Episode 254: The Tipping Point

Welcome to Skucast, the podcast for entrepreneurs in the promotional products industry. Skucast shines a light on our industry's best work, features maverick personalities, and discusses what's really involved in running a modern promotional products business. SkewCast is the official podcast of Common Skew.

The branded merch industry is such a vast industry. There are so many unique business models, so many different paths to growth. And throughout an entrepreneur's journey, there's usually a tipping point or two or three, a point where the business or the entrepreneur goes through an experience that changes the course of their future. In today's episode of the SkuCast, we're bringing you a live session from SkuCon 2023 recorded just this past Sunday, and it's called The Tipping Point. In 3 brief 10-minute interviews, we'll talk with 3 distributors who have each experienced a turning point in their business. We'll uncover the challenges they faced, the obstacles they overcame, and the tipping point that led to their success. Our guests are Nathan Bailey, president and founder of Ideation Creative Brand Management, Stephanie Taylor, co-founder of HelloPromo, and Jeff Becker, founder of Codis Design. Hi friends, I'm Bobby LeHew, Chief Content Officer at Commonsku. Now, as I mentioned, we just wrapped our in-person event in Las Vegas and it was incredible. And next week on January 19th, we're bringing you SKUCon Virtual. SKUCon Virtual features an amazing lineup of speakers, including Michael Bungay Stanier, whose talk, The 5-Question Leader, I promise you will be one of the most encouraging sessions you will hear. Joining us live will also be Ben Grossman from Swagcycle, Ali Delgado, CEO and co-founder of Merchology, plus additional highlights from our in-person event. SKUCON Virtual is built for teams, meaning since it's virtual, it's the perfect experience to gather your team together no matter where they are located and learn. If you're in the same geographic area, I encourage you to watch together as a team. And if you're not, or you're a hybrid workforce, Have everyone join and then close your event with a team meeting to talk about practical ways you can begin to implement change in your business. You can learn more and register at skucon.com/virtual. Today's episode is brought to you by CommerceHQ, the work-from-anywhere platform that powers your connected workflow, enabling you to process more orders and dramatically grow your sales. To learn more, visit commercehq.com. Now here's the tipping point. Brought to you from SCUCON Live. And one note, there is some language in this episode. I just wanted to give you a heads up before you listen. Here's our interviews with Nate Bailey, Stephanie Taylor, and Jeff Becker.

Our next session is something we're calling the tipping point. And Mark and I always talk about— we always like to throw something on the agenda that makes us just a little nervous, whether it's a structural change or whether it's Whether it's some topic or something, and every year we have one thing. And this year, the reason why this is different, it's not a 30-minute panel with 3 different people. It's sort of a fast discussion, 3 different times with 3 different in individuals called the Tipping Point. And what we wanted to know was, in a distributor's life, what was the tipping point that really drove you and your organization to change and improvement? So we have 3 different guests that we'd like to invite to the stage. Our first guest. Is a friend of mine named Nate Bailey. Nate Bailey is the president and founder of Ideation Creative Brand Management, honored in 2022 on the Inc. 5000 list as one of the fastest-growing private companies in America. Nate's worked with Intel, Comcast, Oracle, Salesforce, and what a journey you had, my friend. So Nate, you had this major turning point in your life recently, and you were thinking of exiting the business. You were considering selling, you were looking at all options because you weren't sure whether you wanted to grow the business at all. And when I ask you about it, and I've known you for years, I said, what, what was this change? And you said, really, the change had to do with yourself. What I learned about myself, I applied to the business. What happened?

