Will She Replace Lori Grenier On Shark Tank? Her Designs Have Sold Brought In Over $1,000,000,000 In Revenue With Tracy Hazzard Of Hazzdesign From The Top Podcast With Nathan Latka

This is the top where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per top five and six million. He is hell bent on global domination. We just broke our 100,000 units sold, Mark. And I'm your host, Nathan Latka. Okay, top Tribe, this week's winner of the 100 bucks is Jose Avil. He is a 17 year old that doesn't want to go to college and he wants to start his own business. For your chance to win 100 bucks, just like Jose every Monday morning, simply subscribe to this podcast on itunes right now and then text the word Nathan to 33444 to prove that you did it. Okay, Top Tribe, you're listening to episode 246 and coming up tomorrow morning, you're going to hear from ty Stafford. He's 27 and you won't believe what he's doing for Red Bull. Okay, top Tribe, good morning, you. I got to tell you, it's so nice to just be able to chat with you guys every morning. Isn't this great? You're going to love our guest today. Her name is Tracy Hazard and she's the CEO of Has Design. Co designer of 250 plus consumer products generating over 1 billion. That's with a B at retail. Through her Inc. Magazine column by design, she pushes companies to tactically create success by design accelerating business growth. I love that Design accelerating business growth. Tracy co hosts the WTFF? Exclamation point 3 3D printing podcast. Start point for the next industrial revolution. Tracy, are you ready to take us to the top?

Absolutely.

Let's do this. So first things first, where did you start? You've got an ink column, you've got a podcast, You've got a successful design company. What was first?

First was a couple of really lucky companies to work for. So I worked for Milliken and company, which is the world's largest textile company still today. And I worked for Herman Miller and you can't get two bigger companies that are design oriented than that.

And what year was that?

So that would have been 92.

And yeah, 92. And then at Herman Miller by 94 and yeah, so it was back when the Aeron chair was launching. In fact, my article is just about to come out is about Bill Stump and the Aeron chair and what he taught me at that time.

And so how are you walk me through the business model. How are you actually getting paid from Harmon Miller?

So not anymore. That was an employee situation. That's how I got started. And it kind of gave me this great resume to work off of. And when I jumped out on my own, and my husband is my partner, when the two of us went out on our own, having that pedigree really helps. It opens a lot of doors.

Totally, totally. So what did you do after you decided to quit there?

So we had a startup business that was focused around the tech tools, stylus pens for handheld computers and we got into a really sticky IP battle with palm computing at the time. Who was the Tracy, did you win?

Did you beat them?

We did, we did, but we didn't. This is the thing that they don't tell you about those IP battles. Like you can win on principle, but you will never win in money.

Interesting.

You will always lose.

Interesting.

If you're the small guy. So we won on principle, which we needed to do because we were also battling ideo, which is the largest industrial design firm. And so our reputation as designers was on the line. So it, it worked out for us and we learned a lot of things about tactics for doing it with no money. And we've translated that into, you know, a long term consulting work for ourselves and for our clients. It's, it's kind of worked because you're always bootstrapping it.

So is this has design. That's when you created it.

That's has design. Yeah. And it's been in various phases over the years, but in the last, I'd say almost seven years we've had it exactly the way it is. And, and if it hadn't been for my experience at Herman Miller, it wouldn't have opened the do. Tom had lost his job. He had been working in. And that's my partner and husband and he lost his job. And there was this company we had a connection to and we said, they said they needed a chair designer and we said we can do that and here's why, and here's what we know about making office chairs. And they said okay, great, can you start immediately for us? And that catapulted us into our current form of our consulting business.

So wrapping up. This is unbelievable, the success here. So I'm going to read some numbers here. The audience is going to just not believe this. You've helped launch over 253 retail products. Those products have done over $758,457,260 of client sales and you and your husband and your team have put in over 98,688 design hours. That is unbelievable.

Yeah. And what's more under believable is that's probably a couple months old. So it's a little out of date. Unbelievable because that counter doesn't, that counter doesn't really like keep counting. But yeah, no, I mean it sounds unbelievable but the reality is, is that we just rapid launch process that we go through and it just produces things really quickly and very successfully so that they do generate a lot of sales for our clients.

Can you walk me through a client example? Can like what was the last design that you did?

So our, our platinum record, if you want to call it, our platinum record product is a chair at Costco called, I think it's called Metrex now. Like it always changes names every year, but it's been there for almost five years and you don't get to stay on the shelf at a retailer unless it's extremely successful. And, and the way that we did it was we, you know, sometimes have to design hundreds of variations of something. So in this case we really only did about 20 different chair designs. But because they're so large, but some of the smaller items, we do hundreds of variations.

