in the wall and you have a warehouse next door and then the next one and you just build on as you're building. So we started as a small one and then you just start knocking out walls and building and creating something bigger. Because I don't want anyone to think I have to decide do I or do I manufacture?
- [32:17]
C
Do I build a million square feet and do it here? Curtis, I could not agree more. And I think very practically, if you're going to take on manufacturing, you should absolutely try and view it like starting a business. How do I break this down into atomic components to the maximum extent possible and how do I try and prove out positive unit economics with the minimum amount of investment possible? And like, it's, especially in our case, the fact that we had capital worked against us because it's like we can go and buy $5 million worth of equipment and this kind of grand opening of this huge facility, we should have never done that. It should have been like, how do we invest a hundred thousand dollars and prove out a piece of the concept? And then if that works, we go to $200,000 and that we just incrementally build on top of that.
- [33:14]
B
That's what we did.
- [33:16]
C
Yeah, it's like this is just how good operators think.
- [33:18]
B
Yeah, we bought, we bought like a used injection molding machine. Yes, you know, exactly. I think it was like 90 grand.
- [33:25]
C
It, well, it just should be like, as another example, we were like, well, we don't want to have dependency on China, so we bought an Aoki, which is this like kind of Rolls Royce injection machine, this huge injection machine, but they're three times more expensive than China. And we bought something new. So we bought the Rolls Royce that's three times more expensive than the Chinese version and we bought it new. If we had bought a used Chinese version, we literally could have gotten it for 10% of the price. And if I could go back, I would, first I would shake myself, but then I would be like, listen, you know, like start small, prove it out. And then as you prove it out, continue to lean in with capital. And so that would be my argument for anybody considering this is like, you should try it, but just make yourself prove out the concept along the way. Because the way you really get into trouble here is where you commit to a big facility and then you realize one year into the lease, oh, we don't need all this space. You buy a million dollar machine and you realize, oh, this isn't the machine we needed. And there's not really a great resale market or whatever. It's these kind of mistakes. If you're scaling an E Commerce brand today, ads alone aren't enough After Sell focuses on the one moment that every brand already owns after checkout and turns the post purchase moment into more profit. Monetize every order with post purchase offers and thank you page experiences without disrupting checkout or hurting conversion. Enterprise grade tech used by Gap, Ticketmaster, Macy's and Target. Now driving results for brands like True Classic, hexclad, Ridge and Jones Road. I would know this is the reason I ended up buying three pans from Hexclad instead of two. After sell has already generated over 1 billion in additional revenue for e commerce brands. Revenue that doesn't require more traffic or higher cac. So check out After Sell and tell them that the operator sent you.
- [35:20]
B
So I got a couple points. I think Mike, you started off by saying going vertical is like standing up a double sided marketplace which are for people who love business. Some of the hardest companies to build is when you have to build a marketplace so difficult because you're standing up two types of demand for I would caution, not even caution, I would say that if you're going to go out and go vertical you shouldn't do it purely on the I think I can make it cheaper so I think I can get more margin for myself than I get from a third party manufacturer. I really strongly believe that you should be doing it for like other strategic reasons that are going to increase enterprise value. So like in my case what I have said before, I think on this show is it's the money was going to get spent anyway. So I was either going to buy inventory or I was going to build a factory. Now by building factories you pull the money forward. So you need to finance that.
- [36:18]
C
Right?
- [36:19]
B
We went to outside investors to do that but we the reason we did this was now we are much more cash. We call it like cash cycle efficient. So like we're a negative working capital consumer business. When I sell things, I make them, I don't buy them and then hope to sell them. So for us that was like that's a good reason to do it. You know, I make them and I traded margin. That's the fun part. We are still about 20%, 30% more expensive than if I just bought the crap from China. But I'm negative working capital. That is worth the margin and it's no different than if somebody was to tell you and this is common advice in consumer be willing to trade margin for better payment terms. That's the same advice. Right. I just we set up our own, we're basically our own bank. Like we set up our own payment terms.
