Ecommerce Founder’s Guide to Owning Your Manufacturing & Factory

And welcome to The Operators Podcast. I'm here with Mike and Matt on our wonderful Wednesday as we do our podcast, and we're gonna talk about something that is very apparent. We had, I was in Miami last week, guys, and I had to rush back to do the podcast because I wanted to show, if you're watching this on video, that I have a manufacturing behind me and it's a big one, 280,000 square foot. And I wanna talk because one of the most common things that I'm asked, because I do have manufacturing in Mexico, is why did you do it in Mexico? Why do you manufacture your own product? Do you make more money because of it? Is it awesome? Is it a pain in the ass? How does it help you? Or are you an idiot for even trying it? I was in Miami with all these guys selling supplements and they have like teams of like 1, 2, or 3 people trying to sell their stuff. And I've got 1,400 people in my company. So we wanna talk through this so everyone out there that has a business from $1 to $100 million can decide if they wanna get involved in a larger vertically integrated type of a business. Now, oh God, man, I know, I know, man.

The answer is yes to everything. It's stupid. It's awesome. It's fast. It's just, yes.

Okay. So. Like I did it in Mexico, you did it in Canada. Tell me about why and when and a little bit about this, because I know no history of this.

Well, I mean, my, my perspective is I just, I'm clairvoyant. I knew AI was coming 8 years ago and I knew that it, I wanted to be high asset and low obsolescence. That's it. I'm a freaking genius.

[Sponsor Content] No, that's not it.

How many people do you have? Like how big of it is? Do you go into the, manufacturing every day. What do you do?

No, dude. So our headquarters and our facility are actually separate by about, I think, 8 miles. Um, so there's people going back and forth all the time. We opened like office first, manufacturing came, I think a year or two later. It was out of necessity. Uh, we just, our category has got like a SKU complexity and a planned obsolescence with phone models every year. So like the phone release cycle is brutal. Um, and that once we got into, once I got into the business, this is like where ignorance is not your best friend. I got into the business and started to realize just how bad everybody's balance sheet was in this industry with inventory and how like, this is how companies die. And that opening a factory became a, uh, an absolute, like, you have to do this. Like this is the only way this business works on paper. Uh, I've heard Mike say this before, we're like, if you can't make a business make sense in a, in a spreadsheet, it's probably not going to make sense in real life. Like, it just didn't make sense. I was watching like inventory grow. Apple would release a new phone model and new capacity, and you never knew which phone was going to sell well of all the ones they released. Same with Google, same with Samsung. So the whole thing was just such a mess in the backend that We didn't have a choice. And now we have a factory in Canada here where I live in Kelowna. Um, and then we have a new one in Mesa in Arizona. So 2 factories, uh, at this point. And that's just, you know, growth demand. Gotta, gotta fill it somehow. Um, but I think the cool thing is like, I think somewhere between like 80 and 90% of all of the product we ship now in North America is made here. And, uh, unlike a lot of companies, our resins are also American. So our supply chain is weirdly American. Like we, we don't get a lot of things from outside of the US.

Wow. I mean, the necessity thing is the, the thing that jumped out at me because everyone's like, hey, why did you create North America's largest leather bag manufacturing? Is because I was just stupid enough to do it. And when we went to suppliers with all my demands, no one wanted to give me everything I wanted. I wanted a few of these to test, but with the ability to scale, I wanted the best prices. I wanted them to treat me like the king. And they're like, hey, you're one of many. And we have no belief that you're actually going to grow. I was a guy in a garage calling people up saying, can you make for me? And they're saying, I remember being on my front lawn, walking around pretending I was bigger than I was to people to try to get them to do my this. So I started doing it out of necessity. And then I grew out of necessity. Mike, what do you do there in Oklahoma? Other than run Oklahoma.

Everywhere we turn right now, there is some world-changing AI announcement, and I think the trick for us operators is figuring out what's actually gonna help our business. Is this stuff saving us money? Is it helping us grow revenue? Is it helping us grow profit? Like, where's the fricking ROI? Jason, for Hexclad, tell everybody what is actually working for you guys. Yeah, look, I'm laser-like focused on implementing AI wherever we can to just make us more efficient.

[Sponsor Content] Fulfill has been huge for us. Like my team is constantly using Fulfill's new CLI tool and MCP features with Claude. They're now able to query Fulfill data. They, they can write code up dashboards. I mean, we get these awesome dashboards on operations and, and Fulfill continues to build things that are actually useful for brands. It's hard to see what kind of AI work is valuable.

And what isn't. Sure.

[Sponsor Content] Like there's so much out there, so much coming at us, but Fulfillix seems to be giving us things we can really use to get more efficient. Um, well, I, I do occasionally try and sell drinkware, uh, as well. The, uh, we really started to look at manufacturing. So we, we import our industry, as I've described before, is like 95% of it's made in a very small geographic area in China. And this is not uncommon. You have these kind of cottage industries where all of the world's supply of, like, we've talked about this before, Wuhan happened to have a ton of the world's supply of wedding dresses. And so when Wuhan got shut down, it was like you couldn't get a wedding dress. And this is the same deal with stainless steel insulated drinkware. So there, there really weren't options and that didn't bother us until COVID because during COVID you know, the supply chain was an absolute disaster. Shipping rates went through the roof and it was as much about reliably having access to your product as it was even about cost. So I think depending on the industry you're in, it, it can be a cost play to vertically integrate. But it's also like a risk mitigation that if you can't get your product, then your company dies that way. And believe it or not, that's how some companies have died, that they just weren't able to get their product for whatever reason. So we started looking at it in, I would say, 2020, uh, 2021, we made a major investment, probably on the order of $5 to $8 million. Happy to report, we probably set most of that on fire trying to, uh, figure out, I mean, um, Probably about a Miami townhouse worth of tuition paid in the manufacturing pursuit. And I think we learned a lot of the reasons along the way why it's difficult to manufacture in America. And it's kind of like when somebody comes to me with a business idea and says, I've got this idea, nobody's doing this. And I'm always like, well, probably a good reason. That, yeah, that means one of two things. It means that, you know, like you're just the smart guy that's the first one to have this idea, or there's a really good reason why nobody's doing it. And it's like, turns out with drinkware, there's some really good reasons why making stainless steel insulated drinkware in the United States is very hard. Um, so at this point, most of what we do is, I would call it secondary manufacturing. And this is, uh, I know Sean does some of this as well. This is all of the kind of ornamentation layer of our drinkware. We're laser engraving, we're UV printing, we're, uh, heat transfer, we're doing embroidery, uh, and all of that stuff really plays out well with customization, chasing orders, and different things. And so we've, we've learned a lot there. A lot of highs, a lot of lows. And I, I, I would liken— here's, here's the analogy I get. I would say building manufacturing is like building a two-sided marketplace. That it really can add enterprise value to your company if you're successful. It's just really freaking hard to do and you're probably more likely to fail than you are to succeed in it. And so for us, I think on the Simple Modern side, we haven't figured out how to do it yet, but the advances in robotics and technology make it very possible that it's something we'd look at again. And then we got into other things like electrolyte powder and stuff where vertically integrating would be, um, would be more tenable. And I think what we've learned over in that area is that whether or not you do it, it's very helpful in negotiating with suppliers. If you have a credible threat that you could do the thing, then it really changes the type of prices that they, they offer you and the type of automation that they're willing to do. And it, it kind of becomes their job to price their product and their offering in a way where it's just on the edge where it's not worth it for you to vertically integrate. And so that can be really helpful as well.

