E136: What Top CEOs Do When They Miss Their Numbers

25:09I'm more of an abstract leader. and he helps really turn it into concrete things. I think that one of the things, one of the reasons why I brought this up is that the more formalized you get in your plans, the more often you're going to just have times where it's like, hey, we're just missing. You know, we're just like, we had a forecast, we had, and I think you guys have said this already. I don't know that I've ever given an accurate forecast. This isn't like the weather, you know, like the ranges are really big and you just are gonna miss. And, you know, we make fun of weathermen. They miss all the time.

25:42Like anytime you make a forecast, you're going to be wrong in one direction or another. But when you start really formalizing planning and saying, OK, guys, next year we're going to do four million dollars in kids backpacks or whatever, you know, then you're you're kind of putting a goal in front of the team. And you're either going to usually really beat that goal or really come in short of that goal. And then you have to kind of figure out, well, OK, how do we manage that? And as I was thinking about this topic this morning, what I realized is that once you put a plan out, you basically understand that about half the time you're going to miss your plan, you know.

26:19And so what do you do? And that there's really kind of three things that could be responsible for missing that plan. One is, hey, we just set a bad goal. Like it was optimistic. It was hopeful. We threw out a number that we really didn't have the capacity to hit. Another is, hey, we just didn't execute well enough to hit the goal. We didn't invest enough. We didn't take it seriously enough. We didn't prioritize it, you know, whatever. And then the third one is that there were just like, there were market forces. There were things that could not have been foreseen. Trade war, you know, like this kind of thing.

26:57This year has been a great case study in this because like just about every number that we thought could be true with the exception of back to school. Back to school kind of behaved somewhat similar to what we expected. But pretty much everything else about our market and about the circumstances has changed pretty dramatically this year. And so it's been a really interesting question to me as a leader. You get your whole team together, you do all your planning, you have the plan, and then you realize that the plan is kind of not worth the paper it's written on. What do you do? And that's been a big part, a big question of leading this year for me.

27:31Yeah. So I think there's always that quote, right? It's like, if you fail to plan, you plan to fail. So I like having the time carved out. And sometimes it's like these planning sessions, they don't feel awesome. But there are moments. Like yesterday, there's one particular, like we were talking about Q4 and Q1, which is like Q4 25, Q1 26 calendar. and we were going into my head of supply chain was like she was reviewing inventory flows for Lomi and just like PO sizes and what are we cutting and that that discussion turned into like a good 45 minute if this then that if that then this and we uncovered a couple like very important sort of like decision moments over the next 30 days and what would need to go into like What's going to make those true false?

28:24And those are going to kind of be these gating moments for the business to say, yes, let's go push more, pull back. So I think I don't advocate for lone warrior style leadership. If you have smart people around you, even if you don't have an exec team, I'm a fan of just getting the smartest people in the company together and working through some of this stuff. because Mike, what I think I saw this actually in ECF specifically, but somebody posted about like, I think his name is Christopher Chan. You know, they're at 5 million bucks in revenue. And he's like, mistakes now feel a lot worse. Like the size of mistakes are like, they could be actually lethal.

29:04You know, when you're a million dollar brand, it's hard to make a lethal mistake. Like that's, that's pretty small. But when you start to get a little bit bigger, inventory mistakes can be quite lethal, especially if you're growing super fast. We see this in D2C all the time. It's like the zero to 20 million jump is like two years big. And I just think it's so dangerous. So these planning rhythms to me are a great way to build some judgment and some gating into the business, even though they feel a little slow and a little professional. I think they're probably the right call for most companies.

29:40Yeah. And I think you used a word there that's pretty important. I felt this more. Every business professionalizes over time. And one of the reasons why you have to professionalize the business is so that it's not dependent on any of the parts that make up the team. It's not overly dependent on any of the parts. I think when you are founder led and you have kind of your original team, it's maybe less important to have this stuff, but you have to put these pieces in place so that, you know, when somebody does transition and you bring in a new hire that you can plug new pieces in. And if there's a day with Simple Modern where I'm not running the ship, that it can function.

