Scaling A Business With Tracy Hazzard From The Find Your Exit Podcast With Michelle Seiler Tucker

Welcome to the Find you'd Exit podcast where the leading authority on buying, selling, fixing and growing companies, Michelle Seiler Tucker, is dedicated to helping you find the path to retire rich and move on to your next adventure by exiting your business for the desired dream price you deserve. Get ready to find your exit with your host, Michelle Seiler Tucker.

Welcome to find you'd Exit. I'm so excited to have my very good friend Tracy Hazard on the show today. Tracy has been, gosh, just a great friend to me. She helped me get started with podcasts. We've been trying to do this for two years. So here we go. Tracy has quite the entrepreneurial career and she's been a former ink columnist, CEO of has design and broadcasters and developed 250 plus plus products, generating almost $2 billion for her clients. I mean, that's amazing. And for 27 years she worked with design leading brands like Martha Stewart, Herman Miller and other huge brands. So she also has 40 utility design patents and she has been featured in Harvard Business Review, Forbes, Wired, and C and Money. She's also been on the Larry King show, so she now really specializes in potatoes, which she helps entrepreneurs start a podcast and make money from their podcast. Right, Tracy?

That's right.

Welcome to the show.

Thanks, Michelle. I'm so excited you've got this started.

Me too, Me too. What's good about you is you stayed on top of me.

Well, that's because I believe so strongly in your message because I've lived it, right. I've had businesses, sold them. I've had some I couldn't sell. Right. You know, so I've been there and I know how valuable your message is.

So how long have you been an entrepreneur? Like, at what age did you start?

Well, you know, it's funny because I never really considered myself an entrepreneur until about, I'd say about six years ago. Like, I just didn't use that term in my mind. I thought of myself as a business owner, right. So. But I've been a business owner on and off for about 25 years. So, yeah, we've had various. Yeah, pretty much, yeah. My whole adult life, my whole marriage for sure. And my husband's my partner, which is very common also in, you know, in the world that you're in business with your family.

Right. So y' all work together every day, right?

We do. I mean, it not the whole 27 years that we've been married, that we work together every single day, but for the most part, yeah, we work together every single day. We've had this would be the third form of business officially that we've run together.

That's amazing. So talk to me about the first business, which were the products where you developed over 250 products and raised over $2 billion.

Yeah, so actually that's the second business. So the first business, we had a stylus pens for handheld computers back in the late 90s, early 2000s, and we made them to go along with the Palm Pilots. If you remember, back then, I actually.

Bought my husband one of those Palm Pilots.

Yeah, exactly. Well, we designed stylus pens that had a unique patent on them. We were like the cult favorite. Like, everyone loved our pens. We were featured and wired and all of those things. So that was our very first business. And then the tech bubble burst. But we were okay because we had already fan it into ad, specialty and enterprise, and we'd been doing really well. But then we got our patent knocked off by ideo, the largest industrial design firm in the world. And Palm themselves, because they put it in their catalog when we had to go into an intellectual property fight over it. And then 911 happened. So like we had like a cascade of things. And now I'm proud of the fact that we did get out of the business by having all those patents in the product. We were able to license and sell them off and make back our investors money and come out of that really clean and not suffer as we could have, as most people did at that time.

And that's amazing because a lot of business owners get tied up in those lawsuits that can cost a significant amount of money, time, energy and effort. So, you know, I always tell my clients, one of the most important things is to have an intellectual property and make sure you have those patents in place.

Yeah, you know, we have a really. This is. You mentioned the Harvard Business Review. So what we did in that business is taught in Harvard Business review is in 26 countries around the world as a case study in entrepreneurship and IP together. And the professor who put the program together reached out to us about, I don't know, maybe eight years ago or something like that, and reformed the end of the program to get updated into how we looked at intellectual property and product design today differently because of what happened to us then. So we won that just. But in a very like, odd way, Palm was trying to go public and we had launched a grassroots, what would today be a viral. A social media viral campaign. But we launched this grassroots campaign because it was a pen we used to have on our website, this big animation that said, do we detect A bit of pen envy. And we had their pen and our pen side by side. And of course, everyone knows our pen predated theirs, but you know that the rules in patent law were different back then. And it was who conceived of it first, not who filed first and not any of those things. So we did both, though. We conceived of it first and we filed first. And so we did what our lawyers told us not to do. We put all our dates right out there because we were so confident we were first that we put a timeline on our website along with that graphic. So their lawyers were getting really nervous because they were like, these people know what they're doing and they must have backup or they wouldn't be putting this right out on their website. So they got nervous and there was an indemnification clause. And PALM forced IDEO to settle with us to get it out because they were trying to go public and they didn't want the negative publicity. We'd already been picked up by a couple of newspapers at that point. It worked out in our favor, but it doesn't. When you, when you go into a lawsuit, you always lose, right? You know, you lose attention, you lose money, you lose focus.

The attorneys. That's it.

That's right. So. But knowing that you don't want to get into that changed our view of how we do it. So while we do, we still, I mean, we. Tom and I have co host, I was about to say, because I co host shows with them, but we co own all these patents together and it's wonderful, but we utilize them in a very different way. We don't file patents unless we know we're going to commercialize them. We don't waste money on stuff that people don't want to buy. It's waste of money, waste of time. And you get caught up in the patent and not in the product and the sales and the marketing. So we want that to be first. So we always look at it from that perspective. And then the second thing that we do is we also look at it as it is an asset in a business.

And you want to sell it as fast as possible or license it as fast as possible, or make money on those patents as fast as possible. That's more important than fighting them off. And you know, it's a slight defensive strategy in consumer retail because it's just a front line, oh, I have a patent on this. It'll help things a little bit, but it's really mostly an offensive strategy.

Gotcha. So these 40 patents that you have, they're all commercialized, right?

Almost 90% of them, yeah.

License for someone else.