Mike, in, in the insulated steel drinkware, out of my own curiosity here, what makes it hard to make in the US? Is it labor? Is it materials? Like, is it all the inputs?

Is it—

[Sponsor Content] Steel is a highly political, uh, material. So in fact, even just this last week, um, there was some up— updates to the 301, Section 301 stuff. From the White House. You do still have some significant steel industry in America. I would say that China has been guilty of dumping, and so there have been points where they just made a ton and dumped it on the market. And so it's— they really do have access to lower-cost steel. That's a piece. But the overriding thing that you learn is that like we probably have, I don't know, 10 major ingredients, we'll say, like kind of, uh, pieces or, uh, different things we need. We need silicone, we need PP, we need powder coating, we need steel, we need, and, and then on top of that, it's probably a 30-step process to make these things. And so a really good example that we ran across, silicone, we use silicone in our stuff and it was like, well, Okay, we could buy it from China. Don't love that because we're doing a bunch of colors and, and still have this dependency on China. What if we made the silicon here? And we, we kind of pulled on that thread. What we learned was even if we bought a silicone injection machine and made the silicone here, we couldn't make it even, even if you didn't include the cost of machinery, we couldn't make it for what China was selling it for. And nobody really knows why that is. You know, obviously there's some kind of subsidization or something going on over there. And this is, this is kind of part of the reason why China has become such a juggernaut in manufacturing is that they have all these cottage industries and a lot of them are at prices that you just really cannot replicate in the US. And so one of the issues you have is it's like, well, I don't know that a lot of the cost saving isn't there. But then there's this other issue going on, which is if you can get 80% of your stuff reliably here, but 20% of it still has to come from China and you still have all of the dependencies, then how much are you ahead by making 80% of it here? So it's complicated is the short answer. And I think there's a, we're at a unique moment in time. I'd love to talk about this as the conversation goes on because I do think we're at a unique moment in time. With what's gonna happen with robotics where some of this stuff could change. But obviously China kind of won this era of manufacturing by and large, especially in, in kind of durables. [Sponsor Content] What's up operators? Welcome to the Richpanel ad read. Richpanel has been a sponsor for over 12 months. I've been a paying customer for over 12 months, and guess what? I just renewed to pay again for another year. We have cut our SaaS bill in half and automation dropped our cost per ticket by 70%. Our CSAT has also improved from 88%, which is still really good, to 96%. Best in class, all powered by Richpanel. I told them last year, hey, you guys need to do the same thing with returns, and now Richpanel has a returns portal. It's built to cut down your tickets and convert more refunds into exchanges. They do the heavy lifting, data imports, self-service, retention flows, team training, all of it, and it'll be live in 2 weeks. If you want to save 30% guaranteed on helpdesk and now returns, Book a demo.

There is something called China math, and I saw Matt, your eyes just like go, what? How can we do everything like this and they can still beat us on price? There is something weird and you can call it subsidization. You can call it whatever you want, but it's expensive to have labor in China. It's expensive to ship things into China. It's expensive. I'm really lean and some things they can just make astronomically cheaper than we are. And I'm like, how can you possibly do that? And I don't know, but I would say this, there are such problems in manufacturing in the United States. And part of it is our attitude. I believe that you set something up and then you manufacture. And theirs is they make all their money on manufacturing. right? They're gonna make it and they gotta have a margin somehow. They gotta make some money. So they're always trying to get better penny by penny, dollar by dollar. In US, we set up manufacturing. We're like, hey, that's pretty good. Like we can make that thing for $20. Let's kick that in for a couple years. I heard Mike on the Operator's Podcast one time say about every year he goes back to China, they have new machines doing new processes, making it more efficient. Is that right, Mike?

[Sponsor Content] Yeah, the, uh, I'm, I'm gonna pull up this stat, uh, but if you look at robotics installed worldwide, it's fairly shocking because, uh, China, I think that the perception for a long time is that China and some of these developing economies, what they did is they threw people at the problem. And, and maybe that was true for an era, but what's true today with China is that They're throwing robotics at the problem. And so what, what is kind of a narrative violation and also should give people, should wake people up, is that China is installing robotics. I, I will pull the stat, but I believe they installed about as much robotics as the rest of the world combined last year. And so they clearly have a vision for the future and that it's going to be robotics-driven. So, early on, there's a great book, we've referenced it on here before, uh, go and buy it if you haven't read it, called Apple in China. And it talks about how Apple as a company helped China to develop into the manufacturing superpower, because they certainly weren't when Apple started making their things there. Um, but the thing that I think you can't— listen, game recognizes game, and China didn't have a great hand 30 years ago, and they have maximized that hand. And even if our countries are somewhat adversarial and there's some ways that they do things that I don't agree with. As an operator, I look at it and I'm like, it's pretty amazing. Like you were basically, all you had was cheap labor to throw at things and you have worked your way up the value stack. And so like, yes, like when I go over there, what I see is almost fully automated production at this point. And it's impressive. And I think that my personal view on the technology side is what makes this moment in AI so interesting is not the software. If you're, I mean, if you're in consumer goods and you think the most interesting thing about AI is the software and the ad creation, I disagree. I think the most exciting idea is that when the robotics and the AI come together, like fulfillment is gonna totally change. Manufacturing's gonna totally change. Product development's gonna totally change. And my sense is we're probably a year or two out from that. And that there's gonna be fortunes made.

And yeah, the beginning of the change is like within the next 24 months.

[Sponsor Content] Yeah. You look at like Brett Adcock and some of the, the videos he's posting, you know, with just the robotics is clearly getting really, really good. And then imagine dropping the latest version of Claude, the latest version of ChatGPT inside of it where it's basically like a genius and it has access to the physical world. And then you're like, okay, now I'm going to turn you loose and figuring out the most efficient way to make this bottle and you can go through a million iterations. And it's like, oh yeah, like that's believable. And I think that that's where we're headed in short order.

I think though, like, and I've listened to Curtis talk about this with Portland Leather, that if you're gonna get into manufacturing, you need to get comfortable getting really into it. And that is, you also need to understand all of the inputs. You have to be comfortable going very deep in the supply chain because there is a fragility to it, which Mike just called out. Like, We know every input in our business, uh, and we build direct relationships with all those people and we're looking for secondary and third backups. Like we're, it, making things isn't just a, like, I'm going to buy some machines and I'm going to do the finished good. If you're going to do it, I think you kind of have to look at like how China, how does China do this so well? The one thing that I would caution people on is the political and monetary system that China has. Like, they are fully aligned as a nation. And that's where this whole idea of like subsidizing, even if it's like, don't take that literally, that word is not a literal word. It's that like the entire system is built to support this set of objectives and it's dictated. It's like, no, manufacturing's important. Everything will be set up for you. Like the banks will be friendlier, the labor will be cheap, we'll provide everything. We'll give you cheaper real estate, cheaper power. We will just like set the whole system up to allow you to succeed in this one thing. And in the USA, it's a free market. The whole system doesn't give a shit. It is like chasing the most efficient turning of a dollar, right? And that may not mean that it's good to make things here.

