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The Peel with Turner Novak
How a Hillbilly in Nevada Bootstrapped a $140M ARR Manufacturing Company | Jim Belosic, SendCutSend
01:32:17
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- [00:03]
A
Jim, welcome to the show.
- [00:05]
B
Hey, thanks for having me. This is awesome.
- [00:07]
A
So you're the founder and CEO of Send Cut Send. Some people might know about Send Cut Send. I feel like it's kind of like if you know, you know, type of situation, but so really quick for people who don't know what is SendCutsEnd?
- [00:20]
B
We are a on demand manufacturer. So what that means is people have an idea, they design it in cad, upload it to us and we make it and ship it to their door. So we specialize in sheet metal fabrication, cnc, machining, stuff like that. Metals mostly.
- [00:39]
A
Just curious, why is that so important? Because there's kind of like a lot of companies that maybe have existed that have kind of done this kind of like an older industry. But you started a company semi recently, you've grown really fast, gotten really big. Why is that so important?
- [00:53]
B
Yeah, I mean, yeah, sheet metal and machining has been around for forever, but it's traditionally really hard to get access
- [01:04]
A
to
- [01:07]
B
if you're, well, like Reno, Reno, Nevada for example. We're a pretty small town. I think we're like half a million people, something like that. But even though it's a small city, there's probably 10 sheet metal shops in town and they're all really busy and they're busy doing long run work. Meaning they're going to make a million units of something. Maybe they're making computer chassis and this one company is going to make those chassis for like five years and then they'll get another client and they'll make something else. Maybe there's sheet metal companies that specialize in H vac or something like that. So if you need something made and maybe a prototype or a small quantity or you want to iterate or whatever, a lot of those guys aren't really set up to take on that kind of work because they have to quote it, they have to get tooling, they have to order the special material or whatever and they're like, I don't want to take down my production line just to do one or two of something and then go back to production. And it's traditionally very, very low margin as well. So I'm a car guy, I'm a fabricator as a hobby. And so when I needed stuff made, I knocked on doors and no one wanted to help me. And so I was like, well, I'll just do it myself. I think we can set up a model that would allow this really cool manufacturing process to be easier to access for everybody. Turns out that's really hard but here we are.
- [02:43]
A
So essentially what you do is if somebody is making something and they just want one single metal piece made, traditionally, if you need to do that, that's very, very expensive and maybe time consuming. There's a lot of friction.
- [02:58]
B
I was going to say the price for one is usually the same price as 100.
- [03:03]
A
Oh, really?
- [03:04]
B
Well, it's because the old way of doing things, the quoting process, was so expensive, someone would have to fax over their drawing and then some dude would. A draftsman would lay it out and try and figure out how much material he's going to have and how much machine time it's going to be. And the quoting process sometimes took days or weeks, and then they go back and forth. So you put in so much effort up front, you need to make that back in quantity. You're hoping that the job is going to be $100,000, because you already spent hundreds or thousands of dollars just in quoting or getting the supply chain ready. So we tried to strip all that out because my background before this was in software. And I was like, oh, we're smart software guys. We can figure this out.
- [03:57]
A
To me, that's an interesting place to go. You were working on a car, you needed a custom part. You're like, I can't find it. I'm going to make it myself. And then somehow in there, you started a company. What was the process of that all happening?
- [04:12]
B
I was running a software company that I started and it was B2B SaaS, some sort of marketing software, whatever, heavily
- [04:21]
A
integrated with Facebook, email stuff, some fake email jobs.
- [04:24]
B
Some fake email job, dude. Yeah.
- [04:26]
A
So bad.
- [04:29]
B
And what sucks is like golden handcuffs, right? We were making good money. I wasn't particularly proud of running a fake email job, but I had always worked on cars or whatever. So you're making money, able to go on the weekends and go wrench on a car or something. But then the parts that I needed started to get more complex than I could produce in my own home shop. I had a bandsaw and, and hand tools and stuff like that. But when you needed something precision, I had to go to the guys with the big high dollar equipment. So my initial thought was, ooh, I really want to buy this expensive equipment. But the payment is going to be crazy and my wife is going to kill me. So maybe the best thing for me to do is get a few customers just so that I can, like offset the payment of this thing. I never set out for this thing to be large. I was just like, hey, if I can get 20 customers or something. I can keep the machine running, but then I get full access to the machine for free. So very humble beginnings. And then turns out those 20 customers really liked it and they told their friends and then kind of spiraled and
- [05:48]
A
how big is Sendcusten today? What are you. I saw public revenue number. I don't know how public you are about it, but. But what's like the current state of the business, the way you kind of talk about it.
- [05:59]
B
We're about 450 employees, maybe almost 300,000 square feet of factory under roof. So we have facilities in Nevada, Kentucky and Texas with a couple more facilities planned. Our revenue right now it's about 140 million a year, something like that. And yeah, just growing every day. We have staff I think 18 states right now. Over 150,000 customers. We started with just consumers guys in their garage and now we serve a big chunk of aerospace and defense and Fortune 500, Fortune 50 type stuff too.
- [06:47]
A
Yeah, I think I saw on the website, the number on the website is you serve 59.8% of that Fortune 500. So it's like, I think it's 299. Usually very specific. This is how many we serve.
- [06:58]
B
Yeah, well there's some weird ones in there too. There's some ones that are like, I'm like what are you guys doing with these parts? Maybe they just ordered a logo or something like that to put on their door. But there's some companies that I'm like how are we getting in there? But then you dig a little deeper and some of these companies have like R and D labs or you know, they're trying to get into hardware or something or they have a development arm or something like that. So it's kind of cool. We have no idea what we're going to make that day because being self serve people just upload stuff and then we are challenged to make it.
- [07:35]
A
Yeah, and so you have gotten really big fairly quickly. I'm assuming someone listening to this might assume like, oh, you probably raised a ton of money and bought a bunch of stuff and scaled up really quickly. What actually happened to get things kind of started initially?
- [07:53]
B
Yeah, I have a very loving wife. So when I wanted to start this I was like, okay, to start it. In order to do it right we have to have really good equipment. And at the time the laser that I wanted to buy was about $750,000.
- [08:09]
A
What is this laser? Can you just explain what this is for someone who might not know?
- [08:13]
B
Yeah, yeah. So a really good way to cut metal, or to cut sheet metal especially, is with high powered lasers. So you actually take all of this power we use maybe up to 12 kilowatts of power, and you focus it down to a point that's like the size of a period at the end of a sentence. So many households worth of power focused onto this little tiny point. And what it does is it vaporizes the metal, so it just turns it into dust, basically. And then we use nitrogen to blow the dust away so that it doesn't remelt and turn back to metal.
- [08:53]
A
Is this all in the laser or it's like a separate nitrogen blast?
- [08:57]
B
Yeah, no, the nitrogen is all tied into the laser and everything. So you're vaporizing the metal and then blowing it away. But you're doing it incredibly fast. So you can cut out a piece of metal, like the size of your desk in, I don't know, 20 seconds, 30 seconds, something like that. These things rip when you watch them. So the classification is it's called a fiber laser because it uses fiber optic cables to pump the beam to the actual laser head. So ultra high tech. The ones that we use are from a Japanese company called Omada, and they're awesome pieces of equipment, but very expensive. And the cool thing about Amada is they have their own bank because they're Japanese, and they do weird stuff like that.
- [09:45]
A
That checks out.
- [09:46]
B
Their whole bank, their whole finance arm is there to move machines. It's not there to get interest rates or do anything. They just. They're solely there to. To sell machines. So at the time, I think it was. It was like 5, 5, 5. It was 5% down for five years.
- [10:03]
A
At 5%, that was an insane deal for just, like a guy who is just buying big laser.
- [10:09]
B
Well, so at first they didn't want to sell it to me because they're like, all right, you know, let's talk about your sheet metal shop. You know, why are you upgrading to laser? And I was like, well, I don't really have a sheet metal shop. I'm just starting one.
- [10:20]
A
That maybe was a mistake. You should have just been like, oh, yeah, we got. We're just, you know, we got some customers to serve.
- [10:26]
B
No, well, no, that's. That's the cool part about their bank is they won't fund you until they actually have sales guys come out on site and look at your stuff, and they want to see if you're legit.
