164 - How Active Listening Drives Business Success with ergo's Claire Stepanek

Welcome to Listening with Leaders. I'm Doug Noll, lawyer turned peacemaker. I teach executive leaders how to listen to emotions rather than words so that they can become the leaders everyone wants to follow. And I teach those same leaders how to be authentically present, available, and connected to their families despite being insanely busy. I have learned that we are 98% emotional and only 2% rational. Learning how to listen to emotions is, in my experience, the foundational skill of life. Stick around to the end of the show and I'll reveal how you can be on our next guest in 15 to 20 minutes. So let's get started. Welcome to Listening with Leaders. You are the founder and CEO of a new startup called Ergo Offers, which can be found— it's actually, it's called Ergo, but the website is ergooffers.com. It's one of the most fascinating concepts I think I've seen in a long time. I know you're, you're, you're online in March of 2023. So you've been at it now for about 9 months. Welcome to the show. Really anxious to hear about you and what you've been able to create.

Thanks, Doug. Thank you for having me. I'm super excited to be here.

Absolutely. You have a really fascinating background in So why don't you give us a little bit about your backstory and then we'll talk about how Ergo got started.

Yeah, so my background is, I, I'll go way back actually. I studied math, neuroscience, and economics at MIT as an undergrad. I loved all three of those topics, but I didn't really see them coming together and I was a kid in college, so they didn't have to. But I ended up after a few different roles on the supply chain team at Apple. So working with all the manufacturers that make the parts that flow into the Apple products, and there's a lot that went into that role, lots of crazy stories that came out of that. But a big, big part of it was price negotiations, and I loved the price negotiations. And so you can look back on kind of what I was interested in school, and it seems so obvious, but at the time I was like, wow, I really love this. So I was doing that at Apple. I had an epiphany that negotiations really can be simplified, and that's kind of where Ergo got its start. And you're exactly right. We founded it, or I founded it in March of last year, so 9 months in.

And describe for us this unique concept that you came up with that, I mean, it's so innovative. Tell us about it.

Thank you. Yeah, so the idea is you're online shopping and you really want to buy, let's say, a snowboard, but the snowboard is $600 and your budget is only $450. So So on the website for that snowboard, there is now a button courtesy of our software that says make an offer with Ergo, and you can click on that button and put in that you only are willing to spend $450 and maybe you're willing to wait a couple months because you kind of know that maybe you'd get the deal accepted if, if you're willing to wait. So you submit that information and then the store looks at it and they can accept or reject it. It's not a back and forth, nothing complicated. They kind of say, hey, maybe it's the end of season. They have some of these snowboards left. They were going to put them on 90% sale. Of course, they'd accept an offer like this and you can get the snowboard at the price you want. And it's a win-win for everyone.

So retailers sign up on the, on the supply side of this. And basically what, what you as a, what the customer is bidding on are what, unsold leftover inventory that the—

Yeah, it can be. We— some brands are also looking and they use Ergo more for promotions, like to bring in new customers, or if it's a certain day that kind of aligns to the values, like a holiday or something like that. So it doesn't necessarily need to be products that haven't sold as much as kind of a different type of marketing tool. But for the most part, yeah, it definitely helps clear those pieces of inventory that just aren't selling.

And how's, how's this, this, how has this worked out? I mean, this is sort of unprecedented to have people have the ability to bid on a, a, a retail store's products. How's that? Yeah. How's it working?

Well, what's fun is that people seem to get it, which is a relief as the startup founder that it came up with this, I'll say. So we definitely are working with brands. They can just download it, the app easily in the Shopify App Store. And so once it's on their website, We have a little bit in the pop-up that explains how it works, but it really seems like shoppers are just getting it kind of. We're not getting questions. Offers are coming in, offers are getting accepted. So that's awesome to see.

So does this only work with stores that are on Shopify?

For right now, yes. So our initial product, we did it for Shopify-compatible stores, but we obviously want to keep growing and be platform agnostic in the future.

So that's, that's down the road. And how, where's the money come from on your end?

Yeah.

So who pays?