So most of them, some of them we design for our clients, and then there's usually a royalty attached. So that's like, really helps us with our revenue. So we still have royalty attached to them, and some of them we outright sell to people. And then some of them are ours. Like we're using them for our own products and our own things, and they'll be caught up in the next company that we sell.

Wonderful. So are you still doing that? Are you still designing patents for other individuals?

We haven't done it in a couple of years because our focus is solely on this business. But we have filed a couple of new patents on some products that we're working on within our podcasting business.

So the patent company itself, you can't really sell, but you can sell off the patents, you can license the patents, etc. Let's go back to the products company. We have the 250 products. Were you able to sell that business?

We couldn't. So has design is still the name of the company. It still exists because we do have patents in there. We do have royalty contracts, right? That still exists. So the company still exists and it does make money. It was a design consulting firm. So it was Tom and I and a bunch of freelancers that we hired whenever we needed to do an expanded project or if we needed a specialized engineer, we didn't have them on staff because we couldn't afford that. And then we have a team in China and a prototype shop and things that we would utilize. And we had a direct relationship with them, but we had no investment in them, so they weren't our asset either. So it was nothing to sell, really, at the end of the day, unless I wanted to stay attached to the business. So it wasn't possible. And that is why about six years ago, I took a look at our business and said, this is not scalable. I don't see how we're going to do this. And we looked at it and we started thinking about, well, what could be scalable? And we started to explore multiple options, alternative revenue streams. That's why we started our very first podcast on 3D printing. Because we thought, well, 3D print business, that product business, if we create a product catalog of 3D print items and designs, that would be saleable. And so we thought, okay, that would be great. We could develop a 3D print business that we could then spin off and sell off. And that would allow us to just do keypads. Design and do fun projects that we were interested in. And so that's how we looked at it. It was like, what were we going to create on the side? What we didn't anticipate was that no one would want 3D print products, but that they wanted the information more and that our podcast would become more valuable. And so that's actually what happened to us. And in that process, we started a podcast business without realizing we were starting another business. And that one, we've scaled it purposefully so that it is capable of being sold.

Right. And so that's why I love this conversation. Because there's 32.9 million businesses out there and 99.9% of them are small business owners. And many small business owners, most small business owners don't plan their exit. They really don't even think about selling until they have to sell due to an external catastrophic event like COVID 19 or due to an external catastrophic event. So this is so timey right now and timely right now as far as what business owners need to know because, because so many business owners have created a job versus a business and when it goes time to sell, like you said, you either have to be tied to it for a while or you're not able to sell it. So. Right.

And you know, and that's the thing is like look, the first business we sold off the patents, right? We sold off, you know, we had to lay off all the workers like there was no existing like business even though we had an office back then. And so I always thought that was not the way to go. And so part of it was why the has designed consulting business was designed the way it was to not have employees or an office. It was designed that way as a anti what had happened before, right? Because I didn't feel that that was right in the process. I just didn't have a choice. And so looking through that, it also taught me though that that business isn't as viable either. And that's not a long term solution for us. And we could only take on like two to three clients at a time before we'd max out. And I couldn't keep a staff on because I couldn't keep steady work at the level that we did it at because we would do a couple hundred thousand dollars contracts for a couple of years at a time, but that was it. I could only hire them for the project because the next project, who knew what it was going to be like. And so that's where it wasn't viable. And so when we came to develop our business that's known as Productize today or Brandcasters is really the company, but as it's known today, like we built it to everything to scale, all the technology scales. There are still patents involved in it. There's both software patents and hardware patents. And so like all of that go together. So all of the things we didn't do in the first couple, we're doing here. We have a 60 person team worldwide, but it's all scalable so that we can add more clients, add more employees. Like the whole thing works like that. And we have software and systems in there that manages everything for us. So there's lots of proprietary things as well.

Right. So I call that everything you're talking about. I call that my six Bs. And, you know, for a business owner to build a business that's scalable and sellable, when they're ready to exit, then they have to base that on the 6Ps. And so many business owners go into business but not really understanding that concept, you know, like you did on the other two. But now you get it.

I get it, absolutely. And I did read your book. So I was always cognizant of that over the years here. So.

Like, the first P is people. People, Right, people. Because when buyers buy businesses, they want to buy a business, not necessarily a job. So people is the most important P. And proprietary, Even though it's my fourth P, it's one of the. Or my third P, it's one of the most. It's one of the most important as well.

Well, and we've done some things that are really interesting. So we actually helped a couple of our clients scale up enough to get sold for triple X, which you normally don't go for in a retail business. So a consumer product retail company, especially a furniture company, and that's the business we were mostly working in, doesn't usually go for multiplier. It just doesn't happen because they look at it and they go, well, maybe we'll give you two times revenue. But they usually downgrade it because the retail product industry is so trendy and a product that could be in one year is out the next. One of my favorite people, and I know you know him, the founder of Uggs, right, Brian Smith. And he always says, I'd been in business and my Uggs had been popular for 12 years. And I would go to the bank and the bank would go, yeah, we don't know if we want to lend you more. They might be out this year. And I was like, yeah. You know, like. But that's how the consumer retail business is. But what we did for these clients to get them that multiplier is we created patents for them. And so what we would do is if they had one core product that was working or one core thing that was working, we would create a silo of patents around them. We would come up with and brainstorm, and we would do it in, like, two weeks. We wouldn't take a long period of time. It would be like a. What they call a Sprint. Right. And so a design Sprint. And we would design every which way that we could to hack the patent.

Right.

So, like, in other words, to like, break it or do it a different way and go around them. And we would do that, and then they would file all those in provisionals. They wouldn't necessarily take them all to, you know, final patents, but they would file them all to provisionals. And that way they would have this, like, you know, maybe half a dozen patents surrounding the core patent that is already proven and working in the marketplace.

Right. That's amazing.

Yeah. And so we call it a little patent fortress. And so for these clients. Yeah.

When you buy a domain name, a domain name, you want to buy all those domains, right?

Yeah.

That's amazing.