- [10:37]
A
Yeah. So what'd you do?
- [10:39]
B
Yeah, I mean, I think the SBA should do that or whatever. You know, I see people handing people over a ton of money without actually getting boots on the ground. So they send a salesman and he's like, you are a moron. You're a software guy with soft hands. You know, you don't know what you're doing. He's like, but I like you and I'm going to vouch for you. And he's like, you know, what if this thing all blows up? He's like, I don't give a shit. I'm going to come pick up the machine. It's £50,000. You can't move it. Like, I'll come get it if you don't make your payments. And I was like, this sounds like an awesome deal. So, yeah. So able to bootstrap it because of debt. And really, that's how we run. Getting financing on equipment is relatively easy because it's an asset and they know, hey, if you don't take, it's like getting a car loan, right? They'll come repo it. Same thing on equipment. Especially if it's over half a million dollars or whatever, it's pretty easy to get a loan.
- [11:39]
A
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- [13:56]
B
Well, that was where the software B2B SaaS, fake email job came in really handy.
- [14:02]
A
You were training for this moment.
- [14:04]
B
Yeah. So yeah, pushing that mouse, man. That's where my CTO and I, his name is Jacob Graham. We've done two businesses together. We met as neighbors. I think we've been doing stuff together for like 17 years. We realized that the pain point for doing all this type of manufacturing was the quoting. And it was what we call nesting, where we start with a sheet of material and you try and Tetris on as many parts on there as possible. It's like cutting cookies out of cookie dough. You don't want any wasted dough. You want them to fit really, really nice.
- [14:43]
A
So that's what most manufacturing companies are doing when they are making things. They're trying to reduce their waste and kind of like slippage or whatever. They're making cookies, basically.
- [14:53]
B
Yep. Yeah. They want to minimize time on machine. They want to maximize yield, minimize scrap. They want everything to go super efficiently and smooth. But it's really hard to do that manually. You know, it's hard to do that with dudes at a drawing board, you know, trying to figure it out. Or even if you have CAD moving stuff around, it's really challenging, time consuming. So our thesis, that, which I hate
- [15:20]
A
that word, but such an intellectual word of so sophisticated dude.
- [15:25]
B
I hear that so often now. It's like all these VCs are like, oh, I have this thesis. I'm like, what? Just say you have an idea or a hunter Your gut? I don't know.
- [15:35]
A
I mean, that's how you raise money, is you got to be. Have you ever heard the word legible to capital? Have you ever heard that phrase before? No. It's like a super intellectual phrase. It's like you need to make yourself legible to capital. Like, the people that fund these things, you need to be easy for them to identify. And you need to match a thesis. You need to be able to show up in an investment committee and say, oh, we've seen this before. It matches all the patterns. It matches the playbook. The numbers tie out, and it's legible to all the people sitting around the table who then cut the check and then they lend their. Their expertise.
- [16:16]
B
I hate that. Because, you know, I'm not a vc, obviously, but my understanding is like, you want to kind of make bets on outliers, but then everyone else is trying to pattern match and look exactly the same so that they can get backed or legible to capital or whatever. My motto is this, just you be you. And if they like you, that's great. If they don't like you, they should run away. And guess what? You just dodged a bullet. Um, that's how I met my wife. You know, I was just me. Every girl before that, I was like, oh, my God, you know, flowers and, you know, calling them probably too many times and, you know, being Mr. Nice Guy. And then with my wife, I was just like. She was visiting. She was going to school in North Carolina and she was visiting home for Christmas. And I was like, well, she's going back and she's way out of my league. She's a super smart girl going to Duke, and I'm just like a hillbilly from Nevada. So I was just super normal. And it turns out she totally loved me. So I was like, okay, that's easy. So that's how I treat an investor or whatever, too. Anyway. Oh, thesis. My idea.
- [17:27]
A
Your thesis going into this. Yeah.
- [17:30]
B
Was. You know what? I think with some software, we can solve the quoting thing. We can do instant quoting because we can take this geometry, run it through our algorithm, spit out a price that'll be kind of accurate. And then we can also use our software to nest things or Tetris them together so that we have very little waste. We can use software for scheduling and shipping and logistics and all this other stuff. So that's what we did. And we ended up taking this machine that is kind of a commodity and using it in a way that was very different than the way the industry Used it. So about six months later, after we had been running this machine, salesman came back and was like, hey, now that you guys have been running it, you're making a little money. I want to sell you this automation for it. I want to sell you this additional half million dollar thing that's going to help automatically load the metal and do all this cool stuff. And it's going to bring your beam time. The time that the laser beam is on, he's going to bring it up to 60%. And I was like, well, we're already doing 75%. He's like, no, that's impossible. We never see that. Usually shops are 30, 35. And we showed him all the numbers from the machine. He's like, holy shit, what are you guys doing? So from then on, we had a little more credit with them and we could buy more machines.
- [18:57]
A
Yeah. So the thing that you were doing was just the making the software to automate the quoting and automate the algorithm to plan out how you use the pieces.
- [19:08]
B
Yeah. Like I said, in a lot of manufacturing, people bias towards quantity because the setup is so challenging for us. If you remove the setup equation and it costs you nothing, then you can offer much lower quantities, lower prices, more accessibility. So oftentimes in a sheet of material, we could have 100 different customers in there. But you need software to be able to say, all right, there's 100 unique line items on here. Where do they go? Which customer is which? Is there additional processing that needs to happen? Because it's not just cutting, it's bending and countersinking and tapping and powder coating and PEM hardware and anodizing and all this other stuff that could happen as part of the manufacturing process.
- [19:59]
A
And I think if we're going to use the sophisticated words, there's different ways to think about this. This is capital intensive.
- [20:06]
B
Yeah. Oh, I learned that word.
- [20:08]
A
Yeah. You could have done a more capital efficient approach of this is a marketplace. Or you made this cool software, you could have sold it to other manufacturing companies. How did you think about, you know, you just, you said you run multiple plants now. Like you went all in on a certain strategy. How did you decide which way to go?
- [20:29]
B
I mean, honestly, that was our first choice was to sell the software. Like as we started to build it out, you know, we went back to those shops that told me no. And I was like, hey, we have this proof of concept. What do you think? It's this pretty cool software. And they immediately wrote us off as dumb software kids. And they were very dismissive and I was like, okay, fine, to do this right, I should probably get my own machine. What's funny is that same thing happens to me every single day now. I have so many people out of YC or whatever, and they're like, hey, you know what, Jim? You know what you really need is you need more software that's going to solve all your problems. And I was like, well, the problem that you guys are trying to solve shows me that you've never been in a shop before. You've never been in a factory, you've never been in manufacturing. They're like, everyone thinks that a little bit more software will solve manufacturing. And many times it's not that at all. It's like, I know nothing about restaurants, but it's like me driving by a restaurant and seeing a line out the door and then writing the restaurant owner and being like, hey, you know what you need? You need some software that's really going to help that line out the door. But if I had an experience in restaurants, I might actually realize, oh, you know what they need? They need more burners or they need more refrigeration or they need more staffing or something like that. It's seldom software that's really holding people back nowadays.
- [22:07]
A
It might be another location for that restaurant.
- [22:09]
B
Yeah, exactly, exactly. The software. Yes, it does help. But I think people are so used to the SaaS era, and they're like, okay, software solves software. If you're doing a software company, adding more software usually helps, but they're trying to apply that to hardware, and they're like, okay, in order to solve hardware, we'll just throw more software at it. And that's. It just shows that they're inexperienced. Well, it's weird. It's weird when you're in a vertical and manufacturing or something, there's not manufacturing clubs or manufacturing TV shows. When you go to a backyard barbecue, everyone's talking about sportsball and nascar, popular American pastimes. And I'm like, hey, anyone want to talk about supply chain? So, you know, I'm not super popular barbecues.
- [23:04]
A
It was kind of like dirty almost. Or it's like, maybe that's not the right word, but. Because I was thinking about this when I was picking up my coffee like an hour ago. Just sort of like the way, I don't know, America has evolved. Like, you think, okay, you don't want to do this physical hard job or your kids, you like, you don't want them to do. To be like a plumber and, you know, standing all day and hurting their back. You want them to have a cushy fake email job where they sit at a desk and it's easy. So we basically like guided society away from doing these harder things.