So how do you make money? How do you make money on the platinum chair?

We get royalties based off our client sales. We also charge fees. So we do both.

What's the royalty on the chair?

So typically a royalty, it depends on how big our fees were at the beginning. So it's, it's anywhere from 2 to 3% and sometimes the 3 is usually when there's some kind of patent associated with it.

Okay.

And this particular one doesn't have that, but does not.

Okay, so what was the fee associated with the initial prototyping of the chair?

So typically our fees are on a monthly basis. So we do a retainer and it's, you know, because it, it takes a lot of time to, for us to concentrate on particular client at one time and we usually give them all our time. That's kind of what we do. We don't overlap our clients. So we'll do one, maybe two at a time. So that's usually anywhere from 10 to $20,000 minimum guarantee. And then per month. Yeah, forever, however long. And sometimes it takes two years to get into retail store. If you're, if you're starting from scratch.

What was it? Chair. How many months did you work on that?

That particular chair took about six months.

And who was the client? Was it Costco or somebody else?

No, it's Bayside Furnishings, which is owned by Wayland Furniture in San Diego. And they are, they already had office furniture that they made for Costco and they wanted to expand into a whole new category. And that's what kind of our specialty is sort of expanding companies in. So they already have a brand and already have a relationship with the retailer, but they just want to grow fast.

Yeah, yeah, yeah. Makes complete sense. And it's cheaper to work with you than it is to. For them to hire their own team and worry about health benefits and office space and all that.

Well, it's not just cheaper that way, but it's when you hire the right resources who've done it before, you don't make the mistakes because there's lots of things that can go wrong. There's lots of liabilities that are associated with chairs, for instance, or comfort problems, you know, the wrong foam. And especially because most of the items, almost, almost all of them, probably at least 90% of them are made in Asia. So we also have sourcing relationships that we use. So we, we go to the factory and we babysit these products when they're first launching. You don't get that from a in house designer because they got to move on to the next thing.

Totally. Well, we, we will, we will link to this. Okay. In the show notes, this particular chair we're breaking down live in the show notes@nathan latka.com forward slash the top 2, 4, 6. Again, top tribe. Just remember the number 2, 4, 6. Nathan latka.com forward slash the Top 2, 4, 6. So Tracy, when I'm looking at this chair. Okay, I'm on the chair on your website. First off, Gore, it's gorgeous. I mean, this thing looks unbelievable. It looks like it's made out of platinum.

Actually, it's $99, believe it or not.

What? Okay, so that's what I wanted to ask you. So it sells for 99.

Yeah. And actually right now I think it's on sale for $79, which is like a steal.

So what is it? Okay, so let's break down this. So 99 bucks to make. How much does it cost you to build?

So typically, you know, it's usually 50. 50% of the cost is usually somewhere in there. That's kind of a hard and fast rule with, with retail in general.

So it costs 50 bucks to make?

Yeah, that's what it would be. Typical. But Costco has a really interesting model and this is why buy if you're Already interested in buying it. Buy it from Costco because they only charge a 12% margin. So it's. So there's only their profit is very low, so they can actually get more quality and get a better price out of it and still make $99 unlike the others. So that's probably somewhere around $75 on that particular one.

Okay, okay, so let me just break this down. So again, it's selling for 100 bucks. You have $50 of cost to produce. What other costs are associated with it?

There's landing costs. You just got to bring it in, and you got to transport it. What is that typically landing costs? You know, it varies all the time, but it's usually around 10%.

Okay, so call it 10 bucks. What other costs?

Well, and then there's my fee.

What's your fee?

Well, and then there's like, the 2% royalty, and usually there's a salesperson's royalty on top of that because they almost always have sales. So somewhere around, you know, you'll get 10% or so between sales and design.

Okay, interesting. So, okay, so let me break this down. So this is from Costco's perspective. Let's say Costco is meeting about. Hey, let's analyze this. Chair sells for a hundred fifty. Cost of goods sold, ten dollars. Landing cost, two dollars to Tracy and the design company, or maybe a little bit more, $8 to the sales people. So when you add it all up, you've got 50, 60, basically 70 bucks. So Costco is making. Call it 29 bucks per share.

Gross.

Yeah, something like that.

Yeah. Somewhere in there.

Gross. Yeah, gross.

So that's why when I say, when they sell it for 79 on sale, it's a steal.

Yeah. They're barely making anything.

Yeah. So that's. I mean, that's when we go. I, I, you know, sometimes we'll go out into people's offices. I'm like, oh, you have a whole fleet of my chairs.

