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- [00:01]
A
All right, welcome back to another episode of the Operators Pod. I got Curtis and Mike with me today. We got three topics we're going to dig into. The first is a long standing debate in consumer it is owned warehouse versus 3pl 3pl. How do you pick them? How do you price them? How do you compare these things? We're going to just jam on this for a little bit about like how we have experienced this topic.
- [00:26]
B
Right?
- [00:27]
A
Curtis, you're super deep in it. Mike, you've got both. I've done both. And with all of this wrapped up in, Amazon's now opening up their entire logistics network as like an AWS for logistics. So I think it's time that we just hit this and I think I'd like to start it off guys with let's start broad. Let's start with is there a scenario in which owning your own warehouse is the right call, like you handle your own fulfillment? Mike, how do you think about this? And Curtis, I'll get your your read on this second. But Mike, kick us off, man. Where would you then own your own freaking infrastructure?
- [01:07]
C
Yeah, I think if we're going to talk about this, first thing I just say is it's just like owning your own manufacturing. There's situations where like it makes sense to own your own fulfillment and to vertically integrate there and there's situations where it doesn't. And not surprisingly, actually a lot of the same principles that apply to manufacturing I think apply here. So there were a number of kind of posts on social media going back and forth about this idea and our friend Bill put together a really good one where he basically was making the argument that it's kind of a siren song, like doing your own fulfillment. The siren song can actually slow down your growth and E Comm. And so I guess I'll start here by saying like, the reason I think that fulfillment feels attractive is that it's not complicated. So you're paying somebody when you're paying somebody else to do it. You're looking at, you're like, nothing about what you're doing is complicated. I could do it and then I could make more money. And there's a lot of good reasons. I mean there's a reason why so many people rely on 3pls that doing the 3pl work is actually a lot more complicated than people think it is. And just like manufacturing the you need kind of economies of scale and if you don't have economies of scale, then it doesn't really work. So like just really simply one of the things we've learned is, hey, you have to step into a lease if you're going to do your own fulfillment. And that means that you're paying a certain amount every month regardless of how much you use the facility. So all of a sudden, like, hey, you have to have a certain amount of volume, a certain amount of storage, a certain amount of throughput on fulfillment, or like, this isn't going to make any sense at. And I think the generalized advice is like, hey, if you're a brand and you're growing quickly, like, the primary concern when it comes to fulfillment is to just have somebody that can keep up with you and can be flexible with you. So like, we worked with a local partner, Encore. And even though we probably have given them a bunch of gray hair, they were an incredibly good partner in that what we really needed more than anything else was not cost savings early on. It was like flexibility. Like, we could tell them, hey, we think we need 60,000 square feet. And then we come back a month later sheepishly, and we're like, well, we need 120,000 square feet, you know, or. Or vice versa. As we have grown and matured as a company now, I think I'm starting to like, we are building a building, we are going to be doing more of a fulfillment and we're at a different stage. And I'd be happy to talk about, like, why that's true. But I think the generalized advice to start with is like, it's really great to have a good partner here early on. And when you're in the growth phase and then as your business matures, I think everybody develops this kind of urge to think about vertical integration and how can I do more. And I'd be happy to talk about how we've done that.
- [03:55]
A
So initial variable here to think about for people is higher growth rate. 3 PL is likely a better option. They are more set up to handle capacity increases. Right. And the. I guess, Curtis, you've hit on this in the previous episode. Like you buy a building or you set up a building and you quickly outgrow it. And now all of a sudden it's like physical space in your own logistics is a constraint, whereas once you're bigger, it's slower. Right? So you can do it. So, Curtis, take us away. Like, give us, give us your take on this.
- [04:26]
B
I'm in Portland and I'm in a 24,000 square foot building that I bought. Now when I started this company, it was just in a little room, 2,000 square foot. Then we expanded out. Okay. We have now Officially bought and sold racking in the basement of this thing four different times. We need more racking. We buy this expensive racking, you put it down into the cement, you get OSHA approved and then we change something and they sell the racking off for 30 cents on the dollar. And then I'm out. And they do it again. And then they do it again. In your growing, you don't know how much you need. So if you're doubling every year, I love to tell this story, every year you're doing in one year what you did in the entire history of a company. So if you do 1 million, then 2 million, then 4 million, the next year you're doing 8. You've done more than you've done in the entire history. The next year you do 16. You've done more than the entire history of your company. So every year you're doing that. The first thought if you want to set up your own warehousing is oh, we need to get a space. Great. Sign a lease. Let's sign a five year lease. How much space do you need? I have no idea. I have zero. Can you give me this amount with the ability to grow 10x if I need it? Well, no one's signing that damn lease. So you think you're going to do it in house. We went to a 3 PL that could grow. And I'm going to tell you what, they sucked. They really, really sucked. But it, it got us the ability to take our best people on manufacturing, on new product design, on marketing, on a lot of the other things while they are sucking at the three pl. Then we moved to a second. Now we' third one. And I'm going to tell you what's happened in that time is their efficiency has got better, their price has got better, we've gotten better with working with them. And I love vertical integration. I'm a control freak. I want to control everything. I don't want a big, you know, 400,000 square foot warehouse.
- [06:30]
A
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 fricking roi? Jason for hexclad, tell everybody what is actually working for you guys?
- [06:47]
D
Yeah, look, I'm laser like focused on implementing AI wherever we can to just make us more efficient. 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 vi 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.
- [07:20]
A
Sure.
- [07:21]
D
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.
- [07:30]
A
So Curtis, you, you don't have, you don't do your own direct consumer shipping, so you're vertical in manufacturing, but then you use a 3PL to handle fulfillment. I think that's important. Is it fair to say, Mike, that the dollars saved, so like the allure, the siren song is that, like, if I have my own warehouse, I save X dollars per package, I get my own, right?
- [07:53]
B
Blah, blah, blah.
- [07:54]
A
Is it fair to say that that siren song, that allure, is offset by the brain damage? What Curtis is talking about, which is like the focus of some of your best people, are now going to be on how do you be a great fulfillment center instead of putting it into product or into marketing or into something else that is actually, I guess, like further up the value stack.