- [23:41]
B
Yeah, I think, I think, you know, as a parent, you want your kids to have a better life than you have. And I think a lot of boomers or whatever work their ass off and they saw this new thing, you know, called college and computers and they're like, ooh, air conditioning. That's the job I would want if I could. And everyone went into that and it was good for a while and now everyone's getting their ass handed to them with AI and stuff.
- [24:10]
A
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- [24:49]
B
Anyway, you were asking about bootstrapping and raising and capital intensive. Yeah, that is a term I learned
- [24:56]
A
because I feel like manufacturing is kind of like a somewhat Sexy category for VCs right now. least I see them talking about it quite a bit.
- [25:05]
B
Well, it is in 2026. Yeah. It was not in 2018, 2017 that everyone wanted capital light. They're like, hey Jim, you really need to sell the software. So many people told me that. And by that time I knew that more software was not the solution. And just as far as how the industry adopts software and everything, I knew that it wasn't going to work. So bootstrapped it for as long as I possibly could. I used a lot of personal money, personal guarantee, that's another thing that I learned. Personal guaranteed all kinds of crazy ass loans. And then my wife was like, oh shit, if something goes wrong, we're losing the house, we're losing everything. And to help us sleep at night a little bit, she was like, hey, maybe we should try and use someone else's money just in case.
- [25:59]
A
What a novel idea.
- [26:01]
B
Yeah. I was like, oh, okay. Well, that's the thing is I've driven through Silicon Valley, I guess, but I'm from Genoa Nevada, actually, it's a town of 400 people went to school in Minden, Nevada. Just 30,000 people. So all of my influences for business was agriculture, you know, blue collar stuff, you know, plumbing company, lumber company, whatever. And I knew that to run a business like you, you take a product, you sell it at a profit, and then you take that profit and put it into buying more product. You know, I always tell people that I, I run my business like a lemonade stand. I buy lemons for 50 cents, I sell it for a buck, and then I go buy more lemons. So that, that's how I thought businesses were run. You know, I, I have a high school education. I don't know anything about accounting and finance still. I kind of. I'm Lear. I learned about GAAP accounting a little bit. Holy shit. That's all made up too, by the way.
- [27:05]
A
It is. I will get. Hopefully my accountant's not listening to this, but I just look at my bank account and my accountant will do all this stuff and I don't even look at it. And then you owe a bill for quite a bit of money and you're like, what were we just doing here? This didn't even help me at all. I know how much money is in my bank. I get that you have to pay taxes and I do that. But it's like, this is kind of ridiculous.
- [27:31]
B
Yeah. Sorry to all the accountants out there, but yeah, I feel like accounting was invented to keep other accountants busy. Feel the same way about legal sometimes. I love my legal team, by the way. But anyway, I run my businesses very, very simply and the idea is to make money. So we had to be profitable very, very early. We had a couple months where I could self fund a little bit because it was me and two other guys. And then the other thing with the laser company that's really cool is sometimes you can delay that first payment for a little bit. So I think your first payment is due after you are done with training. And we just never did the training. So you just wait until the salesman comes by and he's like, dude, you guys gotta make a payment. So we could run like that for a little while. And then we were buying sheet metal, we were adding value to it and selling it and making a profit. So that allowed us to bootstrap for a while. But because it's capital intensive and you gotta have inventory, you gotta have more staff, you gotta have all this stuff in order to grow, it did make sense for us to take someone else's money. So shout out to Sandy Corey from Horizon, he knew me from the software company because he always tried to do his little VC thing with the software company. And I was making so much money, I was like, I don't need your money. I'm making plenty of money. So we had this relationship for a long time and then I called him and I was like, hey man, all right, I told you I didn't need you, but I need you now because I'm doing this weird manufacturing company. And he was like, no, no way. That's capital intensive. He said, call me in six months. And I told him. So I made a little chart and I was like, here's where we are, here's where we're at today, here's where we're going to be. And six months later I called him and I sent him the chart and I was like, hey man, look, I did what I said I was going to do. And he was like, oh shit, okay, you guys are awesome. So he backed us. It allowed me to sleep at night a little bit. It was very expensive money because we ended up like not deploying all of. Gave me just enough safety net though to really haul ass. So anyway, yeah, that was my first experience. But then that was in 2021 and that was the only thing. So I guess we call it pre seed or something as friends and family type round, I guess pretty small because
- [30:08]
A
it's almost, I think if you actually, if you calculate kind of like the cost of equity or the interest rate on that investment that you basically paid to the capital holder, the person who invested the capital as if it was a loan, the interest rate on venture backed equity is like three figures, right? It's pretty close to like 100% is basically a payday loan essentially for when it works out. Some of the times it can be pretty high interest rate, but to your point, sometimes it's the only capital. It's highly risk seeking if it's done correctly. And then also to your point, you probably would have done things differently if you didn't have that in the bank. Obviously you didn't touch it all, but it allowed you to take more risk. And that's kind of the point of
- [30:55]
B
it, a million percent. Because when I tell the story to close friends or whatever, they're like, oh my God, don't you wish you could go back in time and say no? And I'm like, hell no, hell no. It got me to where I am today. Like, yeah, it was expensive or whatever, but I don't have a time machine and I don't know, everything kind of builds on everything else. And having that money in the bank allowed me to take on more risk and to make riskier bets. Sorry, sorry, I'm playing. I made a banana
- [31:32]
A
just for this or you already had one, right?
- [31:34]
B
Oh yeah, lots of bananas.
- [31:39]
A
I think the interesting element of this too is let's say traditionally when you raise VC money, you saw about 20% of the company. It's just an even fair number. And let's say you only technically use the capital that was equivalent to 12.2% and it's like, would you go back and only sell 12.2% of the company so you got that extra 8%. Well, you don't know what that number is actually going to be really. And again it's like, hey, in a perfect world you would have loved to known. Exactly. And like sold a little bit of a lower number or whatever. But you know, the chances of this succeeding might have been lower. And it's like, it's really just optimizing the chances of success. Like you want to win, you want this thing to be successful and do what gets you there. Like that's the point.
- [32:24]
B
It could have all gone to zero, but it's doing great and I don't know, I'm really happy. Sandy's been an awesome partner this whole time. And Mark and the cool thing about the investors that we took on is they know nothing of manufacturing. So they have let me do whatever the hell I want to do. They're just like, whatever you say, Jim. We have no idea what you're doing over there, but you're doing a good job and it's been actually a really great relationship. And I would say that that's probably the ideal target for all investors is you want to make sure that if you're investing in someone, they are the subject matter expert, let them do what they do. And like I said, I'm bad at accounting and finance or whatever and usually investors are pretty smart on that kind of stuff. So they're good at what I suck at and vice versa.
- [33:20]
A
Yeah, and actually I, I do have, I have one question from Sandy. I'm just going to read it because I want to make sure we get on. It's probably a good, a good actually place to introduce this. So he said that your go to market execution is epic. Nobody in his industry has ever done anything like it. I'd be curious to hear how he thinks about the strategy of doing that. I don't know what you're going to say. I think I Have a little bit of an idea. But I'm just curious, like, you know, with Sandy's question, how did you guys think about just getting customers going to market? What did you do and what was so different than how people have done it?
- [33:51]
B
Thanks, Sandy. Sorry. That's another term that I hate is go to market. What does that even mean?
- [33:58]
A
It's sophistication. Yeah. You got to sound like you're intellectual and you've thought about this. You got to be legible to the capital holders.
- [34:07]
B
I think Sandy asked me that at one point. It was like, what's your go to market strategy? I'm like, what are you talking about? How are we getting customers? Or whatever our go to market strategy is. It's based on me. It's based on what I know, which is I'm not a great salesman. I don't know how to get into enterprise customers. I know nothing about talking to procurement departments or whatever. But what I do know is people in their garage trying to make stuff. Makers, fabricators, car guys, people doing model rockets and stuff like that. So what we did is just make sure that the product was really incredible, really easy to access, very, very fast. And then we just kind of showed off what people are making. And so, like, Instagram, we're like, hey, check out these parts that we made. How cool is that? Check out this robot that this guy made with our parts. What happens is all of these people that have hobbies, usually they have a day job, too. And usually the day job is just to support their hobby. So I like to think about all these people in the early days that were just using us for silly projects. We had a guy who was making an electric skateboard in his garage, and we made a bunch of parts for him. And he wrote in, he sent us some photos, and he's like, dude, check out how cool this thing is. I'm going to tell all the guys at work about you. We're like, cool, man. Yeah, whatever. If they can use us, that's great. It turns out that he works at a very large American electric car manufacturer. And now we have 400 and some engineers inside that company that use us. So just, I guess now it's called Bottoms Up.