Wow.

And that. That's because they bought them all on sale.

So how many. When did you put this product into Costco where someone could actually walk in and buy it? What. What month and year?

I think it was 2000, and I want to say it was 2010. Okay, maybe it was. It might have been, you know, like, the beginning of 2010. Something like that.

And what are sales to date? Just on the chair.

So I, you know, I think we calculated recently that we hit a million units total. So we've sold, but that's over, you know, what is basically five years.

So, okay. So 1 million units. And so how much have you made on royalties from the. The 1 million. Un. Old.

Oh, gosh, I, you know, I haven't added enough recently. On the website it says, you know, so. Yeah, so it's, you know, it's probably. It does about $20 million a year on average.

Well, it looks like on the Website you have 780,000 is the total that you guys have made from between fees and royalty on the chair. Is that accurate?

That's probably old. Yeah, I mean, from whenever I put up that page. So that's probably at least a year old. But it's, you know, it's fairly, it's fairly close to a million dollars on.

That one share that's on. That is really unbelievable. And it took you, you both 18 months to basically develop that out.

Yeah, no, I mean, it took about six months to develop it, but by the time it got onto the market, it takes about another. It takes about another 12 months. 10 to 12 months.

Wow. Okay, so this is fascinating. So how many you guys will work on kind of one project per year, it sounds like, but kind of your so and so. You make fees in that year, but really if you hit a big winner, you're going to be making a lot of royalties over time as well.

Yeah. So the way that we do it is we really concentrate on making sure that our fees just cover our costs. It's not our, you know, it's not. We're not gouging our clients on that. Our fees are just to make sure that you have our attention. And then we work on multiple projects for them, but for one client at a time. So we might do 10 or 12 chairs at a time. And if, you know, for that particular client, we just closed last year a project with a company that we did a whole line of juvenile products that are just hitting Walmart and Target right now.

So it just varies, but usually it's a product line. So it could be anywhere from 100 to 300 designs.

So, Tracy, I have a question for you. Why. Why do you need baseline, like you're doing 60 million in total sales. You're only getting like a million of that. Why not just build these things yourself and put them in the stores?

You know, it's really capital intensive and brand building is really hard. So we kind of. We always call ourselves ghost designers. So we stay behind somebody else's brand for a reason. Because there's a lot of risk in there. There is a lot of money spent and there's a lot of, I mean, Their margins are very low. So, you know, when I can cover my cost and still make my percentage, I actually probably netting better.

Yeah. Okay, that makes sense. And. And when you have clients kind of ask you guys if you'll work with them, I imagine you go through some analysis to try and figure out if the chair is going to be a winner or if the pitch is going to be a winner, because then you can kind of back into what you think your royalties will be. How do you figure out what's going to be a winner and what's going to be a loser?

Well, we have an 86% success rate, so. Which is pretty good, considering most of the worst of that. So that means that 86% of all our designs have succeeded in the last 10 years.

But what's succeed mean, though? Is there a metric or.

Yeah, so if it were online, it means that it sold probably more than 4,000 to 5,000 units online, but the margins are much higher there and per design. And then it's probably close to, you know, I think the lowest selling product we've had in store probably did about maybe 20, 30,000 units. And then of course, the best seller does much more per year, so.

Yep, yep, yep. Like a million units, you said, is what the generous time. It's unbelievable. So as you guys, as a business, is it just you and your husband or do you have other employees?

You know, it's just the two of us.

Wow.

We have a contractors, we use an assistant and things like that. So we do have a virtual assistant team and we do have freelancers we use for design when we need to, you know, do drawings or renderings and things like that. But we prefer to keep it us. That's kind of how we've. We've done it in the past, but we're really looking at expanding into an agency moving forward.

Oh, wow. Congratulations.

Thanks.

So help us understand overall size of the business on 2015. If you add up all the royalties you made and all the fees. What was total revenue in 2015?

Gosh, it was probably close to half a million.

Okay. And you guys keep. I mean, your costs are really just kind of. Your salaries pretty low. Yeah, yeah, yeah. That's great.

We did a lot of reinvesting in the business this past year because we're expanding into 3D printing, so. And that's really what agency will open.

So you invest in. You actually like, are buying equipment and stuff?

No, we. We sort of more invested in brand building for a change. We started our podcast and we.

Oh, okay. Tell me about that. Tell me about the podcast.

Yeah, so it's wtff, which is. Stands for what? The fff. And FFF is fused filament fabrication. It's just this geeky, techy word for. For 3D printing.

When did you launch it? What year? What. What year?

Last April.

Okay. So April 2015. Yeah.