- [37:13]
A
That was excellent clarity there that I'm gonna. I always like to tell people how smart our manufacturing is. I'm going to tell you how dumb it is right now. Right. Because it takes me, the marketing mind of our company to 90% of my time is spent on making the product. I always like to talk about how smart manufacturing is once you get it set up. And it is really hard but it is also really, really dumb. What we're finding out right now, I found out yesterday is that yes, we're kind of even par in making with China. You said it's a little bit more that when you're making but now China is going into Cambodia and they're coming back and saying hey we can make. We can take your material from Brazil, airship it into Cambodia, make it pay the tariffs, put it on a boat and take it to Dallas cheaper than you can make it right there and put it in a truck for a few hours and send it into Dallas. So you're like well that's good but you need both. That might be good for long term but I need products next week. As I was mentioning, we had a product that recently took off. If I had that in a traditional thing I would go give them the, the specs, they would make samples, we would approve, put a po. We would send materials and I would get that product in October. Last week was Semana Santa which was Holy Week. Everyone has the week off. We had people volunteer and say anybody want to work for the week? And they came in and made that specific product and we produced 12,000 of those bags last week that were on a truck within a week to Dallas to make sure that that flow was good. So there's good and bad that go. I wish I didn't have the manufacturing. I'm going to tell you this, I love it. But if I could just sit back in the United States and have people order the things and it would work as well. I would do it. I just don't think it would work as well.
- [39:05]
B
Have you ever thought of splitting the company, Curtis? So like owning a manufacturing company that is in to Portland leather goods but is also in service to other companies. So you build up the B2B sort of like this stable base of. Of like capacity because that's the double sided marketplace part that's so hard of this is like because you're in charge of your own demand.
- [39:28]
C
Yeah, but there's a. But there's a big problem with it, Matt. And once you've run it you get the problem you want. Curtis's manufacturing has to be captive to Portland Letter Goods because it is incredibly detrimental. If he says, and actually, I'm just gonna zoom out. I'm gonna. I'm gonna give a bigger concept we haven't hit on yet. Here's what manufacturing works. Consistent, significant volume. If you know that you can get consistent, significant, especially predictable volume, then you can make manufacturing work. What is the problem that is actually really hard to deliver on? That volume is lumpy, and what people want changes. And it is very difficult. Your people are hourly, and they want you to say, hey, show up for 40 hours a week. But your demand profile is almost never. Like, you have to bust your butt to try and smooth out your demand profile where it can line up with your people and your production. And so what you just said is the kind of siren call of like, well, what if we split this company out and we had. We brought on other customers? Then we'd have more volume and we wouldn't have weeks where we have nothing to work on or whatever, and we could kind of smooth it out. But the problem with that is that none of this makes any sense if Curtis is manufacturing when he needs them to do something, if they can't do it. And when you start to get other clients, you start to get these bottlenecks where there's a week where everybody needs something and you've got to choose. And, like, you absolutely have to choose Portland Leather Goods. And so then if you're another person buying from his manufacturing, it's like, well, I know I'm going to get big Boyd at any point if Curtis needs something, right? And so this is probably not the best solution for me for my manufacturing. And this is. Anyway, it all goes back to. And you. You mentioned balance sheets, Matt, but ironically, one of the places where you can get the worst balance sheets is when you own manufacturing, because the factory has to run. If the factory isn't running, I mean, you're paying rent, you're paying. You're. You're paying on notes on these machines. You're paying people salaries. You can't just furlough people. And so you get this temptation to make product even when you don't know where it's going. And that's exactly how you absolutely burden your balance sheet with a bunch of inventory that you don't know where it's going.
- [42:01]
A
Mike, you're so smart. You say that in such a great way. I would say it in a. A much more simplistic way. I've always been blessed to have People in my life who are kind of messed up and so they do things so dumb. You say, I don't want to do something that dumb. Right. Like, I'm a long term recovering alcoholic. So if you're around a lot of alcoholics that mess up their lives, you're like, well, well, if I just don't do what Jim does, I'll be better off. I live in Leon, Mexico. There are manufacturing, and you watch these people struggle. They find somebody, oh, you want us to make this product great? You spend all the time in courting them, making samples, developing, starting a run. You make a few of these things and they're like, yeah, that didn't work. Let's try something else. You're like, well, all my cost was up front. Like, I just want a manufacturing line to run. Somebody told me one time, if you want to see how efficient your manufacturing is, look out at those machines. And that needle needs to be moving up and down at all times. That means you have the right materials at the right time beating those lines. If you're always changing product out for somebody else, you're always slowing the process down. There are some lines that I have, probably, maybe 20 of my lines never change product. They're making the same product just in a different color all year long. That's pure efficiency. You can't get that if you sub it out to somebody else. I also know a lot of American companies are really bad at stretching you out and then getting in financial difficulty and not paying you. And you get stuck with their materials and the losses. And then when you have to lay people off, it's Mexico. You have to pay there for months. You have a lot of money that you have to pay. You have your fixed costs. But Matt, we've all thought of it.
