🍝 MADALINA DEFTA // KAIZEN CO-FOUNDER & CEO

25:56But I think how you fake it is kind of important. So I think a lot of times there's a tendency to overextend yourself and there's a tendency to say, let me have top line for the sake of top line, because anecdotally, that's what I heard investors want. And they kind of go for that top line at all costs. And all of a sudden, before you know it, you're in this massive hole that in spite of your massive top line, you can't crawl out of. So for me, that was the one part I didn't want to fall for. And back to the G training, they weren't managing to top line. They were managing to profitability. and you would argue that that's what works for a big company and you've seen tech right there was that pre-pandemic pandemic era where everything was you know was was oh you have a great idea 10 billion um but nowadays it's it's not like that nowadays even for those very innovative high-tech companies they're still looking at profit and that's what i kept telling garages like eventually they're going to want to see profit.

27:16And there's one, why you're not profitable today will make a big difference because you can be not profitable because you have high overhead. I think they can get past that, but you'll never get away with having the bad cogs or having a bad contribution margin because that goes beyond, you know, SG &A efficiencies. So for me, it was always even self-funded or not, I always looked at what are my fundamentals? Where am I making money? Where am I not making money? Why am I not making money? Can I fix it? Because what I told Arash is like, it's not enough to have a good product. You can have a great product that still doesn't make a business if you can't make it profitable.

27:58Madalina Defta:Yeah. I think that's where you see some of the pitfalls maybe in other cases. I feel like you're ready to teach this class. I want to take it.

28:13Madalina Defta:Speaking of margin, I'd love to talk to you about fulfillment. Because I read that you had a rough experience with a fulfillment partner early on. You were being overcharged. Orders were shipping in boxes that were so, you know, way too big, way oversized. So you're shipping air, which is very, very expensive. but at the same time, like products getting kind of knocked around and crushed in transit. And you had to have a hard conversation with them. And so the thing that I'm curious about, and that maybe, you know, we can kind of share as like a tip or a framework for listeners is, like, how do you start that really difficult conversation?

28:50Madalina Defta:And what does it look like when you come through it successfully? And maybe, you know, what were some of the things that you were looking for to tell you if it was time to pull the ripcord or not? Cards on the table. Your tech stack is held together with duct tape and prayers. If you're a brand founder or COO juggling Shopify, your 3PL portal, three different inventory trackers, and yes, that one crucial Google sheet, you know exactly what I'm talking about. Orders get lost, inventory accounts are fiction, and your seamless integrations break every other Tuesday. Endless Commerce changes the game.

29:24Madalina Defta:One platform for everything. DTC, wholesale, marketplaces, the works. AI-powered forecasting, real-time inventory visibility, and integrations that actually integrate. Teams like Great Jones, Food52, and Pattern Brands already made the switch. Ready to ditch the chaos? Visit endlesscommerce.com, mention commerce as chaos when you reach out, and get three months free. Because your op stack should be your competitive advantage, not your biggest headache. I think a lot of times you're working with these larger companies and you're thinking like well who am I I'm too small they're not even going to listen to me and that's sometimes true but the mindset shift is it never hurts to ask and I don't know if you're familiar with dog breeds but I always say you have to have the confidence of a Shih Tzu because they're small and completely oblivious.

30:24Madalina Defta:Totally unaware. Yes, but that confidence compensates for size. And I'm not suggesting being arrogant, but what I've learned is you need to ask and you need to have the conversation. And I start from the premise that you get into a business relationship with a shared win-win type assessment. Like that should be the foundation of any relationship. Not saying it can go wrong, but if I start from that premise and I say, hey, these things are not working for me. This is not a win-win for me. I need to be able to have that conversation. And sure, if it goes to a positive resolution, we grow together.

31:07But if it doesn't, it means that it's not just that particular inefficiency. It's the whole foundation. And when else are you going to drop me? When else are you going to bail on me? So I'm not interested in building long-term relationships that are not on that foundation. So at the time we had just started, we were growing our business. We 3X in the first year, 3X in the second year. So you can imagine there was some adjustment for our volumes. Our customer distribution was changing. So when we had the conversation with, we were creating bundles. So like even the package that worked yesterday wasn't working tomorrow.