- [35:57]
A
I guess Bottoms Up Adoption. Yeah.
- [36:00]
B
Yeah. Which I didn't know. It was just like, have a cool product, allow cool people to use it, do a little surprise and delight when they get the part. It should be better than they expect. It should be faster than they expect. We throw a piece of candy in there, they get a sticker if they tag us on Instagram, we spread the love. We send out gift cards and thank yous and hats and stuff like that. So it's just trying to be like a cool, friendly company. And if you do that for years and years and years, then it starts to snowball.
- [36:34]
A
Yeah, I think if we're going to continue poking the bear about the fancy words, I feel like someone might call this PLG product led growth. Right. Essentially what you did is there are people at these companies that started using the product individually and then they onboard the rest of the company. So even though they didn't even use it for work, it's like they. You were basically selling the product to the larger enterprise. You were just getting the individual to become the champion and bring the big American electric car manufacturer on board and sell the product internally.
- [37:08]
B
Yeah, there's soldiers on the inside. Your customers can sell for you better than you could ever hope to. So we put a big focus on that. Although it wasn't this brilliant strategy, we didn't sit in a boardroom and be like, oh, we're going to do product led growth. It was just, what do I want as a customer? Which is another part of our culture is we are our own customer. Almost, probably 50% or more of the people that work here use SendCut Send for their personal projects. We have a couple different slack channels where people just post everything they're making. You know, all employees get a really hefty discount. But using your own product, eating your own dog food, it helps make it better and better and better. So oftentimes, you know, when I order stuff, I'm always pissed that it took so long to get to my house, you know, or maybe, maybe a part wasn't high enough quality for me, or maybe the candy that I got was stale or something like that. So we're always trying to make it better. And if, if we make it better for ourselves, then we make it better for our customers and our customers are happy. And then they tell their friends.
- [38:24]
A
I think you have this concept called fun coupons I've heard you talk about. It's kind of like this whole giving people extra little fun incentives. They're fun coupons. What are they?
- [38:34]
B
Yeah, usually $100 bills. It could be other stuff, though. So what I've learned with fun coupons is not everyone is motivated the same way. Some people like cash, some people like pto. They're like, hey man, you want a day off? Do this thing for me and we can make that happen. Some people only need praise. So Finding out what people are motivated by is important. A lot of guys are motivated by whiskey, too. So a $70 bottle of whiskey has the same effect as $100 bills usually. And then a lot of the young kids don't know what to do with cash. They're like, can you Venmo me. Again? I hope no accountants are listening, but we recycle all of our scrap metal and scrap guys, for whatever reason, they love to pay in cash. I don't know what their business model is, but that's probably something I want to get into in the future is scrap recycling, because it's very cash and they always drive nice cars. I don't know what kind of seedy underbelly of the recycling world they're dealing with, but they give us cash. Most of it goes to the accounting department. But then we keep a little petty cash in our pockets so that if we see something outstanding or if we need to say thank you to a vendor or a FedEx driver or something like that, you pass out a phone coupon and it just kind of builds rapport and people appreciate it.
- [40:07]
A
Continuing this maybe topic about manufacturing, making manufacturing company one arguments when I have is like, there's no moat, right? Like I, as a, as a listener could just go and do exactly the same thing that you are doing and just sell it for a lower price. And that's how I compete against you. How have you kind of thought about that while building Sun Cut Send?
- [40:29]
B
It's a commodity, like the, you know, I'm buying steel, I'm buying aluminum. We pay commodity prices. Anyone can get it. Anyone can get the lasers and equipment that we have. We make modifications to them, you know, with a little bit of secret sauce to make them run a little bit better. But I don't think it's moat worthy. Our software was a moat.
- [40:50]
A
I was going to say another great word, the moat. This sophisticated investor word.
- [40:57]
B
I don't know if there's any moat anywhere because there's so many smart people that have figured out stuff. If you think you have a moat, you think that people being born today aren't going to be smarter or more driven or have more energy than you. It's going to happen again with us. Our moat is continuing to deliver and exceed expectations. And it really, it's speed. A lot of speed is probably the best moat that we have, because even if someone can sell it cheaper, if we can get it to them faster and they can complete their project faster, that's the most important thing. So speed, capacity, quality. I Don't know, Think about it like Chick Fil A. You know, Popeyes sells a chicken sandwich, McDonald's has a chicken sandwich or whatever. But people love Chick Fil A because it's high quality, it's consistent, maybe the locations are convenient. The drive thru is pretty fast, even though the line, line is long, whatever. So I don't know if that's a moat or not, but they're running a really good business so we try and do the same thing.
- [42:08]
A
Yeah, because I guess if I'm thinking through this, if I'm an overseas manufacturer and I just say I have a lower cost structure than send, cut send, so I'm just going to pass all the savings to the customer, maybe even more, half the price or whatever. But I'm across an ocean and so I have to figure out how to get things to American customers probably faster than you can. When someone is placing an order on your website, the software is just cutting this piece, I don't know, the same day, how fast does it go? And then you just ship it and it gets to their house in like a day or two. I don't know how long this all takes, but is that maybe like a fair way to kind of square this all up?
- [42:52]
B
Yeah, we have an option right now. It's called noon by noon. So order by noon, you can get it by noon the next day. So yeah, that's difficult with offshore to compete with. But internally we always run the teleport model where we're like, okay, let's say China could teleport and as soon as they put it into a box, it magically crosses that ocean and then gets delivered. So all of a sudden, yeah, there is no moat. Right. What does that look like with our business? And our answer to that is it's the entire experience. It has to be the look and feel of the product. It has to be the support before the sale, after the sale, during the sale or whatever. With manufacturing, the tough thing about manufacturing is DFM designed for manufacturability. So just because you can design something doesn't mean that it can be made. Especially to all of you people listening with 3D printers, just because you can 3D print something doesn't mean that it can be made on a CNC machine or injection molded or whatever. So you have to make compromises in your design or adjustments in your design in order for it to be manufactured. We invest a significant amount of resources into helping our customers understand how to make their design better, how to make it cheaper, how to make it Faster. And that's something that Offshore has challenges with, is on the support side. And just like the partnership side, I'm
- [44:30]
A
trying to think of, I'm putting myself in the mindset of someone who was trying to compete against you, I guess right now to kind of think through this topic because to your point about the, the teleportation thing, you could, I don't know, I think this is a little bit far fetched. But you know, with all these rocket, all this rocket technology launching, it's like, you know, I manufacture on the other side of the world rocket launches and delivers it in an hour or something. I don't know. Yes, I could actually see that happening maybe at some point. I feel like some people maybe accelerate the timelines a little bit on some of these, this adoption of new technology. But I could see us eventually maybe getting there. But yeah, then you get to the point of do they trust you? Do they feel like they're getting the best experience from you? That kind of level of excellence of you'll never let them down, the product will always work. They can just trust that you're going to get things on time and they're going to be high quality.
- [45:29]
B
I'm going to call it, instead of the teleport, we could call it the rocket ship scenario because that's actually way more realistic. So.
- [45:37]
A
Or drone, I guess there's like drone. But yeah, rockets. Rockets. Like the cross. The global.
- [45:42]
B
The icbm.
- [45:43]
A
Right. ICBM delivery. Oh my God. Hopefully not like the full ICBM experience. Just the launching part.
