🌊 SAGAR PATEL // YUCCA FINS CEO

29:11To performance in the water, right? And there's so much more. Like these were key tenets or requirements, so to speak, to draw a parallel like to the tech universe, right? That must be adhered to when we're going through the engineering process, Right. And so it took time. It went from a paper or like an idea in his head to a paper napkin idea to a 2D drawing to, you know, 3D CAD files to, you know, finding a manufacturing partner and making sure that the molds are legit and getting, you know, samples and then and only then going into, you know, eight other sizes. Right. And so that's what we do with the hard goods.

29:50And that's why I think, you know, we've succeeded. And then like the second part of that is is the validation and having these relationships with these lifeguard departments. Right. Like they received our product or learned about our product and started using our product and they believed in our product and we support them and they support us. Right. So we're doing the demo days and we're providing them product after testing so they could sell it, you know, on our behalf. So, yeah, it's a very symbiotic relationship. Yeah. Yeah. It works great. And I mean, it's such an interesting product, too, because it combines apparel and style and sizing, which are complicated, hard things.

30:33And they require, you know, taste and trend making in and of themselves with this thing that is like a durable hard good that has tooling and molds that you can go visit and try and all of that stuff. So, you know, I think in that regard, there's so many things about it that are like just more difficult or it's like a needle to thread, I guess, in just kind of creating some of that product market fit where you have to kind of continue to innovate. If in no other way, although you are innovating in other ways than like style and color, like and having something new for people to look at. But then the retail experience, too, to your point, like people have feet that come in different sizes and like you pull this one wrong and you've got blisters all day at the beach and it's like a really bad experience.

31:18And you and you kind of you don't blame it on, oh, I bought the wrong size. Maybe you do a little bit like you probably are just like these fins aren't comfortable. Not like I should have made a slightly different choice. So I feel like your product gets tested in the outside world in that way, but also just like in the retail experience in that way, you know, trying to find trying to find a size that fits and and then, you know, not like not hurt yourself if you get it wrong. yeah no totally right like some people have higher insteps or wider feet or narrower feet um some people have are injury prone right some people just have skin that is more likely to blister than other people it's just how life works it's your anatomy um you know we have a korean partner um who owns south korea the region for us and they only order one type of fin from us so it's an ultra soft in a short blade because they know the market and they know the makeup of the Korean foot as weird as it sounds yeah and that's what works for their customers you know and so um yeah but you know we take feedback that's right yeah um let's talk about you mentioned Korea and I know you have a lot of other international distribution and then you've got uh you know your own warehouse how are you doing inventory management um across like just so many different, you know, need to be in stock of a certain size or a certain style for a certain market all the time.

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33:28AI-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. Yeah, you know, this is all a work in progress. But so we do have partners internationally, right? So our product is manufactured in Malaysia. It's no secret. It's made of so Malaysia and Vietnam are kind of the rubber capitals of the world.

34:09Okay. so um we as far as like the international partners go so you have a few kind of layers to your question as far as international partner go partners go um it really depends on the amount of quantity that they order and whether that makes sense for us to ship it directly from malaysia to wherever they may be located more often than not we do do that okay but there are certain moqs with that because we are charged a certain premium. Should we need to get something sent from our factory, our manufacturer over to a certain different part of the world? Okay. So that's one thing. As far as like inventory and demand planning.

34:51So we work again, I'm giving you a little bit of the inside baseball. We work with an inventory and demand planning resource. He's a, He's a consultant who worked and helped scale a company from essentially zero to over$100 million in sales, an Orange County-based company. It wasn't in Surf, Snow, and Skate, but irrespective of that, he was there, right? And he was running that department. So he has a model based upon various data inputs that we've given him, right? So how long does it take from the time we send over, you know, our tech packs and sticker packs over to our manufacturer and getting into their queue and getting, you know, raw materials captured or procured?