I was in a space now, looking back on it, kind of had an identity problem, was not feeling good about myself. And so kind of went through 2019 and 2020 and COVID and all that kind of stuff. End of 2021, I started doing a program called 75 Hard. If anybody's heard of it, I don't know if anybody's done it before. So I did 75 Hard and in the process of 75 Hard, went about on kind of a mission to make myself feel better physically and spiritually and mentally. And so during that journey, I went through this transformation of those three aspects of my life. And I was able to apply it to the business. And what I come to realize is that although I had on the outside looking in a very successful business and family and personal life and all the things that you would look at during that time, the vision had kind of stopped and I'd reached what I'd always thought that my professional journey was going to be here in this industry. Multimillion-dollar business, good income, house with a pool, like all those kind of things. And so when I got to the kind of end of that vision, I didn't really know what to do with myself anymore. And so I had to, through the process of 75 Hard, you have to visualize, do visualizations every day as one of the tasks. And I began to learn how to do that. And then I started to visualize a further picture out of what ideation my company could look like. And when that happened, kind of the lights went on and I got reinvigorated and refired up.

We use the word vision in business a lot and it's become very generalized. You had a phrase and we're all going to have to forgive this phrase, but I love the phrase myself, but it's a pretty broad phrase, a big phrase, expansion of my being. Now you have to know Nate. Nate was the guy that if you showed up at his office, you were going to have, it was good time Nate. You're going to hang around, you're going to have a great time. That was priority number one. But you really started to think about a bigger vision for your business. What does this expansion of my being mean and how did that apply to the company? Because we really did make a transformation.

Yeah. So I lost 55 pounds during that whole thing. And like you said, I was a good time. I was the guy that ordered all the drinks and all the appetizers and all that kind of stuff. And so when I went through this program the last year, 75 Hard and everything that had to go with it, I just got addicted to Um, personal development in a way that, um, I was talking to Kirby about this at lunch, you know, I started walking and then the walking led to jogging and then it led to walking uphill with a 45-pound vest. And so as that related to the business, um, I started to wonder all the things that we were doing, what could we do better and more efficient and differently?

And so, uh, your personal iteration, then you're like applying it to the business, correct?

Yeah. Okay.

Yeah.

Um, you're at $7 million in revenue now, and if I know now the new Nate Bailey, you have a plan for growth, not a, not a wish, but a plan. So you use the phrase selling the dream. Sell me the dream. Where, where are you growing to?

Yeah. So, um, you know, the new vision, uh, is to become a, what we heard earlier is to become an all-inclusive, all-in-house, everything in-house. Business with decoration and fulfillment and kitting and all those kinds of things. And so I did my, my team a disservice. I had to apologize to them. I kind of basically showed up and did the work and didn't have a plan and just kind of went through every day without trying to push us forward. And so when I came up with the vision of where we were going to take us, I started to see what ideation would look like in its future and stopped thinking about me and what that looked like and started thinking about what my team and how it would impact my team. And we, you know, like I wanna put a wellness center into our offices that has a gym and has a sauna and cold plunge and all that kind of stuff. And so, you know, I'm constantly telling my team like, this is, you know, where we are now, this is where we're going and you know, this is what it's gonna look like in the future.

And practically speaking, what that meant was instead of you showing up as Good Time Charlie, now you are focusing on different roadblocks that are preventing your growth. So tell me a little bit about what are those 4 or 5 roadblocks you have right now that you can see in the immediate quarter, 6 months that you're trying to remove to grow?

Yeah. So up until this year, it's 8 days now, I sold my own book of business. So I totally got rid of that so that I could only focus on eliminating roadblocks. Um, so I'm trying to, uh, I think one of the things that we don't do very well is consistently marketing through all channels. Um, so that's one of the roadblocks we have. Uh, we backed into fulfillment and warehousing because of the pandemic. And so we did it backwards without any sort of plan or any really knowing what we were doing. So, uh, we're reverse engineering that to do it the right way. The other thing that we are trying to do is bringing decoration in-house.

Something you said to me that I loved is that our core values are based on the things we suck at. What does that mean?

So our core values leading up to when I went through this transformation, like we wrote them on paper in 2009 when I started the business, and then they sat in a document and we didn't live by them and they were kind of worthless. So the business matured, it changed, it evolved. When we came up with our new why, our new mission statement and our new core values as a business, I wanted to focus on the things that we were weak at to try and get better at them. There were some things that we were really good at and that I just wanted to highlight. But so our core values are take initiative, take responsibility, do the right thing, and loyalty.