31:49And a lot of that inefficiency came from growth. But as I always say, Kaizen, right? Or the Six Sigma Principles, you break things in smaller pieces. and the first thing was what's my fulfillment cost why is my fulfillment cost too high am i do i need to optimize my warehouses because my zone is high why did i ship a four pack in this huge box and then in this huge box across two different fcs so then we started going down upstream downstream we want to call it to the back to follow the operations follow the pieces and there were two things that came up. One was customers complaining our product is banged, like why is it banged if the box is fitted?

32:37And two, why is my cost higher in certain places than others? So we were able to pull some good old-fashioned analytics and see that the same four units were shipped in four or five types of boxes across a season. When we presented that data to them, it was kind of irrefutable and they did want to make do the right thing. So we first created an interim step where they said, hey, we need to increase drainage because, you know, at least that's going to solve the problem. But then it wasn't solving the cost problem because I'm still going to be charged for volume.

33:19Madalina Defta:Yeah. Yeah. So then we started, we started being very, very diligent in tracking it. And there's companies, by the way, that do that on your behalf, that work with your 3PL and scan your data and figure out where inefficiencies are. But they wanted to do the right thing. And I think that was the most, we're still partners. We still work together. We still grow together. But they were open to listen and we were happy to grow together. You know, the other thing I think you're pointing out is that unless it's a really bad situation. I mean, mostly people want to help each other and they want to do a good job for each other.

33:59Madalina Defta:And I feel like there's a few areas, particularly in manufacturing and in logistics, where, and I call these the four horsemen of the retail apocalypse. There's brands and logistics partners. So dark. Brands, retailers, logistics partners, and manufacturing partners, basically, or suppliers. And sometimes, you know, a single business can kind of wear multiple hats in that. But generally speaking, those are kind of like, you know, the collaborative inputs into getting things done or getting things made. And as a brand in particular, it can be so easy to have kind of a fearful relationship with the other three, where like, you know, you're worried that if you say something to your 3PL or say it really too seriously, like, hey, guys, this has to change or you're not the right partner for us.

34:53Madalina Defta:You know, they have so much power. It's like a babysitter with your kid, right? You're like, if I give them constructive feedback, she's not going to come tomorrow. And also she's going to talk smack with them while I'm out.

35:10Madalina Defta:So I found it, you know, so clarifying and freeing to develop kind of the confidence over the years to have these like difficult, constructive conversations. But the thing I think I've learned through practice with them is that like they want to do well. They want to do better. And the same thing happens with a factory and the same thing can even happen with a retailer. And for each of them, you know, with the retailer, I might be talking about price and then margin and like how much is everybody making and does that feel fair? And you're like, what do you mean does it feel fair? You know, and with the factory, I mean, a lot of it comes down to price, really, at the end of the day.

35:50Yeah, I think for me, it's, you know, to what you just said, right? It's how you say it. And I always like to frame it from this position of it's a win-win. So to take the boxes example, I didn't go in saying, hey, you're ruining my business because I'm overpaying or you're trying to one-up me or you're trying to make money off of me by putting it in a larger box. The approach was the money that I'm overspending on fulfillment, I could allocate to ads and then we can grow more. A customer that's complaining about the pasta being banged is a customer that might not reorder. It's one less order for you.

36:37So we approached it from the perspective of like, hey, guys, we just want to grow. And ideally, we would love to grow with you. But here's what we need in order to grow so you can grow with us. And I think when you position it that way, it just kind of shifts the positioning. Yeah.

36:55Madalina Defta:Yeah. Are there any other, I must, I can tell that you know a lot about all of this and that you've, and that you've been very successful in having kind of, you know, difficult slash constructive conversations. Are there any other like tips you have for folks listening where, you know, maybe, maybe they can get a little bit of liquid courage to have like a tough conversation with a trading partner? I would say before they're even a partner, please read your contract. Careful. I don't care how many pages it is. Read it. And I would probably argue one of the best investments is finding a good lawyer.