35:41Yeah. And so on and so forth through that entire part of the chain and then eventually over to us and then, you know, divvied up from the port, whether it be to us or 3PL. And then taking a look at all of our historical sales data. What I'm explaining to you, you can recite in your sleep. This isn't necessarily my forte, right? So I'm learning a lot about this as we go. You're doing great. I actually think what you're saying is really helpful to everyone listening. I'm sure for it. Yeah. So we're employing this kind of science behind it. And we're starting to put in more and more orders now, given what his model outputs to us.

36:20Right. So he takes our historical sales data and we essentially meet with him every two to three weeks. And he lets us know, even if we want it in real time, we can. But he lets us know exactly what we should be ordering and when we should be ordering it. Right. Right. Given all of those data inputs and the production cycles for our various products. And this comes down to every SKU. Right. So the only SKUs he won't provide us Intel on are the SKUs that we're end of life. Yeah. Yeah. And it's working. It's starting to work, you know. And so it took a little bit of time getting to this point, believe it or not.

36:58As crazy as it sounds, you're like, oh, this company, like it's a cool company. and most people in Orange County know about it. Like, have they been cowboying it for a little bit? And we were cowboying it for a little bit, you know, but now it's becoming a little bit more scientific. I feel like demand planning and forecasting is like the final boss of like operational togetherness, right? Like you have to have like, you have to have the supply chain piece on lock. You have to know what your lead times are. You know, you'd have to have a sense of the pulse of what freight forwarding timelines are given the time of year and optimize for like, okay yeah i could bring this in on like november 15th but uh the container is going to cost me three and a half times as much as it would if i like allocate this cash three months earlier in the year like it's a non it's a non-trivial task then you got to look at all of the sales channel data coming in and like an order has so much information that comes with it right like like uh you know 150 fields worth of information we were looking at the other day like we have an order in our system has 150 different fields of information that carry along with that order.

38:04That one row of information on a table is like a lot to look through. And really what you need is like the SKU, the date it was ordered, the date it was shipped, and like how many. And like, that's five things. But someone's got to sit there and like tease apart these, you know, massive data warehouses to just get to like, okay, but for this task, what's going to help me just get to like a fast and reliable and like believable demand planning answer. And yeah. And there's, I mean, I just scratched the surface of it. I feel like you can be a very sophisticated, really like, you know, tight knit business and still demand planning and forecasting is just like, what?

38:51Exactly, exactly. And like the market obviously dictates a lot of that. And they're like, when do they stop thinking of particular colorware style or cool? Are we ahead of that? And is it just strictly like, like, is that strictly just based on D2C sales or small mom and pop surf shop sales? And then what if like Dick Sporting Goods comes in and goes, hey, I need, you know, 17 ,500 of this in a particular style. And you're like, oh, wait, what? I just, I was thinking about discontinuing that. So I mean, you know, your, your audience knows about this better than anybody, but, um, yeah, it's, it's certainly a work in progress.

39:28I think we're now getting to a point where we're kind of like humming is not the word, but we're like kind of using this model to our advantage. Yeah. Yeah. And you know, there's other, there's other tricky things that go into it, right? Like, uh, I sold zero of these last week. was it because there was zero demand or because I was out of stock? Totally. You get to the answer, but the why is like somewhere behind it. And a lot of times that information is like held in someone's head. Totally. You know what's eye-opening is, because you just brought up the whole out of stock thing, is that, yeah, we're totally working on that part too.

40:09Because there's both sides of the equation, having too much inventory and not having enough. But like his model, again, lets us know over a particular time frame our potential revenue loss because of product not being available and it's eye-opening right like and i don't want to ever be in that position again yeah yeah yeah so yeah being out of stock is not actually sexy no no like yeah you chalk it up to we sold out because we're so popular but like how many dollars did it leave on the table man Yeah, dude, we're not selling the original Air Jordans or we're not a hype brand. As we say in here, we're selling rubber.