Yeah. And so that would work out really well for them. And, you know, we've just charged them a flat rate because it's like, you know, we didn't need investment because they were never going to make those other patents. And so, you know, actually a couple of them did. That's the funny part was we came up with a better, cheaper way and they ended up using it instead of their core patent. But, you know, that was a happy accident. That's what we did for them, plus bring them a broader product line. And that's one of the things I think people don't understand. So, like, when you have a company and you have one amazing core product, you can't stop there. People like to see a portfolio of products. And so my specialty was always going into a company and looking at the products and saying, okay, either you have too many, let's cut them down and get to the core of what's really marketable, what's really going to sell, or let's really broaden this because you've got a lot of gaps that you could be providing in the marketplace, and that would get you more shelf space, and that would get you more return clients or would get more people to buy multiple items when they've shopped from you. So, like, all of that would help to increase revenue quickly. And so I used to do it, I used to call it my cut clean and create. Right. That is my three Cs. And I would cut out of their program because you had to create cash flow somehow. You had to get some money to be able to utilize to do some new things. The clean, it's usually like they didn't update the products over time because they get complacent with it. And so sometimes you need a new color or you need a new feature. You just got to keep up with what's going on the market. Yeah, you just got to get, you know, you got to make sure you're staying on that. And then the create would be to fill the gaps and to create that next level innovation. And so that's how we would go in and look at a product line. But that in and of itself would make the product line more valuable and long term valuable. And so many times these kinds of companies were getting bought out for their positioning on the shelf, but also their future pipeline of product flow. And so that's how we were able to create, not just with the patents, but those things create up opportunity for them.

And that drives value significantly. When you have that real estate, if it's on the shelf or if it's on a radio show with direct response, like advertising with Glenn Beck or somebody like that, or if you are at the top of Wayfair or Amazon or ebay, that real estate drives value, that drives multiple up, significant.

Right. That's today's shelf space is like is your positioning on the page? Right. It's not the same as on your shelf. It's just changed, but it's still there.

I mean, you heard that J.C. finney's just filed chapter 11.

I know, it's. The retail world has been in trouble for a long time and we've been seeing that. Like we knew it was coming and part of it was that. And think about it from this perspective. It's kind of. You think you have the long view as a manufacturer. Let's say you're selling office chairs. Right. Your choice is that I can sell container load after container load to Costco, or I could put 400 units in Amazon and move them. Right. Like you're just like, why do I even want to bother with Amazon? But today, had they not bothered with Amazon, they'd have no place to move their inventory, no way to do it. This is important. So it's important to always be looking at what's going on and staying, figuring out Ways to be on that. Right.

And that's what I always tell my clients, always preach and teach this, that the business landscape's changed dramatically. You've heard me say this. It used to be 90, 95% of businesses will go out of business in the first five, five years. When I wrote Exit Rich right Behind you in 2019, I did the research and I was, like, flabbergasted because it changed so dramatically. Now it's only 30% will go out of business in the first five years. And a whopping 70% of businesses have been in business 10 years or more out of 26 million businesses will end up going out of business. And the main reason for that is lack of innovation and lack of marketing. And consumer buying habits have changed because Amazon changed our buying habits. And you must innovate. If you don't innovate, you're going to get left behind.

Absolutely. Well, I wrote my column on that for a really long time and I would harp on it constantly. What I would say again and again in my column and to my clients and to other places is that, look, it's one thing to do what you're doing really well now, do that, but you have to have systems and processes that's paying attention to the future and testing things out. That's how we got into 3D printing. It wasn't that we. We'd been using it as prototyping for a decade before 3D printing came into, like, being able to stick one on my desktop. Right. Tom said to me one night, he's like, we have to stay ahead of what our clients might be looking for in the future. If we don't understand this technology deeply and how hard it is to use or how easy it is, we won't understand how to stay in front of that from a design perspective. And he was absolutely right. And I coughed up the $4,000 to buy a printer at that point. And, you know, what we discovered was that it was incredibly hard to do this. And we thought, this is going to take so much longer than everyone imagined. But today I've been recording a special series for our 3D print podcast, which is called WTFF, which is a really geeky term for 3D printing. Fused filament fabrication. So it's what the fused filament fabrication. But I read it and I had.

No idea what it was.

Yeah, exactly. It's a really geeky term, which means that you're not listening to the right show if you don't even know that already. Because we don't dumb it down. It's not like your average person wants to listen to that. Right. But we've been doing a special series with Hewlett Packard, so with hp. And HP came to us because they wanted that designer view of the future. But what they're seeing and what they've been demonstrating to us is that there's going to be a tremendous shift in digital manufacturing. Like we saw from 2D print on signage and all those things. So, I mean, think about it today. If you are out there and you had a store and I had a storefront for a little while, I owned a shop in Northern California. So I know what it's like to be on Main street. And you would order these signs and they would pre printed and they would take forever to get printed. And like, if you screwed up, you really screwed up and you couldn't have them redone easily and they would be expensive and so you would save them and reuse them. So you're really careful how you design them. Now today we just spit out these digital signs and before you know it, you can walk into the grocery store. And within a month they all had like a stand here, six feet apart, like, you know, you had all this like floor decals going because everything's digitally printed, right? And so you have that going on. We're going to see the same shift in manufacturing and that's because of what's happening right now with COVID with the sequestering, with all of the things where we need to be. We have a supply chain management problem. So we're going to see that shift happen. So the 3D printers and everyone out there knew it was coming and they've been holding on and the industry's had a hard time with investment, but they're now in the right position.

I agree 1,000%. Yeah.

So it's going to be interesting. So we're going to see a dramatic shift to all kinds of businesses happen. That was expected, but like anticipated. But then people started to go out of the hype cycle and go, this isn't going to happen. This isn't going to happen. But now it's going to.