37:38I cannot tell you how many times our lawyer has paid for itself just by keeping us out of trouble. And ultimately, the foundation of the relationship beyond the human relationship you build with the person on the other side is the contract. And it's going to go back to the contract more often than you think. And I would say nobody, it's like marriage. Nobody gets into a marriage thinking they're going to get divorced. But if you do, you want to have the right paperwork. So that's kind of been my approach with suppliers or different business partners. There's always been, I need to build a contract that thinks through all the situations, situations that I don't want to happen.

38:29But if God forbid they happen, we are, you know, we are protected. And it's been more than a handful of times where that became critical to the situation. So I would say build that and show expertise. And that's not to say that you need to be the expert in every area. But I think a party will respect you much more if you demonstrate you have at least a basic understanding of their reality. because all of a sudden what you're saying will weigh more and it will resonate more. And I think oftentimes there's a lot of misunderstanding because we don't understand their reality. And that kind of puts us unprepared.

39:19So I would say if you want to have that tough conversation, understand what the complexity of operations for that counterparty is. What are their challenges? Not to the ultimate expert level, because that's not your job, right? But if I think about our fulfillment partner, right? It's okay. He's got a bunch of customers. Everybody's complaining. Who's he going to help first? The one that probably talks nicest to him and shows respect.

39:53Madalina Defta:Yeah. And empathy for how their business works. Yes, exactly. So having empathy and assuming, I learned that in tech, right? You have API. And one of my bosses one time, she said, you know, API stands from assume positive intent. So whenever I'm all fired up and about to get into one of these, it's like assume positive intent. They probably did something wrong, but maybe they didn't mean to. So try to position it that way. It feels daunting to have those tough conversations, but it also is very liberating and a big confidence builder once you go through it. And it works in your favor. Yeah. Yeah.

40:44Madalina Defta:My chime in on that, I have two things coming to mind. One, and I forget who said this. really, really, I was very, very young and very like, you know, not, anyway, I hadn't gone through the paces yet. But I was a young business owner and I was looking at a contract and I was talking, somebody was giving me some sort of advice. And they said, you know, there's the business side and the legal side. And that was like very empowering for me because I thought, okay, well, I mean, I might not understand all of the very specific language that's being used and the vocabulary that's being used in this contract yet because I'm 24 years old and I'm trying, but like, I know what I want as a business.

41:29Madalina Defta:And so that empowered me to kind of like have a little bit more ownership over the contract. Like, even though it was, of course, the thing that I was signing, it allowed me to engage with a lawyer, but maybe be a little bit more articulate about what I wanted out of it. Like, here's the business side, here's the legal side. Then, you know, fast forward 15 years, I'm like, really good at the legal side too. Been through some more paces. And, and if I was to give one, if I was to dispense one piece of, I'm not a lawyer, legal advice to other business owners. It's that contracts are not there for when everyone is happy and you're on the honeymoon.

42:09Madalina Defta:They're there for when you hate each other's guts. And you can get to clarity when you're all happy about what might happen when you absolutely never want to see that person's name in your inbox or walk the other way on the street if you saw them. If you can kind of jokingly put yourself in that mindset when you're reading through a contract, this is for not when we're friendly, not when we're going to be in business together. This is for when we're breaking up and like everything's going to hell. And that has really helped me be a paranoid, you know, consumer of legal content. I agree. And hearing you say that it, and I, I, I'm very particular about not framing things this way, but I found that often than not as a female founder, don't be afraid to say this doesn't make sense to me.

43:04Because a lot of times you will get, you know, legalese and you're just like, I'm not going to ask this question because it's going to make me look bad. And trust your gut. If it doesn't make sense, it's because it probably doesn't. And if it's just because you didn't understand, by understanding, you will go further more confidently than wondering what that was. So I would say confidence is not just having the tough conversations necessarily when something goes wrong. It's also very important to say, walk me through it. I don't get it. Yeah. There's no I don't think that there's sometimes people refrain from doing that because maybe it feels like, you know, it's going to make them look not knowledgeable or whatnot.

43:54But I think that's probably one of the first powers you gain by just saying this doesn't make sense to me.

44:00Madalina Defta:Man, I want to wrap that up and put it on the wall. So true. Just having the confidence to express that you're not confident about something. And I think you're right, too, especially as a woman, you know, we're for better or for worse, so calibrated to like not looking weak in the situation because of all of the things and having the confidence to say, you know, can you tell me? there's easy ways to do it, right? There's like anchor phrases that you can use that will, that will, um, diffuse some of the, the fearfulness of it all. Like, uh, can you tell me what you mean by this? Can you tell me what, what you're thinking is here?