- [43:47]
B
Yeah. I'm asking because everybody thinks about it. That's. It's. It's totally. Mike nailed it. It's the siren call of. Of manufacturing.
- [43:53]
A
I would.
- [43:54]
B
The. I guess the caveat here would be in consumer manufacturing, right? So, like, if you're. And I think, Mike, what you're calling out is the. Which business is the priority at that point. So, like, if Portland leather goods as the brand is always the priority because that's where you feel the most enterprise value is. Of course, the capacity of the factory business needs to be subservient to plg. And if it's the flip, then it's just being okay. That, like the consumer brand. Like, I do know there's. I think there is a T shirt brand or like A basics brand in Canada or in the US where they actually own their own loom. Like they are the actual manufacturer, but they were the manufacturing business first and the brand came second. And sometimes I go to buy a damn T shirt and they're frigging sold out. And I'm like, and I know what's happening behind the scenes. It's like, yeah, they just, their manufacturing customers took all the frigging material, like that's what it is. And the consumer brand is just left sitting there saying, hey, we're sold out. For now,
- [44:58]
D
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- [45:39]
C
I have two observations I just want to make, and one is there's a reason why China has all the manufacturing, and that's because it's generally thought of as a crappy industry, Right? And I think one of the points we're kind of making here is that it is a crappy industry to be in unless you have some way to make it less crappy. And by. And vertically integrating is one of those ways. And there's a. And there's even some things we haven't mentioned. Like, hey, if you have kind of proprietary processes and you don't want those leaked out to all your competitors or whatever, like keeping it in house. But all that to say manufacturing, not sexy, not fun, not good, margins, real competitive, lots of ways to go bankrupt. You should only do it if you're able to layer on value in some kind of a way that makes it better and makes it more attractive from an economic perspective. Now, one of the few ways that you can kind of consolidate things where it does make it more likely to work and more value accretive is by adding some of the operational things like fulfillment and logistics. And we have definitely seen that even though we failed in many of our vertical integration with manufacturing, it pushed us to develop a lot of capabilities around warehousing and around fulfillment that have been great for us. Like, a really simple example for us is that we were making things from Walmart in our facility. And so we started fulfilling all of our stuff from Walmart from our facility instead of somewhere else. And then as we were doing that, Walmart's like, hey, you know, I don't know if you guys want to do this, but we actually have this pallet program where we don't send you a PO where you have to go pick everything, but literally we'll just come pick up pallets from you. And it was wildly more efficient. It was like, you know, Walmart could send us a huge po, A huge po and one person could pick it in three hours or some kind of crazy, because they're literally just going and grabbing pallets with a pallet jack and tremendous savings there. And so if you're going to really think about this, you had better have some kind of a justification around why you want to be in manufacturing. And it has to be around the way to bundle a bunch of services together or to create some kind of unique proprietary value because of the brand you own. Otherwise, I don't think you're going to like the experience very much.
- [48:00]
A
Wow. You know, I'm a bootstrap guy. I always brag about it, I talk about it. That's just who I am. I don't want to give up that control. Mike, you had to go out and get investors to build this up.
- [48:12]
C
No, I. I lit my own money on fire. Curtis.
- [48:15]
A
I'm staring at my computer, at Matt, and I said, mike. Okay, so I had my alliteration right and the name wrong.
- [48:21]
C
I don't even know which is worse, Curtis. Burning my money or somebody else's money.
- [48:25]
B
They.
- [48:25]
C
They're both. They both suck. But I. I set my own money on fire on this particular day.
- [48:29]
B
No. I set investors money on fire. Yeah. No, look, the. This was sort of one of those rare examples where I do think consumer has business with outside capital. Like, I'm sort of in camp 99% of the time. You should probably bootstrap in consumer. Like your, Your life will be better building factories like large capex, that kind of stuff. That is where investors can be very, very helpful. Right. So that's kind of why we started down that path. And then ultimately we raised more money for Lomi because of the R and D piece. But that's. That's a, That's a whole other game, right? Like real R and D costs real dollars. You know, Pela R&D is like tooling. You know, what are we. What are we cutting steel on? And. Which is a whole other set of challenges. Like, I, I, when Mike is talking about tooling in China, man, like, do. God, do I feel that pain. I have. I have three sets of 64 tools right now at $6,000 a piece or $8,000 a piece. So, like, and. And they weigh like a thousand pounds each, you know, so you got to move these damn things around inside these facilities. I think Mike is just like the, the point you're making on manufacturing around, like, you need to see it through this lens of a bundle of services or value, like a value add wrapper, and that that's the justification for doing it. And again, I want to, like, emphasize in consumer, like, I have a. My.