- [08:16]
C
I have come to think of businesses. It's primarily an order of operations exercise. You know, like when you learn with math that like, okay, first you do the multiplication and then you do this and you do the addition that, like most of the kind of generalized takes that people have are right, but if you get them in the wrong order, then it can be wrong for your business. And so part of being an effective operator is not just identifying what are all the opportunities in your business. So you might look at your business and say, hey, I see these six opportunities for growth down the bottom line. But the hard part that takes judgment is to then say, okay, and what's the sequence? And to have the discipline to say, I see that, I see that way to produce more profit, but not yet. And I think the thing that typically makes great entrepreneurs great is bias to action. And so restraint and discipline when it comes to the order that you're going to attack things is something that we're not very good at and it pulls against our strengths. So that when you see an opportunity in your business, I think the first question is just like, is that a real opportunity? And then I think the second question is, is now the right time? Because I think the way that we tend to approach problems as entrepreneurs is like, question one, is that a real Opportunity. And then step two is do it. And that's really actually not the most effective way to handle it, especially as your business gets bigger. Curtis made this analogy and I think it's a really good one about space. And how could you possibly know if your brand is growing at 30 or 40%, how much space you're going to need in five years? Like you just have to guess at an unknowable future. And it reminds me of when we first started the company. We had no money and so we had no office. We, we met in the upstairs of my house and at like Panera and stuff. And then we finally got an office. It was like 1100 square feet. It was basically one big common area. And it was kind of chaotic. And eventually we got enough people where we were like, I think a year into that lease where we had to move. And I remember when we got the initial lease, like my, the guy who negotiated it on our team, he was like, do we feel good about signing a five year lease? And I was like, well, you know, like if we're getting so big that we've outgrown it, then that's a good problem to have. And so then we moved from there to another building and, and we got into another lease and guess how long it took us to outgrow that lease? A year. And so we get into the third building and we sign a lease. And two months into that lease, Covid hits. And so we're now working remote. I have three leases on three different buildings and we're using none of them. And what the process taught me is I was like, okay, from now on I'm going to have one lease on one building. But it was just like an illustration of. It's very, very difficult to understand the amount of physical space your business is going to need at different stages in its life cycle. And you really shouldn't be trying to guess at that until you're in a more mature kind of stage, a more mature growth curve. So with simple modern, I'm 11 years in almost and it's a lot easier for me to have some concept of what our physical space might needs might be a year or three years from now. But it would, it was a total fool's errand in the first five years of the company. And we made tons of mistakes as a result of that.
- [11:41]
A
And you wind up in, in sublease situations like now, now not only do you have multiple leases, but you're probably trying to sub it out to somebody else. So you're, you've turned into like a sub landlord.
- [11:52]
C
We're in this beautiful building and ironically the way that I got into it was subleasing it from somebody else who had moved out and was just paying rent on a building they weren't even using. And I ended up buying the building at like half of its market value during COVID But like one of the best investments in my life was actually somebody else making the same mistake that you're talking about. About.
- [12:09]
A
It's, you know, Curtis, the you and I, the thing that we share is that we're both vertically integrated on the manufacturing side. I think the difference between us though is my end product is quite small and because we make everything on demand, we actually do the last mile fulfillment. Like we just manufacture and ship out of the same building because it doesn't take up a lot of space. And it's actually probably the easiest step in the entire process of making the thing and shipping the thing is just putting it in a box and shipping the thing. So we've. We have no 3pls anymore now. We used to, except we were one of those people that the three PLs did not want and a part of that was SKU variation. And apparel companies I think in particular are a good example of like sometimes an apparel company does need to run its own fulfillment simply because the SKU variation is so freaking insane.
- [13:02]
B
Right?
- [13:02]
A
Like they have thousands and thousands and thousands of actual SKU variations which means the bins required are high and you get deprioritized as a, as a client to these three pls. I am curious as Portland Leather, like as you guys have leaned more into three PLs, like how have you handled this because you guys have a lot of skus. How do the 3pls deal with you?
- [13:27]
E
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- [14:09]
B
First of all, let's explain that three PLs want everybody to be really easy and to pay them way too much money. Right. They just like come in and they'll complain about any work they actually have to do. So that's like something to always keep in mind. We just got. When we did everything ourselves, it was a lot of work, but we really were good at what we did. And when the 3 PL came in, they mocked us. They basically were like, well, let's explain how we're doing and how we care about our customers. And like, oh, this is a science. We're experts. We don't need to listen to. We got this. We got this. They didn't have it right. They were just trying to sell us. And they showed us a big warehouse and we said, yes. I think that any 3 PL you need to work with and have people on the ground in their 3 PL every single month. We currently have a big transition. We have two employees, full time employees there on site for the first six months. Yeah. Just to make sure they're doing things the right way. Because one screw up can be really big and they have different priorities. These are huge companies and they'll send the priority down. And sometimes I say, I want these 10,000 products found, put through the system before anything else. We just recently did that. And they're like, oh, we'll get to it. And I'm like, no, not get to it. I want them today. And I made them go out with a cell phone, with a yellow piece of paper, go find what I wanted and shoot. Show me on a video that they're putting it on the right pallets. And then I say, I want the name. Show me a video of the guy waving at me with the cart, taking it and putting it into what I need to have. Right? And they thought that was funny and they did it. And all of a sudden we filled up on Shopify. Our sales went up. We did 200,000 more because I made them do that. They had waited a long time. These are not bad people. They're good people. They're in very, very, very big systems. I think learning how to do a 3 PL like you're doing Matt, when you start, like Mike did when he started, and then after you get better, coming back to it, I would love to in a couple years go back to owning my own and taking some of that money that they're taking from me. But right now, my growth in other areas is just worth too much, you know?
- [16:38]
A
So Mike, you. You mentioned this complicated thing. Cause I think what Curtis is saying is, like, it's Just the complexity of it is not worth it to him right now. What are other areas like when you think running your own fulfillment? I mean, we're not talking about like I don't run a 3 PL for other brands.
- [16:54]
B
Right.
- [16:54]
A
And I don't think, Mike, you're going to either. It's like this is just your owning fulfillment for your own brands. What about it? Like what, what complications are top of mind for you when you think about this? Like where is the brain damage for people considering it?
- [17:08]
C
One thing that is pretty obvious but is definitely a drain is you just attract a different type of person and with those type of jobs. And it just has to be said. And it's like you're not managing white collar workers and there are some great people that work in three PLs, but they do tend to have different lifestyles. They do tend to stay in jobs shorter periods of time. And, and you do tend to have, you know, problems. Like we've, we've had caught people doing drugs in the bathroom and had to let them go. You know, we, we had like when you get your. So we've been talking about the space planning. Well, not only do you have to like plan out the space for what you think you'll need, you plan out your personnel. And so when you're wrong, you don't just have a space problem, but you also have a personnel problem. And that means you're going into temp workers. And I think working with temp workers is quite challenging. So like there was a period where we had to use temp workers for a while and we found one of them had stolen like a thousand water bottles and had filled their garage with water bottles by the time we caught them. And like, you know, like, I'm not. This is nothing against temp workers. Right? It's honest work and needs to be done, but just you're going to get a much higher variance and a much bigger spectrum of the types of people that you're managing. And quite frankly, most white collar people don't want to manage that. And it's just headaches. You know, it's just like, it's just complexity and liability that when you're growing a brand, you're like, hey, I want to sell more, you know, purses. I don't want to like worry about somebody's background check just came back and they, they flunked their background check. And we haven't been able to fill this position because people keep flunking background checks. And so anyway, like that piece has to be said now with that said, I do think this is an area that's going to get fairly revolutionized because. And, and I just want to reiterate, we have a great team. I really love the people in our facility, but it's, it is more challenging. But like, one of the ways that this is going to be revolutionized is the robotics thing is going to, is already coming for three Pls, but like, this is just the beginning. You know, like optimus robots and all this stuff. Like, you look at some of the videos of what's possible and I think that just like customer support is one of the most obviously disrupted jobs via AI, I think the most obviously disrupted job via robotics is 3pls. And you know, having one of the worst things is like having shipments that go out to the wrong address or have the wrong stuff packed in them or whatever. These are like economically pretty devastating when mistakes happen. And like machines are just not going to make the same errors and they can work whenever and hit whatever shipment deadline and they don't have overtime and they don't have benefits. And so I think that this, this is one thing that's going to tip things in some ways that if you have the capital to invest in robotics, I think it's going to be more interesting and compelling to run a 3 PL than it is maybe today. But the people side of it cannot be underestimated. And I think that this is a more generalized take on business that you think being successful in business is mostly about having a good strategy and executing on it. And you just don't think about how much business is really just about managing people. And that's really the job.