- [45:55]
B
I want submarine launched sheet metal parts landing anywhere within six hours. So if we run that scenario, let's say we know that that's coming because the cost to launch is dropping. So crazy. Maybe that is a threat. Well then the thing that we can do is continue to scale with scale. There's economies of scale and people say, oh, China has cheaper labor and they have, you know, cheaper equipment and cheaper commodities or whatever. Yes and no. I mean on really good equipment that's expensive in the US you can actually output more with really good labor that's making a good wage. They actually care more. They put more quality into it. They're looking for ways to improve the process. The big thing that American manufacturers need is scale. They need to be able to make sure that they have a robust supply chain where they're buying millions of pounds of raw materials. They have 24,7 operations. They're distributed geographically so that transit doesn't really impact their cost structure that much. So even if that moat completely goes away. I'm confident that we can compete not only on quality and service, but we can compete on price, too. And oftentimes we do. Today, you know, especially in larger quantities, like, we start to get really, really close with. With offshore stuff.
- [47:40]
A
And one thing I've. I've heard you talk about before is the way that you launch kind of new products and capabilities to customers. There's sort of this trend in, I don't know, tech, software, Twitter. You got this launch video, right? You're like, you make this video. There's a lot of fanfare on what you're doing. You announce it. I feel like you do not take that approach. What is your approach to the new products and kind of capabilities that you guys roll out to your customers?
- [48:07]
B
Yeah, we call it the Gaslight launch, where we say nothing, we just turn it on, and we wait for customers to discover it. You'll turn it on, and then for a day, nothing happens. Then the next day you get one order. A couple days later, you get five, whatever, and it starts to snowball from there. But what that does is it allows you to understand what the demand is. It allows you to start to learn where the process goes wrong or whatever. We test everything. We do test orders. We make a bunch of people in the company order stuff, and we beat it up like a soft opening. But everyone has a plan until they get punched in the mouth. So when you turn it on to the public, the public is endlessly creative, and they will find ways of breaking your stuff. So I think the worst thing that you can do is announce, hey, we have this new process. Go try it. Well, if 1,000 people decide to try it that same day, you might disappoint a lot of them when you only have capacity for like, 100. So the Gaslight launch is we turn it on, let it run, let it run, let it run. We get good, we iterate. And then our favorite thing is when a customer will write in and be like, oh, my God, you guys do welding now? I'm like, yeah, where have you been? We've been doing welding for months. Like, geez, man, I take offense that you don't even know that. And then once you're really good, once you're six months in, then you start telling people about it because you know your capacity, you know what goes right, you know what goes wrong, you know what kind of customers are going to be a good fit or not. So I don't know. It takes a more patient approach, but it works out really well for us.
- [49:54]
A
You can Control the customer experience then too. Because it sounds like really the biggest thing for you guys is that the customers trust you to do exactly what you say. So it sounds like that philosophy kind of rings true in this approach is like you make sure that you are only doing things that you know you can deliver on at the highest quality possible.
- [50:14]
B
Yeah, yeah. I'm just so nervous that one bad experience can cause a customer to go away for life. You know, I had a really bad experience at a Chili's once and I have never set foot in a Chili's again. So it's stupid. It was just the waitress. I can probably go back, but that kind of sticks with me. So I want to make sure if we say we're going to do something, we do it and we exceed expectations. So to do a big proper launch with a launch video and you're like, hey, today's the day we're live. Yeah. You don't know if you're going to get 10 people or 10,000. So yeah, roll it out slow. Figure it out as you go. I remember hearing stories of when they opened Disneyland for the first time. It was crazy hot ladies in high heels, their heels were melting into the new asphalt.
- [51:13]
A
Oh, what? No way.
- [51:15]
B
Yeah, they had this huge ass launch and they made some mistakes and the reviews from that first day launch were. Were pretty poor. So anyway, that's how I avoid those.
- [51:29]
A
Yeah. Oh, and you mentioned restaurants. I feel like you've talked about restaurants a couple times. I know that you said you've learned a lot of things from other businesses. Like you like going into another business and just seeing how it works and whether it's restaurant, whether it's manufacturing company or I don't know, car dealership, like a store.
- [51:52]
B
I don't know.
- [51:53]
A
I mean, so what have you kind of learned and borrowed from other industries and maybe like any memorable, most memorable things that you've maybe are not intuitive, that you've kind of borrowed for. Send, cut, send.
- [52:03]
B
Yeah, no, I'm endlessly curious about every business except for manufacturing. So I think you can know too much about something and then you won't do it. So I can tell you right now, knowing everything I know right now, I don't know if I would have started this business eight years ago because there's crazy challenges. But if you can leverage the Dunning Kruger effect and you're just like, that seems easy. You'll end up doing a lot of innovation. I don't like to learn too much about manufacturing, but I do love to learn about everything. Else. My wife went to yoga class and they had this really cool app to schedule the class and to make payment. And it was really smooth. The UI on it was really, really smooth. I was like, oh, man, I like that checkout sequence. Maybe we can borrow that. I went to a packaging trade show. This is all about jars and labels and cardboard. At least that's what I thought. It was actually about, like, cannabis and weed. It was about how to, like, package weed for weed people. But there was crazy stuff that we learned there. They had these, like, ultra high precision scales that had an API and stuff. I was like, oh, man, I can use those to count parts. They had this, like, vacuum packaging stuff that it was intended to keep the smell out, but it actually works really well to prevent parts from moving, you know, during shipment. So, yeah, the cannabis trade show was really good. Even though I don't do the weed. We've toured distribution places. Aero Electronics, we got a tour of their place and they used these really awesome carts that I didn't know existed, but I was like, oh, man, that would save us from carrying all this heavy stuff across the room or whatever.
- [54:03]
A
So what are the carts? These are automated or they design a certain way.
- [54:10]
B
Yeah, they're kind of modular, I guess, so you can put a bunch of different totes on them. And the totes are designed to go on the cart and it's super efficient, but then it's kind of organized. So when you go through the different stops, you can drop off the totes at the right area, and it limits how much that you're going to make mistakes. We use a modified version of it, we call it the train, which is just like a baggage cart that you see at an airport. And then we drive that through the facility to move parts around, because we got a quote once for $4 million in order to do conveyors, and I was like, there's no way in hell. So we went on Facebook Marketplace, and found this old aircraft tug and made it into our. Our $4 million conveyance. But, yeah, you can see stuff like that everywhere at the frozen yogurt place. The way that they market a new flavor or whatever, they're like, hey, tag us. Show us a photo of you eating this new flavor and tell your friends or whatever. It's just little stuff like that that I kind of pick up and I use what I think is best.
- [55:17]
A
Yeah. And I know you mentioned before that you think in order to run a manufacturing company, you cannot run it from a spreadsheet. You must be in the facility Walking the floor. Can you just explain that a little bit? Because there's some people that probably think it's just a math problem. It's just a spreadsheet. Doesn't seem that complicated. Why do you think you need to be in there? What do you get from going into the facility and just walking around?
- [55:47]
B
Yeah. So what's crazy now? You know, we have six buildings, so I can't be in all of them at the same time. But I have dashboards. My dashboards show me everything I need to know. And I'm like, oh, my gosh, why is, you know, bending so behind in Texas? Or how come powder coat has no work in Kentucky? When you walk the floor, you actually see what's going on. You're like, oh, the reason bending is so backed up in Texas is because one of the machines is down. Or Larry had to go to a family reunion and turns out three of the other operators are family and they're all gone. Or the reason there's no powder coating work in Kentucky is because we ran out of powder coat and no one said anything. So you can see it on a dashboard. But then you have to go investigate, you have to go do root cause. And usually you can figure that out all the time. One of the things that's kind of funny that happens is I watch almost all of our purchase requests and about once a week we'll get a request for more totes. We use those kind of TSA totes to move parts around, you know, like at the airport.
- [57:13]
A
Those little bins you stick through the TSA thing? Yep. Yeah.
- [57:16]
B
You put an order in it and goes through the process. And I get requests like, we need more totes. We need more totes. We're running out, we're so busy. And that kind of makes sense. But then when you look at it, it's actually, we don't need more totes, we need to process more orders. It usually turns out that we don't have enough staffing in shipping so that they can empty the tote and put it back to the front of the line. So it's hard to see on a spreadsheet. You can't see that kind of stuff. You have to walk the floor or you have to have really good leaders that are walking the floor and combining gut with data. Also, if you just have gut, that doesn't work either. You need data to back it up. It goes both ways.
- [58:03]
A
Yeah. So then what kind of things have you done then? As a manufacturing company, you have a history making software. Are there Other things where you've invested in building different things to give you more data or automate parts of the manufacturing process that maybe are not just the automatic quotes.