You know, I, I, I often think that, uh, I'm, I'm proud of our manufacturing. Like I, there's nothing I like doing better than bringing people in. And what you see behind me is a very small portion of it. It is enormous, right? So I bring 'em into one little door and then you go and you go to bigger and bigger. It's like Willy Wonka. People love it, right? And I'm so proud of it. But it's a pain in the ass. It really, really is. And I think we can match China with what we do in our manufacturing in terms of price, but China will not get beat. They will actually go out and now they're using Bangladesh and Cambodia and other labor because their labor is higher. And here's the materials and here's our sourcing. And they thought that. Well, now they need to beat us, so they go out and they own the factories in these other countries where they're paying a couple hundred dollars a month for labor rather than what we pay, which is a lot, lot more, right? So they live and die on manufacturing. They've gotta make it work. So they're going to figure out a way years in advance to put the time and the money in order to do that. And I don't think of China as adversarial, although I, it is. I, I understand that. Uh, but they're all into manufacturing. I'm in León, Mexico, and if you wanna know manufacturing gone wrong, they've been doing it for 50 years. And what they do here is they work with the United States and somebody from the United States comes in and says, will you make our product for us? And they say, yes, we will. And all of a sudden, They, they're building it up. They're building it up. And then demand goes down in the US and they stop buying. And what happens is that business goes out of business. Like they, they just get killed. Uh, there's a company, I'll just say it out loud, Fry Boots. Fry Boots is a 100-year-old company, right? They have twice went bankrupt here and take millions of dollars from the people down here, just crushed. And then they come back 3 months later and said, Hey, guess what? We sold to somebody else. We're still Fry Boots, but now we want you to make again. We're not going to pay you back the $4 million that we owe you, right? So the manufacturing here doesn't have the support of the government. They don't have all of these windfalls. They're just people trying to make things. They're not as good and they're not efficient. So I had to come in with my entrepreneur mindset and say, how do I stabilize this manufacturing so that I have the right product to sell at the right time. 'Cause as a, as an entrepreneur and a marketing guy, that's all I care. Give me the right product at the right price at the right time.

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Oh, I think I can talk about myself. I usually don't, but thank you so much, buddy. I appreciate that.

No challenge accepted, Mike. Challenge accepted.

How dumb I am is I had my own manufacturing before I knew the word vertically integrated, right? Like I had no I started making in a garage. So then we moved to manufacturing in Portland and it was just like, I need product to sell this weekend. I need it today. I need it right now. When we came to Lyon, we were blown away at what was going on. We, I knew problems were coming in 2018, '19 in somewhere in the supply chain. I knew we were growing so fast. I had to break free. But I didn't know what it was. So I spent a lot of time in Lyon setting up the potential for manufacturing and all of a sudden COVID hit, right? And we had just started setting up the foundations. So we got 1,000 square meters, 10,000 square foot, just a little, little place, 10,000 square foot, 5 machines in the corner. And we just started to build and build and build. And now as somebody, and, and I know we're talking on Operators Podcast to people who do a million to $10 million. And they're like, well, I need to make a decision of what I do here. I didn't make a decision. The decisions made me go all in and say, if I wanna win this game, how do I do this? And I'm gonna make manufacturing the right decision. I didn't start manufacturing and question it every week. Like, does that make sense? I don't like say, oh, maybe I shouldn't have done this. I say, how can I beat people? And we go in. So we got the materials. I have 5 million square feet of leather in my facilities right here. 5 million square feet. That's a crazy amount. And the reason I have that is I learned that it doesn't matter if I can make a product fast. I have to make the right product in the right leather and the right color, right? So I can't just paint it like you do on, on a mug, right? You, you have to actually have that leather. I became where I was able to take my marketing in the United States, Mike, and they became this pull system. They're just always saying more, more of this, more of this. And I found myself spending 80, 90% of my time in Mexico feeding the beast of marketing, right? Like they just want that product and the numbers cycle on everybody. We have a product right now that we projected we would sell 100,000 of that bag for this year, right? And after January, it was, we are gonna sell about 100,000 of that bag. And after February, we are gonna sell 100,000 of that bag. We did a TikTok. We started doing $100,000 a day on TikTok. And guess what? They all sold the same bag. Now we're projected to sell 500,000 of that bag.

That's the advantage, Mike. That's the enterprise value. It's that Curtis, Curtis can follow the consumer demand and in, in a traditional supply chain, you are trying to predict it. So like, Mike, in your case, uh, Simple Modern has long lead time abilities to project volumes because you're working with Target and Amazon and they're buying and they're like, you're probably planning out, I mean, I'm gonna guess like 12 months. Something like that, right? Whereas in D2C, the reason that owned manufacturing can be valuable is what Curtis is saying, where it's like, I, you never really know what the consumer's gonna want one month to the next. The Oscars can show up and completely change fashion. The, the, somebody could drop, like one of the Kardashians can say, this color is the new color. And if you, there's no way you knew that was coming. Like Curtis wouldn't know that all of a sudden his most popular color bag is because, you know, Kim decided that gray is going to be 2026's color. Like, that's the issue with a lot of categories. That's the same issue that Pela has. We're trend followers. I'm not so big that I make them, right? And the preferences are where the demand is. And then funny enough, it's how algorithms work. Like what Curtis is describing, this is why like it's so smart that you do this, Curtis. It's like Meta and TikTok are just gonna satisfy what the consumer wants. That's just AI. If we've all used these chats, like they're really good at telling us that we're awesome. So like these AI things are just gonna say it straight up, like, this is what's popular. How do I serve more to it? Curtis, you could just supply it. And a traditional supply chain could not. They'd be 4 months waiting.

[Sponsor Content] Well, I was just gonna make one distinction, which I think is important, which is that whether or not you use molds in your business is a big deal for two reasons. One is that 80, 90% of the world, the world's molds are made in China. And so like, if you need tooling, you're gonna have to go through China and tooling just takes a while. It's just like a multi-month process to get a good tool made and functioning properly. So Curtis can stockpile leather. And then be like, hey, I can have that leather sewn differently next Tuesday if I want to. I mean, we have to design it, but he has more flexibility. Whereas with me, if I want to change a lid, it's like, well, it's 3 to 4 months minimum, you know? And it's like, I've gotta get a tool made and then I've gotta ship it, you know, from China to here. And so that was one of the things that we ran into is that if you have a business that requires molds to make a thing, then it has to be a product that's just not changing at all. You can't be— it's really the opposite of what you're saying, Matt, which is you can't be trend-based at all. And unfortunately, hydration is more trend-based because if there's any amount of changes, then it kind of cooks you when you're using molds. Now, when you're doing, I think, consumables, when you're— that have ingredients that can be mixed differently, and when you have soft goods, I think that there's more opportunity to do exactly what you're saying and fast following. That's another way you can unlock value. I, I think what we're getting to is that there's several different ways you can unlock value here, and one of them is that you make your business more valuable by de-risking having all this exposure to other governments and other countries. One way is that you can unlock better economics potentially by being vertically integrated. One of them is that you can fast follow demand more quickly and stay in stock when other people can't. But the, the main thing I'd want people to hear from me is that I think making good decisions here is highly contingent on understanding your product category. And that was probably where I misstepped, is that I was, I didn't understand that my category was still moving around so much that it was gonna be hard to be like, we're just gonna make a gazillion of this one thing. And it's like, well, if the market doesn't move at all, that would've worked great, but it did. And so it was not as effective as I'd hoped.