- [49:58]
A
I'm.
- [49:58]
B
My family is in aluminum extrusion. It has been for almost 50 years. Great fricking business. Massive contracts are decades long. Like, the world needs steel, lots of it. So that's an awesome manufacturing business. It's in Italy. They've been doing it forever. Great, great business to be in now. It's a commodity business. There's downsides to it, but that's all B2B. And I think just like B2B SaaS, that's a different animal. So I think, like, put all that aside and just like, this is consumer. I would love to hear, Mike, you talk a bit more on the fulfillment, the, like, warehouse running part, because I think, like, we've been talking about, like, criticism, staring at this, like, giant leather factory. Then the, the next level up is like, should you run your own warehouse? You know, we know a lot of people that run their own warehouse. Instead of freaking, look at the videos
- [50:54]
C
that get posted on AM or on Twitter. You know, it's funny. I will never call it X. I don't. I just don't even think it can be. It's like, I. I'm. I'm making myself more of an unk in everybody's eyes. Like, the longer. I call it Twitter, but I don't care. But, like, if you look at all the videos, the example videos that people are putting out of these robots, they're like folding laundry, putting dishes away, or sorting packages. You know, it's like always, like one of these, like, three or four use cases, and it's like, yeah, exactly. Or. Or, you know, preparing for judgment day. But I. It's like, it doesn't take you being particularly, I don't know, intuitive to understand that one of the places we're going is People are going to do 0% of pick and pack. You know, for most of these companies, like that is just all going to go robotic. And, and in some ways my view would be if you want to take on vertical integration, vertical integration around your inventory storage and your fulfillment is maybe one of the easiest things to do right off the bat. Because if you are doing your own storage, you are going to be way better than market rates and that fulfillment. I mean, if you're doing your own fulfillment, you're going to be better than what the market's offering you. But also you can start to look at your first CAPEX expenditure. And I think it's, it's kind of breaking the seal on your first successful CAPEX expenditure, kind of like what we're talking about. And so like I, it's, it, it doesn't take much imagination to say, if you have a building and you're doing, you know, your fulfillment of a thousand or five hundred or whatever orders a day, then okay, if a robot, if an Optimus robot cost me $40,000, how many fulfillments does it have to do to pay itself off? And you start doing the math and you're like, these things can pay themselves off in six months. And just, just to take a step back in some ways, because we've talked about this idea of LTV to CAC before, I think you want to think about equipment the same way. It's like the quicker you pay it off, the better it is. The end, right? And the longer that payback period is, the more likely you are to someday very much regret that you made that purchase. Just like the longer you go out to pay back your customer acquisition costs, like, the more likely it is that you never pay it back. And so if these robots are $40,000, then how long, how many activities would it take you? Or like, like a really simple thing is if you can save a $50 in pick pack fees per order, okay, it only takes you about 27,000 orders to pay off a robot. And you can just kind of do the math. And then you're like, wait a second, I can pay a robot off in six months and nine months. And then I've got a fully paid off robot and who knows what I can do with this thing. And so like my, my sense is that that is where we're going to go. It's interesting because Calcanis went and toured the Optimus facility and one of the crazier things he said is he's like, people are going to forget that Tesla ever made Cars. Now that is a crazy thing to say as somebody who owns a Tesla, but it is at least semi plausible that robots become so ubiquitous that they are the next iPhone product. And this would be one of the use cases that's just like right off the bat doing so are you pro
- [54:27]
B
own your own fulfillment then like I guess if you're looking into the future because there was always a the counter to this, the whole three pl versus own fulfillment was always when you grow, what do you do?