- [58:24]
B
Yeah. The physical side is. And that's where I see, like I said earlier, I get outreach almost daily from people that are like, hey, I've never been in your building, I've never been in manufacturing. But if you use this software, it's going to make your business better. As an outsider, you're not seeing where the actual bottlenecks are. For example, for machine monitoring, you know, we hook up systems to the machines so that we can understand exactly what their uptime is. You know, if they're, you know, how often they're in an error state, how often they're idle, you know, is the power on or not? Are they running? Is the spindle moving at the right speed? Is there vibration, is there, you know, what's the temperature of it, whatever. So we kind of strap on all these little monitors. You know, they're Arduino powered or whatever, but it gives us additional insight. So when you're walking through the building, you might be like, oh man, that, that sounds a little strange, or that smells a little strange. And then you can look at the data and be like, oh yeah, that thing hasn't been maintained in a while. You know, maybe that's the reason, or whatever. So use all your senses, plus data, you know, sight, smell, taste, whatever.
- [59:45]
A
Yeah. And you mentioned bottlenecks. So what are, in your experience, what are or have been some of the biggest bottlenecks of trying to build a manufacturing company and scaling it relatively quickly?
- [59:57]
B
It changes, it changes all the time. As soon as you solve one bottleneck, the next one pops up. So it's, you know, we're playing. Have you ever played the game Factorio? Do you know of Factorio?
- [60:09]
A
I know of it. I actually have not started playing it.
- [60:12]
B
Don't do it.
- [60:14]
A
Okay. When I play video games, I play them with my kids. So it's like Minecraft Roller Coaster Tycoon, we've been playing together lately, which is not quite factorio from everything I know, but it's a little bit of this simulation management thing.
- [60:30]
B
It's addictive, it'll steal days of your life. So I don't recommend anyone do it. But it's this game basically where you have to mine some ore and then turn the ore into metal and then take the metal and do something else. So it's kind of what we're doing. So as soon as you're like, oh man, I can't mine enough ore. And then you do more mining. Then you're like, oh shit, now I have too much ore and now I can't process it enough. So it's the same thing with us. If we can't ship fast enough, we add shipping staff, shipping technology, we try and innovate and streamline the process. Then all of a sudden it's like, well now shipping doesn't have enough work. Okay, let's go upstream from that. How come there's no work? Oh, we're waiting on powder coating. Okay, let's fix that. So not only does the bottleneck change every single day, it changes per location too. So all of our facilities have different bottlenecks and it also changes day to day because we don't just make our own parts for our own product, we make parts for everyone's product. We don't know if we're going to make a million parts in a day or if we're going to make 10. The bottlenecks are always changing. Very, very dynamic. Early on a big challenge for us was inventory.
- [61:54]
A
This is raw material inventory to have
- [61:56]
B
it on hand, raw material. So again my lack of accounting knowledge, I was like, oh man, I want as much material as I can possibly afford so that if we get a spike in orders we can handle it without disappointing people. Turns out that's really bad for cash flow. Apparently all that inventory is actually like millions of dollars that you could have deployed. So we had to get really smart on that. But you know, because we're quick turn and because we're self serve on demand, someone can place an order and wipe us out of a certain material or whatever. So we had to get really smart with that, get really smart with predicting. It gets easier and easier as time goes on because you can start to see seasonality or you can start to understand certain customers buying behaviors. Sometimes we know that they're going to order before they do.
- [62:55]
A
Oh really?
- [62:56]
B
Yeah. After years and years of collecting data, you can start to see patterns. And we're trying to get better with machine learning and stuff like that so we can get smarter. I'm hesitant to say AI because LLMs have no place in that. But good old machine learning helps a little bit.
- [63:17]
A
Yeah, and I feel like you kind of benefit from a little bit from maybe like the concept of like float or like cash conversion cycle where maybe this isn't true, maybe I'm making this up. But because an individual is just entering their credit card and making a payment, you get paid the cash immediately versus if this was kind of like an enterprise RFP order. There'd be like an invoice and negotiating and payment terms. So maybe you benefit a little bit from that to offset this tricky navigating the inventory investments. Or maybe that's not true. I don't know.
- [63:58]
B
We bank with JPMorgan Chase, and we have a great team over there. They love us. And I just heard that term three weeks ago. They're like, your cash conversion cycle is the fastest I've ever seen. And I was like, I don't know what that is, but awesome. Seems to be working for us. And it was exactly what you said. Like, we get paid immediately, and then we usually have to pay our vendors 60 to 90 days later, you know, 120 days if we can squeeze it. And yeah, that's what's allowed us to kind of grow without, you know, a ton of outside capital.
- [64:38]
A
Yeah, maybe if I was getting, like, super, you know, trying to dissect this, like, you may be like, tapped into that kind of. You. You pay your vendors as like a. More of a B2B payment and procurement process, but then you collect from your customers with this more of like, consumer, you know, pay on, pay on, like, order, pay on delivery, which again, like that, I don't know, sounds like 120 days of manufactured kind of float that you kind of made for yourself based off of just this, like, basically the software to give the customer this faster, more efficient experience where they're willing to pay you upfront because you've just made things easier for them.
- [65:16]
B
Yeah, we ran into that in the early days dealing with some of these very, very large companies, and they're like, we don't pay on credit card. We Pay on net 60 terms or whatever. And I was like, hey, man, our system is set up to take credit cards. I don't know what to tell you. Do you need the parts or not? And then turns out the engineers would go to procurement and be like, for the love of God, give us the parts. Of course, over time, that's changed. We've been able to support payment terms and whatever, But a good chunk of our business is that credit card instant payment stuff. So. Works really well. But yeah, the larger the company, the more weird their procurement cycle is. Or if they have to use Koopa or punch out or these EDI systems or whatever, it starts to get really crazy.
- [66:09]
A
Maybe slightly different topic. Maybe you've actually hit on this before. I'm not sure. But what do you think is the hardest part of running a manufacturing business? That someone who has not done it before would come across if me, if I'm just like, I'm going to start a manufacturing company. And Jim, you're like, sounds great Turner, but by the way, you are probably not thinking about this. This is the most difficult part that you should think about going into it.
- [66:37]
B
I think the hardest thing is doing many, many things at once. So we were lucky where we started just cutting sheet metal. And a lot of people told us that that was never going to work because the sheet metal fabrication industry actually needs 100 more steps to it. It needs to be bent, it needs to be painted, it needs to be passivated, whatever. And I was like, nope, I'm just going to cut it. Then we slowly added over time. So what I see now is people are like, I'm going to get into manufacturing, I'm going to build a factory, I'm going to try and make bicycles, for example. It's incredibly complex. You have to have the raw materials and the cutting of the tubes and the welding and then managing supply chain for gears and sprockets and pedals and then the tassels that go on the handlebar or whatever, all these different stages of assembly. Doing that all at once is really, really challenging and it's almost overwhelming. And the thing that people try and do today so like, well, I'm going to automate it all. And that's where things go really sideways because you can over automate. We're very sensitive about when to use dudes and when to use robots. And we put robots where robots make sense. But then just we have great people too that can adapt. Within seconds they can move all across the factory and, and be where they're needed to be. Whereas automation is very difficult to set up accurately the first time. So anyway, long way of saying like doing everything at once in manufacturing is hard, but it's kind of what you have to do unless you have the luxury of like a slow ramp. So if you could start with one very, very simple product and then scale up, you know, if I was going to make a humanoid robot, I would start with like just winding copper. I'm going to wind copper around an armature and then I'm going to take that and make it into an actuator and then maybe I'll make some of the PCBs or something like that and then I'll make the cameras or whatever. Over months and years before I had to do a whole humanoid. So people with much more ambition and smarts are doing the whole thing at once. But it's very, very hard.
- [69:06]
A
Yeah. So it sounds like, do the most simple thing and do it manually. And it seems like this is kind of the philosophy of a lot of the stuff you do is do simple things manually, get really good at them, and then you're able to kind of automate around the edges and kind of expand the scope of automation or the ambition of the automation that's happening.