The, I mean, Curtis, I don't know if you've done this, but like 5 million square feet is 87 football fields.

[Sponsor Content] Yeah.

Right?

It's like, it's almost the size of the Pentagon.

Yeah. Do it hide by hide by like how much that is. No, it's, if, if you actually, I, what we use in leather in a year, I figured it out with AI one time. If you take a semi-truck full of leather and take the entire truck and turn it up like this, it would be like 56 Empire States tall of trucks full of leather. Like it's literally crazy amounts of leather, right? So it is a commodity that we use. And it's something that gets thrown away. I want everyone to know that, like, this leather gets thrown away if you don't make it into something. Now, the one thing I do wanna, 'cause I love the thing, the reason I was a big fan of The Operators Podcast before I ever started coming on here, and I'd watch it, and I'm looking for those one or two things that really, really help me. And the one thing I wanna tell everybody watching is I did not start manufacturing, think I was gonna build this. I wanted product for 3 or 6 months in the future, and I wanted to solidify. I was making quarterly and yearly decisions, not 5 and 10-year decisions, right? There's no way that I, I did this. The neat thing is in Mexico, it's very modular, like Legos. You actually have a warehouse, and when you're done with that one, you knock a hole in the wall and you have a warehouse next door, and then the next one, and you just build on as you're building. So we started as a small one. And then you just start knocking out walls and building and creating something bigger. Because I don't want anyone to think I have to decide, do I go to China or do I manufacture?

[Sponsor Content] Do I build a million square feet and do it here? I, Curtis, I could not agree more. And I think very practically, if you're gonna take on manufacturing, you should absolutely try and view it like starting a business. How do I How do I break this down into atomic components to the maximum extent possible? And how do I try and prove out positive unit economics with the minimum amount of investment possible? And like, it's especially in our case, the fact that we had capital worked against us, because it's like, we can go and buy $5 million worth of equipment and this kind of grand opening of this huge facility. We should have never done that. It should have been like, how do we invest $100,000 and prove out a piece of the concept? And then if that works, we go to $200,000 and that we just incrementally build on top of that.

That's what we did.

[Sponsor Content] It, yeah, it's like, this is just how good operators think.

Yeah, we bought, we bought like a used injection molding machine.

Yes.

[Sponsor Content] You know, uh, exactly.

I think it was like 90 grand.

[Sponsor Content] It, well, it just should be like, as another example, we were like, well, we don't want to have dependency on China. So we bought an Aoki, which is this like kind of Rolls-Royce injection machine, this huge injection machine, but they're 3 times more expensive than China and we bought something new. So we bought the Rolls-Royce that's 3 times more expensive than the Chinese version and we bought it new. If we had bought a used Chinese version, we literally could have gotten it for 10% of the price. And if I could go back, I would, first I would shake myself, but then I would be like, listen, you know, like start small, prove it out. And then as you prove it out, continue to lean in with capital. And so that would be my argument for anybody considering this is like, you should try it, but just make yourself prove out the concept along the way because the way you really get into trouble here is where you commit to a big facility. And then you realize one year into the lease, uh-oh, we don't need all this space. You buy a million-dollar machine and you realize, uh-oh, this isn't the machine we needed, and there's not really a great resale market or whatever. It's these kind of mistakes. If you're scaling an e-commerce brand today, ads alone aren't enough. AfterSell 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 3 pans from HexClad instead of 2. AfterSell has already generated over $1 billion in additional revenue for e-commerce brands, revenue that doesn't require more traffic or higher CAC. So check out AfterSell and tell them that the operator sent you.

So I got a couple points. I, I think, Mike, you started off by saying going vertical is like standing up a double-sided marketplace, which are for people who love business, some of the hardest companies to build is when you have to build a marketplace. So difficult cuz you're standing up two types of demand. For, I would caution, not even caution, I would say that if you're gonna go out and go vertical, you shouldn't do it purely on the, I think I can make it cheaper. So I think I can get more margin for myself than I get from a third-party manufacturer. I really strongly believe that you should be doing it for like other strategic reasons that are gonna increase enterprise value. So like in my case, what I have said before, I think on this show, is it's the money was gonna get spent anyway. So I was either gonna buy inventory or I was gonna build a factory. Now by building factories, you pull the money forward, so you need to finance that, right? We went to outside investors to do that, but we, the reason we did this was now we are, uh, much more cash, uh, what do you call it? Like cash cycle efficient. So like we're a negative working capital consumer business. When I sell things, I make them. I don't buy them and then hope to sell them. So for us, that was like, that's a good reason to do it. You know, I make them and I traded margin. That's the fun part. We are still about 20%, 30% more expensive than if I just bought the crap from China, but I'm negative working capital. That is worth the margin. And it's no different than if somebody was to tell you, and this is common advice in consumer, be willing to trade margin for better payment terms. That's the same advice, right? I just, we set up our own, we're basically our own bank. Like we set up our own payment terms.

That was excellent clarity there. Uh, that I'm gonna, I always like to tell people how smart our manufacturing is. I'm gonna tell you how dumb it is right now, right? Because it takes me, the marketing mind of our company, to 90% of my time is spent on making the product. I, I always like to talk about how smart manufacturing is once you get it set up, and it is really hard, but it is also really, really dumb. What we're finding out right now, I found out yesterday, is that yes, we're kind of even par in making with China. You said it's a little bit more, uh, that when you're making, but now China is going into Cambodia and they're coming back and saying, hey, we can make, we can take your material from Brazil, airship it into Cambodia, make it, pay the tariffs, put it on a boat and take it to Dallas, cheaper than you can make it right there and put it in a truck for a few hours and send it into Dallas. So you're like, well, that's good, but you need both. That might be good for long term, but I need products next week. As I was mentioning, we had a product that recently took off. If I had that in a traditional thing, I would go give them the, the specs, they would make samples, we would approve, put a PO, we would send materials, and I would get that product in October. Last week was Semana Santa, which was Holy Week. Everyone has the week off. We had people volunteer and say, anybody wanna work for the week? And they came in and made that specific product. And we produced 12,000 of those bags last week that were on a truck within a week to Dallas to make sure that that flow was good. So there's good and bad that go. I wish I didn't have the manufacturing. I'm gonna tell you this. I, I, I love it. But if I could just sit back in the United States and have people order the things and it would work as well, I would do it. I just don't think it would work as well.

Have you ever thought of, uh, splitting the company, Curtis? So like owning a manufacturing company that is in service to Portland Leather Goods, but is also in service to other companies.

No.

So that you build up the B2B sort of like this stable base of, of like capacity. 'Cause that's the double-sided marketplace part that's so hard of this. Is like, because you're in charge of your own demand.

Yeah.

