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- [00:00]
Matt
There's genuinely one absolute fireball offense in this company is if you see something that is wrong and you say nothing and I find out I will kill you.
- [00:08]
Jason
Like you're done. Every time a dramatic person has departed, we have realized it is so much better without them.
- [00:14]
Mike Beckham
People aren't going to empathize with you. When you're having a tough week, it's like oh yeah, cry in your dollar bill. To have a competitive advantage, to have a distinctive moat, you're going to have to stand alone. That actually takes some real confidence. To be a really effective leader, you have to have a sense of what your hot dogs are. I'm just going to be completely unreasonable and inflex flexible around those things. You're going to feel lonely sometimes and you're going to feel a bunch of pressure.
- [00:36]
Jason
My views on how to manage people really have evolved. I was wrong about a lot of things. The game that we're trying to play is be a premium enterprise value company. If people just think of Hexed as a cookbook company, we are going to lose.
- [00:47]
Matt
I find myself relearning the same lessons over and over again. I think one of the most dangerous ways to start sentence inside of a
- [00:54]
Mike Beckham
company is I feel the single biggest pitfall that you can run into as a business owner is your own insecurity.
- [01:00]
Matt
The bottom five, 10% that are genuinely not a good fit for the company. You're them a disservice by keeping them and then doing themselves a disservice by
- [01:07]
Jason
staying in investment banking. You're not treated like a human, you're a machine. Be the machine and go cry in the bathroom.
- [01:12]
Mike Beckham
If I do my job well, I keep the money in the pockets of tens of millions of people and I make their life better that way. Business is so much about managing people and managing yourself. Welcome to the Operators Podcast. My name is Mike Beckham and we are proudly brought to you by Fulfill After Sell Rich Panel, North Beam, Sarah's analytics and Postscript. We are a community for entrepreneurs that are building things and if you want to be a part of this community you can listen to the podcast. But you can also go sign up for our newsletter. A ton of awesome information in there. We also partner with E Commerce Fuel, a forum for you to connect with other entrepreneurs that are building businesses where we can learn from one another. So without further ado, onto the pod.
- [02:01]
Jason
Dealing with big box retailers means EDI connections and that's often a trigger for needing an ERP system. We've been using EDI connections to costco forever. And the only way that we've really solved that problem to make it seamless is through Fulfill. EDI adds complexity to everything you do and Fulfill solves that complexity with their connections to their systems. You need Fulfill to move from being just a DTC brand to being a true multichannel brand because big box retailers are going to require you to connect to their systems using edi. Let me tell you, it's way easier if you do it with fulfillment film.
- [02:34]
Mike Beckham
I, I think what you guys are saying though is like, leadership has a cost. And when you're kind of an aspiring, ambitious upand comer, you see positions like CEO and you're just like, man, awesome. You get to tell people what to do, you're the boss, you make the big bucks and you see all the upsides and you just don't see any of the trade offs. And I think what all of us have learned as we sat in the chair is it's like there are plenty of trade offs. Like, and one of them is like, you do have to play a role. Like you're saying Jason, and you do have to, like, your ability to speak your mind is reduced, your ability to be understood is reduced. You know, people are, people aren't going to empathize with you. When you're having a tough week. It's like, oh yeah, cry in your dollar bills, you know, and like, I don't even think it's reasonable to expect people to be able to understand or empathize. So it's like, yeah, you're going to have hard things and other people aren't going to understand them and they're not even going to be particularly sympathetic to them and you're going to have a lot of things that you just have to keep to yourself. And you're going to feel lonely sometimes and you're going to feel a bunch of pressure and there's all these other great things that do come with it. But like anybody who's listening to this and like this same way when you're a seven figure company, you're like, man, if I was an eight figure company, things would be awesome. And it's like, yeah, there's some awesome things, but there's also some trade offs waiting for you.
- [03:54]
Jason
It's pretty awesome. Yeah, like what you're saying, Mike, it hits home because we are having to constantly change as leaders of exceptional businesses my views on how to manage people, on how to run this business, they really have evolved. I mean they are very different now in a good way. And, and like I was wrong about a lot of things. Like, when it comes to managing people, I still have. I kind of still have a bit of an old school. Like, I was a banker, I was a lawyer. Get the job done or get out. I think it's really important to maintain that. But at the same time, you know, as the teams get bigger, as the organization gets bigger as a leader, it becomes more about, like, people, management. And knowing that, you know, not everyone is an A player and knowing that these people are human. In investment banking, you're not treated like a human.
- [04:50]
Mike Beckham
Yeah, you're a.
- [04:50]
Jason
Cause, you know, in big law, you're not treated like a human. It's like you're. You're just. You're a machine. Be the machine and go cry in the bathroom, you know, and that's made me the man I am today. But not. You can't expect that everywhere, you know, things evolve. So there's like a balance between just. Just get it done, Jason. Just get it done. And, you know, making people feel good. And I. I love what Matt said about the reviews because we're getting close to the end of the year here or this, this may air just like, right at the, you know, the beginning of the year. We changed our fiscal this year, so we're doing all of our reviews in January, but we're prepping for that now. And Matt said, like, you get a job satisfaction survey and like the bottom 10% who aren't satisfied with their job, well, clearly they should just be fired. Right? Like, that's the thing.