- [69:32]
B
Yeah. And you just made me realize we were able to do that because we were mostly bootstrapped. We had no pressure on us to deploy capital or, hey, in 18 months you better have this factory humming and I want full on Humanoids coming out. And I think that's probably one of the bigger problems with Venture right now, is they're throwing a shit ton of money at people without a ton of experience. And the expectation is like, all right, you're going to figure this all out very, very quickly because we got to make our money back. And it takes longer than that and it takes a lot of partnerships. And oftentimes where you start and where you end are going to be different. You might start out to start making toasters and it turns out that you're actually just really good at the electrical components and you become an electrical component manufacturer instead of a toaster manufacturer. Whatever. The path is very winding and sometimes there's better opportunities, but if you're forced to do it all at the same time, you're going to have this shitty toaster factory that's putting out really garbage toasters and nothing works. And then everyone's money is lit on fire.
- [70:55]
A
Yeah, because I think when I put on my VC hat and you probably, I don't know, the darling right now is anthropic. And you just look at it and I don't know, it's the fastest growing company ever, whatever. I think they went from 1 billion in revenue to 30 billion in a couple months or something like a couple of quarters. Yeah, I'm sure the numbers are all different. But, but so an investor is like, that's what you have to do. Like they, they pattern match you to that. And they say this is what our expectations are. And you know, that may be completely unreasonable and impossible. And you know, meanwhile, the path that Anthropic went on was like not, it's not like they just flipped a switch and like that happened like it was a very long winding and they probably got lucky in some cases of like OpenAI was they were trying to do an ICO back in 2017. Right. I don't know if Anyone remembers they were trying to do like a crypto token launch thing to raise money. All these companies that we kind of are benchmarking everyone too, they also were not perfect from the early days. And there was an element of, of luck, maybe there's a lot of skill, but an element of like the environment. You got lucky in terms of things hitting and switching and, you know, really accomplished, really good team. Of course, that's what you're looking for. Really good product. You're. You like the elements of the market. But like a lot of these companies that really take off, like, you know, Nvidia back, I don't know, six years ago, no one was talking about Nvidia and AI. It was all about crypto and bitcoin mining. Right. But they were positioned for it. I think Jensen, he knew that what was happening with artificial intelligence, Nvidia was a cornerstone of that, but the market didn't really know that. So I don't know, I think it's maybe a long winded way of saying investors don't know as much as, you know, they like to pretend they know. And a lot of this stuff is just kind of like you got to be positioned to get lucky and then take advantage of the timing and the luck when it happens.
- [73:16]
B
Yeah, I agree. And I guess that's why, that's why I hear, you know, investors say sometimes they're backing the founders, you know, or they're backing the team more than they're actually backing the product. And that, that makes sense to me because if we've had to pivot and we've changed and we've added services that I never thought we would have. So being able to pivot, being flexible, being able to adapt, overcome whatever, that's probably the most important thing. Because the market changes. We're always worried about what's the next Black Swan event.
- [73:51]
A
What was Covid like? I'm assuming that was an eventful time for you guys.
- [73:56]
B
Yeah, Covid was actually really good for us. We were lucky. I remember I grabbed everyone and we all went out in the parking lot and like put our arms out. You know, we're like, okay, everyone, social distance. And I said, yeah, yeah. I was like, okay, we have like six weeks where, you know, we have, we have enough Runway to pay you guys for six weeks. So if we don't have a lot of orders, we'll just like do painting and we'll clean up the shop and we'll, we'll get ready for when the work comes back. And then like the next day we started making parts for, you know, hospitals and ventilators and sneeze guards and all that kind of stuff. So a lot of, a lot of other manufacturers, like, shut down during that period. You know, they were deemed as, you know, not necessary or whatever. But we kept running and came out of it stronger than ever. And that was a crazy time. We had so much demand and the supply chain was so screwed. Trying to get clear plastic to make a steez guard was damn near impossible. And if you'd call an aluminum vendor, all their salespeople were working from home and they'd never worked from home before. Everything was really sideways, but we got through it. But I'm glad that we had that experience in recent memory. And so we always kind of prepare for whatever the next one is going to be. So that being able to pivot and change and adapt is kind of in our blood, it's in our culture.
- [75:39]
A
Yeah. And I mean, thinking about pivoting, adapting on like an individual, like a labor level. I know there's like a lot of people that say we kind of have this skilled labor shortage in America. And like, even if we do bring back manufacturing, people don't even know how to, how to run some of these machines. How have you guys approached that? Because you need to hire people. I think you mentioned you have 350. 450.
- [76:02]
B
450, yeah. Again, that's where starting a company in a small town is a huge advantage. You don't think so at the time, but you know, okay, I'm buying these ultra high tech Japanese fiber lasers, million dollar machines and there's like, what, two guys in Reno, Nevada that already knew how to run them? Maybe, maybe one guy I knew that was unsustainable. So it forced us early on to kind of build our own training program. All right, we're going to learn about the maintenance, the operation, best practices. We're going to innovate our own best practices. And I didn't know it at the time, but we're trying to create an academy company. I want people to be able to learn a skill here and hopefully apply that skill long term and create a career out of it. But if they get poached away, I think, I think the biggest compliment I could have is someone's like, hey, I want to hire you. And I was looking at your resume and you worked at Sendcut Send. Oh, man, you must be amazing. We think about Pepsi a lot. I think Pepsi has created more CEOs than any other company in history.
- [77:23]
A
Really did not know that.
- [77:25]
B
Yeah. They have this crazy management leadership program that just generates awesome people and they end up going and being CEOs other places. So entrepreneurial spirit, that kind of stuff. So we do that everywhere, especially in CNC machining. CNC machining is an industry where you have to be an apprentice. You have to go through this whole journeyman type thing. To become a machinist takes years and years and years. And I knew that at the scale that I wanted to operate, there's no way that I could do that. There's just simply not enough machinists to hire, especially in my small town. If I was in Los Angeles or Chicago or something like that, then I probably would have taken a different approach. But instead of spending effort on trying to find skilled machinists, we decided to invest in creating skilled machinists over at our machine shop. I think our average age over there is like 26.2. And it's because we have a bunch of 45 year old guys like me skewing the metric. But yeah, we have 19 year old kids running multimillion dollar machines and they're doing it better than their peers that have been doing it for 20 years.
- [78:44]
A
Yeah, I think I saw a post. You had some of the previous experience of your newest hires is like donut shop worker, accountant, janitor, bartender, call center rep, a nurse, school custodian, graphic designer, AI data analyst. So it's like pretty much all over the place. Like how, how do you train people? Is it, do you do like an internal kind of apprenticeship program or did you like make coursework and like there's classes or like how do you, how do you teach these people how to run these machines? No.
- [79:17]
B
Yeah, it's very hands on. So we have designated trainers and we have programs, we have standard operating procedures, but those are kind of bullshit. No one actually looks at those. It's about like learn by doing. So my daughter just started going to Cal Poly San Luis Obispo and that school model is learned by doing and she's a business major. The first thing that they did, they're like, all right, you're going to create a business. Like go run it, let's figure this out. It's going to fail, it's going to work or it's not. So we take that same approach. Or like, hey, let's go touch and feel the machine. Let's feel like what a normal sound is, what's a bad sound, what's the safety, what's the maintenance? What does it look like when it's running good, when it's running bad. That's where we start. And then there's additional levels. It's like, all right, now you want to get advanced, let's dig into it. Let's dig into the electronics, let's dig into the programming of it. So there's always these steps forward. We do have a pretty sizable classroom and we'll do little sessions in there. If people want to learn something new, we'll do little breakout sessions on the floor. It's like, hey, we're going to have a little class on welding or something like that. But I don't know, we just don't know any different. And so it's kind of just became second nature for us to train people.
- [80:48]
A
Yeah, it's kind of a good point when you say she's majoring in business and the first thing is start a business. I went to school for accounting and finance and the first accounting class I took I was like, this is so confusing. This is all just so, there's just so many things going on. And then I did an accounting internship when I was like, oh, this all makes sense. Now I'm actually using this stuff. And I get it now because instead of just you sit in a classroom, you're reading a textbook. And I feel like even with my finance classes I was kind of like, you're learning all these rules about finance and stocks investing, whatever, versus I made this paper trading account where you get a fake million dollars and you buy some stocks and you watch them all go up or down. Like, oh shoot, there's this thing called a banking crisis. I think it was the Greek banking crisis. The banks in Greece were collapsing or something and like all my stocks are down like 20%. You really learn very quickly how to invest when you actually are thrown into it. And luckily it wasn't real money because you know, 19 year old kid, you buy some socks, you're going to make a lot of bad decisions. But, but I, I agree. We the, the just like the hands on, like going in there, like just do the thing. You're going to make mistakes, you're going to learn. That's really the best way to, to learn things.