- [54:38]
C
The problem with 3Pls is that and the reason why most people use 3Pls is the reason why most people use contract manufacturing. It's the same business in disguise. It's like you have to have a somewhat steady flow and predictability or it doesn't work. If I think I need 10,000 square feet of space and I actually need 20,000, then I have a problem. Or if I commit myself to 10,000 square feet of space and then I actually only have 3,000 square feet worth of product, then I've got a bunch of dead stuff that I'm paying for. And the same thing if I've got hourly employees who their job is to come in and pick and pack orders. And today I have a hundred orders, but tomorrow I might have a thousand. Well I'm going to have a problem. And so it's the same kind of like if you have consistency. I mean you mentioned your family and aluminum. There's a reason these contracts are multi decades. It's because they have to be so that you can work it out. And so I guess what I'm saying is I think what people are going to find is it's because we have a lot of, you know, three PLs in America. I think people are going to find it's much easier for me to kind of bite off that piece of the physical world than manufacturing is a first step. And I think the robotics is going to make that even easier. And so again this is not sexy stuff. Like you're not generating massive amounts of EV here but that once you have it there are certain things that you can do.
- [56:07]
B
Like no, there's definitely defensive. There's like defensive maneuvers in some having some of this stuff, right? I, I do listening to you guys talk like I think that if I was going to guide the listeners in this, your level one move would be to go from like 3 PL to owned fulfillment.
- [56:26]
C
Right?
- [56:26]
B
Like there's and there if there's real advantages to it, level two would be I'm going to personalize so I'm going To do like, printing, embroidery, engraving, like that kind of thing. Like, we call it, like light assembly, light manufacturing. And then level four would be, I'm going to Curtis it, and we're going to do like, cut and sew. We're going to do cutting. We're going to like, we're actually going to manufacture. We're going to build tools, like, do what I do too. Um, and then level five, above that would be, like, even more vertical. So, like, Curtis is buying and storing massive amounts of leather. I, I, I guess, like, maybe at some point he could raise cows. But like, there's, at some point you gotta stop with the, like, how deep you go in this, because it gets less sexy and there's less enterprise value the further you go.
- [57:13]
A
Well, for the people just starting out, you know, we doubled every year we went. Literally made our goals in here. 1, 2, 4, 8, 16, 32, 64. And what I used to tell people is it's not intuitive that every year you're making as much that year as you did in the entire history of your company. So when you're making eight, you did what you did at one, two, and four, right. When you're at 16, you did what you did. So every year you're making the entire compound of what you've done to that point. So when you're looking at A3PL, we wanted to do our own fulfillment.
- [57:49]
C
Yeah.
- [57:49]
A
And we're like, okay, how big of a building do we get? Well, take six months to get in. We're going to be here this year, but next year we're going to be again. And at this, well, are we going to get a building 16 times bigger than what we actually want? So we're fine in three years. Like, the reason we never went three plus was because I didn't know how much space to get how many racks to buy. And I didn't want to screw it up. So I went, safe. Now should we have? I think we should have. And I'll tell you why. We just switched three PLs and I get a lot of questions about three PLs from people. We started one three PL, they didn't know what they were doing and they didn't care. And they were like the worst 3 PL you could have. So we moved to somebody who cared, who still didn't know what they were doing. We recently got an offer to save us $8 million a year by moving to another three PL. Eight million guaranteed. Eight million. And I'm like, well, I like that. And I went to my old people and they're like, oh, no, no, we'll just give you better prices. We'll save you the 8 million. I'm like, you were making 8 million in on me. You gave me that bad a service. You were fighting over a $50,000 charge. So it was your fault and you could have. You're making more than 8 million on me, you jerks. Of course I have to leave right now, right? So there's a lot of money in that efficiency, in what you're doing, Matt. I thought it was brilliant. That's what Mike does. If you can value add in something by having your own three pl, I think that's great. I like to go into marketing is where your money's at, right? Can I sell more at a cheaper price? So we're a marketing company, so manufacturing is here. And I'm like, well, where can my time be best spent? Like, if you learn how to sell, you're just going to be better off. We are in manufacturing heaven down here in Lyon. When I came down, I was told that there were 400 tanneries and 800 shoemaking factories in Lyon. 800. I've had at least a hundred of them come to me and say, hey, we can make this stuff. Do you want to set up a brand and we'll sell the stuff in the United States? And you want to know what I say? Marketing's the hard part. Running a big manufacturing, as hard as it is, it's not as important as knowing how to create a brand and selling it to people.