- [05:40]
Matt
They should release to the market.
- [05:42]
Mike Beckham
You should have a conversation where you're just saying, like, hey, if you're really unhappy here, let me help you find a place where you're happier. Like, it doesn't even have to be punitive. It's just like, if you have 100 employees and five of them are just really not happy, then it's like, well, don't. I don't know that it makes you a bad person. It just makes it a bad fit.
- [06:02]
Matt
Yes. Yeah, I think that's the thing. Don't cater to the minority when you're building a team. Like that is. I had to learn that lesson the hard way. And that's what I'm saying. It's like the bottom five, 10%, whatever it is, that are genuinely not a good fit for the company, you're doing them and a disservice by keeping them right. And they're doing themselves a disservice by staying.
- [06:21]
Mike Beckham
So you can't be all people. You know, and, and I think that, that anytime you've led an organization, you figure that out really clearly. And one of the phrases I've, I've said a lot around our organization recently is it's like, hey, I'm not saying this is the best way to do things. I'm not saying this is the right way to do things, but this is the way that we're going to do things. And that's just pretty much what leadership is, is that you really. I don't even know if I believe in the idea of quote unquote best. I just see trade offs with different ways of doing things. But you got to pick a lane. And this kind of, I'd love to hear you guys take on this. Like when I'm going through and doing my one on ones, I will kind of come across ways of saying things that I'm like, that was kind of bouncing around in there, but I hadn't put it into words. And I think that's right. And so here's my, my kind of theory from yesterday I was sharing with my direct reports. I think to be a really good leader in general, you have to be an open minded person. You have to listen to feedback, you have to hear what other people are saying. But then you have to be almost completely unreasonable and inflexible in two or three key areas that now what those two or three key areas are. I don't think it has to be the same from leader or organizational organization, but you have to have at least two or three areas. And I was thinking about like, well, what's a, what's kind of a parallel? And I was thinking of the Costco story with the hot dogs. This is like, you know, you see this on Twitter every month somebody posts it, but they, they famously have these $50 hot dogs. And I think Jim Senegal, I think this was his thing and one of his key leaders came into him one day and is like, we can't sell the hot dogs at A$50 anymore. And he was like, if you change the price of the hot dogs, I will effing kill you. And it like, it kind of like made me think about this question of like to be a really effective leader, you have to have a sense of what your hot dogs are. What are the things where it's like I'm just going to be completely unreasonable and inflexible around those things because they're that vitally important. And then I'm going to be really open handed and flexible on a bunch of other things. And I'm going to hear feedback and I'm willing to go with the flow. But for me to be the leader I need to be, I've got to have a couple of these issues that I'm just like, this is how it's going to be. You guys think that's right?
- [08:44]
Matt
I 100% think it's right. I'll take it. I think, yes, it's the main thing. Keep the main thing. The main thing is another way to say that there's like the theory of like in a business, you should focus intensely on the constraint like that if there's like usually one or two constraints in a business that if you just focus on those two things, your business will get better. I think every company particularly, like tie this to the leadership thing. The way your culture is built also has to be around a few non negotiables, right? And how you run your team and how that team shows up. They need to know what those non negotiables are. This is, I think like values gets a bad rap for this because they kind of got construed into this, like. But really what it comes down to is what are the things that we believe, like what principles or which ways that we operate. These are not negotiable. Like one of mine, Mike, Now I
- [09:39]
Mike Beckham
want to know what you guys hot dogs are. I'll tell you, like, that's the question. What is your. Yeah, what are your hot dogs?
- [09:44]
Matt
When it comes to people, like, I, I have told people, like there's only. There's genuinely one absolute fireball offense in this company is if you see something that is wrong and you say nothing and I find out, I will kill you. Like, you're done, right? Like you're just doing everybody a disservice at that point. And there's no room for that. I often, I'll tell you, like Jason, the whole, you know, cultural thing like this non negotiable pieces. I am often saying my response to things is more often than not, do you want the answer that makes you feel good or do you want the honest one? Because they sometimes aren't the same.
- [10:24]
Mike Beckham
Right?
- [10:25]
Matt
And your job, I think in the seat that you have, at least for you guys and myself, is to just say the thing that is true or you believe to be true, regardless of how it makes people feel. And you kind of need to have a company where like, that's a non negotiable, like you should just be able to speak plainly, like never attack people. I don't do that, but I definitely Like I am brutal with attacking problems like that's a non negotiable in this company and that's cultural. Long time sponsor North Beam is launching incrementality later this quarter. This means that you can now have the trifecta of marketing measurement all in one platform. That is multi touch, attribution media, mix modeling and incrementality holdouts all inside of North Beam. You can automate that lift testing end to end, unify results with your MTA and your mmm. This is a lot of letters. But if you know, you know. And you can start to cut what doesn't work and you can scale what works and you can do this all with confidence. This is why this is such an incredible ad to northbeam. North Beam's incrementality measures what results marketing is actually generating, not just what they're claiming credit for. As a CEO, that's like music to my ears. Sign up now and you can lock in 50% off unlimited tests, free for the year.
- [11:43]
Mike Beckham
What are your hot dogs?