30:22There's a lot of things that you can do when you're the founder that another CEO can't do, is kind of my opinion. And is that a permission thing or a culture thing, Mike? Well, I think it's some of both because my view is that the founders have this special kind of latitude to be able to say, hey, this is where we're going. This is what we're about. And I can say that authoritatively because I started this thing. Whereas when you're leading a company that you didn't start, you always have to, it's a little bit different. And this is more true when you're talking about values and culture type stuff.

31:00But I think it just as an example, sometimes strategically, the right strategy is to do something that's painful, like financially, for example, like, hey, we're going to plow into this new market, we're going to lose money in the first two years, because it's so important for us to gain market share and have a foothold in this market, whatever that is. that's difficult for somebody who's not a founder. That's difficult for somebody who doesn't have a big piece of the cap table to say that. You got to really have the buy-in of a lot of, because people here are losing money and they think, man, that could be, does that mean that I lose my job?

31:34You know, like, are the shareholders going to be okay with that? Whereas a CEO founder can come in and say, hey, we're doing this. You know, I'm a big shareholder. I'm the biggest shareholder. I started this thing. This is important. And I think this is some of the reason why the research that's out there just says founder CEOs outperform. It's because they have a larger range of motion strategically of what they can do. And when they make more dramatic strategic actions, they can get away with it. Whereas if you're not in the founder CEO role, then you just have a lot more risk of getting canned.

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33:45You guys do a lot of life. How does this work at Hexclad? Because I think I remember a couple of years ago, you were talking about some of this stuff and you were, I think at the time you were like, there was just so many obvious things to do in the business that you didn't really need to like step back. It was straight up, like just execute, right? Like you We're in that mode. Yeah. Now that you guys are at a more mature state and your expansion seems to be like very strategic now, like we're going to go into this market. We're going to do like, it's a little less like, oh, that's obvious. How are you guys doing this?

34:18How do you like you and Danny and the other, the team decide what are we doing next year? Like what, what are the, what are the big moves? You know, like we're going to deploy capital. Like where are we putting it? Look, our North store is how do we continue to grow at an acceptable rate and do it profitably, right? And what are the things, what are the levers that need to happen to do that? Like I talk about this with everyone at the company, everyone outside the company. It's like really not that difficult when you get, because you can just listen to public company CEOs and talk about, and hear how they talk about growing their business from a high level strategic perspective.

34:52We start there and say, okay, how do we grow our business? increased brand awareness, new products, and international growth, right? New markets. It's those three. And then what are the things that we need to do under each of those? And we tend to agree, Danny and I, we tend to agree on almost anything strategic, right? And then the strategic initiatives that we need, like we know 2026 is the year of launching more products, right? We've launched lots of products every year, but we're trying to make 2026 a big, because we've got a couple of big ones, right? And then international, no, we may not agree on everything.

35:27Like, you know, Danny kind of wants to open more markets than I do because he feels like we just need to be there. Whereas I look at him more from an ROI perspective. And in that case, he can overrule me and that's fine, you know? And I won't, you know, I won't fight that hard unless I think it's just like, what a mistake we're making. And then typically I wouldn't have to get there because he wouldn't. He wouldn't do, He wouldn't agree to do something that's that big of, that's going to have that big of an impact. But then on the tactical operational levers that need to be pulled to do all those things, there's just a lot of them, right?

36:02Are you guys top down on those though? Like, are you talking to Connor? Let's just use Connor because he's on the mops. Are you spending time with Connor to help him decide what he's doing? Or is he coming to you saying like, all right, I hear you. This is what you want. Here's what I need. And here's what I think we need to do to make it happen. Like, is it bottoms, more bottoms up or more top down? We tend to be bottoms up. That's why I ask. Right, right. I think it's more like we have certain North stars, right? And then we decide how do we, how are we going to achieve? You know, we have certain, you know, sales targets and more targets.