- [20:49]
A
You know, Curtis, the you mentioned, what Mike's making me think of here is three like running a warehouse. There's a lot of difficulties with it. You've, you've said that, you know, you pay these companies a lot of money, right. So like there's definitely. That's the attraction. It's like maybe I'll do this at a certain scale and my growth rate will slow down. It'll make sense to run it myself. How do you then? So let's, let's just look at like as you are today. How are you evaluating which 3 PLs you choose? Is it purely price driven? Are there other things that you look for when you've made these choices in the past? Like you've got a lot of reps here.
- [21:29]
B
Yeah. But first of all, let's just say how different it is. Mike and Portland Leather, because I'm in our Portland Leather. He said they catch people doing drugs in the bathroom and they let them go. He here. We have to give them a promotion and talk to HR in Portland.
- [21:44]
C
And Portland, you get in trouble for interrupting them for using drugs.
- [21:50]
B
Exactly. I get in trouble. Would you please give them a few more minutes so they can complete the task? So that's a little bit different right there, I'm going to tell you. We really try to work with three PLs, and the last move we made was a company called cart.com who was very nice people, and they really tried. And we went to a biggie. We went to Flexport. And the reason we did it is the technology was better or promised to be better, and our people thought that it did, and they saved us just a load of money. They, like, literally guaranteed 23% savings. And when you're spending tens of millions of dollars a year, that's a lot. And they gave us a $2 million bonus for transferring over to Flexpo. And so here's the key. When I said this to Cart, they said, oh, we'll match that. And I said, you son of a bitches have been making that much on us. Now I'm so pissed I'll never stay with you anyhow. Right. We kept waiting for the efficiencies to catch on our last three pl and for the pricing to go down, and we kept promising that that was going to happen, And it just never actually came through. Well.
- [23:14]
A
Okay, so go back, though. Like, why did you choose them in the first place? Like, I guess every time I talk to somebody, just to frame this up, this is. This is the most requested referral I get. I don't know about you guys, but, like, in our network, when somebody is. I get a message about, hey, do you have a referral? Like, I need a. A referral to somebody. I'm like, what's it for? It's 3 PL. It's the number one thing I get asked about. So, Curtis, how are you choosing, like, how did you choose the. If you look at, like, your history with each three pl, is it just cost? Is that always the, like, number one thing, or are there other criteria that you're also looking at?
- [23:50]
B
Let's admit that as an entrepreneur, I can be very stupid sometimes. Okay, let's just all jump.
- [23:56]
A
We were all good with saying that
- [23:57]
B
we like to sound smart on here, because Mike's been doing this 11 years. I've been doing it 10 plus. I mean, Matt, you've done this forever. The thing is, we made thousands and thousands of mistakes. I love how Matt just our mic just breached through. I was paying three leases at the same time and like joking about it, but at the time you're like, what in the. We're throwing money away, right? This is crazy. The first one I chose because they showed me a big empty warehouse and said, look, we can move your stuff in here and we can do it efficiently. And I'm like, wow. Rather than the basement of my current building, that sounded like a really, really cool thing. Then when they failed, we went to a bigger, shinier building that promise better technology and better service. And the people seem to know what they were talking about a lot better. After several years, it came down to a price. As we've scaled bigger and bigger and bigger, we need the technology to work with, shopify seamlessly and make sure our inventory counts are right. The sinking problems will kill you if you have thousands of things and they haven't moved it in the right thing. Or if we have a big sale, we'll sell 20,000 bags in eight minutes. Sometimes we'll do something called the C grade sale. That's a lot. And if it's not updating every couple seconds, you could oversell five and 10,000 bags. And that is a months and nightmares and million dollar problem that you have. So it's the technology, it's do the executives seem to know what they're talking about? So they all have transition teams. You're going to always talk to a salesperson, salesman. They're idiots. They don't know what they're talking about, right? Yeah. They convince you that you should go with them, but you have to talk to the transition team before you sign the contract. How would you do this? What is the time? And you have to judge their integrity as a person, not as a what answers they're giving you. It's do I really feel they've done this for 10 years? Do I trust that if there's a problem, I can talk to this person? Is there something about this person that I connect with? Because a company is people and people for you are the people you can call up or you can email and say this is a problem. Can you help out with this and this recent one in working with Flexport? First of all, I met the press, I met the founder and he we can do it. The next thing is we talked to their chief financial officer. Then we went right down the line, talked to 20 different people. They assured us they can do it. And I'm going to tell you right now, when there's a problem I call up the scale and within a half hour something is happening and getting taken care of. Now for all these people who are listening to this, they're not able to do that right away. Here's my suggestion. Go with the two or three people that you're talking to that are not salespeople who will be somewhat involved in your account. They have to be involved in your account, not just, oh, I set you up here and I moved down because they'll all give you the stupid tour. They'll all take you around and say, look, we use robots and this little robot will put the thing down and everything. But yeah,
- [27:20]
C
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- [28:04]
A
It's funny that you're both going to. People like, both you and Mike are talking like the Mike more from a, you know, hiring and managing that type of labor force. I'm happy you said it, Mike. Like nobody wants to say it, but it is true. Like it's, it's a very different animal from hiring like a head of growth or, or a CMO or you know, a cfo, like all that stuff, right?
- [28:26]
C
Listen, when you're an entrepreneur, part of the reason you're an entrepreneur is that you get to choose. You get to choose. You get to choose the problems you work on. You get to choose the people that you work with. And that's why we do this, right? Everybody goes to work, everybody. And you get paid to solve problems. That's what you do. Entrepreneurs say, I want to have agency on what I work on, how much upside I have and who I work with. And so like it's not rude to say that you should make decisions around who do you want to work with because it largely influences the problems that you're going to solve, which is the other big thing. And so like that's what entrepreneurship really is. I don't think I've ever heard it described that way, but that's what it really is. And I think that that's my own personal philosophy, is that I want to have high agency where I work on the type of problems I want to work on with the type of people I want to work with. And there is nothing wrong with that. That's what every single person is doing.