- [11:44]
Jason
One of the things that I, that I really focus on is making decisions and taking emotion and drama out of work and out of decisions. It's incredible how often people allow their emotions to affect their decision in business. I think it's the fatal flaw and everyone suffers from it, including me, right? You know, it's like that's the who the are you like to tell me that or like this is my department or. But you just, you just gotta check that. You just gotta be like wait, I'm system A here. I gotta get into system B. Critical thinking, thoughtful, logical thinking, decision making mode. System A was built to help you survive in the outdoors with predators. When you had to hunt and live and fight, you know, that's not. The fight is different now. The fight is applying logic and reason to succeed. And I, I just, I just see it and like the one thing that I'm constantly thinking about, well, I'm constantly thinking about a lot of things but one thing that I am constantly thinking about is like who is a drama person? You know, because every time a dramatic person has departed, we have realized it is so much better without them. And that's all. They were dramatic because they were making emotional decisions and making decisions based on emotions. So my, my hot dog is not allowing people to, to consistently make emotional decisions that cause drama that they will hurt the business, period.
- [13:31]
Matt
You know, this might be a bit contrarian because we're in consumer and we sell things to people and often times to sell those things we have to, we're we're building messages, right? Like, we design visuals, copy that are compelling. They make people feel things. I think one of the most dangerous ways to start a sentence inside of a company is I feel like, yeah, I feel like. And I hate saying that because, like, the marketer in me is like, no, no, no, man. Like, write better, make better marketing. That makes people feel things. But what you're hitting on, Jason, is that internally, when you're building, like, high performance teams, they need to become, I would say, like, far more objective than they and data driven than they should be emotionally driven. Now, the weird part of that is that great CEOs, great decision makers often have an incredible gut feeling.
- [14:29]
Mike Beckham
But, you know, that's, I think, what makes it powerful. Well, I was just, I think we were going to say the same thing, Jason, which is, I think, you know, the what makes intuitive people really powerful is when they pair that intuitive thinking and feeling with data. So there are a lot of times where I will have a hunch, but there's a rigor and a discipline to saying, I'm not just going to go out spouting off my hunch. I'm going to actually see if objectively, if I can verify that hunch. And I've said this before on, on this pod, but one of my phrases I started saying around the company is when people would say, I think or I feel, I'd be like, it's a knowable answer, you know, or we can get real data. We can test your hunch. We should do it right. You, you think we'd sell more if we had free shipping? Knowable answer, right. You think we could drive costs down 10%? Knowable answer. Like, let's go find out. And so there's definitely room for intuition, thankfully. I mean, I'm a hundred percent intuitive on Myers Briggs, but what I've learned with my personality in particular is that I'm a persuasive speaker and that I'm highly intuitive. And so if I'm not careful, I can get a hunch and then I can get very charismatic and persuasive about that hunch before I actually realize whether or not that hunch is right and that I've got to do the work and I need to have an environment where people are like, hey, show your work. And not just make it sound good, but like, show me. Prove to me that you've actually thought this all the way through. And that's healthy when you have that, when you have both, right?
- [16:10]
Matt
You and I have the same disease
- [16:12]
Jason
on the gut feeling, right? This is about time in the game and the leaders have risen to their position through experience and application of good judgment and making better decisions on average over time, we're all going to make bad decisions like we all have Sean
- [16:35]
Rich Panel Representative
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- [17:17]
Jason
This is actually one of my biggest problems is I, I very often can feel the right answer but not express why it is the right answer. This is one of the things that frustrates me most in my life, in my career. But, but more often than not and more often than most people, I am correct. I know I am. And it's just like I, I can't get it out, I can't verbalize it. But what it is, is, is years and years and years of experience and success that is in it. It's inside you. It's like, it's like it's walking. You don't have to think about how to walk.
- [17:56]
Mike Beckham
You know, it's so hard when somebody comes to you with something like one of your people comes to you with something and immediately in your head you' to fail. This is a bad idea. And you can't actually put into words exactly why you just kind of, you just have the spidey sense and the, the. It's really challenging for a couple reasons. One is sometimes you're wrong and it's a, it isn't a bad idea, just something, an experience you had in the past, like kind of prejudiced you against this idea. But also it's dangerous because if somebody comes to me with an idea and I'm just like, that won't work. We're not going to do that in their mind. If I don't really walk them through the reasoning and sometimes even if I Do well, you don't get to see the counterfactual. So if I just kill it and we don't do it, then it's like that would have worked. They just don't know, you know, and your people can start to be that way. And so sometimes I've learned that sometimes you've got to like let people try things to be able to share your intuition. And I, I've still not figured out how to do that balance but I know exactly what you're talking about, Jason, where you just, somebody starts saying something and you just immediately start to feel uncomfortable. Like I have seen something like this before and it went really, really poorly. Or I just kind of know this is not going to work, but I don't know exactly how to put my finger on it and it's going to be really discouraging, unsatisfying to this person if I just say that's a bad idea. And I can't tell you why.