- [82:13]
B
Well, they, they have a huge safety net. You know, they have leads and supervisors and managers and trainers and then their coworkers and you know, you know we have a no assholes policy. So the reason why we hire the donut shop person and someone who is working at Dollar Tree and someone who is a nurse or whatever or bartender, it's because they're friendly and they're just like, they're used to dealing with people. Customer service is kind of built into them. And so even if they're not talking to our customers, they're talking to their colleagues. And so oftentimes you'll find in skilled trades there's hesitation to share those skills. Like, well, if I teach this guy, what if he becomes better than me? I'm going to lose my job.
- [83:04]
A
Yeah. I mean, that's pretty scary.
- [83:07]
B
Yeah. So here we have none of that. Everyone's like, hey, I want you to be the best you possibly can be. Because there's just not that old school trades mentality of hiding the good tricks because you're going to have some leg up. Because we're just hiring people that are cool to begin with. I can't teach someone how to be cool or friendly, but I can teach them how to weld. I can teach them how to become a machinist. For sure.
- [83:38]
A
Yeah. One thing that I really, I like the kind of philosophy of how you think about things is when you're talking about the employees that work at the company, you think about it is like you're supporting their families. Really? Where like, you know, it's, it's not just, you know, you hired this guy, 28 years old, 32 years old, married, has some kids. It's basically like you're paying his mortgage, you're paying for the kids to play sports, the vehicle, like the vacations that they take. Like you're essentially supporting the entire well being. And it's not just this person that's being turned from a donut shop worker or a bartender into a machinist. You're really taking on them as a member of the extended family in a way. And I feel like not a lot of companies think that way.
- [84:23]
B
Yeah. The way that I rate how good I'm doing or how good the company is doing is based on what does our parking lot look like? Does everyone have a car, a decent car? Or is there a bunch of people taking the bus because they can't afford a car? Or is there a bunch of Corvettes out there or something? There's a few. How many sendcut Send babies are there? We keep track. We have little sendcut Send onesies that we send out to newborns. So I like to see that stack go down because people are like, hey, I have a good enough job to where I can have kids, I can start a family, whatever. That's really important to me. Selfishly, I think about, okay, let's say I'm on vacation In Mexico, I get abducted by the cartel. If I make a phone call, and I'm like, guys, like, how many dudes in a van are driving down from Reno to come, like, bust me out? You know? And I think. I think I have a few. I think there's. There's a couple van fulls of people that are going to come and to the rescue because I try and treat them right, and I think they would treat me right in return. So I don't like to think about it as a family because that gets all weird. And it's tough to hold people accountable when you treat them like family. But we definitely do more like the sports team analogy. It's like, hey, we're all high performers. We all want to win the Super Bowl. Let's all kick ass and do it.
- [86:07]
A
Yeah. Yeah. That's a good way to think about it. I saw that you hired a college ambassador at Florida Tech. I think you mentioned it. Maybe there's some other. So why hire College Ambassadors as a manufacturing company? I don't know. I'm trying to think, how does that compute? What's the point of doing that?
- [86:26]
B
We have the means to give back. I don't know if it generates any customers.
- [86:32]
A
Okay, so this is like a test. You're just trying this thing?
- [86:35]
B
Yeah. Oh, God. First of all, marketing attribution is the most bullshit thing in the world. It's all vibes. We throw money at a bunch of different stuff. If it feels right, then keep doing it. The reason we have College Ambassadors is because there's so many kids trying to learn stuff and do really cool stuff, like Formula Baja, Formula sae. College rocketry programs are incredible. Nowadays we sponsor concrete canoe teams. Are you familiar with that? Did your school have concrete canoe Canoes made of concrete? Canoes made out of concrete. So it's these engineering students. Usually they're like civil engineers or whatever. They have to develop cool concrete mixes, make a form, and at the end, they float them and race them.
- [87:27]
A
I didn't know you can make concrete float. I just assumed it sunk.
- [87:30]
B
Same as long as it displaces more water than the concrete weighs. I guess it works. But anyway, there's all these programs, seismology labs, mining labs, whatever. And these kids have great ideas, but sometimes they don't have access to actually getting the parts they need to do their experiments or whatever. Some colleges have machine shops or whatever, but they're usually backlogged or you don't have access. So I just want everyone to know, hey, we exist. Use this if you want? We sponsor all their efforts. All we ask in return is like, hey, send us some photos if you guys win a competition or something. Take a group photo. They never do because all these engineering kids are really shitty at marketing and advertising and customer service, but they're really good engineers. But I don't know, it just feels good. It's cool to see those projects. When I was in software, especially marketing, Facebook integration software, my kids had no idea what the hell I did all day. And in this company, especially with sponsorships and helping out college kids, you can kind of point to something. It's like, hey, our company made those parts for that rocket. Or see that go kart that these kids made. Look, those are our parts. That's kind of cool. So they know kind of what dad's doing, and it makes me happy. So the whole thing is probably just selfish.
- [89:06]
A
Yeah, okay, that's fair. Yes, you can vote, kids. My kids, there's definitely been times where they're like, oh, what does dad do? He's like, oh, he, like, eats bananas all day. Like, banana capital. Like, he just likes bananas. Like, that's what he does. It's like, ah, I try to. I try to like. But then when we play, we'll play games like roller coaster tycoon or something. I was like, oh, it's kind of like I. I invest in people starting businesses. Like you're starting a theme park. Like, I help give them money and then they make their business. And we've kind of done like a lemonade. We did a lemonade stand once. And by the way, as a kid, lemonade stand, highest margin. You have, like, 100% margins. Your parents buy everything, they help you for free, and you keep all the money. Best business ever. And so, yeah, it was like, you know, it's like I just help people run their lemonade stands. Like, I help people get lemonade stands going. And I do exactly what I just did for you. I give you the money and I help you for free.
- [90:00]
B
My dad did it differently for me. I had to pay him back for all the country time mix and the sugar in the cups. So I learned margin very, very early. Yeah, he was incredibly strict.
- [90:11]
A
Maybe I should make that tweak, because I'm teaching the kids that there's unlimited free money. I should.
- [90:16]
B
Oh, they're going to start watering it down, man. They're going to. All of a sudden, it's going to be like, almost clear lemonade. Because they're going to figure out how to stretch that margin.
- [90:25]
A
Yeah, we do. Do chores though, where it's like if you unload the dishwasher, I'll give you a dollar. Or if you clean the house, do this thing, we'll give you like five bucks. But again, maybe that's teaching them a job that you get paid for and not the running and managing of a business. Maybe we need to upgrade a little bit, but they're pretty young so we're just teaching the you do something, you get money. Like we will pay you to do a thing. Trying to create that habit young.
- [90:52]
B
Yeah, they have to spend that money back into the ecosystem though. It's like, hey, I'll pay a dollar to do the dishes, but a plate of dinner is 25 cents. That might get CPS called on you,
- [91:05]
A
but yeah, mine just buy stuffed animals. They've got 100 stuffed animals. Well, this was. This is a lot of fun.
- [91:14]
B
Yeah, this is super fun.
- [91:14]
A
Thanks for having me and thank you for listening. Thanks again to this episode's sponsors. Upgrade to flex with one of the two links in the description and get $1,000 after your first $10,000 of spend. Put your sales tax on autopilotumerl.com and for AI analytics, just ask Amplitude if you enjoy this conversation, please like comment, subscribe and share this episode with a friend who's thinking about starting a manufacturing company. Make sure to check out the back catalog of over 100 episodes with the founders of companies like Robinhood, Sweetgreen and Mercury. Tune in next week for my conversation with Ali Partovi at NEO on the importance of betting on outlier talent when investing at the earliest stage, how to identify it, and lessons from investing in the first rounds of Cursor and Kalshi. If you don't want to miss it, subscribe to my newsletter. The Split linked in the description to get each episode plus the transcripts emailed to you directly to your inbox every week. Thanks again for listening. See you next time.