- [29:25]
A
Yeah, I couldn't agree more. And I think, yes, I'll just leave it at that. Yes, 100%, yes. And you're both coming at the same. The same topic from two different angles, right, Curtis? It's like, how do I evaluate these companies? People first, Mike. Do I even want to do this? People first. Like, do I want to own this? Then I think, Curtis, you hit on another point, which is you talked about it in the frame of technology. So, like, do they have the systems to handle us? But what you're really getting at, what you mentioned is like, right underneath that is inventory counts need to be accurate. This can screw up my financials. It has, like, meaningful balance sheet impact. It can have tax impact. All that stuff actually needs to be really dialed. That's like, one way to evaluate, right? It's like, how tight are you operationally as a 3 PL? I think the other one, Curtis, and I don't know if you guys do this, but are you going sort of single node or multi node, right? So, like, when you're evaluating a 3 PL and the size of your business, like, are you shipping out of one location? Are you shipping out of multiple? That has an inventory impact. So this thing gets real complicated real quick.
- [30:35]
B
Right? So yes, okay, Single node. Oh. First of all, Mike, again, people say, why are you on this podcast? Like, why do you get up and do this podcast? It's to listen to Mike tell me informative shit like that. Because I'm like, wait, I thought I sounded smart. But he brought it down to, yes, I get to choose the people I
- [30:57]
A
want to work with.
- [30:58]
C
That is what high agency people charge each other up. Paul Graham has a great line about this. He's like, you can't actually see ambition fully when people are young because they haven't been able to self select into groups of other ambitious people. But when you put ambitious people around other ambitious people, it's like a wilted plant that all of a sudden is getting water. It just like perks up and like it. I'm the same way. Like, the reason why I love doing it is the same exact reason that you love doing It, Curtis, that when we were around each other, like, it just fires me up. And it just. It like, makes me want to be that version of myself that's the really high agency version. And I think that this is, like, the power of the Internet, really is that like, 200 years ago, I would have just had to make do with whoever was around me. That was close enough. And now I can get crazy. Curtis in Portland, you know, and Matt in Canada, and I get the. And so, like, I'm. Amen. I'm. I'm right there with you.
- [31:58]
B
I'm gonna go to that single node, multi node.
- [32:00]
A
Yeah, Tell. Tell me about that, because I think that's an important one for people to hear. I'll give you some context. What made me think of it is, I think about two years ago, Mike, I don't know if you remember, but Jason from Hexclad, they did this huge analysis of their business, and they were basically shipping everything out of, like, a single node. And then they ultimately went to, I think, three across the country. All of it based on, like, cost and margin. Right. Like, they're just. They're at the size where they had to do that. You're also at a size with a lot of product. And I don't know how. I wanted to just hear how you think about that part because that ties into your whole, like, inventory counts matter.
- [32:40]
B
Not just inventory counts, but our. We make in Mexico and we send right across the border and we go to Dallas. Okay. So ironically, our biggest market, which is Portland and Seattle, get their packages the slowest. So you. And you're really. And hey, let's talk. These are entrepreneurs. Let's talk real people in Texas who do their first buy, who get it, like, within 48 hours, our LTV skyrockets over to people who it takes four days to get it to. Yes, yes, absolutely. So we know for a fact if we can get those first purchases there much quicker, their LTV immediately, their second purchase jumps immediately. Right. So then it's like, well, that makes sense. Let's do this. Okay. The average number of products someone buys from us is 1.68 per purchase. Right? So they're buying a bag and they're getting a wallet or something small along with it. Right? So they want all of those colors. And. And so all of our SKUs in like 8,9000 have to be in stock. And if we're trying to send that all around, we can't keep in stock in three different locations. So we have to get to the North, California and The Northwest and huge in the Northeast, New York, Connecticut, Boston is huge for us. Right. So we would have to have several different nodes. We don't have the product to fill that at this point.
- [34:11]
A
Oh yeah. So it is, it's genuinely like how the do I inventory? Because if you do multi node, it's like you need everything everywhere all at once. If that's how, if you're truly going to do it, you know, like this is, this goes back to the, like when I saw the Amazon news that they're basically going to open up their network now in an AWS way, I'm like, I've never, I've never really had a strong opinion on like speed, how much speed matters outside of an Amazon. Like when I'm buying toilet paper, it's like, oh my God, I need toilet paper now. Right? But if I'm buying a purse, it's like, can I wait two weeks? You know, like, do I really care? And you saying that that matters makes me think this is where an Amazon genuinely has an advantage because their fulfillment infrastructure is just like, it's clearly the best. Like, there's no question it's the best. It's what they do. Mike, are you guys, when you think about like building out your own facility or, or bringing it back in house, would you do that in one location? Would you do that multi? Because you're also incredibly omnichannel. And I think that's a variable here is like, are you fulfilling largely consumer, are you fulfilling largely retail? Like those are very different packouts, those are very different fulfillment lines. Like, can you break that down for me a bit?
- [35:22]
C
There's a lot of nuance here. I'll just give a few kind of high level principles. I think the number of SKUs you have really dictates whether multi node really makes sense. Any sense. And like we have 5,000 SKUs with simple modern. And when we went to multi node, the biggest thing we learned was that for any savings, for any benefits, you introduce five new problems where it's like, hey, why is this not live on the website? Oh well, it's active here, but not here. And hey, why do we over order this? Oh well, we Forgot we had 10,000 units of it. You know, in, in unis they were receiving it and it wasn't in our system for some reason. And so I just think that in general, if you have a single skew and you're at insane scale, okay, maybe multiple locations like in, in the United States. Now obviously international is a different thing, but if you Have a bunch of different SKUs. If you're really rapidly growing, it kind of comes back to the same principle that like, there is plenty of complexity that already exists. Do not introduce more complexity in your business unless there's a very clear path to why that is an amplifier for your business. And so we've actually kind of collapsed down towards a more centralized. We're doing almost everything kind of in Oklahoma at this point, and there's some, some cool opportunities that are only possible that way. So like we got on a program with Walmart where they just pick up entire pallets instead of them giving us purchase orders where it's a certain number of units and you kind of have to compile it or whatever. You just are like, hey, you can order in pallets and they just come up and, and they, the, the truck pulls up and then they, you get the forklift and you just drop the, the pallet on their truck. And so like the efficiency is like through the roof. So we've collapsed down to one. I've seen use cases like, I think hexclad has multiple nodes and they did a big analysis on it and it was worth millions of dollars for them. So it's definitely possible if you get really big that and you're doing a lot of individual fulfillment where multiple nodes can make sense. I just think that you have to have some pretty extreme scale and you have to have a more narrow SKU band to really make it work. Otherwise it's just unnecessary complexity that you're adding to your business.
- [37:47]
A
Call me a nerd if you want, but one of my favorite things is when one of my existing software partners, in this case Northbeam, adds something that I would have had to have normally paid more and separately for. Incrementality was broken and Northbeam decided to fix it.