Who pays me? I wish everyone. No, we have two different revenue sources. So we have different tiers that are monthly subscription fees for the brands. So we have a free tier because we are just excited to have people use it. So we want to make sure it's accessible. But kind of with some higher-end features, we have more expensive monthly subscription fees for our software. And then on every accepted and transacted offer, we also take a percentage. So we make money when the brand makes money.

Okay. And, and how is your volume doing?

Yeah. Well, it's so fun to see because we launched at the end of last year and we're really seeing multiple brands using us, multiple offers at all of those brands. So it's starting to, it's starting to tick up, which is fun.

Wow. So you've gone, you went from corporate to being a startup and now you're in the midst of nursing this little baby along, right? What is it that gets you up in the morning that gets you really excited?

Yeah, I mean, I think what's so great about a startup is you can really kind of control your destiny. So I love the responsibility. I mean, it was kind of an idea that came out of my own experience. So obviously I feel very connected to the product, but our team is awesome. So I love working with them. Really everything is like the fun meetings, getting to do what we want, trying to get more sales and getting Ergo out there. All of it is very motivating because I think so much of it comes from kind of our own intrinsic interests.

And, and you've got all this background in supply, supply chain management and purchasing power and all that stuff. What is it you think that's unique about you that you bring to the table that, that makes Ergo successful?

Yeah, I think I liked efficiency and I liked simplicity. So when I was at Apple with my negotiations, I really fell into a pattern of that was just the most successful negotiation strategy of like, we don't need to meet. Meet 50 times if we both kind of know the price is going to end up about here. Like, let's just kind of cut to the chase and get there. And I think the like brand or not brands— now I'm in Ergo world, but the suppliers at Apple, I think, appreciated that. So we would kind of get deals done quickly. And I think that was kind of unique in the supply chain world of like not having to wine and dine and all that stuff that they would try. It's like none of that is relevant. Let's just focus on the number. And so I think maybe my analytical background allowed me to think that way and then carry that over to Ergo.

So I like, I like your negotiation. Let's cut to the chase, cut out the BS and just get to the number.

Exactly right.

Yeah. As a mediator, that doesn't happen very often with me. I see people, people have to go through the dance so that they're absolutely positive they're not leaving any money on the table.

Yeah, I wonder, I bet being a mediator, I mean, there's so much more emotions. I feel like so many times in the business deals, it was so easy to say like, Hey, this has nothing to do with our relationship or anything like that. It's truly about like what price would make the most sense and really kind of take out all the emotion. Whereas I feel like as a mediator, you're probably doing the exact opposite.

Exactly. I mean, that's why listing becomes so important in both litigated and non-litigated disputes is you got people who are really upset and they're either suing each other or they're about to sue each other, or they got a family business problem and they're really upset and not talking to each other. It's all driven by emotion. And so one of the skills you have to have in the work is to be able to calm angry people down. And that happens to be a skill that I'm really good at. And I, I wrote my fourth book about it and teach people like I just did a few minutes ago, teach people how to do this. So, and then the, in the, in the other thing, I think, I think what you mentioned was in the, in your, this is interesting about Ergo and in your previous corporate world with Apple, there wasn't a lot of give and take, a lot of back and forth. Like, in Ergo, as I understand it, the, the customer puts in a bid, it's either accepted or rejected. But the retailer doesn't come back with a counteroffer. Say, exactly, I can't do $450, but I can do $500.

Right. Right. Because it's when the second you introduce, like, we're going to go back and forth, I think people are like, let me start with a lowball offer and, and see what happens. And it just takes time.

Whereas if it's like, hey, you have one shot, don't waste your shot.

You gotta put in a high-quality offer. It's just, again, the efficiency and simplicity is what I, what I cherish.

So do you have, I'm curious, do you keep statistics on how many offers are accepted and how many are rejected?

Yeah. Yeah. We, we monitor that daily.

What do you, what are you finding? Are you finding that people are able to put in, be reasonable?

And, and we are as a, we are. That's, that's, I mean, that's why we monitor it daily, is that's so critical. And yeah, right now we're hovering around 70% of all offers are accepted.

Wow.

Yeah. Massive, massive number.