- [19:25]
Matt
It's. I do this with, I do this with customer feedback. I don't know if you guys do the same. Like I read so much of our customer feedback. Like every review, all the post purchase surveys, I just like to read them. And what you're describing, Jason, is like there's just an intuition that it's like you can read if I can read a thousand reviews and pick the four that matter. Right. And you just have a feeling like, oh, that's actually really insightful like what that one person said. The tricky part, the where I struggle is like how do you build this muscle in a company? Because like I, on one hand I think that it does come from years and years and years of experience. So like Jason, the thing you're describing is pattern matching. Like you just intuitively pattern match off of like you don't even, you can't even tell what you're matching off of. The computer in your head is just like we've seen this before, this is the conclusion we're getting to. It just can't demonstrate the formula that got you there. But then on the other hand there is like a natural, some people just naturally have it. Like I have people on my team who have incredible intuition, particularly when it comes to customer product, like all that stuff. But yet I still think that that statement, I feel is a dangerous thing to allow to be a regular way to lead conversations in a company. It's like all that to say, I still think that if you have a culture or you're like, you're finding that that is the way that people begin most of their arguments. Culturally, you have a, like, you have a leadership problem.
- [21:05]
Mike Beckham
But here's the issue with that, Matt. 50% of people are feelers and not thinkers.
- [21:11]
Matt
I know.
- [21:12]
Mike Beckham
And, and the vast majority of of women are feelers, not thinkers. And so Jason doesn't like feelers. Well, it's like get rid of those people. When you're a highly logic driven person, it's like everybody should work the way that I work. But it's like many people don't. And like you said, many of our customers don't work that way. And so this is, this is the, probably an example of where you have to have diversity. If I had a bunch of, you know, very logical androids running my company, we would just miss all kinds of things because primarily we sell to young moms. Like that's our demographic. And you know, what is not the guiding principle of all young moms is a purely logic based approach to life. Like it's one of the most emotion driven, in a good way, seasons of life, right? It's all about like protecting my kids and taking care of them and looking out for my family. And so, you know, running a brand, trying to sell to them where it's all about logic is going to be difficult. I don't know what the balance is here, but I do know that what you don't want is you don't want the loudest person in the room or the most emotional person in the room to be able to sway discussions simply by saying things like, I really feel like we should do this.
- [22:30]
Matt
I think. So what you're hitting on too, like as a consumer company, I think about this a decent amount, right. Which is what are the, like the reasons that people buy from us? So like, let's use hexclad. Hexclad, you sell right now primarily it's cookware, right? Lots of different types of cookware. Great product. We know that there's like a very like functional benefit to the product, right? So there's some amount of people that are like, I need to buy a pan, I need to cook things. So they're buying for like a problem solution reason. Then there is another portion of people who are buying from an identity perspective. Like I want the same cookware that Gordon has, or I want the same cookware that like some chef on Instagram has. I'm gonna buy cookware, but I'm gonna buy this one because like it's speaking to some portion of my identity. I think, Mike, what you're hitting on, on the like that intuition from and how you construct team. I think a lot of that gets driven by how much your product skews to function versus identity and how it shows up in the market. Because if you're a far more identity driven brand, then you're going to need more people that are attuned emotionally to customers that you're trying to serve than you would if you were a pure. Like you buy this product because like you're gonna buy this knee brace, because this knee brace fixes your knee pain. Like super functional problem solution. Not a lot of emotion required there outside of just scaring out of them and telling them how painful their life is.
- [24:09]
Mike Beckham
I think to, to your point, going back to this idea of hot dogs I've had, you know, we're 10 years into simple modern and I had a little bit of an epiphany. Epiphany is not the right word, but like a refocusing moment over the last month where I'm just like, you know, what I get really passionate about is driving value to customers.
- [24:29]
Jason
Oh yeah.
- [24:30]
Mike Beckham
And that is a very logic driven thought process. And I just don't want to play the kind of popularity trend game. And there are a lot of people in our industry playing that. I don't think I'm particularly good at it and I don't get particularly passionate about it. I get really excited about the idea that if I do my job well, I keep the money in the pockets of tens of millions of people and that I make their life better that way. And I know exactly how to do that right, using like the skills that I have and logic and things like that. And so there's a lot of different ways you could run a drinkware brand. And I'm just more and more, there's a lot of different ways we could run all the companies under our umbrella. And my kind of hot dog moment is like, we're just going to be about value. Like we're going to be about that. And there are going to be. Some people are like, that's not the coolest way to do it. Or maybe you could make more money, you could be more trendy if you did this or that. And it's like, I don't care, we're not doing that. We are going to be the company that when you buy something from us, you're like, this is amazing that I got this for this price. It's amazing. I got this level of quality, this level of taste, this level of style, this level of whatever, and I got it for this Price. And. And it's been amazingly clarifying that. Okay, so that helps. All my leaders know exactly what they need to do. It helps us know the kind of diversity that we need and don't need on our team. It. It helps me to understand how to be the best version of myself as a leader. And. And it plays to my strengths. And so I think these ideas kind of come together, Matt, that you have to, like, think about your organization and what your organization needs. And. And depending on the type of the way you're trying to be great and effective as an organization, you probably need a different balance of this stuff. But for us and what we're trying
- [26:20]
Matt
to do, it's interesting that you. You had to, like, re. I don't know if you guys. Jason, if you do this too, but, like, I find myself relearning the same lessons over and over again in my career, and it's like, it drives me nuts where I'm like, no, no, I know this. Why am I having to relearn this? And I think what it is is that, like, your context is constantly changing.