- [60:12]
B
Every SaaS company says they are AI powered, but very few can explain what it actually does for the revenue of my brand. This is why postscript's approach stood out to us. They don't just build AI for demos or buzzwords. They built it to drive real incremental revenue. Postscripts AI called Shopper. It shows up inside of SMS at moments with real buyer intent, when shoppers are likely asking questions, hesitating, maybe even about to drop off. Shopper can answer product questions instantly, answer questions about fit, availability, recommendations, order issues, the kinds of stuff that people usually bounce for. This means more conversions, higher aov, less lost demand. So you are driving more revenue and doing it more efficiently. Check out Shopper from postscript. We use it at Pela, which is why I am telling you to check it out. Why? Why is Bezos going out and doing like, what is he doing? A hundred billion or two hundred billion? Some stupid number that he's looking to put together to buy or build manufacturing capabilities?
- [61:13]
A
I know nothing about that, Mike, it
- [61:15]
B
just, it, it just seems like that all the talking heads in the world are like, no, no, no, you know, go high asset, you know, low obsolescence. Halo is the new term I keep hearing Bezos made.
- [61:28]
C
I was about to call him Jeff. My friend Jeff made his money. My buddy, on a first name basis, guys, he just doesn't actually know it. I mean, Bezos made all his money by running this playbook. You know, like, you could say the infrastructure they built out digitally with Amazon became aws. And the infrastructure that they built out with the Amazon fulfillment network is the backbone of Amazon. And that he, you know, is whatever, a gazillionaire because of it. And so to me, it is very logical that somebody who has a bunch of capital and has made a bunch of money running that playbook would be like, I think I can do that again, but maybe even better with the technology that's coming. So, I mean, we've talked about this before, but part of being a successful entrepreneur is that you're able to kind of look at, well, what are my skill sets? Like, what am I like personal, My personality, my giftings, my talents, my abilities, what are my assets? You know, this can be capital, this can be experience that I've developed over the course of my career. It could be industry contacts, whatever, you know, know how to. And what does that allow me to do that I can do at a level that other people can't. And so if you said, well, who's going to build the next generation of warehousing and fulfillment in America? It's like, I'm betting on Jeff Bezos. And so, like, for him now is, is Mike Beckham, Should Mike Beckham be doing that? I don't think so. I mean, I can do that and I may do some of it, but that's not really my primary skill set. And that's really what you were talking about, Curtis. And I think that that is a good way to frame the entire discussion here is that whether or not you take on manufacturing, whether or not you take on fulfillment is. Comes back to how are you situated, what are your skills, what is your brand? And this kind of overlapping set of factors. And does it make sense in your particular Venn diagram how all these things overlap? And for some people, many people, the answer is no. Like any, anything that pulls you away from thinking about marketing and customer acquisition or product is just not the right focus of your time and it's a lower return on your time. There's some people that are able to do it and turn it into a massive advantage. And this is why I keep coming back to the idea that success and entrepreneurship is as much about understanding yourself as it is about anything else. We. To, to use a quote that I used last week, there are many, many things where I am not the best, but there are a few where I'm situated where I can be one of the best in the world. It would be, it would be stupid for me to focus my time in areas other than those few things where I can be truly elite. And that all these. We've, we've used this word before, but I like it. Anything else is just kind of a side quest that's just a distraction. And for operators, the problem is we like solving problems, we like proving we can do things, we like taking on challenges and that that can easily work against you. And so maybe this paradigm will be helpful for people. Anytime you're trying to take something on new hey, is this a main quest or is this a side quest? And if it's a side quest, don't do it. You know, like get back to the main quest.
- [64:51]
B
Is that a leverage thing, Mike? You're like the, the we're always just looking at where do I have maximum leverage. And I should probably be putting my time into those things.
- [65:00]
C
Yeah, I mean one of the ways I think about it is my capital is not, not unlimited, but it's a lot less limited. But my time is very strictly fixed and that, so I have to maximize the return and the leverage on my time to be the most effective version of myself. I have to. And there's a lot of my time that's explicitly set aside for non monetary reasons. This is, I'm spending time with my wife, I'm spending time with my kids. I, I want to have interests outside of here. I want to have friendships. You know, I want to have a balanced life. I want to be in good shape. So like there's, there's this very small pie of my week of time. I don't know what it is. Is it 40 hours, is it 50 hours? Where it's like this is to be used to generate economic value and it literally can't get any bigger. So the game is how do I most effectively get the highest yield out of that. And the way that you do that starts with having very clear eyed understanding of exactly how you're situated. Gifts, skills.