Wow. And, and you're not offering any instruction to the, to the customer on how to make a bid. These are people are just intuitively figuring out, this seems fair to me. Let me put in an offer and see if it, it'll get accepted. It's true.

Exactly. And credit to our brand partners that are doing marketing when they use and turn on Ergo. So I think as well, it's kind of clear to their shoppers when they see kind of the concept, how it's working.

I got it. Huh. And what kind of products are on the, on the site?

Yeah, so we're all over. We have some fashion, we have some skincare, we have some home goods. So really a whole variety are using Ergo.

And are you finding, how are people, how are retailers finding you?

Yeah, mostly through word of mouth is super powerful. So we work with brands and then their friends kind of see it on social media of like, hey, I kind of want to do a promotion like this. So really that's what we have been leaning in on. But we are on just publicly on the Shopify App Store. And so really there's kind of a variety of different ways. Some press too got us some brands. So people are coming in the door in different ways.

And are these— are you have any big, big retailers you're working with or are they all relatively small?

So we initially launched with the free tier. So most of our initial brands are relatively small. And then we have been developing more enterprise-level software that we're gonna go live with quite shortly. Wow.

And that'll allow you to deal with much larger retailers.

Exactly. Exactly. And have more automations and things like that that they need to kind of use the tool effectively.

So, are, do the automations include algorithms about whether or not to accept or reject an offer so human beings don't have to look at, look at the thing and make it funny?

You should work with our product team because that's exactly where we're going. We're not there yet because we want to get a lot of the data first so that our algorithm's super accurate.

Right.

But for Now the automations just allow it so you don't have to manually accept and reject every offer that comes in. You can kind of set some rules.

Yeah, I was going to say, if you, if you're a large enterprise retailer, that could be overwhelming, and you don't want somebody sitting in front of a computer deciding what to do.

Exactly, exactly. We're not telling them to go hire someone to manage Ergo. They, they can just set it up and watch it go.

Yeah, it seems to me that they could set up an algorithm and, and, but they could set the parameters.

Exactly.

Then they can play with it. So, okay, well, you know, we're getting a, we're getting a 90% acceptance rate. Maybe we're being a little too lenient here, right? Back off a little bit, or they can be a little more lenient. And, and I, I presume that's the direction you're heading.

Exactly. Yep.

Yeah. Okay. Well, that makes a lot of sense. And it makes a lot of sense that, that, uh, retailers would like that because it's just more volume.

And exactly, exactly. There's so many Yeah, like you're sitting on things that just aren't selling. Like, what are you going to do with that other than that? And this is like a fun way your customers get excited about the opportunity. They feel like you're being flexible. It really kind of boosts that relationship as well. So as I keep saying, it's always a win-win for everyone, which is the only type of negotiation that really works.

Right, right. Where everybody, where everybody's benefiting from the relationship.

Exactly.

So where, where do you see Aerigo going in the next 5 years?

Yeah, I think what I always say is any store that has ever put something on sale would benefit from Ergo because why put something on sale where you set no matter what, this is going to be 40% off? You automatically lose that 40% where Ergo is better than that because maybe you'd get a higher offer if that's what works for someone. So really, I think taking over the entire e-commerce market so that you start to see Ergo every time you're shopping would be the dream.

Wow. You know, it also strikes me that this gives good market data to, to the retailers.

Exactly.

They can determine— I mean, they can tell whether or not their pricing strategy, their quality strategy, their, their mix of offerings makes sense or not.

Exactly. One of our key things that we launched with even on the free tier, we have some analytics because it's so incredibly useful for the brands to see this and really understand their pricing. And there's nothing else out there like it. So we thought that was super important too.

And, and what kind of comments are you getting from your brands?

Yeah, so far positive. We've gotten a whole bunch of 5-star reviews, which is always nice to see. And we've really built relationships with these initial brands that kind of took a risk on a startup that didn't have any, any brands yet. Now we kind of have more coming in, but those initial brand partners were really valuable to us. And so it's been really positive working with them.

Is your team, are your team, how's your team organized now? Are you guys remote? Are you hybrid? Are you all together in one place? How's, how are you managing that?

Yeah, fully remote. So there are, um, 2 full-time members other than myself and a couple other contractors, and we're all in different places, and so fully remote.