- [38:01]
D
Matt, you're not just a nerd, you're also cheap. Yeah, and one of the things my team and I are looking forward to with this is now having MTA and incrementality cleanly tied together. It's really nice having multiple views of a test totally integrated from design to monitoring. We can just focus on the insights and not the logistics. So now your incrementality test results, they just feed right into your North Beam MTA dashboards that we're just used to looking at every day.
- [38:30]
A
Yeah, I don't think any of us are going to say no to less work and making life easier for all of our teams. If this is interesting to you, go to NorthBeam IO and ask for a demo and feel free to tell them that the operator sent you. We've been Talking about like 3pls how do you evaluate them? We've mentioned a couple things that would drive you guys bringing it in house, right? So like growth rate is a really interesting starting point. Sharon. We'll drop a link to his post on X because he, he jumped into this conversation, right? Sharon being the, the CEO of Fulfill, who's one of our sponsors. One of the reasons I actually like Fulfill as a sponsor. Sharon is fricking smart, works his ass off and he just like culturally their killer team. But his he put together like this list of and I'm going to just rifle them off for you because I want to get your take on this. This list of like when would owning your own fulfillment make sense, right? And he talks about manufacturing. Curtis. So like if you already manufacture, the last step of just shipping it is easier. Mike and Curtis, the retail store thing is another variable he threw in. Like if you own a lot of your own stores or you're having to do that kind of fulfillment, 3pls kind of suck at cross docking and they kind of suck at like D2C.3pls typically don't do B2B3PL work very well. At least in my experience that's true. So that's another thing for people to consider. The third one is you personalize almost every order. I know if Katie was here, she'd be screaming at us saying like she, she owns her own fulfillment and she does like I think 30 or 40% of her business is personalized. But she just ran into your problem Curtis, which is she had to double the size of her facility. And so she's now working on that issue. The fourth is apparel. We hit on this, which is SKU counts get into the thousands. So like that's the thing. Here's a fun one. Never thought of this hazmat. So like if you sell anything with aerosols or alcohol or lithium batteries, like these are very specific requirements. I didn't even consider that anything over 50 pounds, furniture, fitness equipment, that kind of stuff. He's like, that actually might be better. If you own the dock, you own the ltl relationships, the lift gates, like all that shit and then frozen food. Guys, I didn't even consider this. But you know how many people listen to this show are in CPG in some way might have like very unique product requirements. That again, there's not a lot of three PL options. I don't know if, if you have any others that you would add to this list. But when I was looking at Sharon's list and I was looking at Pela, I'm like, okay, so like we manufacture, we do retail, we per. We do personalization. We have a crazy ask you count. I don't think our products have a hazmat problem. They definitely don't weigh 50 pounds and they're not frozen. But I checked a lot of these boxes, right? And Curtis, you check a lot of these boxes.
- [41:30]
B
I am glad that I didn't think all these things through before I started my business or I never would have been an entrepreneur. This stuff sucks and I don't know how I get through it and still stay so optimistic. We actually use a great 3 PL but we try to cut some of this out because we manufacture in Mexico and we have an enormous, enormous, what we call a SETI central distribution unit. They are in a system in Mexico. We are now shipping directly to our retail stores from Mexico manufacturing. So we're not. We cut out the cross docking of that so they can now get the orders. It's all put together and goes directly from Mexico right to the retail stores. Because that became a problem of making sure that they had the right things. So that was one of the solves that we did on that. Too many things can go wrong on that. I've seen those cooling units and like having to deal with like beverages and cold and meats and all that. That's just an entire huge industry. We're lucky enough to stay away. Katie Mamari is amazing that she does all this plus the personalization. Like I, I just, it's. It's staggering. But again, for entrepreneurs, I'm an entrepreneur. Everything inside of me, I prefer growth than all of the little things you have to do. So I looked at yesterday, I mean here in Portland and we met and we said, hey, I think we can add 40 million more this year onto our revenue. Right. I really believe that from what we thought we're going to do, we can add 40 million water. So I want to do the marketing rather than deal with all this crap that we do in the 3 PL. Mike, Mike knows about some of this. Mike, what do you got?
- [43:23]
C
I. I think you're alluding to a really good point with personalization stuff. And that's something I didn't really touch on. And it's one of the best arguments for running a physical space is that you're able to do something differentiated and create some kind of competitive advantage. Advantage with it. And when you can do that, you should absolutely think about doing that so for us, one of our big value adds, our kids business is just crushing it. It's just, it's actually kind of shocking because our kids business is kind of like this aspect of our business that we focus more on adult and kids just keeps growing faster than adult no matter what we do. It's kind of like the market's just like we want more of your kids stuff. But one of our things like back to school has been huge for us. It's our best kind of D2C window. And the reason is because the carts are really big and because embroidery and laser engraving is huge. I mean if you've had kids, they lose stuff all the time and they, they all have a water bottle that looks the way that, you know, 15 other kids at their school's water bottle does. And so actually like basically putting their name on stuff has a huge value add in a number of different ways and, and it looks good. And so like we've, we've got several embroidery machines, we have probably 20 something lasers. And this is a huge part of actually why we're doing our own facility. We have a period like with back to school and we generally kind of personalize stuff throughout the year. And then we have a really good custom business that's kind of high seven figures, low eight figures of custom orders that we do for corporate partners and different people that are just wanting to order, you know, 50 or 500 tumblers or whatever for something. And that's a great business to be in. And it's another example where having centralized inventory and stuff can, can really pay off. So I would say like, we're kind of coming back to a thing over and over again, which is you shouldn't do this just to do it. You shouldn't do it if it's adding complexity, when you don't need to add complexity. But there are certain situations where your product demands it or where you can build a competitive advantage off of being willing to work in the physical world. And then I would heavily endorse it because E commerce is so competitive and it's so easy for somebody to put out your exact same offer. Competing offer. You've got to be looking for surface area where I can offer something that other people can't or won't.
- [45:56]
A
Yeah, I think that that's the, that's actually a really good point, Mike and Curtis. I suspect at some point you're going to hit this where the growth rate slows, right. And you're going to start to look at like, okay, well, where else can we actually build moat and build, like, be very different?
- [46:15]
B
I'm not making this up. I'm not exaggerating. We started our first years on Etsy where we personalized. So we get an order, we'd hand write it and we had pass it along and we would make every piece for that person. And then we got too good for that and we moved on and said to scale, we can't do that. Mike has just recently, I have never thought of bringing personalization back until Mike just talked and I'm like, oh, that's a really good idea.
- [46:42]
C
And you guys would crush at it at your scale.
- [46:44]
B
You would, it's, it's still bringing that back.
- [46:47]
C
But it, but it even, even something like personalization, it just requires scale for it to make sense. Like we, and we've run into this like early on, it's like, oh, we gotta have personalization. And it's like, okay, it's on. We're doing 50 units a day or 30 units a day. And it's like, ah, it's hard for that to be worth it. You need hundreds of units a day. But when you do get to a certain, and this is the order of operations thing, like Curtis, in your business, I don't know your business the way that you do, there is a, definitely a scale where personalization makes sense. And then that's the order of operations thing of just kind of like deciding when are we at the scale where this is the right move for us.