It's definitely going to happen. And you know, there are so many opportunities out there right now because of COVID So always tell business owners, don't panic. The worst thing you can do is panic. You know, what you really need to do is, you know, first and foremost, look at your financials, look at what you can cut. That's not serving you anymore. And then look at what you need to add and double down on and pivot. I mean, just one pivot, one tweak can really take your business to the next level.

Well, and you know, the one thing that I can say, Michelle, like, I'm seeing a shift in Warren Buffett calls a value investing. Right. We're seeing a shift to that. But sometimes value investing is misunderstood by people. Value investing is. They get into it and they think, oh, there's excitement here. This is a trendy thing. I want to be in, you know, I want to invest in cannabis or blockchain or whatever that is. I want a business like that.

Yeah, that's exciting. But we forget the businesses like Uggs. We forget the ones that have deep proof that they're selling day after day that their business is growing. And so that's one of the things that I know that I've done very successfully throughout my career is we build in proof really early on that the market wants what we have to sell. When you have that, when you put more money in that, you only get more revenue. Right? Like, you able to scale that up. You know how to market, you know, people want it. You now just need more fuel.

Right.

And so that's the perfect kind of business. A business that has great proof that they have something of value and that it's growing. Like we're growing. Say, you know, you're growing even in hard times, right. And you have that steady growth happening. When you see that that's where you want to put your dollars. That's the value investing. Because your dollars will be well spent and grow faster than it is when you get on these, like, well, maybe this one will work out. Cause it's going to be a 10x deal, you know.

Right. Yeah. You need to invest in what's sustainable, what's proven, what's a proven concept. What continues to go up. And that's what, you know, I always talk to my business owners about, is there's lots of business owners that continue to go up, but then they take a deep nose dive because they don't continue to innovate.

Yeah, well, they do. They hit that curve, you know, the top of the curve. Right.

Change. The way that we used to buy things is not the way we buy things anymore. And now with COVID it's. It's changed dramatically more because we used to go to the grocery store. You don't have to go to the grocery store anymore. You just order and it's shipped to your door, it's put in your car. You don't really have to walk in and fight the traffic and worry about getting germs.

Right.

Well, dramatically. You got to see how you can ride this wave and how you can take advantage of this. So you just don't survive now but thrive later.

Absolutely. And I'm a big fan of. I would call it research testing. Right. So I guinea pig myself all the time. So I will start a. That's why I have five podcasts that I host. And I do that because I'm always out there. I start a new one every year. I'm testing it. How hard is it? What's going on? What can I do? Well, you know, video came along and we were already prepared for it because I'd been shifting one of my podcasts, testing out video casting and seeing how it was going to work. How hard is it going to be? How stressful is it going to be on my system? Can I develop a team that works on that? Specifically, do we have standard operating procedures on what's best practices? Like, so I'm always out there testing it. That's my role in the company as CEO is to be out there testing it and to be the spokesperson. Right. Like those are the two things. And of course on the backs and make sure that we get our funding.

Right. You have to do.

Right, of course, all those other things. But that's my particular role in the company is to test those things out. Only because I'm not going to get. I'm not the kind of person who's going to go, shiny object. I'm so excited about this. Let's shift everything. That's not me. I'm be like, there's proof here or there's not proof here. And so because I have that experience, that's how we utilize that. That way you're not distracting your entire team. So if you can't be that person in your business, get someone in. There are a business out there. They used to call it at IBM, I think it was called Skunk Works. Like there's a person out there whose job it is to explore these new technologies and these new ways of doing business and understand from that perspective how we're going to build a bridge to what you have today. And doing that is the best way to keep going. Because otherwise what happens is a lot of businesses and Michelle and I know a few of them who just went completely out of business overnight because they didn't do what was right by continuing with their existing customers, considering with their existing technology, they would just go, let's shift gears and the whole company would have to shift and it would destroy the productivity, it destroyed the revenue value. Everything happened like that. So that can't. That's not the way to innovate. Right. You want to build off of what you've already got with things that make sense.

Right. You don't want to take your core product, your core competency and abandon that to jump ship to another shiny object somewhere else.

No, you want to get it up and running and then. But one of the things that a lot of companies do have a hard time doing is deciding when it's time to cut, when it's time to let go of those old products. It's a really hard thing. I learned this like my first real. Yeah, it's really hard. So I worked for Herman Miller and I was one of their in house designers, which is very rare. They used to kick all the designers out and they'd have them out. But I was in the color, materials and finishes group. So my job was to handle all the things that went on every Herman Miller product. And at that time they were launching the Aeron chair. So there were new materials coming in, but we had a budgetary constraint that said we can't have more than this much dollars in material. And so we had to cut some products. And some of those colors and finishes were in the line for since the 60s. And so they were like, you're never going to get the clients to agree to cut this. Like the clients are going to go up in arms. Coca Cola is going to freak out if you discontinue Coca Cola Red. Right. Like these things are going to happen. And so what I did was I found a way to do it. And I found a way to do it by first getting people excited and bringing in all the new things and then slowly just convincing them that we didn't need the old things. So it was like this bridging thing that happens. That's what I was referring to before making this bridge happen to where they really want the new things. They get used to them. And then I show them how great they're going to work with what they already have and a way to discontinue the old. And now all of a sudden, everyone's excited about the new. So I cut their line, which used to be 600 SKUs, which is stock keeping units for those of you out there who don't have products, but 600 different items, basically different colors, different materials, and I cut it down to 350 and no one complained. And our profitability went way up on.

The product line, that's amazing.

So that it can be done. But letting go and knowing when it's time, they could have been profitable so many years earlier. Right.

I think you have a good integrator to do that because you do. The entrepreneurial, the business owner is typically an entrepreneur who has shiny penny syndrome who says, oh, let's do this, oh, let's do that. Because they're the visionary. Right. They're a visionary and they want to grow things huge. But then you need an integrator that says, wait, okay, this is how we do it. This is a research we need. This is the proof we need. This is how we do it. Just like you did.