- [66:04]
A
Sometimes I don't understand the words you say. Mike, what is a balanced life? Like, I have no idea what you talk about.
- [66:13]
C
You know, it's actually funny you say that because I do kind of hate the idea of balanced. It's more that I have multiple success criteria for my life. And I don't think there's this idea of, like, okay, I want to spend, you know, for me to have balance, I've got X number of hours are always going to my family, and Y number of hours are always going to my, you know, whatever. But I think it's more that, like, if on my tombstone, if it's like, you know, he built 10 figures in value, if that's all you have to say, it's like, that's a pretty depressing tombstone, is basically my perspective. And. And then the other perspective I would give is it is a lot of fun to build economic value. But I'll tell you what's really fun is to having people and relationships and community where you can use that money to do things. And what's really sad is that there's some people who are really good at the economic creation piece, but then they have nobody to celebrate with, nobody to spend it with, nobody to give it to. And that's like a travesty. So I want to have that kind of balance. Like, I want to make a gazillion dollars. But what makes the gazillion dollars awesome is I have amazing people that I can go on vacations with. I have causes I believe in, I can give it to, and I. I have a community that I've been in for a long time I can invest it in. And to me, that's like winning in life. And like, I. I just don't know that you can be the best version of yourself as an operator if you don't have some kind of definition of, like, what is winning in life? And if that. And that has to be at least a little bit different than winning in business. I think absolutely.
- [67:46]
A
Hey, Matt, I thought it was a great question about Jeff Bezos, and I didn't have an opinion when you said it, but it doesn't take me long to come up with an opinion, so I want to say it. I don't actually read as many books as I pretend to, but I do scroll a lot on the Internet machine. And I saw him say, hey, I like to invest in things that take 10 or 20 years that I know are not going to change in 10 or 20 years. People are going to want faster service, not slower. They're going to want better products, not worse. They're going to want cheaper products. Not with de globalization that is happening right now. We have had de globalization happen in the last 18 months like we never thought was going to happen. The US is very, very well situated to have the raw materials, the resources and the market so that you can manufacture in your own area with the right power in order to do this. I think he's playing a very smart long term play of saying if we're going to bring manufacturing back, it's got to be smart, it's got to be high tech, it's got to make the things that are on this and it's going to take us 10 years to do it.
- [68:46]
B
Curtis, on this, like, the reason I'm asking the question is we're, we're living through a period of like pretty significant, it feels like pretty significant disruption. So like we're going into a future that definitely seems a little less certain than maybe what we've all experienced over the last couple decades. Like we're all old enough to have been in business now for a while. And while I love the question of like, what, what's going to be the same in 20 years, I can't help but also ask like, what won't? Like what? What assumptions do I have on, you know, what is good decision making, good judgment and good taste and being an operator that maybe isn't true anymore because like the inputs are changing. You know, Mike, you sent this article about the whole like boil the ocean thing. Like that would have been terrible advice a few years ago, right? And, and like to go as an operator, like the best advice ever is just focus on one or two things and do them really well. And then you tell your teams that and that's how you scale up an organization. And now we're in this place with AI, we're like, no, you can probably boil the ocean because the nominal cost of doing everything is going to freaking zero. What? So I just have to like, I feel like it's, I feel stupid asking the questions because history tells me the answers, but I still gotta ask them because like are the inputs changing? And I don't know, Mike, if you have an opinion on this, but like it seems that we should be questioning everything.