[Sponsor Content] But there's a, but there's a big problem with it, Matt. And once you've run it, you get the problem. You want Curtis's manufacturing has to be captive to Portland Leather Goods because it is incredibly detrimental if he says, and actually I'm just gonna zoom out. I'm gonna, I'm gonna give a bigger concept we haven't hit on yet. Here's when manufacturing works. Consistent, significant volume. If you know that you can get consistent, significant, especially predictable volume, then you can make manufacturing work. What is the problem? That is actually really hard to deliver on. That volume is lumpy and what people want changes and it is very difficult. Your people are hourly and they want you to say, Hey, uh, show up for 40 hours a week, but your demand profile is almost never, like, you have to bust your butt to try and smooth out your demand profile where it can line up with your people and your production. And so what you just said is the kind of siren call of like, well, what if we split this company out and we had, we brought on other customers then we'd have more volume and we wouldn't have weeks where we have nothing to work on or whatever, and we could kind of smooth it out. But the problem with that is that none of this makes any sense if Curtis is manufacturing when he needs them to do something, if they can't do it. And when you start to get other clients, you start to get these bottlenecks where there's a week where everybody needs something and you've gotta choose. And like, you absolutely have to choose Portland Leather Goods. And so then if you're another person buying from his manufacturing, it's like, well, I know I'm gonna get big boyed at any point if Curtis needs something, right? And so this is probably not the best solution for me from a manufacturing, uh, and this is, anyway, it all goes back to, and you, you mentioned balance sheets, Matt, but ironically, one of the places where you can get the worst balance sheets is when you own manufacturing because the factory has to run. If the factory isn't running, I mean, you're paying rent, you're paying, you're, you're paying on notes on these machines. You're paying people salaries. You can't just furlough people. And so you get this temptation to make product even when you don't know where it's going. And that's exactly how you absolutely burden your balance sheet with a bunch of inventory that you don't know where it's going.

Mike, you're so smart. I, I, you say that in such a great way. I would say it in a, a much more simplistic way. I've always been blessed to have people in my life who are kind of messed up, and so they do things so dumb. You say, I don't wanna do something that dumb, right? Like I'm a long-term recovering alcoholic. So if you're around a lot of alcoholics that mess up their lives, you're like, well, if I just don't do what Jim does, I'll be better off. I live in Leon, Mexico. They're manufacturing and you watch these people struggle. They find somebody, oh, you want us to make this product? Great. You spend all the time in courting them. Making samples, developing, starting a run. You make a few of these things and they're like, yeah, that didn't work. Let's try something else. And you're like, well, all my cost was upfront. Like, I just want a manufacturing line to run. Somebody told me one time, if you wanna see how efficient your manufacturing is, look out at those machines and that needle needs to be moving up and down at all times. That means you have the right materials at the right time, feeding those lines. If you're always changing product out for somebody else, You're always slowing the process down. There are some lines that I have, probably maybe 20 of my lines never change product. They're making the same product just in a different color all year long. That's pure efficiency. You can't get that if you sub it out to somebody else. I also know, uh, a lot of American companies are really bad at stretching you out and then getting in financial difficulty and not paying you, and you get stuck with their materials and the losses. and then when you have to lay people off, it's Mexico. You have to pay there for months. You have a lot of money that you have to pay. You have your fixed costs. Matt, we've all thought of it.

Yeah, I'm asking because everybody thinks about it. That's, it's, it's totally, Mike nailed it. It's the siren call of, of manufacturing. I would, the, I guess the caveat here would be, uh, in consumer manufacturing, right? So like if you're, and, and I think Mike, what you're calling out is the, which business is the priority at that point. So like if Portland Leather Goods as the brand is always the priority because that's where you feel the most enterprise value is, of course the, the capacity of the factory business needs to be subservient to PLG. And if it's the flip, then it's just being okay that like the consumer brand, like I do know there's, um, I, I think there is a t-shirt brand or like a basics brand in Canada or in the US where they actually own their own Loom, like they are the, the actual manufacturer, but they were the, the manufacturing business first and the brand came second. And sometimes I go to buy a damn t-shirt and they're fricking sold out. And I'm like, and I know what's happening behind the scenes. It's like, yeah, they just, they're, they're, they're manufacturing customers took all the fricking material. Like that's what it is. And the consumer brand is just left sitting there saying, hey, we're sold out for now.

[Sponsor Content] Implementing AI without trusted data is shooting in the dark and building an application from scratch, dealing with Tableau, dealing with data pipelines, dealing with all that. It doesn't have to be your headache. You can hire Saras Analytics to handle that stuff for you. Saras IQ gives your leadership team a single shared view of the truth. Contribution margin, channel performance, customer economics, all can be answered instantly with the power of Saras Analytics. Do not fall behind. Saras Analytics is experts. They've set it up for Ridge, HexClad, and hundreds of other brands. Speak to them today. Connect whatever AI tool you already use, and you can put that right on top of your personal data privately, securely, and you can start talking to your data like your favorite chatbot. [Sponsor Content] I have two observations I just wanna make, and one is there's a reason why China has all the manufacturing, and that's because it's generally thought of as a crappy industry, right? And I think one of the points we're kind of making here is that it is a crappy industry to be in unless you have some way to make it less crappy. And by— and vertically integrating is one of those ways. And there's a— and there's even some things we haven't mentioned, like, hey, if you have kind of proprietary processes and you don't want those leaked out to all your competitors or whatever, like keeping it in-house. But all that to say, manufacturing, not sexy, not fun, not good margins. Uh, real competitive, lots of ways to go bankrupt. You should only do it if you're able to layer on value in some kind of a way that makes it better and makes it more attractive from an economic perspective. Now, one of the few ways that you can kind of consolidate things where it does make it more likely to work and more value accretive is by adding some of the operational things like fulfillment and logistics. And we have definitely seen that. What, even though we failed in many of our vertical integration with manufacturing, it pushed us to develop a lot of capabilities around warehousing and around fulfillment that have been great for us. Like a really simple example for us is that we were making things for Walmart in our facility, and so we started fulfilling all of our stuff from Walmart from our facility instead of somewhere else. And then as we were doing that, Walmart's like, hey, you know, I don't know if you guys wanna do this, but we actually have this pallet program where we don't send you a PO where you have to go pick everything, but literally we'll just come pick up pallets from you. And it was wildly more efficient. It was like, well, you know, Walmart could send us a huge PO, a huge PO, and one person could pick it in 3 hours or some kind of crazy, because they're literally just going and grabbing pallets with a pallet jack and tremendous savings there. And so if you're going to really think about this, you had better have some kind of a justification around why you wanna be in manufacturing, and it has to be around the way to bundle a bunch of services together or to create some kind of unique proprietary value because of the brand you own. Otherwise, I don't think you're gonna like the experience very much.

Wow.

You know, I'm a bootstrap guy. I, I always brag about it. I talk about it. That's just who I am. I don't want to give up that control. Mike, you had to go out and get investors. Investors to build this up?

[Sponsor Content] No, I lit my own money on fire, Curtis.

I'm staring at my computer at Matt and I said Mike. Okay. So I had my alliteration right and the name wrong.

[Sponsor Content] I don't even know which is worse, Curtis, burning my money or somebody else's money. They both suck, but I set my own money on fire on this particular case.