What does that look like practically on a day-to-day? Like you and your team are every week, you've got your goals, you're working on things. How do you, how does that become a practical conversation in your, the value, the value, value add? Yeah.

So, So our why, our mission statement, because we wanted to do something that was more than like be exceptional or be creative or anything like that. So our mission statement, our why, is to make our clients look like rock stars. And so we build everything around the decisions that we make around the core values, and then we celebrate intentionally our employees that exemplify and work within, inside of those core values. And so we have an internal process through our Slack channel that we give each other kudos. Um, and they earn kudos cash basically for, um, for doing something that matches with one of our core values. And then they get rewarded. We have a reward system through it.

What does success look like for you now? Is this a threshold? Like for years I've known you, you had numbers in your head. When I hit this, when I hit that, what does success look like for you now?

Taking this vision that I have of the business so that my team and my people have jobs and careers that satisfy them, that meet the personal goals and aspirations that they have. And, you know, spending time not daydreaming about this, but visualizing what that looks like when I roll up to the office, what my people look like, you know, inside the office collaborating, what the office looks like.. And then now I spend most of my time reverse engineering the steps to get to that vision.

Give us an example. Example of the reverse engineering those steps.

Yeah. So one of the visions I told you I had is that I drew out, so I have a drawing that looks down at the building of how it would flow, how the office is, where the spa wellness center is, where the decoration is, where fulfillment is. It's all planned out as if we've got the money to do it. And so I am constantly showing it and talking to it with my team. One of the things I talked about is the wellness center. And so to prove that I'm not just lip servicing or to show that this isn't just lip service, this is just a dream. Like we bought 2 massage chairs and we're breaking in a treadmill. And so we can't, I can't build yet the, I can't build the, you know, elite first-class gym yet, but we're taking those steps to show that the vision is coming to fruition.

Nate Bailey, thank you, my friend. Yeah, enjoyed it. Appreciate it. Thanks. Stephanie Taylor. There's probably a few Stephanie Taylor fans in the house. Created Hello Promo, created Hello Promo in 2014 because she had a passion for helping brands build awareness and communicate their values. So welcome, Stephanie. 2020, in your words, knocked the wind out of you.

Mm-hmm.

In fact, you just almost quit, right? You were, were you thinking of closing the shop? What happened?

I think Jamie and I were, Jamie's my business partner. We're a— Jamie Webb.

There we go.

You know, we had just gotten momentum and we had, I think we had creeped over the $1 million mark at that point. And then we, we were working with a, an agency to do a rebrand. We had just hired a new gal. There were like 4 of us on the team, I think. And then March 13th, you know, it's like school shut down and we're like, like, what are we gonna do? We have to lay off the girl that we just hired like 2 months before. We laid off our team, like the other 2 people, and we're like, well, you know, we started with nothing, literally $250 each, and we bought some laptops and worked out of our spare bedrooms, and we're like, we can go work at Starbucks, it's fine, and we can still do this. Like, it'll be fine and just be us again. And, um, but holy shit, sorry, he told me not to swear. Who, who didn't get the wind knocked out of them in 2020? And I think we're like, every 2 weeks we're like, okay, 2 weeks, we'll be fine. You know, we're gonna be back in business. 2 weeks, we're gonna be back. Well, it's like May, June, July starts picking up again, but it was scary.

And it, but in 2022, so you think of that threshold of sales that you'd hit in 2022, you did that in the 12 months alone.

Yeah.

So you had this phenomenal return and bounce back and get this program. So part of this was due to a program you landed that included 7,500 employees would each get a piece of apparel. But here's the kicker. The client, and I still read this and shake a little bit, the client has 350 different logos.

Huh.

For 750 employees. Yeah. Everybody groaned, right?

Everybody's like, who wants that?