- [26:37]
Jason
Right?
- [26:37]
Matt
So, like, where you are today is very different from where you are five years ago or 10 years ago. Like, Mike, you're describing this, like, in the last month you've had this sort of like, re. Epiphany around the brand. I only know the simple, modern. Like, if somebody said, like, what's simple modern? And I. It's like, what makes it successful. I would say they figured out the value equation.
- [26:58]
Mike Beckham
Yeah, right.
- [26:59]
Matt
In drinkware. And they. I'll take a step inside of it.
- [27:03]
Mike Beckham
When I remember on an ad in our first year, it was like, style, quality, value. Like, that's what the ad said. That was it. And it's like, yeah, that's.
- [27:15]
Jason
That's it.
- [27:15]
Mike Beckham
That's what we do here. Style, quality, value. And it almost at. At points became pejorative inside of the organization of like, well, that's how a white label brand thinks or that's how, you know, whatever. And to some extent, I allowed the organization to drift to a mindset of how do we charge more for our products over, I think the last two or three years. And listen, we had an amazing couple of years in there. Our margins, our profitability, it was off the charts. And I think it just allowed me to take my focus off a little bit of how that's the thing that makes us great. And so like you said, Matt, from the outside, it's kind of obvious that that's what we do and what we should do. But internally we kind of drifted from it. And I have a theory about why, and I'd love to hear you guys take on this because I think this is really like if you're on Twitter, if you listen to the operators podcast, here's, here's my theory. My theory is that the single biggest pitfall that you can run into as a business owner is your own insecurity. That the more you listen, you read business books, the more you listen to podcasts, the more you look at what other people are doing, the more you see smart people that are running their businesses in smart ways. And you're like, well, we're not running our business in that way, but they are and they're being really successful. And so I should do that. And it's very difficult to have the kind of confidence and security in your identity that you're like, yeah, there's a bunch of other people doing a bunch. I mean, like, listen, I could not run hexcloud. I could not do what Jason and Danny have done. I couldn't do it. I don't have that skillset. I do not think I could build that business. And me being an effective leader is being able to look at that business and say, I deeply admire that business. But I'm not going to let the way that they run that business and that business is success warp my approach to running my business. Because we're just running different races. And I think that I consider myself a pretty self secure person. But even in me there's this tendency to like, look at all of these people that I admire that I'm friends with and the way they run their businesses and to feel like, man, I must be doing it wrong cause I'm not doing this thing that they're doing and it's going so well for them. And so another way of saying this is like businesses that are really good are good because they're differentiated, they're distinct, they have like real, they have moats, they have competitive advantages. By definition, to have a competitive advantage, to have a distinctive moat, you have to be an n of 1. Other people don't have what you have. And so everybody wants that. But what you don't realize is that means you're going to have to stand alone. 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. Aftercell has already generated over 1 billion in additional revenue for e commerce brands. Revenue that doesn't require more traffic or hire cac. So check out after sell and tell them that the operator sent you. You're going to have to run your business model different than all your competitors. And that actually takes some real confidence. Is kind of my.
- [30:58]
Jason
Well, there's also, you know, what's also people don't realize is like a lot of. You got to have a lot of good breaks go your way. You know, you got to have the vision like, you know, the original Panzerism. The harder you work, the luckier you get. Like you. But, but what that really means, that luck, that luck part, you know, you can't get lucky if you don't work hard and you can't get lucky if you don't have good strategy. But like it takes a lot of positive breaks to go a certain way, right. And you put yourself in a position for the, to, to capitalize on those things. And I think that's, that's been to me, you know, it starts with a great product, but everything else from there is like, okay, how do we capitalize and execute on everything and how do we continue to maintain our edge? Like one of the things.
- [31:54]
Matt
Do you think about positioning much at Hexclad, like where you position in the market and like the, what Mike is talking about, like what are the things that makes Hexclad particularly unique? Like what is your. I want to say competitive advantage. But it's. I think the problem with the statement competitive advantage is competitive advantage is typically like two or three things combined. It's not like one variable. Like, to me, the Hexclad competitive advantage is not just Gordon Ramsey. Right. There's like probably two other things that make you guys n of one. And I'm curious, Jason, like, is this a active and ongoing conversation at Hexclad or is it. No, we know what it is. We just keep the main thing. The main thing.
- [32:37]
Jason
Oh, it's a constant conversation. You know, it's like I, I have, I have this North Star. I'm, I'm actually, it's funny because we're talking about this right now with, with my presentation for, for our annual meeting.
- [32:53]
Mike Beckham
Right.
- [32:54]
Jason
But like my North Star is growing hexclad as fast as we can while maintaining best in class profit margins. That, and to do that we have to be not just a cookware company, but a best in class consumer brand. Those are the things that I'm constantly saying. I say it to everyone. They're probably bored of hearing me say it. I feel like I'm repeating myself all the time, but it just bears repeating. And so like we were texting this morning about product market fit. Like all these things, it's, you have to be looking ahead and watching your back and constantly thinking about how do we, how do we, for in our case, if, if we are just a cookware company, we are going to lose, I mean we're going to lose the game that we're trying to play, which is to be a, a premium enterprise value company and a best in class consumer brand. I've talked to investors, I've talked to private equity, I talk to the public guys, I talk to everyone. You know, and if people just think of Hexed as a cookware company, we are going to lose. We will make plenty of money, but we will lose the game that we're trying to play. The game that we're trying to play is be a premium enterprise value company. And if you look at SCB Group or any of these other like big guys in cookware, they trade at very low multiples, but that's not who we want to be. So we're always focusing on who do we want to be and what we want to be is different or better than where we are today.