- [47:25]
A
It's so like now I'm listening to you, Curtis, here and I, I. The second thing I wanted to actually talk about today is this idea of like the founder reinvention cycle. And what you're hitting on here, Curtis, is like a perfect example. Okay, you, you didn't even think about like layering back in personalization. And the reason I'm tying this in is because like, it takes, it's such a different animal to run a company where like all you are is a marketing company, which is what you've kind of been talking about, Curtis. And I know Sean talks about this. Like, I look at it like everything I do is marketing first. And when you start to run your own logistics or your own manufacturing, like, this is now a very different company, you know, And I think Mike, you're hitting on this too. And that are you the right CEO to do that? Are you the right guy, like, or can you get the right people? And there's this constant like reinvention thing that happens. And Curtis, you've been a big advocate for talking about this in the show. But like this past couple weeks, you've seen Tim Cook is stepping down, Doug McMillan from Walmart is stepping down. You got a lot of CEOs putting their hands up saying, like, I think this next generation of the company needs a different kind of leader and a different kind of leadership. I, when I see this, I inevitably go to, is this possible at companies our size? Like, can you do this at this scale? Or is the founder, Founder mode founder juice just too damn, too damn valuable still?
- [48:52]
B
Yes, it's too damn valuable. But you know, you, you guys are young whippersnappers, okay? You guys are just these young folks doing this stuff. And I've, you know, I'm ease into that a little bit later years and some things just, I'm going to be honest, I'm very flexible. My mind does things. I have thought that maybe somebody becoming CEO would be a better thing for the scale that we're going to. And every time I do that, it takes me about a night to go home and then egotistically think, no, they can't do what I can do. They don't got the energy, they don't got this, they don't got this. And there's some amazing people. Maverick said something to me one time. He said, curtis, could the best CEO in the world take our company from 250 million to 500 million? I'm like, the best one. Well, sure. The best one could do that, right? So then it's just a degree from me to that person. Can we find someone who could do that better than me in certain ways. And I think that it's probably possible. Of course they're not going to have my energy, but my energy creates problems too, right? Mike's always saying these wise things about order of things. I'm just like, hit that shit really, really hard. And most of it works out. And if it doesn't work out, I just say I meant to do it that way and I keep moving, right? So I believe that there is a. And I believe that there's new technology coming that is going to take new minds in order to do it. I, I really do. I don't think I'm going into AI hard enough. I'm not going into certain technologies. I'm not writing some of this as fast as I, I think I've got years, I don't got a decade.
- [50:51]
A
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 Postscripts 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. Mike, I think we've talked about, we've danced around this topic in past episodes, but there is a certain element of what Curtis is saying which is like the job of the founder sometimes is to inject risk into a company. And like at a certain stage it's like that you should be injecting risk into a company and then at some point it changes. Right? And that like companies maybe are wanting less risk, less founder energy and a little more stability. Simple Modern as a company is like this massive omnichannel machine. You know, this whole like Curtis view of do you, you have to reinvent the company every year? Like how do you think about this at Simple Modern and how are you thinking about like long term sort of succession and your role and I mean, I guess all of it when it comes to this type of thing.
- [52:26]
C
Yeah. Well, I'm Curtis and, and I and, and really this is true of several of the people we've had on the pod. It is very rare to found a brand and then to CEO it from zero to hundreds of millions. And the reason for that is that it just is very different at the different stages. What it requires to be an effective and successful leader and it takes, I would say a pretty tremendous amount of neuroplasticity to be able to continue to grow and be willing to make the changes that it requires from you as a leader. And one of the observations I've made is that so like when you're 0 to 10 million, let's say like you're the quarterback and you've got to be great at throwing touchdown passes and reading the defense and like that's your job. And if you're not doing it, you're not scoring. And so then you get to like say 10 to 30 million and it's like, hey, I, I've got to add people to my team or like I cannot like do Everything right now, but I've still got to be, like, throwing touchdown passes. But I also have to kind of simultaneously be like, coaching offensive line, line on what they're doing and like telling the running back, hey, you need to be lined up here or whatever. And then you get to like 30 to 60, 30 to 75 million. And it starts to be like, hey, I actually need some of these players that I've hired. I need them to start doing some of the kind of directing people. And I need to start, you know, doing less and less executing and thinking a little bit, you know, abstracting up and being a little bit more of like a coach role. So maybe you're a player coach. And then there's a point where it's like, hey, this thing's getting big enough. Where it's like, you need to kind of just exclusively coach. And these are all transitions that are like. I mean, how many times have we seen somebody who was a great sports player who tries to be a sports owner and totally fails at it. It's just like, it's totally different muscle sets, totally different skill set. Michael Jordan, greatest basketball player of all time, terrible basketball owner, because it's a different skill set. And I think that entrepreneurship is the exact same way that you've got to wear all these different hats as the company continues to grow. And it's like, are you willing to, like, make those transitions? And if you're not careful, what happens is you'll develop elite skill sets at certain stages. Like, I have these elite skill sets as a individual contributor. I use this example for me, like, I'm great in a spreadsheet, right? I'll put myself in a spreadsheet up against almost anybody, very fast, very effective, very good with data. And so obviously, in the very early days of Simple Modern, it was like, huge asset, right? I'm running an E commerce business, and that's a huge asset. And then as we started to get a little bit bigger, it was like, well, it's still probably an asset, but sometimes I kind of feel like it's taking me away from talking to people or doing other things that I should be doing. And then around the time that we hit about 100 million in revenue, I realized if I am in a spreadsheet during time that I'm in the office, like, it's just a fail, right? I'm not doing my job very well. But that muscle is so developed and I'm so good at that that it's like when I get stressed, when I don't know what to do. You know what my first, like, my binky is. My binky is Excel. I want to pull up Excel and it's like, that's how I'm going to fix things. And it's just like, that's not how it works. And so, ironically, the better you are at something, the more that that thing can then sabotage you as a company grows. And so, like, I've seen that risk with me, and it's very difficult to work against that. A lot of times people will just say, hey, I'm awesome at this. I want to keep doing this. And so I'll go just start another company or I'll let you know, like, whatever. So I think that's one thing, and then I think the other thing that is probably going on here is that there is something that has to do with what generation did you grow up in and what were the experiences you had in your life. And your ability to lead or manage a company is kind of prisoner to those things. So it would be very difficult for somebody who, let's say, was born in the 60s to really lead a company into the mobile revolution effectively. Right? It's not to say that some people didn't. It just would be hard because you grew up without mobile technology. And so you don't think natively in that way, like a 20 year. As somebody that had grown up in the, you know, whatever that was born in 2000 and grew up in the 2000s, their understanding of technology and mobile phones and how they intersect with life and culture is like totally different than somebody born 20 or 30 years earlier. And so you do kind of age out in some ways, like maybe Walmart's not a good example of that. But especially when you're in E commerce, when you're in technology, I do think there is something about, like, it's a young man's game because it's difficult to think AI native or to think, you know, mobile native when that wasn't a part of your experience growing up.