40:46Yeah, we're cool. It's cool. But like, yeah, we're not Gucci, you know, that only made 50 of a particular purse. right right yeah you want to be inside speaking of which so uh i know you visited your manufacturing partners uh earlier this year did seeing their facility like in person kind of give you like did it inspire you for how you could partner with them as you grow the business did you learn anything that like you probably couldn't have gotten from a phone call or um you know like a zoom it was one of the coolest experiences i've ever had in my life it was amazing it was and you're a cool guy so that's that's a lot oh thanks you've been someplace yeah no i just try to life is short dude be as happy as you can be for as long as you can you know it's the mentality but as far as visiting our factory in malaysia and meeting our partners for the first time face-to-face because everything has been more digitally done up until now was awesome um seeing the amount of work and what it takes to just create a single fin or a single pair of fins the level of detail some of it's done by machine a lot of it is not done by machine okay their rigorous testing process um they're a family-owned business their father started this company 40 plus years ago and now the children the the brother sister team run it okay um they take a boatload of pride in their business and creating a premium superior product that we've built our business on, you know?

42:30Um, so yeah, it was awesome. I have an immense amount of respect for them. Um, I always believe in getting into some of the philosophical stuff, but like, I always believe in good business, you know, and I always believe in finding good partners who have everyone at Yucca is high energy, high character or integrity and high intelligence. That's what we look for. And I look for people like that within our partner network. I always tell them, I go, if I win, you're going to win. So it was amazing to see how much work they put into creating our product. And so if you think about a 40-foot container, right?

43:19So that's the biggest container that we can receive here, right? That fits around 4950 almost 5 000 pairs of fins okay if you look at our defect rates okay on what we receive what irrespective whether it comes into the costa mesa warehouse or goes to 3pl or whatnot um the defect rate is essentially zero so it's insane yeah you're you're you probably think i'm Like, like, it's crazy. Our fins, anything we get out because every pair of fins that's sold here, right? Like in Costa Mesa, like, clearly we're opening the box and we're checking it to make sure everything is of the utmost quality. But it's it's insane as far as like, you know, the level of detail that they provide and the quality they produce and and that low defect rate.

44:16It's awesome. It was awesome. I feel like you have to have a lot of pride in craft in order to deliver that. Like I've worked probably maybe directly with, I don't know, call it 70 odd manufacturers over the years where like I know the person I've shaken their hand, kind of that kind of manufacturing relationship. and they haven't all been great. Like they'd be good people for the most part with a couple of exceptions. But the thing that I have found to be the best kind of like gut check that I can do is that one thing that you just mentioned, which is just like pride of craft. Like it could be a brand new factory that just opened.

44:59It could be something that's generational. It could be something that was generational, but relocated. they could have two employees or 2 ,000 employees. If people are proud of what they're putting out there and they are like, you know, meticulous and detail oriented about it, like that is, that's a hundred percent of the ball game, more than how much money they have, more than the tech that they have. It's really, it makes such a difference. Yeah. It's like hard to quantitate that, right? Yeah. It really is. Oh, they, they, it's, it's amazing. And, you know, part of our visit was to see how this relationship is going to expand, you know?

45:40And like, does that mean more dedicated square footage there? Does it mean a dedicated facility? You know, does it mean more dedicated personnel, 24 hour productions, um, staff, you know, like, so there's a lot of things that we're discussing and, um, yeah, it's just awesome. There's a trust fall in that too of like, you know, you're growing your business, they're growing their business in, you know, collaboration with you effectively. And they're making probably like infrastructure investments, decisions and personnel and training and all of that. And like the trust fall piece of it is that if you succeed, it will all work.

46:19And if it's like, if it slows down, kind of the dominoes start to fall. And that's where I think that building those personal relationships around your contract manufacturing network are so meaningful because it's much more compelling for a human being to sit across from other human being and say, we're going to do this together. We're going to build this together. But also, I'm going to need you to buy 20 more tools. Well, yeah, right? So we did have to invest more tooling, right? Of course, in which we have done recently. um but yeah i mean like i give them a little bit of insight into what our growth plans are right and they could reverse engineer some of this as well they know how much product they're creating on our behalf they know how much it's msrp for here or around the world for that matter right to the consumer um and yeah so like uh um you know the goals are kind of like conjoined They're too joined, for sure.