- [34:26]
Mike Beckham
Yeah, I think the, the point that you're making, Jason, which is worth really emphasizing here, is that you think that business is one singular game. It's really like, it can be a thousand different games and every company is kind of playing its own particular game. There's some commonalities, but like the game that you guys play at hexclad is very different game than we're kind of playing at Simple Modern. There's similarities. Like, you know, you can't lose money or you go out of business, but like we're not trying to become public. And so like we don't think I, I, I shouldn't think about valuation basically at all in, in any of my decision making. And what's going to get me a multiple from investors because I don't want investors, you know, like, I literally do not want their money. And, and so like you, you just have to understand what game you're playing.
- [35:14]
Jason
But maximizing the value of your business is always a good, you know, like there's, like, there's.
- [35:21]
Mike Beckham
I guess what I'm saying is the way I'm gonna maximize my, my business value is through cash flows because of, I don't want outside investors, if that makes sense. So that makes the game that we're playing different.
- [35:30]
Jason
Yeah, like the game of like, how do I, how do I throw off the most cash is, is. I mean, that should, that should, yeah, but it should be part of the equation. You know, like, people love talking about valuation, right?
- [35:42]
Mike Beckham
Yeah.
- [35:42]
Jason
Valuation is driven by sales growth and profit margin. Like, that's what drives valuation. But cash profit actually should sort of be driven by the same thing over the long term because valuations should be the net present value of your future cash flows. Right. So we're kind of doing the same thing. They're just. But the, the goal may be different, but I think it's actually the same. There may be slightly more focus on, okay, like let's focus on generating, let's not sacrifice generating cash now to chase growth. And that's like, you know, there are a lot of companies out there that they spend more on marketing than we do. Right. They're, they're, they're much less efficient than we are on marketing and they're driving, they're driving sales growth. But so we could spend a lot more on. Grow a lot faster. We could, we could probably double our growth. We could have doubled our growth this year and halved our margins. Right. And ultimately we, we might wind up in the same operating profit position, but we, we choose not to do that as well. Like, we choose to say, okay, we're going to hold the line on a, on a certain margin. So I just don't think that what we're talking about, Mike, are all that different.
- [36:52]
Mike Beckham
Well, I think where it gets more different is like that there's all these qualitative. Like, to me, the money piece of it is like a piece of the business. But I'm also like, I'm trying to optimize for quality of life and I'm trying to optimize for impact. And so like how I make, like here's a good example. How do I think about sponsoring the thunder, for example? Is it a purely cash flow driven or is there also like a kind of community impact, like, you know, quality of life piece? And it's like, well, it's really all three. It checks all those boxes in some kind of different way. And so like I, I would think about that decision very. I, I might think about that decision Differently than you would think about the Yankees, for example.
- [37:33]
Jason
Yeah, there's the, you have the, there's this ability to kind of like, I call it the do fun stuff like factor. It's nice when, yeah, like when you're, when you have. No, when you don't report to anyone. Right. I mean you probably have to report to, to a lender, right? To some extent but, but like that's probably pretty easy for you to satisfy what you need to report to them.
- [37:55]
Mike Beckham
Like when you don't have any debt right now, guys. Oh, there's cash on the balance sheet, some no debt.
- [38:01]
Jason
That's awesome.
- [38:04]
Matt
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- [38:46]
Jason
it out when you have no one to, to report to and like, yeah, you get to do whatever the heck you want. I think that's awesome. I mean that's a, that's a, that's a nice place to be. We're in a different position where there are people of different state investors and owners in different stages of life who, you know, they have different, they have different requirements. It's, it's nice to be uncomplicated to the extent that you are Mike, and say like, we're going to run this thing, we're going to have a great time, we're going to have a great quality of life. We're going to make a community impact and then you get to run for governor of Oklahoma.
- [39:21]
Mike Beckham
No, the quality of life is that I don't have to run for governor of Oklahoma. That's, that's the great thing. I get to have influence without being a politician. That would be the best. So Matt, you had a really, I think compelling idea to talk about this idea of product market fit, which I think is such a great topic. And you shared, you shared some of the thoughts with us I'd love to talk about that.
- [39:44]
Matt
Yeah. Cause I think it actually ties into what you guys are hitting on. So, like, your ability to generate outsized financial returns comes from some ingredient, some combination of ingredients.
- [39:56]
Mike Beckham
Right.
- [39:57]
Matt
And the one I've been thinking about a lot lately is, is product market fit, and particularly how markets move.
- [40:03]
Mike Beckham
Right.