44:42Madalina Defta:Walk me through why this is important to you. Right. So it doesn't have to, it doesn't have to signal like, uh, fear or stupidity. It can just, it can just signal like seeking more information. And I feel like if you can find a way to put yourself in that posture verbally with these anchor phrases, it can help navigate what is perhaps an intimidating conversation to someone who's, you know, going through the first 15 years. Yes, that is absolutely true. Yeah. Okay, I'm going to bring us, and I could talk about this part all day long, but I'm going to bring us into a lightning round for funsies.

45:20Madalina Defta:And I will ask you quick questions and you can answer them in a few words, but if any of them really interest you, feel free to linger longer and share an anecdote. You ready? I'm ready. Okay. It won't hurt. What is the Kaizen product that you personally cook with the most? The rice. Okay. What's your favorite recipe? Oh, my favorite recipe, risotto. I mean, that's a follow-up question. Sorry. Question number two. Yes. I love to make risotto. uh how okay i have a trick for risotto that involves a pressure cooker it would probably completely destroy um uh pasta risotto but uh can you share like what you do what what's your like you know ingredient ingredient recipe i i boil the rice in um in in some broth so then it it kind of already infuses with the broth which is what you would do with the traditional rice and then I just I like to shave the parmesan cheese like snow snow fine so then I just keep putting it on and it kind of melts into a little bit of the extra broth so then it gets you that creamy texture and then you can put mushrooms you can put shrimp whatever you want your risotto to be.

46:43But I like to do that a lot. And I love Italian food. And I feel like you can't tell the difference. And that's also one of my go-to comfort foods when I want to feel good after a long day. And then I still get my protein in and my fiber in and I don't feel like I cheated. And it's my biggest hack. Oh, man. Come over for dinner. We'll cook together. Sounds great.

47:10Madalina Defta:I would love that. What is one tool or system that you feel you couldn't run Kaizen without? Excel. I should have guessed. Do you have a favorite formula? VLOOKUP. Are you using Excel and CLAWD in your day-to-day work or any other AI tools? Yes. Oh, yes. A hundred percent. but not i you i don't use ai to to necessarily do the work for me it's um i i usually and and this is funny i my email starts with i need this yeah and then okay hello so and so how's your day and then i have to like wrap up because otherwise it would feel very very crazy so i sometimes use chat GPT or Claude to just kind of, hey, this is a relationship with this person.

48:11This is what I really want. Can you make sure, you know, you adjust the tone so that it comes? English is not my first language. So I always make sure that it kind of bellows it down. So I kind of do that. So it's really helps me keep my relationships while asking for things.

48:32Madalina Defta:I appreciate that. It's been interesting, too, to see. So we work with a lot of suppliers who English is their second or third or fourth language and so much respect. way. It's incredible how far we've been able to get with my absolute lack of ability to speak, you know, Chinese in particular, and their ability and willingness to communicate in my native language, which I'm deeply grateful for. And to watch AI start to improve our ability to collaborate through email has just been extraordinary. And it's interesting. I feel like in a past life, one of my almost superpowers as an individual was I'm a very good reader, like a very close reader of things.

49:25Madalina Defta:And I kind of I majored in English and poetry. So I can kind of find I can find the meaning in very few words. That was like what I was trained to do. And that made it wonderful for me to communicate with factories because I had the patience and diligence to be like, what are we really saying? And like, I'm getting like a few words, but not all the words. And, um, and I'm not doing, I'm not contributing at all because I'm not trying to speak their language right now. And, um, you know, that was, um, that was, that was definitely an advantage that I had, uh, in building relationships. And now I, and it's like And that advantage is drifting away, but in a way that is even more extraordinary, which is that, like, they're saying exactly what they mean to say.

50:10Madalina Defta:And the robot's translating it so perfectly. And we're just cooking, you know. It's so much easier than talking to talk. It's a double-edged sword. Yes, double-edged sword. All right, it's supposed to be a lightning round, and here I am telling a story about myself. Next question. What is the biggest piece of advice another founder has given you that made a really big impact on you, either emotionally or financially? The biggest one was around customer experience. And in having conversations, we were actually at Amazon. and Amazon FBA has probably the gold standard as far as mass commerce is in terms of speed to customer, customer relationships, all that kind of stuff.