36:36And then, you know, Connor will say, okay, you want me to hit these targets. Here's where, well, here's where, you know, or we're going to say, here's how much you get to spend. You know, what do you think, you know, what do we think we can do? where you're going to spend it. And for the most part, there's so many decisions that need to be made down at the growth team level that Connor and the team will do. But we're just going to start by very simplistically looking at how much do I think and does finance think we should spend? We've got a great VP of finance. She's very commercial. And she and I and FP &A will look, okay, because we have banks, we have a credit agreement.

37:15Like we have, you have investors, we have banks, right? So we, you know, we have to, we have to make decisions that are going to result in us being in a good place with the banks. And, you know, the interesting thing that we're talking about now, just to like make it real is how much are we going to spend in Q4 in light of the current like efficiency levels that we're hitting, which are actually pretty good. Right. So it's very tempting to let's spend more and grow revenue more. And we will grow revenue more. But it's the question of, is that incremental dollar in revenue worth it? And the philosophy that we've taken is let's spend up to a margin of safety where we know it's still worth it.

38:07And then we were happy to leave some money on the table there. even if like, okay, we were wrong. We probably could have spent another 100K, 200K this month. And that would have resulted in another million, million five, whatever in sales. We're okay leaving that on the table, but we don't want to leave too much on the table. So that's an interesting thing that we're constantly talking about. I mean, okay, I got two things there. One, I think it's the ability to decide to leave money on the table. like that statement, that takes a lot of discipline. That's typically my observation there is like, I hear that from very seasoned operators.

38:48I know when somebody's new, when they freak out at the idea of like potentially leaving revenue on the table in Q4, they feel like that's just gone forever. I'm never going to get that customer back. Like if I don't spend the money now. So they, they wind up taking a lot more risk in the business out of fear of leaving money on the table. So like that would be my first observation. Okay. If you're listening, please don't be that idiot. Like be okay with some discipline and some control, you know, especially if it means like you've got more downside protection, like number one rule in business, stay in the damn game, no knockout punches.

39:22The second thing, and I'm, I am curious, Mike, actually for both of you, cause like Jason, whether you guys go decide to go public or not, It seems like with more scale, we actually need to get better at reading the tea leaves and making budgets and making more public statements. Like, I think we're going to do this. Maybe, Mike, how do you guys do this as a team? When you set a budget or a plan, are you planning the business on a base or a bear case, and then you're just taking upside? Right. I think this is actually the most important question, which is when you're making a plan, you know the plan is going to be wrong.

40:03And so what's the point in the modeling and the plan? Part of it is you buy inventory for that. We're in durables. And so you have to plan your supply chain around it. And it's deterministic in that, well, you bought this inventory and so you're eventually going to have to sell it. But if it takes you eight months instead of six months to sell it or your inventory turns go from two and a half to point one, is that terrible? I don't think so. So we've had this debate over and over and over again of if we're going to have a profit model that projects our financial performance of the next one, three, five years, what is the point?

40:38What are we using that model to do? One thing you have to use your modeling to do is set expectations for shareholders about returns. like or their wife's asking them like hey or how much in distributions are we going to get this year and it's like well okay your responsibility when your management i think is to set good expectations to your shareholders and a lot of times there's overlap a lot of times people are wearing both those hats of here's what the business can actually produce and so that's one of the things in the last year there's been a lot of adjusting that with my shareholder group of like well here's the situation on the ground obviously as things have changed here's how this has impacted the way that you should think about dividends.

41:17So like, for example, when the trade war hit, it was like, okay, this blows up our model and you just need to plan on, we're not going to be doing distributions for X number of months as we put more money and working capital and just kind of see how this plays out. So I think that's one question kind of with the modeling. And then I think the other thing that modeling can help you do is it can help you think about through like headcount, like, hey, how aggressively do we need to be hiring? It can help you think through financing, like, hey, when are we going to really, when are we going to run out of cash?