- [40:04]
Matt
So you could have the same product selling into a market. Right? A market being, say, a customer with a certain value proposition. Not purely like a market is in, it's a country, but that, that market can move. Right. Like the reasons that people buy things can move. And we've talked a lot about consumer sentiment. Where, where is the consumer going? So naturally to me, I just come back to product. I think, Jason, probably we share that. Like, it's like, what is my product? What are the attributes of that product? And then what are all the reasons that people buy it? And to me, it's all linked, like product market fit. This idea of, like, markets are more liquid and they move around a bit. We're an identity driven product and our competitive advantage is like a combination of things. But really what I'm getting at is like, how often should brands be thinking about the market they serve? How do you guys do this at your companies? Like, when you look at the products you have, rather than go develop new products, are you just looking for new ways to sell those products first? Or are you like, how does this work internally? Because this is a, this is a big question for me.
- [41:15]
Mike Beckham
I just wanted to find what we're talking about. Are you asking the question, how do you stay in product market fit?
- [41:20]
Matt
Yeah, like, how do you maintain it over time?
- [41:21]
Mike Beckham
Yeah, markets move. Kind of draw an analogy here. I've always said that, like, product market fit is kind of like being in love. It's like you just, you, you kind of know when you're in it, you know, like, it's just like, oh, man. Like, I just can't keep up. People just, you know, like I. People just want more and more of my stuff. And I'm like, you know the analogy of going from pushing the boulder up the hill to it going down the hill and you're chasing it. But I think the love analogy can kind of work because anybody who's been in a long term romantic relationship knows that you can fall in love, but it takes a lot of work to stay in love. And that if you don't, you just grow apart from somebody that you can feel a lot of affection for. And, and I think product market fits that way. Um, like, I'll Give a kind of an example with our market that getting product market fit is usually this. You said this earlier, Matt. It's this combination of I have some kind of a stew of two or three or four factors that creates this really valuable and unique offering in the market. And the customers are digging and sometimes I. Some of those pieces are kind of proprietary and other people can't have them. This is there. It's a cornered resource. Gordon's a good example. And there's one Gordon Ramsay. But usually for E Comm brands it's not. It's more. I've put together two or three things that yeah, other people could do it, but I've done a particular kind of pairing of things. Like, you know, other people make phone cases, other people make them toxin free, other people, you know, the things you guys do with Pl. But you've kind of found the right combination of things to kind of find product market fit. Well, if you study what markets do, markets are pretty efficient and when you come up with a good pairing of things. So for us with Simple Modern earlier, it was like understanding that style was really a piece. So that means the colors and the, the things we print on the bottles that the prices we offered it at, that, the quality level and the features that the lids have in the sales channels, we found a really good combo of those things that nobody was doing quite our thing. And because nobody was doing quite our thing, the market was like, yes, this is great and they bought it. But you know what happens when you come to market and you're successful doing that? Other people see that and other people are like, yeah, I think I'm going to do exactly what Pela is doing or I'm going to do exactly what Simple Modern is doing. And so you have other people kind of rush to market with very similar solutions. And this is where the. You can fall out of product market fit. Because if you're not continually evolving the unique combination of offering that you're presenting to the market, then you look up one day and you realize there's now four people doing exactly what you were doing and you're not that unique anymore and you don't have the same level of demand, the same level of, of product market fit. And we've really seen this. I mean, water bottles are such a commoditized industry and there's so many people selling them and anytime you do anything unique, people are going to see it. And like, as a really simple example of this, we were fairly early, I think, on the identification that like the best Market you can go after in water bottles is going to be women 25 to 45. And maybe like the clearest example of this is Stanley has been around for over a hundred years and they basically turned on a dime and went from a complete men's brand to a complete women's brand, like almost overnight because they just realized it was that much more lucrative. So this is where I think markets move around, Matt, to your point and why, if you're not evolving your offering, then you will fall out of product market fit. And you. And you can happen quite quickly with how competitive the market is today and how quickly it moves.
- [45:15]
Matt
Yeah. And I think that, Jason, to tie this back to like this whole valuation thing, we've talked a lot in the past about equality of revenue, like the quality of the company also as a driver of the multiple. Right. Like the current example is like Palantir has an insane valuation by most measures, except when you dive into it, it's like the quality of that revenue is pretty nuts. Like it's very unique. Like they're a one of one company. And I think, Jason, the. When I hear you talk about like your valuation is just a function of margin and growth rate, like how much profit do you generate and then how fast are you growing? I immediately start thinking of the things that make that happen, right. And that, that to me is like, that's a product market fit thing. That's a cultural relevance thing. That's a how long has the brand been around thing. Like there's all these variables that tie into it. Has Hexclad. Have you guys actually encountered competition in a way that has made you shift around how you put the brand in market?