47:20Yeah. And I think to tie this back to the kind of forecasting conversation we're having, a lot of times what a factory will say is like, what's your projection, right? Like for how many are you going to order this quarter or this year? And that can kind of be distilled down into one approximate number. But the calculation that's going on behind the scenes for your business to generate that amount of demand and then also for their business to like serve it is like so is so multifold and like they don't want to know just because they want to have a sense of how much money they're going to make from you they want to know so that they can like buy the building next door and like train 10 more people totally totally totally no and you know and like like you said there's a lot of uh there's a lot of inputs in that as well like and what are our goals right like yeah what if like yucca sold 10 years from now like ideally the person who took it over continues to work with the same manufacturing partners, right?

48:21Like there's a lot of uncertainties. What are your goals that you can share without killing us? Yeah. I mean, earlier I was telling you about how like some of those incumbents, right? The fin companies who have been around for the 20, 30 years, like they built their businesses on the backs of like the ocean water experts. And I think the opportunity is substantially larger for Yucca. And so that's what I always profess to our team. Our goal at Yucca is that if you go to the beach, you should have a pair of fins. You take your umbrella, you take your beach chair, you take your towel, you wear your bikini or board shorts, and you have a pair of fins.

49:00Right? So that's our goal. Like, I use this, like, anecdote. I, like, talk to the team here. And, like, so, you know, like, when it comes to Neutrogena, believe it or not. Okay? And they're a leader in the sunblock space, obviously, among many other things, right? But 30 years ago, if you wore sunblock, it was almost only when you went to the beach. You're like, the sun shines hotter at the beach. You don't have the shade. You need sunblock. Maybe sometimes at the pool, okay? Okay. Neutrogena built their sunblock business by growing vertically. They said that if you're out in the sun, if you're playing little league, if you're on a five mile run because you're training for some triathlon, if you're just sitting out having a picnic, you should have sunblock.

49:54Now, everybody wears sunblock when they go out. Yeah. If they're going to be in the sun, right? That's how I think about yucca, right? Not only if you're riding 20 foot waves at wedge or if you're a junior guard or lifeguard, for sure, then use Yucca, right? But if you go to the beach, use Yucca. Right. Yeah. And that's easier said than done, of course, right? Because cost of acquisition goes substantially higher when you're getting on the fringe and extending that, right? Of course. So that's a massive challenge, but that's what I want for our company. And then I want to be, we want to be the leaders of premium, like the premium hard good water space.

50:37Yeah. Yeah. Like Speedo is your grandma's brand. Yeah. I know it sounds ridiculous, but like, like I want to, I want to fire.

50:51We've been around for a hundred years. It's different, you know, it is different. Yeah. I had that feeling. I, you know, I had, I had a little battle to wage of like, you know, there's so many incumbents here and I'm just, but I'm obsessed and I'm just going to try. And it worked. But I think back to your daughter's point, you have to be obsessed and, you know, and a little crazy to feel like you can go change the brand perception and create a new mode for yourself around that. Absolutely. Like, and earlier I said unhealthy obsession. I mean, maybe that's not the exact phrase or we're cool with it though.

51:34Yeah. I love this. I love this. I am obsessed with this, this, I am addicted to yucca. It's the best thing that like, you know, it goes without saying that your spouse and your children and your parents, and that's a different type of thing. But as far as like having to build a brand and having the opportunity to build a company in its current stage and with the people that I get to build it with, there is no better feeling. I don't want to look back on this and go, damn, I didn't give it my all. So that's why this is an awesome thing. Oh, man, that's so great. I have one more thing to throw into the Yucca Fan Fest before our exciting landing round, which I didn't prepare you for.