When you were faced with that opportunity, did you and Jamie struggle with that? Like, were you like, oh my God, are you serious? This is what we're gonna do?

What happened? I'm always like, Jamie, what do I do? She's like, let's just do it. So we broke a few, um, embroiderers got fired by a couple.

They fired you or you ran through them?

Oh yeah, we had a phone call one time and they're like, we just think you're too big for us.

I'm like, what?

But you know, like until you— I did— I didn't know, like we're hogging up their machines doing one logo at a time. And right, yeah, they didn't want us.

Now that's, that's some business that some people in this room would not— that would run away from. But you were like, I think we can actually craft a niche out of this business. And you decided to do that. Yeah. And now you've actually created a path forward where you're going after more and more of that business.

Yeah.

And what does that look like?

I mean, we're— we've learned a lot and I know I'm kind of like jumping ahead a little bit. Go ahead. We brought in embroidery in-house and we have 4 heads, which I mean, it's crazy that we're doing the volume that we're doing with just 4 heads. But what we figured out is like, there's tons of companies like this across different industries, and we're like, we figured out how to work with them. In addition to like the embroidery part of it, I mean, we're a whole service, like full service. We do company stores, warehousing, and fulfillment. Like, we're like, we can, we can solve problems for them, make things super easy. And so now that's part of our growth plan for like 2023 is like going after these companies.

So was that the tipping point for you when you look back and you said yes to this program that basically no one would say yes to? And you were like, that's what we're going to do. We're going after this business. Yeah. How did this expand your thinking, you and Jamie's thinking? How did this sort of like give you the confidence to go after more of this?

I keep looking at her.

Like for permission, like, is this right? We still like this, right? We still like this business, right?

Can you ask me that again? Sorry.

Yeah.

Yeah. How did this change you as an entrepreneur? Because you, you know, you went from almost closing the doors to now doing a million in 12 months.

Mm-hmm.

And that was a phenomenal turnaround.

Mm-hmm. Um, I mean, we have a warehouse and office and we have in-house decoration. We went from like 4 people to, I think we're at 11 now. Yeah, it just forced us to grow, right? But we didn't back down.

So you carved a niche. Now you're going after that business specifically. You're targeting that business. So you're doing that online. You're— how are you doing that?

Yeah. So we're right now we're building out a new demo, like a demo store so that we can start going after that business. A little bit more proactively too. But we're doing— I think, you know, we have a few different verticals within our company as well. So we have the, the company store division with the warehousing fulfillment, and then we also have our own e-commerce, and then we have like traditional, um, like sales, right? So we're going to start doing a drip campaign though for the, um, to grow the company store division. Um, but also like going after investment companies because they have these people that we want to work with, and like just good old cold calling.

Yeah, it's awesome. Um, what advice do we have for those in the room? And any of us— it could happen to any of us this year— faced with a difficult decision where business suddenly takes a nosedive, and you've had to make that decision a few times, the whether we're going to press on and keep going. How would you encourage other entrepreneurs who might face that kind of challenge?

To close up or to keep going?

Yeah.

I would say just keep going. Like, just push. Like, evaluate, like, what your strengths are and then focus on, you know, growing that. So, like, we're working on our processes for the company stores and so that we can keep bringing on that business and just pushing forward. We know what we're good at now. Um, That's why I would say I would just keep going.

Our last guest is Jeff Becker. Jeff Becker founded Codis Design during college in 2003, and he's since grown the company to over $50 million in revenue. When the pandemic hit, Jeff was already in the development of a remote work environment and his plan for Codis's office staff, but revenues took a drop, falling nearly 50%. $50 million falling nearly 50%. Like 30. Okay. His pre— your pre-pandemic planning paid off, resulted in a comeback. And now where did you hit in revenue in 2022?

I think it's going to end just about $55 million. Okay.

So what's fascinating about your story in 2022 is that $55 million, in part you got there through attrition. You fired 1,200 of your 1,600 customers.

Great job.

