The Dangers of Scaling Too Fast (Revisited)

Chris Collins here. And over the holiday break, I wanted to showcase some of my favorite episodes of Unleashed from this year. And this one is the dangers of scaling too fast. You know, we're in the greatest economy right now, and a lot of businesses are booming, but they get into trouble because they don't have hiring systems. They don't understand cash flow and supply and demand. And so there's some really great tips in here to save you if you're scaling and you're growing really fast, how.

You can avoid the pitfalls.

So maybe take some notes, grab a pen and paper. And also watch out for some new episodes coming up in January of Unleashed.

We'll see you soon. Welcome to Chris Collins Unleashed.

All you have to do is listen.

Welcome to Unleashed. Today we're going to talk about the dangers of your company scaling too fast. The dangers of scaling too fast. How you doing, Jimin?

I'm doing great.

The dangers of riding a skateboard too fast.

Those are events.

You know, everybody keeps asking, why didn't you talk about G Man's helmet?

Yes.

Are you gonna bring in your helmet? You got a helmet, right?

I did get a helmet, but it.

Must not look good because you haven't brought it in.

No, it looks. Actually, it's. It's pretty cool. Get out of here.

What helmet is cool?

I found a nice trim, slim fit helmet. It's got a little bill on it that you, like, flip up.

It sounds terrible. You're honest? You're a grown man on a skateboard wearing a helmet with a bill.

I mean, I don't know. I kind of see, like, you should be like, with board shorts, a sweatshirt tied around your waist, and a backwards ball cap.

I know. Well, that's how I.

Not a Vespa helmet.

That's how I was riding until I crashed three times. Is it.

Would. Is your helmet more Vespa or more Harley?

No, it's more Vespa. Yeah, Definitely more Vespa.

You got to be more Harley Davidson.

Yeah. They don't make a really good Harley skateboard helmet. That doesn't really. It doesn't really work. No. And then they're too heavy. Like, if you got a real motorcycle helmet, it's just too heavy, like on your head.

So I. I don't care. I'm like. I'm more about fashion.

Yeah.

I'd let it be heavy.

Well, me too. You wait. You'll have to see.

I'll bring it right to the Harley shop. Where's the big Harley shop? Here in la. That's where I would go.

Or maybe we could put like a link to. Can we. Lucas, can we put a link to a photo on the show, notes or something? If I.

No, you got to bring it in.

I got to wear it live. Yeah, we'll do it live. Bring it in, bring it in.

So funny. Do it live.

It's funny how many people are mad that I haven't talked about that.

I know, everybody's like, what happened to the helmet? Did you get. I got text messages, people asking me about the helmet. I don't know if I told you. I went home and got three helmets from Amazon and I had all three. Well, you remember.

Do you return something on Amazon?

Oh, yeah, yeah.

How do you do that?

You just click return and send it back.

What? And then you got to make a box or what?

Yeah, yeah. Well, you save the box and then you just. What about a label back up. You print a label right on your computer, stick it on UPS, FedEx, what, send it back. You typically UPS sometimes USPS, depending on what it is. But if you buy it from Amazon, like fulfilled by Amazon or Amazon directly, then you can send. It's a lot easier to send it back. If you buy it from a third party seller, then it's a lot more difficult. So I only buy typically from Amazon because I want to return it.

You bought three helmets.

Yeah, because you remember, you set it up with my wife. She called in. If those of you who didn't listen, go back and listen, but. And I was put on restriction, basically.

Grown man boy.

Gary, you're unrestriction. No TV in skateboards until you get a helmet.

That's right. I was put on physical restriction and so I was not going to allow that to have.

Oh, no.

What?

I told her she should. She shouldn't have, you know, adult time with you.

That's exactly right. Sex, I guess.

Restriction.

No, no. Bouncy, bouncy.

Yep.

Did you get bouncy, bouncy?

No, I had to go buy helmets. And so Amazon, you know, next day, delivery, I had three helmets. I tried all three on. I found one that I liked and I was back in business.

And then bouncy, bouncy. That night, did you wear the helmet?

Did you come in the bedroom? You're like, baby daddy's home with the big helmet.

Sexy with the helmet on, by the way.

Right after that, your, your wife did the, the G man, Katya equivalent of sexting. She sent me a. Oh, the Bitmoji.

Is that your little cartoon?

Yeah, of her riding a skateboard.

That's how you guys sex.

That's right.

Bitmoji.

Oh, man. It's funny.

It's not sexting.

I'm having a cartoon relationship with my wife.

I want to hear what that would be like. If you go in the bedroom and you're wearing the helmet, Nothing but the helmet.

That is not attractive. That is not gonna happen. She will not like that.