41:45When are we going to need another, you know, a series B? When are we going to need to add more capacity to our lending facility or things like that? And what I've basically found is in different stages of the business, what we needed our model to do was different things. So like the first couple of years, it was like, literally just don't run out of cash. Like that's the model. The model is like, make sure we don't, make sure we can make payroll next week. I had a situation where this is probably a year into the company, year and a half, where we didn't get paid by somebody when we thought we would get paid.

42:17And I just called my CFO and I was like, well, roll pay roll, you know, like, cause you know, we don't want the checks to bounce. And I didn't tell anybody cause I was like, it's not a big deal. They're going to get paid next Wednesday instead of on Friday. And one of my partners called me and he was like, you need to not do that again, especially not without messaging. Like that really will freak people out. So early on, it was literally like, well, you just need all the cash, all the checks to cash. And then I think there was a period where the modeling was more about trying to get our arms around like, what is this business and what can this business be?

42:48Today, the modeling is more around making sure that we're communicating well with our banking partners and our retail partners and our shareholders about expectations. But it just, because you know models are going to be wrong, they really can't be all things. They have to, you have to really with your team define like, what's the point in the plan and what's the point in our modeling? And we're not going to try and make it do 10 things. We're going to try and make it do the most important thing for the business where it's at today. And at different stages, you know, different stages in the business of planning does different things.

43:21Matt, you have investors that, you know, you need to report to, but like if. And banks. I've got both, right? We have debt. We have equity. We have like, I have a board. We have like when we were, you know, early on, like there's a lot of people like don't don't get don't get too crazy, right? Like if you've got a two or three million dollar business, you can kind of manage it by looking at the bank account if you're if you're smart enough to cash. Yeah, just like don't overextend on anything. Be super conservative. Work really hard, but be super conservative financially. As it gets, the bigger you get and the more challenging things get right.

43:57The more challenging things get, you just got to be better. You got to be sharper. There's less room for error. There's less room to rely on good luck. We did like very little budgeting until a year ago. And that blows my mind. It's, you know, it's just like we were just printing, you know, it was like, it was just going so well. Yeah. But I think that's a great example. Like modeling hex clad in some ways was an exercise in futility because you were growing. So just as your growth rate goes up, the variance on any forecast goes up as well. And so when you're growing, I don't know, 100%, it's like, well, listen, we're going to do somewhere between X and 3X this year, you know?

44:39And so it's like, well, how's that even helpful really? So I think that's what you guys ran into, Jason. The risk also gets exponentially higher, right? So like if you're growing at X or 2X, the risk that you blow yourself up. And that's why I think really any modeling you're doing, It's like cash modeling. It's like, hey, the only goal is to keep this growth up without going, you know, running out of money. We saw it from Jason, right? Like two years ago in whatever, I forget whatever month he was like, I have an armada of containers coming and I'm terrified. Like there was just so much money on the water coming in for his Q4 because the growth rate was insane.

45:18You totally saw it. I think Jason, like you guys, like we have investors. I guess you guys have investors now too, right? And you've always had shareholders. You've got Gordon. You have outside investors. But I think, actually, the thing that makes me think this is really relevant to a smaller brand, I see this in younger founders and younger brands. They get to a point where they want bank lines of credit, debt facilities. They want outside help. So they're going to move off of the fintech players, the Wayflyers, and whoever else in the world. I don't think people realize that the minute you start working with a real bank and real debt facilities, you got to have your on lock.

46:00Like there's no like napkin forecast you're sending to your bank without a lot of questions coming back. So because you're managing to like debt like service ratios. Right. Jason, could you I guess there's a lot of people listening that don't have to deal with this. Can you explain why the bank is going to force you into better financial models, discipline, budgets? What triggers that? Why do they care? Well, you have a credit agreement and banks are all about risk. Banks are conservative. And so they structure their agreement to you to make sure that they get paid. They're not going to lend money to someone who's not credit worthy.