- [57:21]
A
You know, Mike, I think what's interesting, you're both saying similar things here, but what the CEO transitions, we are seeing at this scale, they are actually pointing to, like, we're heading into a different world. Like, this is a different time and companies are going to run in a different way, you know, and these guys are, are seasoned, you know, seasoned experts. Like, they're putting their hands up and saying, like, this is my thing, it's time for me to go, or this is my moment, it's time for me to Go, Curtis, do you like Mike talked about? His binky is like the spreadsheet. Do you have a thing that you're like, I'm exceptionally good at this. I always go back to this one thing. This is where I spend my time?
- [58:00]
B
Yes. And it's not spreadsheets. My ability is to memorize the numbers outside of the spreadsheet and have my brain work on unique situations and my subconscious while I'm just walking through the world. I tell everybody if I ask somebody a question like, what is that number? And they have to look at their computer, and I'm like, stop. Like, that's an easy number. You have to have that in your head. Why? I'm very good at putting this in my head. And then as I walk through our facility, we're in meetings, I'm in calls, I'm at the store, I'm in the car, my brain is working on solutions because I have the numbers and it's moving it around in a new way. So when someone shows me a spreadsheet, I can show them new ways to look at that that they can't see from. Put in this number and build it to this number. I actually can say, no, no, no, no. I know that that's what the numbers say, but it's wrong. We have to do a system completely different. Have we thought about this, this and this? It's looking from a completely different angle than everybody who's looking at their computer. That's. I just like. I'm like, turn off your computer. Put it down. Stop. Do you know the numbers in your head? Let's talk about this. Let's figure it out in our minds and let our mind spend days on coming up with something unique. Because that computer is going to tell us the same damn thing every single time. And everybody's staring at the computer. What about. What of us that's unique that we can bring to the situation?
- [59:33]
A
You know, I would say mine is probably performance marketing. Like, I go, if I'm like, I'm bored, right? Or know what to do and I don't feel productive, I'll be. I'll start writing copy. I'll start looking at ad accounts. I'll like, I'll go after creative. I'm thinking of angles for a product. I. It is such a muscle that I can't even help doing it with my friends. Like, I was hanging out with my buddies, got a company, and he's telling me about his business, and I'm like, have you thought about this? Have you thought about this? Have you like I immediately it's the most overdeveloped muscle I have as a, as a founder. So like it's so easy to go over there. Mike. I'm like you like that's my like if I feel uncomfortable with the silence, I'll start working on those things. But I think it's, it's actually like it makes me think. Mike, when we talked to Tim from Eucalyptus, right he had this, you know, you should hire away from you as a skill set, away from your core skill set. I thought that was such a good take.
- [60:28]
C
I, I think that one additional thing I'll layer on here. I think that anytime a really gifted founder totally extracts from a business, I think the business does worse. I think your business will always be better if you're involved in some capacity. I think the wisdom is figuring out how do I inject the thing that only I can inject and then you know, hire and build up those abilities. Other places there nobody in my organization is going to be able to give the risk on nature, the let's freaking go the, the ambition, the vision that I'm going to. And part of that is also like I'm the biggest shareholder so like it's more my money than anybody else. So how can I expect anybody else to be as risk on as I am? That's it's an unrealistic expectation. So even if I someday abstract out of the CEO role I have to find a way to continue to inject in the organization the thing that I can only bring at the level that I can can bring it the one other thing. It's my, one of my favorite sayings of all time. But it goes back to this binky idea. When you're a hammer, everything looks like a nail. And it's just like such a great self assessment is how are you like a hammer? Like what are the things where you like you always want to solve it in the same way or you always want to apply the same lens to things and it's a great like self reflection exercise to kind of find out where you are less effective than you could be because you just always generalize back to it's more marketing, more creative, more excel, more whatever. And like it's how you. I think this is the way that you make breakthroughs as a leader and it's the reason why being a truly great leader is hard because it requires a lot of internal reflection and a lot of willingness to change and that requires a level of security in who you are that few people get to. But if you do, if you don't do it, if you allow your insecurity. Because basically what we'll do is like, growth requires looking backwards and saying, okay, I can see now I was not as good a leader as I wanted to be because I constantly tried to find the answer in Excel. And a lot of people when you're insecure, it's like you can't deal with that idea. It invalidates you to a level of like, you've done things wrong in the past, that you just can't accept it and so you just ignore it. You know this really effective leaders are like, that's fine, I could have been better. I see it and now I'm going to try and be better tomorrow and I'll probably still struggle with it, but I now see it and I'm going to, I'm going to choose to kind of grow in that area.
- [63:08]
E
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- [63:52]
A
I guess I could probably argue the other side of that as a founder, right? I think what you're hitting on is like as a CEO, you've got a lot of other jobs that are probably just that one area that you can be like a great individual contributor. But then as a founder, I could argue that if you're a great hammer, you should go look for more nails, right? Like they're just personal leverage.
- [64:14]
C
Maybe. I mean, maybe like I love, I love a little conflict here because it's like, listen, it depends on what you're, what skill set you're talking about. If you're like, I'm an amazing gatherer of talent and I'm just going to be, you know, that's how I'm going to try and solve every problem is gather More talent, maybe that works out. I still, I don't know, maybe if that's your. So there's certain skills where if you just said, hey, I don't have to do anything more than just be. Be elite at this one thing, but I generally have found that life is not so simple the other. Here's the other problem with that, Matt. It will maybe work in one area of your life, but it won't generalize to all the areas of your life which will prevent you from being successful.
- [64:58]
B
So.
- [64:59]
C
Right. Have you ever, have you ever tried to, in your marriage, tried to use the same, you know, like, you see nail. You see nails in your marriage, and you try and be the hammer and you tell me how that works out for you. So I, I think being successful in life requires, like, adaptability and flexibility. And maybe, maybe in business you can kind of say, hey, here's my lead skill set, and I'm just only going to focus on that thing. But generally, like, the most successful people are successful because they have a diversity of really elite skill sets. And then they kind of know when to pull the right tool out of their tool belt.
- [65:30]
A
Curtis, what say you on this?