- [46:19]
Jason
You know, we, we started with a superior product, right? And from the beginning there was a vision to be something, to have something around the brand, to have a brand cachet, not just based on the product. And it might have been something to do with the look and feel of the product, but was like xcloud should be the badass cookware brand. Like that's, that was kind of how it started. And then it evolved to, I think something even better, which was to be a best in class consumer brand, be a consumer brand, a best in class brand, not just be the badass cookware and basically building a brand. And we went through this exercise, you guys all remember, because we were all taught, you know, we're all working together, friends and chat and everything back then. When we kind of rebranded the company back in 2022 and we redid our website, this was like implementing the vision of how do we do it, how do we build the best in class, how do we build a brand around this great product? And, and then in 2023, we said, you know what, we need to be really heavily focused on creating great content. And we hired a great head of content who had a lot of experience in, you know, filming in film. And, and then Danny's great at this. You know, I've learned a lot about it. And we've like, we had this, this mission to be like a content machine. And everyone talks about content and ads, et cetera, but we, we really wanted to, you know, take it to the next level. And you're seeing it like, you're seeing it drop now. Actually, we started doing this in 2023 and talking about this, but I don't know if you guys saw the Open to Close series that we did, the Dre Gordon commercial. Like, all the content that we've put out in the last year and a half, I think has been. Has been like, really exceptional. So that's our. We just kind of look at the levers to build a great business and build a great, Build a great brand. And we're constantly reviewing what those levers are, and they're kind of the same. But you might shift focus on some. Like, some people say, oh, we got to grow. International growth is the key, or increasing brand awareness is the key, or new products is the key. And there's like this. I think it's an equation where the variables change or the, you know, the constants change in the equation to, to do that. So that's, that's just like the way we sit around and, and talk about it. It's like Danny Niles and I and a few other people at the company, like, that's, that's, that's the way we think about it.
- [49:06]
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- [49:51]
Mike Beckham
I think the way that you guys have used content, Jason, as a part of the unique product offering has been very, very cool. And it makes, you know, it's kind of, it's an example of how the digital world makes new things possible. You're pairing digital content with physical pans. You. In a way that has really worked very, very effectively.
- [50:15]
Jason
That it's us too. Like, that's not for everyone. It's just, it's just we, we, we've known this for years. Like you go on Instagram, you see like people's puppies, you see people's cars, you see them cooking or you see women in bikinis. Like, so, you know, we're very fortunate in that this is like a very, I always said this, we're in a very contentable vertical and we just like focused on executing it well.
- [50:41]
Matt
Yeah, we're looking at all of the ways that we position in the market and then what we're trying to do is like match up the ways that we position in the market to like, the things that we consider are giving us competitive advantage.
- [50:56]
Mike Beckham
Right.
- [50:56]
Matt
Like, Mike, the. Lots of people sell phone cases. Lots of people sell phone cases with lots of designs on them. Some of them are even going after like, they're coming after our sort of like sustainable toxin free messaging. But then we're the only ones that do it domestically. We're the only ones with like the kinds of negative working capital that we have available to us. So, like, what are all these things that give us competitive advantage that we then can leverage in the ways that we go to market? This is like a big question for us right now. So I, I appreciate the.
- [51:26]
Jason
And that's you being. But that's also you being a good operator and a good marketer. Like, you're talking about the toxin free side. Like, this is obviously a hot button, right? Yep. That everyone is on. And I think it's, it's a, it's a, it's great to jump on a hot button and work with it, but then it actually kind of becomes table stakes and then there's a new hot button. Totally. Right.
- [51:49]
Mike Beckham
Yeah, I think that's, I think that's what I'm saying is that it just, the bar just goes higher and higher over time. You know, being really effective at selling phone cases five years ago is totally different than being very effective today.
- [52:03]
Matt
Yeah.
- [52:03]
Mike Beckham
And it'll be an even higher bar five years from now.
- [52:06]
Matt
Yep.
- [52:06]
Jason
Every. Everybody loves this.
- [52:09]
Matt
Yeah, I know. My custom hexclad. Yeah, everybody loves it.
- [52:13]
Mike Beckham
Let's go.
- [52:14]
Matt
This is a fun conversation. I like, I like the tie in between company value and like, what are you building? How do you run the company? And then this thinking of, like, how is the company positioned? That's the products you sell and how they're positioned. I got a lot from this.
- [52:30]
Mike Beckham
Yeah. What's your takeaway, Jason?
- [52:34]
Jason
My takeaway is just that I continually do this podcast simply to learn from you guys. You know, I mean, I, I mean it. I gotta tell you, I find half this ecom stuff boring af, but I show up because I want to talk to you guys. And I like that we talked about more high level strategic thinking today because I think that's just super, super valuable. And so. Thank you, guys.
- [53:00]
Mike Beckham
Yeah, I think my big takeaway is just that business is so much about managing people and managing yourself. I mean, I just think the longer I do it, the more I realize that. And I really, I like the, I like the discussion that we had around how much do you lean on intuition? How, how fact driven do you make your teams? And that you, you know, depends on your business, depends on you as a leader. I, I think that's. That's really helpful. That's something I'm processing through right now, so. And I'm the same way, Jason, love learning from you guys. And I. And I really love that you guys have different businesses than me. I think that was kind of a point I was making earlier that it's fascinating learning from people that aren't situated exactly the same as you and to hear what they're learning. So. All right, guys, I think that's it. Matt, good luck with playing.
- [53:49]
Jason
Have fun. Thanks, boys.
- [53:50]
Matt
Yes, sir.
- [53:50]
Mike Beckham
Thanks for joining us, everybody. That is a wrap. Thank you to all of our sponsors that make the pod possible. We do this because we love talking with each other and we love sharing with you the things we're learning and we hope that they're helpful as you're building whatever it is that you're working on. Really. Operators as a whole exists to help make people empowered, to help them know what's possible, that they can just go and do things. You can actually build stuff. So we hope that you got something in today's episode that'll help you to build something amazing and we will see you next time.