No, I set investors' money on fire. Yeah, no, look, this was sort of one of those rare examples where I do think consumer has business. With outside capital. Like, I'm sort of in camp 99% of the time you should probably bootstrap in consumer. Like, your, your life will be better. Um, building factories, like large capex, that kind of stuff, that is where investors can be very, very helpful, right? So that's kind of why we started down that path. And then ultimately we raised more money for Lomi because of the R&D piece. But that's, that's a, that's a whole other game, right? Like, real R&D costs real dollars. Um, You know, Pela R&D is like tooling, you know, what are we, what are we cutting steel on? And which is a whole other set of challenges. Like I, I, when Mike is talking about tooling in China, man, like, do God, do I feel that pain? I have, I have 3 sets of 64 tools right now at $6,000 a piece or $8,000 a piece. So like, and, and they weigh like 1,000 pounds each, you know? So you gotta move these damn things around inside these facilities. I think Mike is just like the, the point you're making on manufacturing around like, you need to see it through this lens of a bundle of services or value, like a value-add wrapper, and that that's the justification for doing it. And I, again, I wanna like emphasize in consumer, like I have a, my, I'm, my family is in aluminum extrusion and has been for almost 50 years. Uh, great fricking business. Massive contracts are decades long. Like the world needs steel, lots of it. So that's an awesome manufacturing business. It's in Italy. They've been doing it forever. Great, great business to be in. Now it's a commodity business. There's downsides to it, but that's all B2B. And I think just like B2B SaaS, that's a different animal. So I think like put all that aside and just like, this is consumer. I would love to hear. Mike, you talk a bit more on the fulfillment, the like warehouse running part, because I think like we've been talking about like Curtis is staring at this like giant leather factory. Then the, the, the next level up is like, should you run your own warehouse? Yeah. You know, we know a lot of people that run their own warehouse instead of freaking out.

[Sponsor Content] Look at the videos that get posted on Amazon or on Twitter. You know, I, it's funny. I will never call it X. I don't. I just don't even think it can be done. It's like I, I'm, I'm making myself more of an unk in everybody's eyes. Like the longer I call it Twitter, but I don't care. But like, if you look at all the videos, the example videos that people are putting out of these robots, they're like folding laundry, putting dishes away, or sorting packages. You know, it's like always like one of these like 3 or 4 use cases and it's like, yeah, exactly. Or, or, you know, preparing for Judgment Day. But I, It's like, it doesn't take you being particularly, uh, I, I don't know, intuitive to understand that one of the places we're going is people are going to do 0% of pick and pack, you know, for most of these companies. Like that is just all going to go robotic. And, and in some ways, my view would be if you want to take on vertical integration, vertical integration around your inventory storage and your fulfillment is maybe one of the easiest things to do right off the bat. Because if you are doing your own storage, you are going to be way better than market rates. And that fulfillment, I mean, if you're doing your own fulfillment, you're gonna be better than what the market's offering you. But also you can start to look at your first CapEx expenditure. And I think it's kind of breaking the seal on your first successful CapEx expenditure is kind of like what we're talking about. And so like, I, it's, it, it doesn't take much imagination to say if you have a building and you're doing, you know, your fulfillment of 1,000 or 500 or whatever orders a day, then okay, if a robot, if an Optimus robot costs me $40,000, how many fulfillments does it have to do to pay itself off? And you start doing the math and you're like, these things can pay themselves off in 6 months. And just, just to take a step back, in some ways, 'cause we've talked about this idea of LTV to CAC before, I think you want to think about equipment the same way. It's like the quicker you pay it off, the better it is. The end. Right? And the longer that payback period is, the more likely you are to someday very much regret that you made that purchase. Just like the longer you go out to pay back your customer acquisition costs, like the more likely it is that you never pay it back. And so if these robots are $40,000, then how long, how many activities would it take you? Or like, like a really simple thing is if you can save $1.50 in pick-pack fees per order, okay, it only takes you about 27,000 orders to pay off a robot. And you can just kind of do the math and then you're like, wait a second, I can pay a robot off in 6 months, in 9 months, and then I've got a fully paid off robot and who knows what I can do with this thing. And so like, I, my, my sense is that that is where we're going to go. It's interesting because Kalkanis went and toured the Optimus facility and one of the crazier things he said is he's like, people are going to forget that Tesla ever made cars. Now that is a crazy thing to say as somebody who owns a Tesla, but it is at least semi-plausible that robots become so ubiquitous that they are the next iPhone product. And this would be one of the use cases that's just like right off the bat doing—

so are you pro own your own fulfillment then? Like, I guess if you're looking into the future, 'cause there was always a, the counter to this, uh, the whole 3PL versus own fulfillment was always when you grow, what do you do?

[Sponsor Content] The problem with 3PLs is that, um, and the reason why most people use 3PLs is the reason why most people use contract manufacturing. It's the same business in disguise. It's like you have to have a somewhat steady flow and predictability or it doesn't work. If I think I need 10,000 square feet of space and I actually need 20,000, then I have a problem. Or if I commit myself to 10,000 square feet of space and then I actually only have 3,000 square feet worth of product, then I've got a bunch of dead stuff that I'm paying for. And the same thing if I've got hourly employees who their job is to come in and pick and pack orders, and today I have 100 orders, but tomorrow I might have 1,000. Well, I'm, I'm gonna have a problem. And so it's, it's the same kind of like if you have consistency, I mean, you, you mentioned your family and aluminum. There's a reason these contracts are multi-decade. It's because they have to be so that you can work it out. And so I, I guess what I'm saying is, I think what people are going to find is it's, 'cause we have a lot of, you know, 3PLs in America. I, I think people are gonna find it's much easier for me to kind of bite off that piece of the physical world than manufacturing as a first step. And I think the robotics is gonna make that even easier. And so, uh, again, this is not sexy stuff. Like you're not generating massive amounts of EV here, but that once you have it, there are certain things that you can do.

Like, no, there, there's definitely defensive, there's like defensive maneuvers in some having some of this stuff, right? I, I do listening to you guys talk, like I think that if I was gonna guide, uh, the listeners in this, your level 1 move would be to go from like 3PL to owned fulfillment.

[Sponsor Content] Right?

Like there's, and there, if there's real advantages to it. Level 2 would be, uh, I'm gonna personalize, so I'm gonna do like printing, embroidery, engraving, like that kind of thing. Like I, we call it like light assembly, light manufacturing. And then level 4 would be, I'm gonna curate it and we're gonna do like cut and sew. We're gonna do cutting. We're gonna, like, we're actually gonna manufacture it. We're gonna build tools, like do what I do too. And then level 5 above that would be like even more vertical. So like Curtis is buying and storing massive amounts of leather. I guess like maybe at some point he could raise cows, but like there's at some point you gotta stop with the, like how deep you go in this because it gets less sexy and there's less enterprise value the further you go.