52:15But that's what I like around. It's like a pop quiz, which is that we were headed down to the beach yesterday and we'd get halfway down the hill and my kids wanted to boogie. and um but they weren't like it wasn't like a big boogie day it was just like okay they just wanted to go and we get halfway down the hill and jack my oldest son he's like oh i forgot my yuccas like well we turned around we turned around we went back because he knew he would have it is like part of the it's part of the experience for him he's got a towel he's got sunblock he's got sunnies and he's got his yuccas and like you know see like bathing suit optional but for him without I love it, dude.

52:55That's a great story. That day was not happening. We turned around and we got him. You're going to have to come into the shop. Bring your family into the shop. And I'll show you around. But the amount of feedback and stories we receive from people, it's crazy. It's awesome. People talking about, I just turned 75 and I'm wanting to do this six mile swim to celebrate my 75th birthday what kind of fin should we get? And we're like, what? That's awesome. Kudos and congrats to you, right? We get stories all the time and stories like you just told me all the time. Yeah. Yeah. That's great. That keeps you coming back, you know?

53:35Totally. All right. Wrapping this up here, got a couple of lightning questions for you. Shorter the better for answers, but if we get into something that we think is interesting, we can linger. Okay. Which data do you like running better? Data for healthcare or data for surf oh data for uh data for what we're doing now so data for surf okay yeah I mean healthcare enterprise stuff is there's a lot more red tape there's HIPAA rules and regulations you know what can I show within visualization elements what can I share how do I have to share it this is this is a lot bigger of a sandbox and a lot more it's a lot more fun yeah yeah and you you get to move with a little bit more freedom, which is like, can be really happy.

54:24We own it all. Yeah. Yeah. Okay. This might be, I don't know if this is going to be an easy question for you to answer or a hard question for you to answer. Do you have a daily driver Yaka? Are you like it's standard? Are you soft, super, like ultra soft? Or do you, are you one of those guys that just has like a different fin for every occasion? No. I mean, I think the thing is, so first of all, soft. Standard. our standard fins are uh are generally for our ocean experts so we like that's for like your sun will eventually phase into those you know um but definitely softer or supers um i like softs too uh and they're and they're really they're just really comfortable yeah like from super mushy waves to like 12 foot waves you're good yeah yeah want to tread water great you want to go snorkel great you want to go to catalina great do what you want Yeah.

55:19And Yatka will be there. Okay, you don't have to answer this if you don't want to, but what do you feel like is Yatka's biggest ops blind spot right now? Or do you feel like you're seeing everything for the first time? There are some areas. I mean, there's a ton of areas for improvement, right? There's improvements we can make to get Amazon humming. There are improvements we can make with respect to our relationships with our retail customers to learn a little bit more about burndown or throughput, like I was saying. You know, there's a little bit of, I'd say, lack of visibility on the ladder.

55:55I'd like to always shorten the production cycle. That's a big concern for me right now. It takes a lot. It's a heavy lift on the factory and manufacturing side. We're not just printing T-shirts, which take six days. Yeah. You know? So those are, like, definitely concerns. concerns visibility if i wanted to double click into all this stuff i can find it if i needed to you know and like here's the thing right like and i alluded to it through the course of this conversation is that like i don't ever want to at this stage i don't want to be bogged down by too much data it's like paralysis by analysis we some of the way we operate we still operate based upon what we think is cool yeah that's fair by the way that's like a legit yeah you're allowed to have that rule right like we brought surf mats to market yeah we have these inflatable surf mats in four different sizes take a look at them on our website they sell very very well but like you know we brought them to market because we thought they were cool and we and we brought them to market at a price point that allowed you know all different types of people to start using them you know right yeah and so we have to operate like that to a certain extent yeah you still get to build what you think you would want, basically.