And so, you know, we. We podcast five times a week.

Wow.

Yeah. So we. So we really pushed into it. We did, we did this feature where we do ask us anything four days a week and one interview a week.

And what are your downloads per episode?

So we're, We're, We're. We're close to about, you know, 30,000 per month. And so. But I don't know what that breaks down per episode because we just are about to hit our 200th episode.

Wow. Congratulations.

Thank you.

What does it cost you guys to produce it? Do you pay an editor and a show notes person and all that? We do.

We do. Yeah. We analyzed it recently, and it came out to close to $200 an episode.

Okay.

And, you know, and that's, I think, fairly typical. We're. We're pretty picky about the quality. So, you know, that's. That's part of the reason there. Yep.

And what, what category is this in? Is it arts and crafts or tech or.

No, it's. It's in tech. And it's. It's, you know, kind of an educational. So the idea is that we're the start point. So where you go, when you go, what the heck is 3D printing? And, you know, why do I need to know about it and what should I do about it? Or we get a lot of educators who are like, their school district just gives them a 3D printer and they say, go ahead and figure this thing out.

Oh, gosh, that's crazy.

So they come to us, and so. And we also have a huge designer community who are just like, well, I hear all about this 3D printing thing. I should learn about it. And so they're coming out of other design fields and trying to 3D print, and it's not as easy because 3D printing as a product at the end of the day, not just a computer model.

And what are you, Are you monetizing it? Do you have sponsors or anything?

We just landed our first sponsor, and so we're really excited about that. And so that will come out in April.

Oh, that's exciting. That's exciting. What are they. So what will they pay you per month?

I think there it's going to be close to.

A thousand an episode or something like that. Something close to that. I, you know, I haven't actually, I don't handle that part.

That's okay. No, it's interesting. I talked to a lot of folks doing podcasts, like even Alex Bloomberg at Startup and Art of Charm and all these guys and some people. I'm always curious, when you work with a sponsor, did you just pitch kind of a CPM to them? Are they paying per episode or what?

No, we did a per episode because our listeners are really active and they're a really tight niche. So, I mean, when. When we say, oh, we really recommend this printer we've reviewed or something like that, they all click through the links, check it out, watch the videos. So we have a very high activity we can show. Plus we have an A site that's highly Google ranked that's connected to it. So both those things really kind of helped through that. And you know, in this case, we're offering a sort of a free gift kind of thing as well, so.

So you're doing five episodes per week. A thousand per episode would mean you're doing about five grand per week just on that sponsorship. Am I doing that math right?

Yeah, no, this one is going to be a 4000 because they're just doing one episode a week.

Oh, got it. So 4000 per month.

Yeah, yeah.

Oh, got it. Hey, that's great, though. Yeah, that's awesome. Congratulations on that.

Thank you.

Yeah, that's exciting. Okay, cool. Well, hey, before we get into my favorite part of the show, Tracy, if people want to connect with you personally online, where can they do that?

So they can do that anywhere on social media. And it's az, Design, H, A, Z Z, D, E, S, I, G, n and has design.com is my homepage, basically, so you can find me there. You can link to my ink column and everything else.

Okay, Top tribe, do not forget your chance to win a hundred bucks right here on the podcast every Monday. It's very simple. You just subscribe to the show on itunes and then once you've done that, text me to prove that you've done it. My number is 703-431-2709. Subscribe now and text me to enter 703-431-2709. Okay, top tribe, I have to tell you, many people go, nathan, and you came out of nowhere. Your website's growing so fast. How'd you do it? The answer is simple. So I use hostgator. I don't know if you guys know that, but I use hostgator and the reason I do, they have like about 4500 free templates I can use because I don't code. They've got a great e commerce plugin and guys, I bug the heck out of their support. They've got 24. 7 support, which I love. So what I've done is I've worked with them. You guys know I make great deals. If you go to hostgator.com Nathan, you can sign up, get your own domain for 30% off and a 45 day money back guarantee. Okay, again, I make great deals for you guys. Go to hostgator.com forward/nathan to grab that now. I love that. Well, top tribe, there you have it. We'll link to all that in the show notes@nathanlatka.com forward/thetop 2, 4, 6. Tracy, before we get into my favorite part of the show, tell me real quick the writing you're doing for Ink about how many impressions would you say your articles get per month? Is it. In other words, is it worth it?

You know, it's. I just started it in January, so it's not quite worth it yet. But I just had an article that hit about 15,000 views in weeks, so that was pretty exciting. And that was about John Asaroff and innovative. How innovative? Thinking can't actually happen. Innovation happens in a subconscious level. So it's really.