If you had the Harley helmet, it'd be attractive.

I still don't think nobody wants a.

Guy in a Vespa. That's the problem. She wants the guy on the big Harley.

She wants me, bro. Harley. No Harley. Vespa. No Vespa.

If you're role playing, like, she would rather role play with the biker that's like, you know, I don't know, like the biker guy. Like the biker gang guy. Not the guy in a Vespa.

It's pretty funny.

He's trying to figure out what he's gonna do. In college, I got the beard and.

The tattoo, and then.

I'm just saying you might want to reconsider that.

All right, I'll bring it in for the next podcast and wear it.

Vespa. That's funny. Okay. The dangers of scaling too fast. Do you want to do the dangers of scaling too fast or do you want to do stuff?

I love.

Stuff. I love.

Our expert to producer. Late on the queue.

We agree on. We agree on the stuff I love.

Yep.

So I asked G man, what's your favorite cigar? And he goes, those Monte Cristos. What are these things called? You have glasses. I can't read anymore.

I need to go espada, espada.

And so These are the 70. Is it centimeters? They're long. This is a long smoke.

Yeah.

A long smoke.

Yep.

So these are great cigars. They're mild. It's a long smoke. They're the perfect size. They're smooth. I would say this is our go to right now.

Yeah, no, this is my favorite. Even though it's right out of those Cubans. It's a long. It's a long smoke. I still like this. I still would prefer this over some of the other ones. I mean, some of the other ones have a lot of flavor, but they can be pretty rough, you know? And this, like you said, it's smooth. It doesn't knock you out, doesn't make you dizzy. Yeah. You know, you can smoke it and it's. It's a. It's a nice, easy smoke, easy draw. Yeah. Yeah. Highly recommended.

The Monte Cristo Estrella.

Espada.

Espada. Espada. Can we put a picture up of that when we do this, like, on a link to it? I'll send you the link. Good job. Do you want to do that again? The thing? Just the stuff I love.

We got an outro. You want to do the outro stuff?

Yeah, let's do the outro for stuff I love.

That was stuff I love.

Lucas hates that. How much do you hate that, Lucas?

Oh, expert.

We were playing. So Lucas has never had the pleasure of. You know, what us Americans love, like motocross and monster truck and all that. And I was like, you got to do the voice like that. Ricky Carmichael, like, number two from Havana, Florida. Ricky Carmichael. I used to love that at motocross. And they'd play that. They'd play that disturbed song, down with the Sickness. And then, like, from Havana, Florida. I don't know how that guy gets. He drinks razor blades.

That's right.

That's what you got to do, Lucas, is drink razor blades.

Well, it's funny because we were talking about it and playing the monster truck. Luke is like, I don't understand. What is this? I don't like.

What's a monster truck?

Yeah, it just did not. None of it computed. He was like, it's none of this. This is all.

He's had a very civilized upbringing.

Yeah, right.

We're. Yeah, we're shooting off guns and jacking trucks. Right, so they can drive over a house. Lucas, in England, you guys don't have trucks drive over houses.

Not like the monster truck things you guys are talking about. Nothing. Not like that.

I don't know that you're missing anything.

So that. I got some good notes here on the dangers of scaling too fast. And this is a real thing. And I'll tell you, like, I've. I've. Over the years, I've seen this.

Firsthand in us turning a business around and shooting the sales up too fast. And they're being, you know, there's always a ying and a yang to things. And then I've had.

Friends that have scaled their business really fast. And one, either because they are really smart and they, you know, they just set the goal to scale it, and they did. Or they were in an industry that just took off, right? And they were, you know, they were riding a boat.

That they couldn't get off. You know, it just. It went. And so.

The.

So there's a couple things that happen when you scale too fast. And I'm. I'm going to go through these, and then I'm going to tell you what the kind of. What the solution is, and I've figured out to this to avoid it where you can scale very fast, if not even accelerate your growth if you do this. Right. But the first one that, that, that I've seen is just that there will be. When you, when you increase sales and you scale really fast, there's going to be customer service issues. So I can give you an example.

Of.

Somebody on the Internet selling a sports cream and selling tons of it and having very low returns in relation to what they were selling. But they weren't set up to handle the returns. And so the people report them, they cancel their credit cards and their merchant thing gets shut down because people can't easily just return it and there's nobody to answer the phone because they just weren't ready for it. Right. So there's, there's going to be, no matter what you're selling is going to be some sort of customer service issue where people either want to return the product. Right. So with like clothing and stuff, there's a percentage that's going to be bad. If it's 1% or 3%, there's always going to be some sort of return rate. With online sales, there's going to be people that get it. Even if the product's amazing, they want the, they want to send it back. Buying cars, like, there's just, there's lemons. There's, you know, there's all kinds of issues with that. So there's always going to be some sort of customer service issue. And most of the time where I see people that scale fast lose control is in customer service and returns.