57:17You can get pretty big before you have to. In fact, never let it go. Okay. What freaks you out more on a daily basis? Your 3PL's ops or your own warehouse's ops? Like what's more triggering? Our own. Our 3PL partner is incredible. And they weren't the first local 3PL partner that we worked with. Yeah. We had a horrible experience with the prior 3PL partner. And it was a huge issue for us. Our 3PL partner now, which is actually located four miles up to 55 from where we're at, has been a godsend. That's awesome. Because as you know, all of these, even if we're in consumer goods, right? Like the nature of our business, businesses rather, they just differ.

58:13Yeah. There are so many nuances, right? We have certain business rules and logic that are only specific to us. You know, there's a lot like just the out of the box solution and integration between their W, what is it? MS, right? Yeah. And our Shopify instance, like that's vanilla in nature, right? But we have certain business rules in and around international B2B or Hawaii shipping, or the way that we ship based upon smaller volume, prioritization when it comes to certain custom orders. I mean, there's a lot of kind of business rules that they have been more than happy to implement on our behalf.

59:02The relationship is incredible. That's right. We have to be better at our warehouse. I mean, yeah. And we're getting there. Yeah, it's really hard. It's the hardest. I think it's the hardest business I've ever participated in. What's that? Just managing a warehouse? The fulfillment side of things. Yeah, yeah. Like we ran a 3PL. And, you know, the thing that I've always felt was hardest about it is that whether or not it's your fault, which it often is, if you're the 3PL, you hear about it when things go wrong. UPS loses your package. Like, 3PL hears about it. It rains. There's a porch pirate. 3PL hears about it.

59:40It's like all of these kind of difficult micro interactions, or I could say like negative micro interactions that are between sort of like just on that side of the supply chain. uh if you're a 3pl you you touch all of them even if it's not your fault and that is hard over time it's hard like psychologically even to just be like oh my gosh commerce is chaos yeah exactly exactly um no they're so cool and like i remember i so like they're always willing to bend over backwards and i even told them last time i went there to visit them and i was like dude i've only met you guys maybe five times in person i said that to them the partners and i'm like every time you see me, it's chaos.

1:00:22I need something. I need this will call. A customer's crying or breathing down my neck because they haven't received their product. And they're like, dude, we see this every day. Don't worry. And I'm like, we'll get you. Yeah, we got to. That's great. Well, if you're willing, we'll put their name in the show notes and hopefully a bunch of people will knock on their door. Yeah, well, they are awesome. And their name is Left Brain Logistics. Go get them. yeah they're orange county based they're the coolest two people some of the coolest people that i've worked with yeah um okay very last question uh if you can give us a hint about one or both of the collabs that you have dropping later this year okay so we have two collabs um that are dropping we have one that's coming out in late September, early October and one that's in Q1 of next year.

1:01:27They're both still within Surf, okay? But they're not what you would normally think.

1:01:41I'm just trying to think about how much I can share. um sorry an unfair question so i'm just trying to think about this so one of them is with a company

1:01:59that was with one of the largest companies in the surf space okay okay okay another one is not is is with actually a digital slash tech company okay yeah um i don't know how much i can share about the companies that's good enough good yeah but it's awesome yeah yeah they're gonna be awesome and the products look so cool oh i can't wait to see them yeah super exciting i'll actually show you after. Okay, great. Yeah. Awesome. All right, man, this has been such a fun conversation. Thanks for sharing so much of just, you know, that goes on behind the scenes. Yucca is such an amazing brand and they're so lucky to have someone like you at the home who's just making it happen for them.

1:02:51And the growth is just spectacular to watch. So can't wait for more and I appreciate the time. Thank you so much. Thank you. Thank you so much for having me. Thank you so much for being like a proponent of the brand and a valued customer. For sure. All right. Take care. All right. Thank you. Thanks for joining us for another episode of Commerce's 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's Chaos wherever you get your podcasts. Don't forget to subscribe to our sub stack, also called Commerce's Chaos, for more good stuff and actionable tools to build your business.

1:03:30Thank you.