Right. And also another thing that it's too easy to go looking at, like bottom line results. Right. So if I looked at products and go, this one's not profitable, but that one may be just exactly why people come to you to buy lost leaders, we call them in the industry. Right. So you can't cut based on numbers alone. So you can't go the opposite way. You can't do your gut and just say, oh, everything's great and I love my stuff and you can't just go by numbers. There has to be that understanding and analysis of both parts together to say, this is what's attracting people to us and this is what's making us money. Let's make sure that we make all of this together profitable.

Right. It needs to be a logical decision based upon fact.

Yes, definitely. And based upon market interest like that. At the end of the day, if people don't want it just because you love it and you think it's going to be great time to cut.

It's kind of like when Steve Jobs came in, Right. What does Steve Jobs do? Yeah, he got rid of the dumb phone, right?

Yeah, right, exactly.

You know, invented the smartphone. Yeah. Without it.

Yeah. You know, these are the things that every company needs, someone like that. And if they can't find, if they don't have it in house, then they need somebody to like, sit in with them, get in with their business like you do, Michelle, you know, get in with them and start to analyze and look at these things with a keen eye on creating value. Because at the end of the day, that's what we need to do. Whether it's creating value so we can sell our company. Creating value for our own businesses, our own employees, our families, or everything. And creating value for our customers, our clients. At the end of the day, like those three parts at the end of the Day. If that values chain isn't there, it will not work in anyone's business. It's not viable.

And that value chain changes.

It does.

It changes. And that's why I tell my clients now that you really have to get in tune with your customers, your clients, to see what their needs are, what are their problems, because what their problems were before COVID are not their problems today. So you need to really find out what they need and become the solutions expert.

Well, yeah, you know, a friend of ours, Michelle, Betsy Westhaefer, who has solutions, she's starting a new podcast with Tony Botto, and they have a podcast called really in parentheses know your customer. And the part about that that's so critically important is that so often we don't ask the right customers. You know, in the 3D print world, part of the reason so many printer companies went out of business was they were asking the early adopters. They weren't asking the people who are mainstream. So they weren't getting this understanding of like, well, this printer's too complicated to run. I don't know how to do it. Like, no wonder people aren't just buying it off the shelf easily, right? So you've got to understand which customers to ask the questions of. And then Betsy creates customer advisory boards where you come back to them again and again and verify what you're saying and doing is what they were talking about or how they're seeing it. Because what I know from branding, right, from branding things, is brand is a perception. It isn't what I say I am. I'm the best podcast production company in the world. It's what Michelle thinks of that at the end of the day, because she's my customer and my client, and if she says pottage is the best, then that means more. And so it's their perception that matters in it. And that's how you become a household name at the end of the day, right? That's why you become Kleenex, Right. You know, because people perceive you as the essential thing.

Right? And that's called brand advocacy. When somebody says, you know what? You have to use Tracy, she's the best. There's nobody better than her. Go potatize this.

And so that's actually, you know, a great way to create proof in your business. So I looked at that when I shared that with my potential investment groups. We have a 90% referral rate. So 90% of our business comes from referrals from our own clients and partners, and only 10% comes from our advertising or me out There speaking now, there's a lot of brand awareness going on out there. So it does have residual value. But 90% of that the exact people we are closing and we're bringing in. So we're not overspending, right. To do that. And it's proof that we have desired value. Because people don't put themselves on the line and refer somebody unless they really believe you're going to get the same value they did. And they believe in that value. So it's a sign of great brand.

Right.

And that in and of itself, you create that in your business. It doesn't cost a lot of money.

It doesn't. And I call it the branding ladder. Because at the bottom of the ladder, you're starting from where brand absence, where nobody knows who you are and what you do. Then you go from brand absence to brand, they know at least who you are. Brand awareness, they know at least who you are. Right. Brand awareness. You go from brand awareness to brand preference. And you know what? I prefer to drink Coke over Pepsi. Then you go from brand preference to brand advocacy to brand insistence, saying, I only drink Coke. And to brand advocacy, where it says, you know what? Go zero oxid. You don't have an apple. What's wrong with you?

That's right. That's right.

Brand advocacy. Guess what? You don't have to do much marketing. You don't have to spend a lot of money on marketing.

No, you really don't. At the end of the day, and I'm a big fan of getting that fast, start creating. I call it the hypothesis brand. So you start a hypothesis brand to test out, does the customer want what I think they want?

Right.

And that's simply. It's this dialogue that you're going to do. And so we very often don't actually go into our full invention of products. Like, so we won't go tool for something, spend a lot of inventory dollars. We'll do a test in another way. We call it a B testing. Just like if you're in marketing, you have a B testing. Like you'll do an A ad that has certain color or certain headline and then you'll do a B1 that's slightly different. Right. We do the same thing with products. So a good example of that is we were going to create. It was a line of like dog collars that were for an invisible fence, but they had a really cool on the neck, like cool design. So the dog collars themselves were selling like gangbusters. So while we were designing, I sent that client off to go start selling them, start getting clients on them. And then when you have that client base, you're going to send out a survey to them of these new designs we're creating and saying, hey, if you could have bought our collar with this, which one would you have bought? So now we have a ranking of the different design. So then we did a 3D print run. So this is like going into our C model.

Right.

So we did our A model, or our B model is to do the 3D print test. We ran 100 of each item and they sold them on Amazon. So now you're just testing out a small run. Which one got sold fastest, which one sold first, which one sold out? That's the one they go to tool for. That's your C model. Now you're in the marketplace and you know you've got the best hit. And while you maybe refine the other ones, change them, test them out again and see if we should bring them on next.

And it doesn't cost that much, right?

No. All along the way, they were generating revenue for the project because they were selling the core neck collar portion. They were selling the whole electric fence thing. They were selling that all already and making profit off of it. So it was funding the project instead of them going, I have this great idea and this great design and I want to market it, but I need money for inventory, I need money for tooling. Right. They didn't have to do that in that process. They created proof from the beginning so they knew it was a worthwhile investment for themselves.