- [65:32]
B
You know, Tim Cook's leaving because he was around a long time. I'm just starting to get good at this shit after 10 years, right? Like, I had a bunch of drinking in the middle of my life that stalled my life out for a while. Or I might have got better earlier on, but at 10 years, Mike said 11 years, you're at 10 plus. Like, we're all just starting to get good at it. Tim Cook did this thing for 30, right? I think things have moved past him a little bit. He was great at logistics. He was the coo. I get that. I think that we started from the ground. Tim Cook entered a big company and learned how to do it. Mike built the damn thing he was meeting upstairs at his house. You built this, Matt. You know, Sean built ridge at past 4 million. Like, we all built this thing. And it takes a while to get good at it. And now that we're good, we don't want to step all the way away. There's still a lot of growth that I need to learn about. I need to learn better about people. I need to learn better about 3pls. I need to learn better technology. I need to continue to hire. I need to get all this shit. So 10 years is just like when you grow. I'm just like Tom Brady. Hey, in mid-30s, he was just learning the game. He was just getting really good at figuring exactly what it is and getting better and better. Now, physically, he was going to age a little bit. We're not going to age that much. We're going to be fine. We're smart enough, we got the energy, so we can keep doing this. And I think that if it's not just this company, for me, it's multiple companies. And I think it is for Mike. And, man, I think it is for you. Like, now that I got this knowledge, I can look at other companies. I can't help it. I was at dinner last night talking to people, and I'm just like, talk to me about what you're going. No, no, no, no, no. And I could just see it. I could see the pattern recognition of what they were not doing and what they needed to do. So I think it's multiple companies, not just one big company.
- [67:24]
C
Well, really talented people get bored is what you're saying, Curtis. Like, I might be the best pattern recognition ever at a particular thing, but that doesn't mean that's what I want to do for the next 30 years. It's like, I want to. I want to take on new problems, and I want to expand my skill set. And I think this is what's true of ambitious people. Like, I don't want. There was a great quote that I posted yesterday, which is like, my ambition is in life is to be defeated by greater and greater challenges. This is what growth, mindset, and ambition looks like. And so, like, this is the other problem with what you kind of espoused, Matt. It's like, man, it'd be such a depressing idea to me if my tool belt and my ability to solve problems is the exact same 20 years from now that it is today. Like, I hope it's so much more diverse. I hope I'm able to take on so many more different things. I hope that there's problems that I'm going to take on and help people solve that I have no idea how to solve today. I think this is what makes business so interesting, is it's like this infinite game where it supplies interesting things for us to work on and build on, you know, for the rest of our lives, which I love.
- [68:29]
A
Yeah, I don't disagree with you, Mike.
- [68:32]
C
I'm thinking of it more a manufacturing drama here, Matt, because you and I never.
- [68:37]
A
Here's. Here's the. Here's the thing, right. I raise it because I think what you're. What you're both hitting on is there is, like, ambitious entrepreneurs, and that is a certain kind of person Right. There is also ambitious and driven non entrepreneurs. And I would put Tim Cook in that bucket where, like, he is the all time greatest CEO if you just look at the numbers. Like, yes, he came into a big company, but he came into a big company that was worth $400 million. He's leaving one worth 4 trillion. Like, that is an incredible amount of economic value created as a driven, like, operations guy, you know, like, that's exactly what that company needed. So, like, he was basically like, I have a very specific skill set. And he took it to the very top of business, which is what made me argue the like, maybe you just need a different nail, right? It's like, you're so damn good at this. Like, you're just in the wrong boat. So I guess that was my. My pushback is in Tim Cooks, where his perspective. He did just hammer a damn nail his whole life. He just did it in the right boat. And that boat got real big.
- [69:42]
B
You're not supposed to hammer nails into boats, buddy. I'm just letting you. Yeah, yeah, sorry.
- [69:48]
A
Thanks for screwing up the analogy, Curtis. Let's bring it right back around to where we started, and I want to finish on the 3 PL topic and let's play a little game, okay?
- [69:59]
B
We're gonna.
- [69:59]
A
We're gonna call this red flag, green flag. And I want each of you to give me. I'm gonna. I'm gonna basically call you out. Curtis, I'm gonna start with you. What is a green flag that you are looking for when evaluating a 3 PL.
- [70:14]
B
No, I want to start with the red flag.
- [70:15]
A
Okay, you start with red. Let's. Let's let Mike. Let's let Mike do green. Like.
- [70:20]
C
Okay. Flexibility. Flexibility and a willingness to grow with your business and to modify their plans based on your business's changing needs.
- [70:31]
A
Okay, Curtis, red flag.
- [70:32]
B
They're gonna say that the red flag is when you go and see this big warehouse and they're showing you how fancy and how they can build your racking and do everything. If the people you're talking to are number one salespeople or they're. The manager is new, and they're bringing like, the regional manager who says, oh, I spend a lot of time here, but they flew him in from Tahoe to show you. It means no one on site knows what the hell they're doing. It's new, and there's no manager running it. And yes, those are specific examples that happen to me.
- [71:06]
A
Mike, do you have a red flag? What would you. What would cause you to look the other way?
- [71:09]
C
Bad Systems, bad systems. Like, the worst thing in the world is when you have a 3 PL and you cannot understand what the heck is going on. Like, and we, we grew with a 3 PL, but like, there was example that we had this print no ship where they would print out labels. And we thought that that meant it had shipped, but that didn't. It just meant that the label had been printed. And so we had a whole nightmare around trying to communicate with customers not knowing what it actually shipped versus just what label had been printed. So I think systems is a huge red flag. If they're not advanced in systems, especially in this day and age, I'll throw
- [71:41]
A
in a red flag. I think if the three PL's been around for 10 or 20 years and they don't have any customers that have been with them that long, I would also be concerned.
- [71:49]
C
Yeah, references. Lack of references. Red flag.
- [71:52]
A
Yeah. Curtis, green or red? What do you want?
- [71:55]
B
I'm going to go back to a green.
- [71:58]
A
Look at you being positive.
- [72:00]
B
I know. Well, I want to, I want to do that. But three pls, you just like, you know, I want them to work better than they do. But yeah, here is what it is that they don't just promise the technology. They let you, when you're talking to them, talk to some of the technology people and they'll start walking you through for an hour or two. Like, this is what we use. This is the integration. This is how we do it. And they give you examples of things that went wrong in the past. Not just everything's easy. They're like, yes, we've had this problem before and it created this. This can be a problem. They start telling you about problems that can occur her not like, oh, we're so good at this. It's easy. We got, we got a tech guy in Lexington, and this guy can do anything nobody in Lexington can do.
- [72:50]
A
Mike, what do you want, green or red?
- [72:53]
C
I'll give a red. A red is they have lots of really big clients because be careful. You're not going to matter. They're not going to flex to you. Like, you're not going to be meaningful to their business.
- [73:06]
A
Oh, that's good.
- [73:06]
D
Yeah.
- [73:07]
A
You don't want to be the very smallest client. I'll give you a green flag. They work with other companies in your space so they can kind of see how your product category works. They know all of the nuances of, like, what it is to ship apparel or what it is to ship frozen food or something like that.
- [73:28]
B
I love that. I, I, a lot of them always say, oh, and they give you the big names of people they work with. With. Oh, it's Katy Perry's new this or this. Like that. And it's like, yeah, yeah. I want to know more about a D2C company that's doing nine figures, that has a bunch of SKUs that's a pain in the. Who's always switching, just like we are. And how do you work with someone like us? Because I'm D2C. I move fast. Boom, boom, boom, boom, boom. They have to move fast, too. This is an old system. They've got to be updated for the way things are done. And that means minutes and hours, not days and weeks.