Yeah. I went back and actually looked at the numbers after talking to you and I think we fired about 950. It was about $6 million. I see it flies. About $6 million in customers. Probably maybe 60% of our customers basically moved on from the start of last year.

Why? Was it purely a revenue thing per client or did you decide a type of client? What was it?

Yeah, I mean, we looked at the size, we looked at the size, we looked at people, customers who probably wouldn't spend, we didn't think would spend $25,000 in a year. I know that I always reference Jim Collins from Good to Great on the hedgehog model, and I've always talked about this hedgehog model, but for the last 20 years, I didn't know what my hedgehog model was. I, like a lot of us, I just sort of sold to everyone, but we've doubled down and refocused and I'm like this now. And so we said these don't fit, and so we axed them all so I know I can grow by moving on from and opening the bandwidth up for my team to really focus on the customers we want.

Do you have a criteria different than $25,000 threshold? Is it a certain type of industry, sectors, verticals?

I mean, it's got to be somebody who works with our programs, who fits into our model. I definitely— some of the speakers earlier do a lot of customization and yes, and I definitely say no to customers. Like, it's got to really fit because for our support staff, I want to make sure they know how to handle the customers that we bring in so that they're able to actually service the customers and be successful with them.

So this gave you some breathing room because you landed $14 million in new sales in one year.

Yeah.

Um, I know it's a broad question, but how the hell are we able to do that?

Yeah, so, uh, we've changed our model where our salespeople there They're outselling. Our salespeople are focused on bringing in new business rather than focused on maintaining the customers. I've been in this industry for 20 years and I've seen the toll it takes on each of us, the hours we work, the days we work, the vacations that it's hard on. And I recognize that there's models out there that the salespeople can bring in new business, and I've built a model that— and then by reducing our workload it's allowed the customers— it's allowed my team to really focus on bringing in new business, and it paid off with a bunch of new— a lot of new business.

Your structure then must allow for biz dev people and then account managers.

Yeah.

Did you go through any of the infrastructure changes and cost changes? Oh, okay, here we go. Oh my. So how are those— this has always been a hard business to get hunters and farmers. Yeah. Organized and properly compensated? Without, like, you don't have to divulge everything, Jeff, but how did you, what were some of the distinctions that you made between those two and how are you able to, like, obviously you had success at it, $14 million. Yeah. Give us a little insight into what that was like and what it looks like.

So the biggest challenge has been getting the salespeople on board. Because one of the benefits of this industry is that we're paid on residual business and continuing getting business and having business that repeats year and year, year after. And I came up with a model that incented our sales team to say, all right, instead of focusing on the current business, instead of focusing on the recurring business, I'm going to get paid on really going out there and finding new business. Uh, not everyone was on board. I've lost a few people. I've got a few people that are, you know, skeptical is the wrong word, but the vast majority, they liked this thought. They liked the thought that they didn't lose money when someone made a mistake for them. How many of you, right, are frustrated when an assistant or a support person makes a mistake, not even necessarily their fault, and it financially impacts you. They like the idea that on the weekends they weren't answering phone calls, on vacations they were taking vacations. And so I got my salespeople on board and I've compensated them. And so now they're out there looking for new business and finding business and attacking.

Was that a risk for you? You had to—

I mean, it's still a risk.

You had to draw deep though on your—

draw deep—

your profit reserves that you had to say, we're going to compensate these folks with and look for future benefit of that.

Yeah, but you're—

yeah, you're real bullish on business development, and most of us do not have an aggressive new business development plan. But with you, it's like an obsession. Every time I talk to you, it's like a really obsession. Talk to us about this passion as a leader. Like, how do you shift from managing a reacting, responding team to being someone who is saying, nope, we're going to be a proactive sales team.