Well, for the people just starting out, you know, we doubled every year. We went, literally made our goals in here. 1, 2, 4, 8, 16, 32, 64. And what I used to tell people is it's not intuitive that every year you're making as much that year as you did in the entire history of your company. So when you're making 8, you did what you did at 1, 2, and 4, right? When you're at 16, you did what you did. So every year you're making the entire compound of what you've done to that point. So when you're looking at a 3PL, what we wanted to do our own fulfillment. Yeah. And we're like, okay, how big of a building do we get? Well, takes 6 months to get in. We're gonna be here this year, but next year we're gonna be again. And at this, well, are we gonna get a building 16 times bigger than what we actually want? So we're fine in 3 years. Like the reason we never went 3PL was because I didn't know how much space to get, how many racks to buy, and I didn't wanna screw it up. So I went safe. Now, should we have? I think we should have, and I'll tell you why. We just switched 3PLs, and I get a lot of questions about 3PLs from people. We started one 3PL. They didn't know what they were doing and they didn't care, and they were like the worst 3PL you could have. So we moved to somebody who cared, who still didn't know what they were doing. We recently got an offer to save us $8 million a year by moving to another 3PL. $8 million. Guaranteed $8 million. And I'm like, well, I like that. And I went to my old people and they're like, oh no, no, we'll just give you better prices. We'll save you the $8 million. I'm like, you were making $8 million in on me? You gave me that bad a service? You were fighting over a $50,000 charge that was your fault? And you could have, you're making more than $8 million on me, you jerks. Of course I have to leave right now. Right? So there's a lot of money in that efficiency in what you're doing, Matt. I thought it was brilliant. That's what Mike does. If you can value add in something by having your own 3PL, I think that's great. I like to go into marketing is where your money's at, right? Can I sell more at a cheaper price? So we are a marketing company. So manufacturing is here and I'm like, well, where can my time be best spent? Like, if you learn how to sell, you're just gonna be better off. We are in manufacturing heaven down here in Lyon. When I came down, I was told that there were 400 tanneries and 800, uh, shoemaking factories in Lyon. 800. I've had at least 100 of them come to me and say, hey, we can make this stuff. Do you wanna set up a brand and we'll sell your, the stuff in the United States? And you wanna know what I say? Marketing's the hard part. Running a big manufacturing, as hard as it is, it's not as important as knowing how to create a brand and selling it to people.

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I know nothing about that, Mike.

It just, it, it just seems like that all the talking heads in the world are like, no, no, no, you know, go high asset, you know, low obsolescence. Halo is the new term I keep hearing.

[Sponsor Content] Bezos made, I was about to call him Jeff. My friend Jeff Bezos made his money.

It's my buddy.

[Sponsor Content] We're on a first name basis, guys. He just doesn't actually know it. I mean, Bezos made all his money by running this playbook. You know, like you could say the infrastructure they built out, digitally with Amazon, became AWS, and the infrastructure that they built out with the Amazon Fulfillment Network is the backbone of Amazon. And that he, you know, is whatever, a gazillionaire because of it. And so to me, it is very logical that somebody who has a bunch of capital and has made a bunch of money running that playbook would be like, I think I can do that again, but maybe even better with the technology that's coming. So, I mean, we've talked about this before, but part of being a successful entrepreneur is that you're able to kind of look at, well, what are my skill sets? Like, what am I like personal, my personality, my giftings, my talents, my abilities? What are my assets? You know, this can be capital, this can be experience that I've developed over the course of my career. It could be industry contacts, whatever, you know, know-how. And what does that allow me to do that I can do at a level that other people can't? And so if you said, well, who's going to build the next generation of warehousing and fulfillment in America? It's like, I'm betting on Jeff Bezos. And so like for him now, is, is Mike Beckham, should Mike Beckham be doing that? I don't think so. I mean, I can do that and I may do some of it, but that's not really my primary skillset. And that's really what you were talking about, Curtis. And I think that that is a good way to frame the entire discussion here is that whether or not you take on manufacturing, whether or not you take on fulfillment, is, comes back to how are you situated? What are your skills? What is your brand? Um, and this kind of overlapping set of factors and does it make sense in your particular Venn diagram how all these things overlap? And for some people, many people, the answer is no. Like anything that pulls you away from thinking about marketing and customer acquisition or product is just not the right focus of your time, and it's a lower return on your time. There's some people that are able to do it and turn it into a massive advantage. And this is why I keep coming back to the idea that success in entrepreneurship is as much about understanding yourself as it is about anything else. We, to, to use a quote that I used last week, there are many, many things where I am not the best, but there are a few where I'm situated where I can be one of the best in the world. It would be, it would be stupid for me to focus my time in areas other than those few things where I can be truly elite. And that all these, we've, we've used this word before, but I like it. Anything else is just kind of a side quest. It's just a distraction. And for operators, the, the problem is we like solving problems. We like proving we can do things. We like taking on challenges, and that, that can easily work against you. And so maybe this paradigm will be helpful for people. Anytime you're trying to take something on new, hey, is this a main quest or is this a side quest? And if it's a side quest, don't do it. You know, like get back to the main quest.

Is that a leverage thing, Mike? You're like the, the we're always just looking at where do I have maximum leverage and I should probably be putting my time into those things.

[Sponsor Content] Yeah. I mean, one of the ways I think about it is my capital is not unlimited, but it's a lot less limited, but my time is very strictly fixed. And that, so I have to maximize the return and the leverage on my time to be the most effective version of myself. I have to, and there's a lot of my time that's explicitly set aside for non monetary reasons. This is, I'm spending time with my wife. I'm spending time with my kids. I want to have interests outside of here. I want to have friendships, you know, I want to have a balanced life. I want to be in good shape. So like, there's, there's this very small pie of my week of time. I don't know what it is. Is it 40 hours? Is it 50 hours where it's like, this is to be used to generate economic value and it literally can't get any bigger. So the game is, how do I most effectively get the highest yield out of that. And the way that you do that starts with having very clear-eyed understanding of exactly how you're situated, gifts, skills.

Sometimes I don't understand the words you say, Mike. Uh, what is a balanced life? Like, I have no idea what you talk about here.

[Sponsor Content] Well, you know, it's actually funny you say that because I, I do kind of hate the idea of balanced. It's more that I have multiple success criteria for my life. And I don't think there's this idea of like, okay, I want to spend, you know, for me to have balance, I've got X number of hours are always going to my family and Y number of hours are always going to my, you know, whatever. But I think it's more that like, if on my tombstone, if it's like, you know, he built 10 figures in value, if that's all you have to say, it's like, that's a pretty depressing tombstone. Is basically my perspective. And, and then the other perspective I would give is it is a lot of fun to build economic value, but I'll tell you what's really fun is to having people and relationships and community where you can use that money to do things. And what's really sad is that there's some people who are really good at the economic creation piece, but then they have nobody to celebrate with, nobody to spend it with, nobody to give it to. And that's like a travesty. So I want to have that kind of balance. Like I want to make a gazillion dollars, but what makes the gazillion dollars awesome is I have amazing people that I can go on vacations with. I have causes I believe in, I can give it to, and I, I have a community that I've been in for a long time I can invest it in. And to me that's like winning in life. And like, I, I just don't know that you can be the best version of yourself as an operator if you don't have some kind of definition of like what is winning in life. And if that, and that has to be at least a little bit different than winning in business, I think.