Is that what you need to do to hire productive and innovative designers?

No, no, it's. It's how. How the brain works, basically. So I can't even remember the time.

Three ways. Three ways to train your brain for bigger and better ideas.

Exactly. That one.

We'll link to that in the show notes too. I think it's a good article. I'm scanning it here is where a lot. Yeah. Okay. Very cool. Well, hey, do you know what time it is?

I think you're gonna ask me a bunch of questions.

Come on, Tracy. That's close enough. It's time for the Famous five. Are you ready?

Famous Five. That's right.

Number one. What's your favorite business book?

You know, my favorite business book is Rembrandts in the Attic, which is kind of an unusual book, but it's a really. It's. It's a designer's book. It's about unlocking the hidden value of patents.

Interesting. You know a little bit about defending patents, don't you?

I do. And this is, this one's like about, you know, building up an asset portfolio of patents and, and that we've done and We. I love that idea.

I love that. Okay, next question. Is there a CEO that you're following or studying right now?

Yeah, you know, I, I met this man, Ken Courtright, about. I guess it would be almost a year ago, and I just. He started a podcast called Today's Growth. It's. He. He's the CEO of Today's Growth and Income Store. I think. I think it's the income store. And his podcast is called Today's Growth. And I love it. He tells the best stories and he has the most interesting people that he's been connected to.

And I really have learned so much from him and I kind of want to emulate him.

Very cool. Next question. Is there a favorite online tool you have, like Evernote?

You know, we use Get Pocket because Tom and I like share things all the time. We're always. The easy part is we just stick it in the pocket and then we both can open it on any device.

I love that. Okay, so as you're building this empire, Tracy, yes or no, Are you getting eight hours of sleep every night?

Oh, you know, you say that and I know I only got like four hours last night, so. So absolutely not. And you know, it should have been a sign when at Christmas I got two copies of Arianna Huffington's book Thrive, Sleep More. Yeah, everybody recognizes that. That is like a big problem for me. Do you have kids? I do. I have three kids. 21. She's about to be 21 and 2 years old.

Wow.

You know, that kind of contributes to it.

Yeah. You put the 21 year old to work. Right. But make her babysit.

You know, she's away at college.

Awesome.

Yes.

Well, Tracy, last question. What do you wish that your 20 year old self knew?

You know, that is such a good question. I love that. I really wish that I had recognized earlier the power of not doing it all myself. Like, you really think when you're 20, you're invisible and you can learn anything and you can do anything and you should do anything. But there's really a point at which, especially when you are an expert, that you should just hire an expert and it will cost you less money and take you less time.

That's such valuable feedback. A lot of people, for me, I know that's just been ego. I just don't want to let go of stuff.

And, you know, it is for me as well. And I was. And I'm a perfectionist. So, you know, I want it to be done better. You know, it's got to be my. Done my design stuff. But, you know, over the years, it was like, this really came to me. And that's actually how I met Ken Correy was. You know, I'd written like 40 blogs on my website and nobody ever read them. I started podcasting and all of a sudden all my. All my things were tracking and I didn't understand what was going on. And I talked to him at an event once and he was like, well, this is because your. Your podcast is such fresh content and it's Google ranking and you. What you really needed is an authority site, like, and all these great things. And I was like, like, why did I think I could do that myself?

Yep. Yep.

Well, I was years.

I love that advice. Tracy, thank you so much, guys. Again, I hope you enjoyed Tracy. What? I mean, she's one to follow. Her and her husband has designed. They started from nothing. They now launched over 200 retail products totaling over a billion dollars in sales. We focused on the Office Share that sold over $60 million in transaction volume across Costco, Staples, Office Depot Depot, Walmart, Sam's Club, and others. Tracy, thank you for taking us to the top. Thank you.

If you guys enjoyed Tracy today, go back and listen to Joe from yesterday. Yesterday. I'll tell you what, He's a teacher and he's 100% right about education. You're crazy if you disagree. Top tribe, I love giving away free money. I feel like Oprah giving away cars. And I have something special for you today. How many of you have heard our super sharp guests talk about success they've had with Facebook and Google Ads? Well, all of you listening right now? Yes. If you're listening, you get $100 in free AdWords. Here's how you get it. Okay, again, thanks for listening. Get the free $100 from Google right when you sign up with my website host provider, hostgator. Go sign up now to get your free money. Hostgator.com forward slash Nathan again. That's Hostgator.com Nathan them. Okay, top tribe, I'll see you bright and early tomorrow morning. And don't forget, before you listen to any other episodes, subscribe on itunes right now for your chance to win a hundred bucks every Monday.