Proof of concept. Proof of concept. Go out there and sell it, then build it. You know, Kevin Harrington does the same thing. I mean, he has all kinds of different ideas that get dropped on his lap. And he does the same thing. He goes out and splits, test it on Facebook, on Google, you know, all those different platforms on Amazon, and then he decides what product he's going to take.

Well, and that's the thing is it's harder to date when we're direct marketing. It's harder because we have all this online selling and it's not like you can touch it, feel it. So there are products that are difficult to explain, difficult to communicate that mode. And so you have to test that to make sure.

Right, Great. So let's talk a little bit more about potatoes. Okay.

We created potatoes because people like you, Michelle, demanded it. Like, we started it. And people were like, what are you doing? Your show is doing so well. So when we started our 3D print show, we had zero email lists we had zero followers because we'd been ghost designers for Martha Stewart and Herman Miller, like people like that, Right. So no one knew who we were. Nobody knew you.

It's like me selling businesses.

Like I'm right, Nobody knows you. You're behind the scenes.

Nobody knows me. Because it's the best, best kept secret.

That's right, exactly. So the being. Lots of you can relate to being a hidden expert, right? Being that ghost behind the scenes, right? That's where we were. And so we realized we needed to step out front. The podcast helped, but the podcast itself went from no listeners in five months to 25,000 listeners a month. And then shortly after that, it hit 100,000 the following January. So it was like within nine months, we were hitting 100,000 listeners a month. And we were producing a lot of shows, we were creating blogs, we were doing. We weren't doing video at that time. We were doing like video companions so that people could see the printer running. And we would run that on YouTube and run that in our website. And we had hit on this process and formula that was trending and working with the algorithms that were going on and shifting at Google and at itunes and other places. We just didn't know it was happening.

Right.

We were tapped into it. And that was because voice recognition technology was coming into play. As soon as we realized that's what we were doing and we could see the pattern of it increasing, our business increasing again and again, we were able to like set up more best practices and dial into what we were doing. Right. And that's really where our special sauce, where that proprietary process comes in for us, is that we created this, that taps into, we call it verbal SEO or verbal search engine optimization because we're talking to Alexa, we're talking to our Siri, we're talking to Google. Right. And so because of all of that, they want to match that instead of keyword cram like people used to do. And so like, instead of typing in like odd ways to search for things, we're asking for things in a much more normal question way. So the results need to be in a normal conversational way. And so that's what's being rewarded in the process. So that's what we tapped into. But on top of it, we looked at companies like yours and like our own, and we realized that we have things we need to advertise for, for ourselves. We don't just want to go in that old school radio model of taking advertisements from Kindle and from, you know, the latest Coca Cola. Or whoever wants to advertise. Generally across our platforms, we have specific things we want to promote. It might be a book, it might be a program, it might be an event that we want to have tickets for. It might be a charity, it might be someone we could help right now, today with what's going on in our local area or in our industry. And so we look at that.

Being able to educate.

Right, Exactly. So but what happened was, and this is so funny because the original editor of our podcast is now my son in law, but he was a student back then and so he was a video student. He told me that in order to put an ad in and then take it out later because I wanted to take it out like a month later when this program was over. He told me it cost me just as much as it did to edit it originally because it takes just as much time to remove it and then re encode the files. And I said, well, that is ridiculous. And I challenged my husband and some tech and a tech friend of ours to come up with a solution. And that's what they did. So when you have a deep need and you say, I don't just have this need, I know other people are going to have this need. And we say, let's brainstorm and figure out a way within a couple weeks they had a solution for us. And so that is the core patent pending part of Potitize is this ad mixing system where you can put your ad for your book in when it's on sale and then take it off and just put a different ad in and put a different program in. And you never touched the actual episode itself. And so that's why people come to us because we have that service, we have all that service side and we have this technology side, so we combine the both.

Kind of hard to do it yourself. I'm the type of person that says do it for me.

Well, you know, I learned that in my consulting business. I could go in and say, here's my plan for you to design. But then they go like, well, how do I get it made? So we always had a done for you consulting, like heavily level consulting. So it's what I'm comfortable in and what I know because I don't want to do it. That's why I had a team to begin with.

Right, right.

So anything that I don't want to do that seems too much cumbersome. That's repetitive. I hate repetitive. We're going to have developed a system for it. Like that's how it is.

So now you have what, 350 clients that you work with?

We do. We have 350 clients, 60 employees worldwide. We produce episodes in about seven to 10 days, depending on when they're submitted in the length. It's expanding so quickly. And we're looking at a large acquisition plan for the latter half of the year, which is another great strategy because we can't grow fast enough.

That is a great strategy.

We can acquire some things that we need faster.

And that's where I come in.

Yeah, that's right. That's where Michelle comes in.

For me, that's a great strategy. Instead of trying to go out and reinvent the world. Reinvent the world. Reinvent the world. Acquire. You know, I own a graphics company, specializes in first responders, and that's what we're doing. Yeah, going through acquisitions.

Well, and you know, there's proof in the industry, in the podcast industry. So they just announced that about a month ago that there are a million podcasts, Apple Podcasts, or was itunes. It's now Apple Podcasts. A million podcasts on there. But there are only 300,000 or so that are active. That's because that's how hard it is.

Right, so meaning that they're recording every week. Right.

They're posting every week. They are actively have a show. Sometimes they're dropping. Dropping seasons. That still counts as active. But yeah, most people have abandoned their show. We call it pod fading. So they. Because they usually don't mean to quit. It just sort of happens like they. For they didn't have enough episodes and they go a week and then it goes to two weeks and then three weeks, and then they're like, well, I guess I haven't posted in a while. Was it really worth it? You know, and then they don't do it.

Well, you're my coach, so you're gonna stay on top of me.

No, that's right. That's what we found in our research on podfading, that those who had coaches, those who had services, those pod faded at a much lower rate. So if you look at that number that industry standards like 70 to 80% quit rate of shows, and our actual platform has a less than 12% quit rate.