Absolutely. Hey Matt, I thought it was a great question about Jeff Bezos and I didn't have an opinion when you said it, but it doesn't take me long to come up with an opinion. So I want to say it. I don't actually read as many books as I pretend to, but I do scroll a lot on the internet machine and I saw him say, hey, I like to invest in things that take 10 or 20 years that I know are not going to change in 10 or 20 years. People are gonna want faster service, not slower. They're gonna want better products, not worse. They're gonna want cheaper products, not with deglobalization that is happening right now. We have had deglobalization happen in the last 18 months like we never thought was gonna happen. The US is very, very well situated to have the raw materials, the resources, and the market so that you can manufacture in your own area with the right power in order to do this. I think he's playing a very smart long-term play of saying, if we're gonna bring manufacturing back, it's gotta be smart. It's gotta be high-tech. It's gotta make the things that are on this, and it's gonna take us 10 years to do it.

Curtis, on this, like the reason I'm asking the question is we're, we're living through a period of like pretty significant, it feels like pretty significant disruption. So like we're going into a future that definitely seems a little less certain than maybe what we've all experienced over the last couple decades. Like we're all old enough to have been in business now for a while. And while I love the question of like, what, what's going to be the same in 20 years? I can't help but also ask like, what won't? Like what, what assumptions do I have on, you know, what is good decision-making and good judgment and good taste and being an operator that maybe isn't true anymore because like the inputs are changing. You know, Mike, you sent this article about the whole like boil the ocean thing. Like that would've been terrible advice a few years ago, right? And, and like to go as an operator, like the best advice ever is just focus on one or two things and do them really well. And then you tell your teams that, and that's how you scale up an organization. And now we're in this place with AI, we're like, no, you can probably boil the ocean because the nominal cost of doing everything is going to fricking zero. What? So I just have to, like, I feel like it's, I feel stupid asking the questions because Like, history tells me the answers, but I still gotta ask them because like, are the inputs changing? I don't know, Mike, if you have an opinion on this, but like, it seems that we should be questioning everything.

[Sponsor Content] I think it's the fundamental skill of, um, I think intellectual curiosity is like a core life skill. And I, one of my favorite exercises, I think I do this a lot of days, but in my business, I certainly try and do it fairly regularly where, what have I learned in the last week, the last month, last quarter that I didn't know before? And what are all the assumptions that that might change? What are all the possibilities that might open up? What are the— Mark Twain once said, It's not what you know that gets you in trouble. It's what you know that just ain't so. And so the, I think when you're intellectually curious, what it does is it prevents you from just running on autopilot with a thing. And that's how you get disrupted. You found a thing that was successful and you're doing that thing and you're just doing it, doing it, doing it. And the world around you is changing, but you're not reflecting and considering The, the way that that's changed things. So I'm constantly doing it. I'm constantly trying to say, how has, uh, the change around me created new opportunities or changed my perspective on how I should be doing things, whether it's my personal life, business, whatever. And right now, I think the, the gift of this particular era of history is that it's pretty obvious to everybody that they need to do that. Like the technology is so disruptive and it's moving so quickly that Even people that are not very into tech are realizing like, I need to kind of think about how this, you know, interfaces with my life and how I need to think about my career. And so, yeah, I just think we should always be doing it, but especially now when the disruption is highest is when you should be reconsidering your priors the most. And so that's what I'm doing with my business. And like what I'm coming out to is some things are going to change quite dramatically the way that The way that P&Ls are structured, the way that organizations are structured. Like one of my favorite things I read in the last week was basically in organizations, you're either building or you're selling. That's it going forward. And it's like, that's a cool model. That's very different. Like the middle manager thing may just be an idea that's headed towards extinction, but there's a lot of things that won't change as well. Like you said earlier that like we're still going to need the physical world, right? Like these products have to sit somewhere before they go to customers and they're still going to have to get on trucks or drones or something and get delivered there. And that we're still gonna need people that design these products and take on the mental overhead of creating companies around delivering these products to customers. And that's one of the reasons why I think being in consumer right now is great. Like parts of us are gonna, parts of what we do are gonna get disrupted some, but there's still gonna be a huge need for what we do.

You know, part of this ability to, as we have on The Operators Podcast, to actually talk to people who are out there and building their businesses is I always do this. You, Matt, you asked the question perfectly. It's, you've gotta be a good enough person to figure out what the hell's going on, and you gotta be looking at what's coming new, but you can't be jumpy. You can't jump, I read this, we gotta do this. I read this, we gotta do this, right? You've gotta have balance, and you've gotta be so curious and aggressive at the change at the same time. You have to be balanced, not in life, but in business about what you're growing. You have to be saying, I want all the new technology, but I'm not gonna jump from thing to thing. I've got something that's working and I've gotta build this over there. And they don't seem like they work together, but they do. You look back after 5 years and you're like, wow, I'm glad we didn't do the same thing. I'm glad we grew, but I'm glad we didn't chase every trend also. So I know that's the hard answer for everyone. It's like, hey, you gotta be balanced when you look at these decisions. Make 'em, don't go too deep. And if you get into something bad, get out of it and get back on track. So you know what? The best thing about this Operator's Podcast to me is I used to have to watch it and now I just get to sit here for an hour and a half and, and listen to you guys give me this wisdom and talk to me about this stuff. So I got one last question for you to end this all up. What is the one thing you've done in the last 10 years that 10x'd your business? Like a simplistic one. We all like to have people ask us like, what's the secret? Nah, nah, nah. What is the one thing you can look back and say, wow, this 10x'd my business. And I'll tell you what mine is right now. This manufacturing that's a pain in the ass 10x'd my business.

It, it did.

And it was really, really, really hard, but I kind of just kept doing it year after year and got better. And all of a sudden We got to where we are and now it's worth it. Now you guys are being very thoughtful. You have something there.

I was, uh, spent more money on Meta. Like, honestly, like we, we just like, we're a marketing company and we got really good at it and we just continue to obsess about it. And that's the lever. Everything else is kind of in service of the lever.

That's it.

Like, it's, it's, that's the whole thing.

I love it. Some people overcomplicate it.

[Sponsor Content] Yep.

That's a great one.

[Sponsor Content] Mine is probably, I really became an expert on omnichannel and at a time when the world's moving that way and there's just not many people that are experts at it. You've got all the legacy players that have been in physical and are trying to figure out how to do digital, and you've got the new digital companies that are trying to figure out how to do physical with it. And I just found myself positioned where I was one of a small number that had kind of built both simultaneously and it wasn't a bolt-on, you know, physical wasn't a bolt-on to digital or vice versa. And that's just really expanded what's been possible both in my, you know, Simple Modern and the companies that we've added since then. And even in some of the advising and different things I've done. I mean, even on this podcast, there are times when the conversation's really meta-heavy where I just kind of smile and nod because we just don't spend, you know, comparatively, we just don't spend enough on meta for me to have strong takes, but then there's other times where we, we start talking about things like omnichannel where, you know, I, I know my voice is the loudest because I have the most experience. And so like that, that decision, and, and I think that there was this point during COVID where it's like everything's going digital and it's like, no, it's not.

No, it's not.

[Sponsor Content] Like the, the future is hybrid. And so having that skillset has helped me dramatically.

Love it. Wow. You guys, you absolutely killed it. Thank you so much. And everybody who made it to the end, thanks for watching The Operators Podcast. If you're not somebody who hit the subscribe button, we don't say that enough. Hit the darn subscribe button.

[Sponsor Content] Bye.