- [70:10]
C
I think it's the fundamental skill of. I think intellectual curiosity is like a core life skill. And I. One of my favorite exercises, I think I do this a lot of days, but in my business I certainly try and do it fairly regularly. Where. What have I learned in the last week, the last month, last quarter that I didn't know before? And what are all the assumptions that that might change? What are all the possibilities that might open Up. What are the. Mark Twain once said, it's not what you know that gets you in trouble, it's what you know that just ain't so. And so the. I think when you're intellectually curious, what it does is it prevents you from just running on autopilot with a thing, and that's how you get disrupted. You found a thing that was successful and you're doing that thing and you just doing it, doing it, doing it. And the world around you is changing, but you're not reflecting and considering the way that that's changed things. So I'm constantly doing it. I'm constantly trying to say, how has the change around me created new opportunities or changed my perspective on how I should be doing things, Whether it's my personal life, business, whatever. And right now, I think the gift of this particular era of history is that it's pretty obvious to everybody that they need to do that. Like, the technology is so disruptive and it's moving so quickly that even people that are not very into tech are realizing, like, I need to kind of think about how this, you know, interfaces with my life and how I need to think about my career. And so, yeah, I just think we should always be doing it, but especially now when the disruption is highest is when you should be reconsidering your priors the most. And so that's what I'm doing with my business. And like, what I'm coming out to is some things are going to change quite dramatically the way that P LS are structured, the way that organizations are structured. Like, one of my favorite things I read in the last week was basically, in organizations, you're either building or you're selling. That's it going forward. And it's like, that's a cool model that's very different. Like, the middle manager thing may just be an idea that's headed towards extinction, but there's. There's a lot of things that won't change as well. Like you said earlier that, like, we're still going to need the physical world, right? Like, these products have to sit somewhere before they go to customers, and they're still going to have to get on trucks or drones or something and get delivered there. And we're still going to need people that design these products and take on the mental overhead of creating companies around delivering these products to customers. And that's one of the reasons why I think being a consumer right now is great. Like, parts of us are going to. Parts of what we do are going to get disrupted. Some but there's still going to be a huge need for what we do.
- [73:02]
A
You know, part of this ability to, as we have on the operators podcast, to actually talk to people who are out there and building their businesses is I always do this. Matt, you asked the question perfectly. It's you've gotta be a good enough person to figure out what the hell's going on and you gotta be looking at what's coming new. But you can't be jumpy, you can't jump. I read this, we gotta do this. I read this, we gotta do this right. You've gotta have balance and you've got to be so curious and aggressive at the change. At the same time, you have to be balanced not in life, but in business and about what you're growing. You have to be saying, I want all the new technology, but I'm not going to jump from thing to thing. I've got something that's working and I've got to build this over. And they don't seem like they work together, but they do. You look back after five years and you're like, wow, I'm glad we didn't do the same thing. I'm glad we grew, but I'm glad we didn't chase every trend also. So I know that's the hard answer for everyone is like, hey, you gotta be balanced. When you look at these decisions, make em, don't go too deep and if you get into something bad, get out of it and get back on track. So you know what the best thing about this operator's podcast to me is? I used to have to watch it and now I just get to sit here for an hour and a half and listen to you guys give me this wisdom and talk to me about this stuff. So I got one last question for you to end this all out. What is the one thing you've done in the last 10 years that 10x your business, like a simplistic one we all like to have people ask is like, what's the secret? Nah, nah, nah. What is the one thing you can look back and say, wow, this 10x my business. And I'll tell you what mine is right now. This manufacturing, that's a pain in the 10x'd my business. It did and it was really, really, really hard. But I kind of just kept doing it year after year and got better and all of a sudden we got to where we are and now it's worth it. Now you guys are being very thoughtful. You have something there.
- [74:58]
B
I was spent more money on Meta, like, honestly, like, we just, like we're a marketing company and we got really good at it and we just continue to obsess about it. And that's the lever. Everything else is kind of in service of the lever. That's it. Like, it's, It's. That's the whole thing.
- [75:18]
A
I love it. Some people overcomplicate it. Yep, that's a great way.
- [75:22]
C
Mine is probably. I really became an expert on Omnichannel and at a time when the world's moving that way and there's just not many people that are experts at it. You've got all the legacy players that have been in physical and are trying to figure out how to do digital, and you've got the new digital companies that are trying to figure out how to do physical with it. And I just found myself positioned where I was one of a small number that had kind of built both simultaneously. And it wasn't a bolt on, you know, physical wasn't a bolt on to digital or vice versa. And that's just really expanded what's been possible both in my, you know, simple, modern, in the companies that we've. We've added since then, and even in some of the advising and different things I've done. I mean, even on this podcast, there are times when the conversation is really meta heavy where I just kind of smile and nod because we just don't spend, you know, comparatively, we just don't spend enough on meta for me to have strong takes. But then there's other times where we, we start talking about things like Omnichannel where, you know, I, I know my voice is the loudest because I had the most experience. And so like that, that decision. And, and I think that there was this point during COVID where it's like, everything's going digital and it's like, no, it's not. No, it's not like the. The future is hybrid. And so having that skill set has helped me dramatically love it.
- [76:45]
A
Wow, you guys, you absolutely killed it. Thank you so much. And everybody who made it to the end, thanks for watching the operators podcast. If you're not somebody who hit the subscribe button, we don't say that enough. Hit the darn subscribe button. Bye.