That's amazing.

So the support matters at the end of the day. So get yourself some support.

Absolutely. You know, I say if you're not the. If you don't have an assistant, you're the assistant.

That's right.

Hire people that are more competent than you in areas that are not your core competency. I mean, Donald Trump did it. What did he do? Hire George Ross. Why? Because George Ross is an attorney. Everybody thinks Donald Trump was a deal man. Donald Trump was a visionary who made that deal. Those deals work. George Ross made them work.

That's right. Somebody else. But you know, the other thing that happens too often is when. And this is how most I'm going to call mom and pop businesses don't get out of where they are. Right. That when we don't look at it as, we look at it as like we just get at a casual assistant, a virtual assistant, those kinds of things. Nowadays we can set ourselves up for a lot of trouble. So sometimes service companies in essential parts of your business make sense. So we've seen a lot of people who, their assistant said, wow, I got my kids at home, I can't do this anymore. And all of the core knowledge that they developed for you is gone. And they really. Because you weren't putting that into systems and processes and team or a service bureau that you could utilize that would stay stable for you. Right. So you've got to make sure that if you have an essential part, it's like your supply chain. Right. An essential part of that has to stay with your business.

Right.

So it has to be able to stay with that. So if you're creating core knowledge, it better stay in your business, not be single person dependent.

Well, that's, that's processes, which is my third p. That's right. People number one, product number two, production processes number three, and proprietary number four. But that's so true. I mean, you have to have those policy and procedure manuals when I go to sell. Look, I sold an $18 million company and what was I doing on closing day? Walking around getting everybody's employee handbook signed, getting everybody's employee non competes. Because the CPA that works for the company, come to find out, we actually found it out during due diligence was embezzling money.

Oh, my God.

So I called her during due diligence. She took all the employee records. So here I am. So always.

So you're like you're recreating it? Oh, my goodness.

Everything. Yeah. So also have backups. Always have those backup files.

That's right. A really great book that I really like is A Clockwork by Mike McCallowitz. If your audience hasn't read it yet, he talks about ways to create those procedures really simply. And we do this all the time here. So when something changes and it happens all the time, like the way you submit a podcast to itunes, changes like every few months you know, and so every time they notice a change, the person who's going and loading in a new podcast will do a screen share record. And that replaces the file on how to do this in our standards manual. Right. And so we're always, like, keeping that stuff up to date. And so. And then if they learn something like, oh, this didn't work, they'll create a short little video saying, hey, this is important. Don't mess up. This part of it I discovered after the fact. Then a podcast doesn't get launched because itunes says no. Right. So that really critically important is you built that process in. And he's got a great little book about it. It's really fascinating.

Yeah. Even in Exit Rich, we really go into. We really take a deep dive in each one of the six Bs, especially processes. And then we have special bonuses where somebody can go to the free book membership and get employee handbook samples, operation manual samples, and all those documents. Because a lot of owners are like, well, where do I start?

They don't even have it. Yeah, exactly.

You know, for me, it has to be a checklist. In every department, every department has. Have a checklist or SOP checklist. And it's simple. We just check it off. So that way if we lose somebody, then the next person can come in and we can train them pretty quickly. I mean, how do you think McDonald's trains people all around the world? Because they have those sops in place, you know, they have those processes. Did you ever watch a movie, the Founder?

I did. I loved it.

I loved it because they went to a tennis court, an empty tennis court, spent an entire day there orchestrating who's going to take the order, who's going to cook the hamburger, who's gonna put the mustard on the bun, who's gonna put the pickles there. Right?

Yeah, I know, it's fascinating.

And I tell you, it's undervalued in a lot of companies because a lot of M and A advisors don't get it. We get it. We understand processes. There's a lot. A lot of my companies have proprietary processes. And that's worth money.

It's worth more money because it's scalable then. And that's really the biggest difference.

More money. Absolutely. Because if you're selling to a strategic or a competitor or something like that, that's what they look for.

That's right.

That's why we're partnered up.

Michelle, what is your number one business tip that you have? Tracy?

You know, that's a great question. So we have a mantra. It's not just a tip here, but it's a mantra. We call it hope is not a plan. So if you're going to hope that this stuff is going to work out, you're sorely mistaken here. And it's like my current Covid advice as well is that if we look at everything as a short term problem, we just got to get through this. And so often in family run businesses, whether you're running a shop, because I know it's like, I just got to get through this and then I'll hire some employees, or I just got to get to this revenue level. And you don't look at that as saying, that's short term thinking. I need to lay in place. That's not going to mean that I need that employee yet. Maybe I need a system, I need efficiencies. I have to scrutinize that every single day and create strategies and plans. And as long as I'm always taking a look at everything, then I'm not hoping the result is going to happen. I'm making it happen.

Absolutely. I love that. Making it happen. Absolutely. I'm curious and I know this is going to be a crazy question, but what were you like as a child?

Well, that's a really good question. So evidently I was very curious. And I think that's part of what is, like, has made me who I am. And it's part of what I hope that I give my daughters. Right. Like, I hope that at the end of the day that their curiosity is the biggest thing. Right. Like, so I would. My mom learned how to weave because we lived in South Africa for a couple of years.

Yeah.

Well, my dad was on an assignment. We lived in there. And I was like, it was at the height of apartheid, actually. I was like 78, 79. So I was 8, 9 years old. And my mom learned to weave. And I would sit below the loom and read because I. And I would be reading things like Shakespeare and whatever because my dad was a literature major and it was the only books in English we could get. So I'm reading, like, his books. I have no idea what. I'm sure I didn't understand them, but I was reading them because I just needed to read. But I'm sitting below it and my mom would say, tracy, this doesn't look right. What do you think? And I would look up and I go, you skipped this. This pattern's not right. And so there's this high level of curiosity combined with pattern recognition. And so I Could see things really clearly about how they're supposed to work and how they could look. And I think that at the end of the day, that's exactly what I ended up tapping into as my gifts in the world.