So it's really, you've really got a small footprint.

Yeah. Yeah. We're, we're trying to make a big impact with as little footprint as possible.

That sounds pretty cool.

That's the way to run a business, I guess.

No, I like keeping, you know, your overhead. The problem with this startup, especially if you get funding, is you've only got a runway that's so long.

Exactly.

The lower you can keep your costs, you know, the longer the runway until you're sustaining. So it sounds like the model you're using is designed to be extremely efficient financially.

Exactly. Yeah. And I was doing a lot of cost modeling also back at Apple. So I'm very familiar with how do we save costs in as many places as possible.

Good for you. So let's, let's switch a little bit to the topic of my, of this podcast and my interest, which is listening. Tell me about the importance of listening in your career. I'll just leave it at that.

I mean, I don't think it can be overstated, especially in a negotiation-type setting of there's so much being said that isn't even being said out loud but is being implied. And so if people are angry about something that seemed illogical, I remember so many meetings with suppliers where it'd be like, we're not really talking about what you're upset about, or like, it doesn't make sense because we're talking about something very light that we've talked about 100 times and you're coming in very heated, so something else is going on. And I think having that sense of trying to pick up on kind of the information people are telling you, just maybe not explicitly, really was so critical to being like, hey, like, let's not talk about this, let's talk about what you actually care about. And I found that that was so valuable, and that skill has applied so much at Ergo, where kind of doing sales, it's such the other side of the seat than being in supply chain and procurement. Now I'm, now I'm the one doing the sales, but really listening of people saying, hey, this is the problem I have, and So many of the brands we've worked with have surprised me where they're like, oh, we want to use Ergo for this. And I had never thought of that as a use case. And then that's been something we start to do. So really, we've had sales growth because of the brands coming in and kind of having a different perspective. And so I, I just, yeah, as I said, can't overstate it enough.

Where did, where did you learn how to do this? Listing is a skill that has to be learned. It's not something we're, and it's not something we're generally taught. How do you figure it out?

Yeah, I'm, I'm, it's funny. I think I've been fortunate. Maybe it's the super corporate roles I've had, but having real lessons on this, I definitely had went to something that said every time someone says something, repeat it back in your head. Like, that's the really way to active listen. It actively listen is you really have to be kind of thinking hard about every word they're saying, not thinking about what are you gonna say next and planning your move, but really focusing on what they're doing. So I think it's just been and luckily trainings and things like that that I've gotten through work.

So you did have— you had training in, in some of these skills at Apple and other places you worked?

Yeah.

And so that's how you got it. And what do you do when you— what do you do when you're confronted with a person who doesn't know how to listen?

Or what do I do when I don't want to listen, which also, if I'm being honest, happens too.

Exactly.

I think you, you just have to realize it's not going to go anywhere, right? Like when, when you're not listening, people can tell and then they don't want to be talking to you. And so I look back on things like that was a wasted meeting. I, I was in a state or they were not listening to me and I'll just have to call them up in a week when kind of we're in a better spot. But it really just, I, again, it goes back to I care about efficiency. You just lose time when you're not listening to people.

Yeah. And, you know, good listening, especially I teach people how to listen to emotions. That's what builds loyalty and trust is when you validate other people and they feel like they have been deeply heard, that builds trust and loyalty quickly. And yeah, that's when the re— that's when stuff really happens. And if you don't do that, then your relationship can be a little rocky.

Totally.

You need trusted relationships, then you really have to learn how to listen to them at a deep level. And show them, show them in the way that you listen that they are being heard.

I think that's so true. And I think people also forget, like, even if my meetings at Apple or my meetings with Ergo are short or, like, we just get right to the point, I think what you said about a trusted relationship is you have to have that. I think people confuse, like, oh, I can just meet with this person for 5 minutes and get this done. And really, like, the long relationships I've had are the ones that have been the most fruitful. In, in a business setting.

I mean, yeah. And if you're talking about efficiency, you can only get efficiency when you have trust. You can only have an honest, open conversation about pricing when you, you know, the other side's not gonna betray you. And, and they know you're not gonna betray them. And when you have that relationship, then the, the transaction, the transactional costs go way down because you're not spending much time dancing back and forth.