Yeah, I mean, last year, you know, we dropped $6 million, picked up $15 new million, but I also lost some other business and customers that are, uh, we're in aggressive markets. I've, I've lost some business from customers not buying, and I know that's going to happen at some point. I know things are going to change, and I am, you know, neurotic or crazy or in the middle, you said to me, I'm like something optimistic. You said some phrase to me like, I'm super optimistic, but I'm also like very, I don't know, he's more eloquent than I am. But I just, it's this sort of paranoia that if I have to keep going, keep getting new business. And the reason I have to keep getting business is because I want to build this incredible product. And to build this incredible product, I have to make sure that I'm bringing in new business. I'm always fearful that there's the next CODIS. I mean, look around this room. Every single one of you is working on this and I'm fearful that— I'm just fearful that people are coming. So it just pushes me and drives me every single day to look for new business and keep going.

So much so that when I told Jeff about this premise being the tipping point, he's like, I don't want to talk about yesterday. I don't want to talk about what the transition in my business. I want to talk about tomorrow. And, um, this, this, I want to re— to repeat a phrase you said to me verbatim. I used to have a hope to hit $1 billion. Now I have a plan, like a literal plan. So give us a glimpse at what the future growth trajectory looks like. Timeframe, investments required. Yeah. I mean, broad brushstrokes.

Yeah.

I mean, if I can pick up $15 million in new business a year and then it can add on top of each other. I don't know, maybe 17 and a half years, I could hit a billion dollars. One of my sales directors said to me in the meeting, this idea came from him, I have to give him credit. It was like 2 months ago. He says to me, he goes, Jeff, what would it take to get to a billion dollars in sales? I'm like, no, that's not possible. He's like, no, no, but Jeff, what would it be? So I'm like, okay, well, take out my phone. I start running some numbers. I'm like, I mean, maybe. So now I like use this decision and I look to myself and I'm like, okay, I have these two decisions here. Which one is more likely to get me to a billion dollars? And I used to say, if I'm venture, if I was venture-backed with venture, with VC money, what would I do if I had VC money? Like just a bunch of money, what would I do? But now I say to myself, which one of these two decisions help me get to a billion dollars? And it takes about a nanosecond to actually figure out which one should I do. And now with my plan and sort of like this 17.5-year plan, I have other people in my organization, they say the same thing. They're like, "Hey Jeff, here's the thought. This will get us to a billion dollars faster." And it's not even really a discussion of which one should we do. That's just the direction we're going because we're all aligned on which way we're trying to go. And it's more of, I think, a guiding light than necessarily I have to get there, but it's amazing to have this sort of clear directional plan to lead us in a way.

And I love the story where you actually did the math and said, "Oh wait, we grew by $15 million. We could actually pull that off." You're a fierce optimist, but you're also not real Pollyanna about it. You're practical, but obviously fiercely determined. What would you say is the most important trait that has helped you think forward? Because I think thinking forward is one of the hardest things for us. We're optimistic people in this room, but thinking forward as a planner is a big difference. What do you think is the most important trait for us?

I mean, I think that you need to spend enough time walking away from your current each and everyday life on what's going on and really set a goal. Okay, I think the most important thing is to have a clear vision of what you're doing, where you're going. I'm so-so on mission statements because I think they're kind of fluffy. I have a two-pronged approach in my business, these two goals, and we're always just looking at these two goals of where to go. It's not so much for me, I care about making all this money. Growing a ton. It's more about working towards something and I don't know, there's this drive to doing something. And I've just realized that if I have this plan, we're all, my whole team, we're running in this direction. And some people aren't on board. And honestly, that's not a bad thing. I'm like, hey, we're just different. But I've recently become so focused and we're all so moving in the same direction together. It's so inspiring for me. It's even inspiring. I'm sitting here getting excited just thinking about this because I've spent so much time trying to figure out what to do and now I have this clear vision of where we're going and I feel like I'm actually doing something and I'm actually making progress and working towards something.

Concrete realities versus just, I hope and wish that we get to that kind of stuff. Thanks so much for tuning into this episode of SkuCast. Be sure to keep up with our latest content by subscribing to SkuCast on iTunes or to our blog at community.commsku.com. Until next time, friends, thanks so much for listening.

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