Right. I love that. Yeah. You know, when I was. I always say I'm curious too. You know, I'm like a kid in a candy store. What gets me excited, what gets my juices flowing, is to learn how a business owner has started a business out of the garage or on their kitchen table and now it's a multi million dollar company, almost a billion dollar company. That's what gets me excited. I'm like a kid in a candy jar.

Well, and you know, you and I are probably very similar to that. That's why I love designing all those years, because it was never the same. It was always something new, something different. Some new business to grow in a different way, some new products to tackle and innovate on. So you also have that newness of. Each business is slightly different, each story is new.

Absolutely. And then you did what I always tell my clients to do, especially now more than ever, is think about your business. What business are you in now and what business should you be in? And you did that with prototype?

We did, yeah. I mean, we're temporarily in the production business. Like that's how I look at it. We're really a tech company at the end of the day and we have a big tech plan for where we're going. But in order to do that, we had to have the best produced shows and we couldn't get clients to do that on their own. So as a means to an end, we created that. Right, exactly. And so as a means to an end, first off, there's nothing wrong with that business, but I didn't want to be in a total service business. Right. I want to be in an innovation and tech business. So we see that as like the two things go hand in hand really nicely. And think about it this way, look, you can have GoDaddy and GoDaddy is in, arguably a tech company with servers and all of these things and all that. But at the end of the day, somebody still has to build websites for people, Right. That's why they offer those services. And because they couldn't just get enough people out there doing it, you've got to also offer them yourself. So that's kind of where we see ourselves. Not like GoDaddy, but we see ourselves in that kind of combination of tech and hosting and having to have the services. So that People can utilize it to its best.

Right. So, Tracy, last question. Are you planning your exit for.

We are. We are seriously planning. We're planning an. Actually a really large exit. So we're planning a billion dollar exit.

Yay.

And.

Yeah, right.

Yeah, that's right. Absolutely. We're planning that because what we see is that we're intersecting a gap in the marketplace and there's some really big players and a lot of big movement going on in the industry. What we see is that they're not value investing right now, they're hype investing. And so we say we're just going to quietly plot our way to this place where we've got the most consolidated, best technology, best of everything. That is doing the daily business and doing the hard work that everybody wants. And that's where we're going to put ourselves so that then all someone has to do is come in and buy us and move us into that next level, which we won't be able to get on our own without a lot of investment dollars.

Right, right. And expertise.

That's right.

Like I say, it's hard to read the label from the inside of the bottle. You need an outsider's perspective. So, Tracy, if our listeners want to get in touch with you, how do they get in touch with you? Because I think every business owner should start to apologize.

Well, you know, I have five podcasts out there, so you can Google my name, and it's Tracy Hazard with two Z's, and that's the best way to find it. But the one, if you're interested in the product side, I have a podcast called Product Launch Hazards and there's over 120 episodes or something like that. And I go over my P's, which I have seven of them that are all about the product process. And so if you're struggling with any side of that, that's a great one. Plus, I introduce people to the people that I use to create products, whether it's over in Asia or get it sold into Costco. I introduced them to all my partners because I don't do that business anymore. I wanted them to know who they were so they could access them. So that's there. And that's my gift out to everyone. And then the binge factor and feed you'd brand are our podcasts for aspiring podcasters. So if you're interested there, I told you about wtff. And then I have one on Blockchain, because Blockchain is a secret to my new technology that we're developing. And so sometimes when we want to learn something, I make time for it by having a podcast on it so I can ask really important people like IBM what they're working on on their blockchain, and so I can get the inside scoop and understand what's going on in the industry so I can prep myself for being a part of that future. So the new trust economy is that show, and that's what landed me on Larry King.

That's wonderful. And you have one of my HPs, which I call his passion. So you're so passionate about that.

That's an extra one on yours.

Yeah, well, I came up with pivot, too, because, you know, with what we're dealing with right now, everybody has to pivot, right?

You do.

You really do have. And I think it's important to have passion in what you do on a daily basis.

I think that's. It's absolutely right. If you don't have passion for your business, it's going to be very hard to make it succeed.

It is. I always ask my clients, would you do what you do right now if you didn't make any money?

And I absolutely would because I love it every day.

And so would I. Yeah. Because I love saving businesses. I love saving businesses. I love helping business owners exit and I love helping them obtain their desired dream price. Price that they've always. That they deserve. And I've always dreamed of.

Yeah, I. And I love the how to. I love that I can provide businesses a how to. Like, you don't have to know it. I've got the how to covered for you. I'm your how to girl.

So you're the how to for Palmitize. I'm the how to for Exodine.

There you go. Love it.

Well, it's been wonderful. Thank you so much. I appreciate everything you do. And you're the queen of Palmitize.

Oh, thanks so much. I appreciate it. And I look forward to exiting rich with you.

Thank you. Me too. Thank you. So I just interviewed trust Tracy Hazard, the queen of podcast who owns Pot of Ties. Oh, my gosh. She had so many great golden nuggets, so many words of wisdom, and she really tied in some of the six P's that I use and I teach in Exit Rich in my book Exit Rich. And so she talks about product and how product is so important and how you should be innovating. And then she also talked about processes, and her Number one is IP intellectual property. She has 40 utility brands. 40. So I'm going to be talking about the six P's and I'm going to be doing an individual podcast on each one of the P's, so stay tuned. So make sure you go check out Tracy so you can go to findyourexit.org to get all the information about Tracy and all the words, the nuggets that she dropped on us today, and the six P's that we talked about as well.

Thanks for listening to the Find you'd Exit Podcast. Don't forget to check out Michelle Seiler Tucker's Build to Sell Blueprint Books and Exit Rich, along with more blogs, videos and resources@findyourexit.org be sure to connect with Michelle on Facebook or LinkedIn and stay tuned for her next next episode by subscribing in your favorite podcast player.