Right, right. Totally.

Right. And I think that's what I like about Arago too, is, is that the dance isn't there because the customer puts in a bid and the customer knows that be reasonable. I have to be reasonable. I can get a deal here. I'm not going to, you know, pigs get, pigs get, pigs get fed, hogs get slaughtered. I can't be a hog.

Exactly. Exactly. And it, it creates that relationship between the shopper and the brand.

Right.

Where they're putting a high-quality offer and the brand is saying yes. And then that really does fortify that relationship.

It seems, it seems like it's automatically a trust-building relationship. If, if a deal closes, that, that customer is likely to come back and say, hey, I, you know, these people are honest and they gave me a deal and I, got a deal and I'm happy.

And they're happy. Exactly. Exactly. Like, I put in a real offer for this and they respected it and they accepted it. I, I completely agree.

And that makes me feel good. So I want to come back and do business with them again.

Exactly.

You see much repeat business from people from, on the customer side?

A little bit. Yeah. I think we, again, because we're in such early days, I think we're gonna expect to see a lot more of it. Um, but yes, for sure.

Okay, good. All right, one more question, I'll let you go. What's one thing, Claire, about yourself that we would never know about unless you revealed it to us?

I love to read. I guess, I guess the books are behind me, so maybe this is a little bit revealed without me saying it. I can think of something else, but no, I just truly love to read.

What do you read? Everything? Everything.

Everything. I switch all over the place. Nonfiction, fiction. I'm currently reading The Lord of the Rings because I never read it before.

Really?

Yeah, I had never. So I started with The Hobbit. Now I'm on the first book. So I think there's always something to learn from books, and I love kind of being transported into a different world. So I love it.

Tolkien does that. I read— I started Lord of the Rings when I was 12 years old.

And you just finished last month.

I probably— I haven't read it in a long time, but, uh, I— there was a point in time when I was reading it about once a year. I just love that story so much.

I love it too. I, I mean, there's moments that are slow that I'm finding it hard to get through. That's why I joked that it would take so long to get through, but when he— the plot picks up, you're really in it, which is quite exciting.

It's really good. Um, well, good for you. Uh, yeah, I'm a kind of I'll just tell you quickly, I'm a voracious reader too, but I didn't used to be. I was born almost blind, 2400 vision. And it wasn't until 4th grade that somebody had the, a nurse school nurse had the bright idea to test me. Today they test kids at a very young age, but not then. And wow. I was a non-reader and then I got glasses, big thick black Coke bottle lens glasses. My, my life as a child was pretty rough. But I advanced 2 grade levels in one summer.

Wow.

I'm a voracious reader of everything I could get my hands on. To this day, I'm still that way.

So just like it can change your life, like just getting into reading, things just take a turn.

Well, the other thing that I found is that the more you read, the better you become at thinking and the better you become at writing, which are kind of my stock and trade as a lawyer. Although I don't practice law anymore, being a really powerful writer and having good critical thinking skills, I think, are sorely needed in this world today. So, and reading is what gets you to get, get you to that level. Yeah.

That's why I majored in math and now I find myself drawn to all these literature and, and things that I definitely did not study.

Yeah. I was an English lit major at Dartmouth. So there you go. Claire, it's been really great talking to you. Thank you so much for your time today.

Thanks, Doug.

Doug Noll here. Thank you so much for listening to Listening with Leaders. If you are a successful executive leader who would like to be on this program, please visit podcast.dougnull.com/podcast. If you got something out of this interview, would you please share this episode on social media? Just do a quick screenshot with your phone and text it to a friend or post it on the socials. If you know someone that would be a great guest, tag them on the social media to let them know about the show and include the hashtag #ListeningWithLeaders. I love seeing your posts and guest suggestions. We are regularly putting out new episodes and content. To make sure you don't miss any episodes, go ahead and subscribe. Your thumbs up ratings and reviews go a long way to help promote the show and mean a lot to me and my team. Want to know more? Go to my website, DougNoll.com, or follow me on LinkedIn, Facebook, and Instagram. That's @DouglasEnoll. Thanks for listening, and we'll see you on the next show.