Yep. I agree. It's funny, we're talking about my skateboard earlier and I. It's a, in a skateboard made by a company called Evolve. And I've been following them and they're, they're scaling very fast.

So it's a new thing. It's great. No, you know, somebody sees somebody riding it and they're like, I gotta have that.

Yeah. Well, I mean, I ride mine around Venice and people are always constantly asking me and they're, you know, they're putting notes in their phone because they want to go get one and so.

And the helmet.

And the helmet. That's right. But then they started in Australia, now they moved to the States, so. But that is an issue for me. Like, I've had some issues with my board.

Yeah. So what's gone wrong with it? You're. You have like a little tranny issue, right?

Yeah. Well, the, the first Thing was the power button failed on it because you crash. I couldn't turn it on. No, that was. That was something else or something different.

Oh, because Ms. Katya was saying she had to buy you a button after you crash.

Oh, no, I smashed the remote when I crashed. But I. I was able to get another one of those. That was pretty easy.

But to have one fixed was a whole different. It's easier to buy one than to have it fixed.

Not have it fixed. They would have fixed it. But, yeah, it would have been gone for two weeks. And so I just bought one. But then the. Then right after that, maybe a week later, the power button broke. And so I was. I was emailing them back and forth, and just getting the communication going was really difficult. You couldn't call them. They didn't have a phone. They would give you a phone number. And so you're just emailing them back and forth. And finally they were just like, look, just ship us the board. And so then I had to pay. I had to go to the place, pay to ship the thing over. It sat there for a week. And then I was. I was nervous because it's an expensive item. And I'm emailing them, trying to figure out, do you have it? Don't you have it? And all of a sudden, the board ended up back at my place because they just. They took it, they fixed it, and they shipped it back to me without ever telling me what happened.

Not, hey, we fixed the whatever button or this was wrong. Nothing's got a board back. How long did that take?

It took a week. A little better than a week.

That's not bad, actually.

Not too bad. But the communication freaked me out. And.

Well, they have. When you scale that faster, taking shortcuts.

Yeah. And so now I've got another issue, and I'm in the same boat. I'm back and forth. I'm back.

Are you gonna send it back?

I. Hopefully not. They gave me a tip, so I'm gonna go try it tonight. We'll see. But it's. But I can. I can see.

I. I just think it's so funny that you people can go ride a skateboard in your 50.

I fully support. I fully support these guys. I love their business. I love what they produce. They got a great product, bro.

Most guys under 50 like reading a book.

I know I am.

I should probably like smoking a cigar.

In a law J.

You're watching Westworld and riding a skateboard. My man, baby G, man.

But they're scaling fast, you know, they're growing quickly and they're, and they, like you were saying to your point, the customer service is definitely an issue. And, and you have to be aware of that because it'll creep up on you. And I've seen evidence of that over and over and over again. So you got to be prepared. And people underestimate how much support their customers are going to need regardless of the product. Doesn't really matter. Could be an info product, could be a skateboard, it doesn't matter.

Yeah. And so I've, I've seen where a business scales really fast in an industry that's growing and they are trying to add locations. And so every time they had a warehouse and with the warehouse comes the stuff that goes in the warehouse and inventory and they're running out of inventory because they can't make it fast enough. But they're building warehouses, they run out of cash.

Yep.

And so the second thing I have is cash. Like when you scale too fast, you run out of cash because a lot of times you are selling the inventory, you can't make it fast enough. Then you have to put a bigger order in to get more inventory. So you got to put more cash up front. But you haven't sold that yet. And people aren't paying you because like let's say you're selling to Nordstrom's or Costco and they're on a 60 day or a 30 day pay, right. And they're like, we can't get enough product and at the same time they're not paying you and you run out of cash. And I've seen businesses have an amazing product with a huge demand for it and they run out of cash and they implode. And that happens.

You got to watch out for that. You know, the, the other thing too is having you run out of cash. You, you need a support system around it and if you don't have the right support system for your product, you don't have enough cash to support it. Right. I mean if you're, if you're investing in inventory and then all of a sudden you sell a bunch of it, but you don't have anything on the back end to support it and you don't have enough cash because you got it all tied up in, in facilities and inventory. Yeah, you're going to run into the.

Same problem because I think a lot of those, a lot of good companies like that startup cost to it in inventory and their inventory is perishable. And so like with Tesla, right, they had to make their own seats in the cars because nobody else, which adds hundreds of millions of dollars to the whole equation.