51:04And I think at the time we started, it felt like that's something I'm going to build towards, but it became very apparent that the customer doesn't quite care if you're a hundred million company or a 2 million company. They want, And they expect that level of excellence no matter what. So we realized early on, and that was an important lesson where we said we need to build to this standard from the beginning, given that might cost us more because that's going to cause customer retention. You can't give a crappy service because then maybe they come back and you're going to give a better service next time.

51:42So you have to, you have that first interaction is very important. And so I would say that was probably one of the biggest learning for us early on, which was you don't get a path to not be the best just because you're small.

51:56Madalina Defta:Oh, man. Tough standard, but so true. Biggest myth about bootstrapping a food brand? I think people think you have a lot of time because you're on your own boss. You don't. you will wish you kept your day job at times. I wish I had a job so I could relax. Yes. So I'd say the biggest myth is, and we're probably at fault for it because I feel like there's so much, there's this imposter syndrome that follows you and you really want to put a polished, you know, face. And from the outside, it looks like you have a thousand people team and everything is rosy. Meanwhile, you're bleeding and hurting like nobody's business and you feel that the ground is running from under your legs.

52:53I'd say that's probably the biggest myth is that you're a founder or you're self-funded and you've sorted life out. And actually, it's quite the opposite most days, as I'm sure you know. Yeah, yeah.

53:08Madalina Defta:There are days where I wish I had a job, for sure. um okay last question uh what is next for kaizen that you are most excited about we are actually launching a new category a brand new product same ethos high protein high fiber low carb um it's gonna be a snack so we're very excited for that because we always wanted to build like i said this functional comfort food brand that that's what i wanted a food that works for you while you enjoy it. So our goal has always been, you were asking me about Lupin, we're just scratching the surface. There's so much more you can do with it. So we're very excited about that.

53:48Madalina Defta:So fun. Well, thank you for coming on. And you did great on the lightning round, by the way, five stars. It's been really nice to get to know you. And I think that we shared a lot of advice and anecdotes that might be useful to listeners. So I appreciate you being so candid with your whole story. And I, for one, am a huge fan of the brand. Thank you. May I ask you one last question? Oh, yeah. I'm an open book. You've been a very successful founder. And I believe you never stop learning until you die. And I'm always so excited to hear. You heard a lot from me, but I would love to hear your perspective about what you would advise somebody in my position?

54:41Madalina Defta:Well, oh my goodness.

54:46Madalina Defta:You know, I think the biggest thing that I come back to that is probably like applicable to everybody, whether they're in a moment of success or in a moment of struggle, is just try to have fun with it. Like, I have treated, you know, my forays into all of this and all of the different businesses as a serious game, like a sport in a way. Maybe sports are serious games. But framing it that way for myself has allowed me to come back again and again and again, you know, to play. Okay. And so I have three kids and when they're playing games and they're learning how to play games with each other, right?

55:30Madalina Defta:Board games or sports. And I always say that the most important thing about a game is that everybody wants to play it again. And if you can all get to a place where you're playing in the way that everyone's going to come back into the neighborhood tomorrow or come back to the table tomorrow to play it again, then that's really what matters is wanting to play it again. And I suppose that that writing is a little bit on the wall for me. You're about to play it again. But I think that no matter what stage you're in, if there's one anchor, I would leave you with that. Just make sure you're having fun.

56:09Thank you. I like that. It's a serious game.

56:15Madalina Defta:Thank you. Thank you so, so much. It's been a pleasure. and I can't wait to have you over for dinner. I would love that. Thank you. All right. Take care. Thanks. Bye. Bye. Thanks for joining us for another episode of Commerce is Chaos. If you're listening, I have a feeling you know just how much good at leaving a five-star review can do for a team. Drop us a review on Apple Podcasts and subscribe to Commerce is Chaos wherever you get your podcasts. Don't forget to subscribe to our sub stack, also called Commerce is Chaos, for more good stuff and actionable tools to build your business.