46:40So this has been going on. Banks have been lending money for a very long time to companies. And so they have, you know, they've got rules. They've got coverage ratios. A lot of, there's like a lot of ratios that you as a business need to be able to hit for the bank to A, lend you the money and then B, continue to want to work with you. So you hear this a lot where people will trip a covenant in this credit agreement. And, you know, it's a problem. Sometimes things happen that you just were just unforeseen. But you as a manager, as a financial manager, need to just be, you got to first and foremost, manage to not trip those covenants because you don't want to be in default.

47:19And look, the banks aren't going to necessarily look to take your company from you right away because they don't want to run your company. You just don't want to do that. It's just no fun. You need to stay on the good. So that's like the baseline. So there's a certain amount of EBITDA that you need to hit. If you have debt, you are more than likely a profitable company. and certainly if it's bank debt from real banks, you need to maintain certain margins. And then there's other ratios, ratios of fixed charge and et cetera that you need to hit. And so that's where it starts. Otherwise, you don't want a bunch of angry banks calling you and showing up to your door.

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49:15My business partner was there. I like to joke that all of my biggest life lessons are actually his because he's, he's made so he's older and he's made so many big mistakes. Like he's been bankrupt twice. He's been in special loans. If you've never been in special loans with a bank, that's such a fun process. So it's so bad. And, uh, So I don't think I told you guys this, but I think about maybe two and a half, three years ago, we, okay, so like rewind the clock. When we did our series B, I also took on a mes debt facility, right? Like we were ripping. Lomi did like a hundred million dollars in the first 18 months.

49:53Like it was freaking insane, right? So I'm like, we need access to capital. This thing is working. And then this is where like, this is one of those moments in life where my ego definitely was running the show. We took on this Mesdet facility and it was pretty good terms. Like we liked the terms. Well, a year and a bit later, there was a couple of things that changed in our business. Like we had a supply chain, real bad supply chain problem in our manufacturer and we bought too much inventory. So we were out of covenant on, I think, two of three terms. And that, like, I can tell you, like, that was a fatal blow to the company if we weren't so well connected and had really good financial partners on the equity side.

50:41Like, had we not been in that position, that was a knockout punch. By the way, what year was this, Matt? 20, the, 2023. 23. So like, uh, going and going into the end of 23. Yeah. It was, you know, it's funny though, like how the time dictates the decisions you make dude, right? Like it's just, it wasn't, we're still coming out of COVID. There's still so much going on. Yeah. We did that deal at the end of 22, Jason. So like, I kind of, I felt like, okay, we're in the now, you know, I was really resistant to like raise any kind of capital in COVID. Cause I'm like, this isn't real. I was old enough to know this is not happening.

51:21This is not sustainable. I'd been through enough to know that 2021, that's not normal. So we waited until the end of 22 to go back to market. The downside of that is the investors were basically wallet shut. The upside was you got a much more real mark on your company. And I was okay with that. I was like, Like, all right, I know I'm not going to be as valuable on paper as like some of my peers a year ago. But I think they're going to have much more pain three years by doing that than I will by doing this now. That was just the craziest time. I remember September 22 was like everything seemed great.

52:01If you look at the D2C public companies, I remember because I had all the bankers coming in and they're like, oh, there's this category that you fall in. it's called high growth consumer, right? And the valuations in high growth consumer are incredible and the market sees it this way. And then when those high growth consumers didn't grow so high anymore, like the market just went crazy, right? And then in, so... The snapback was nuts. The snapback was nuts. It reminded me of the dot-com era, not quite as bad, but it was. A lot of people made decisions like you during that time, for sure. I feel like I have fairly decent judgment at this point in my career.

52:43If you didn't make a bad decision, then you were actually kind of lucky. We didn't make any bad decisions, but I would say a lot of that was just like, we were lucky enough that we weren't forced to make one. We didn't have any reason to make one. This is the thing too. That decision really taking on that Mezdeb facility, which then I had to wipe out by going out and raising money, right? Because the bank was like, I want my money back. and I'm looking at it like, well, that's like a serious chunk of our cash. I'd like to not give it to you. So we have to go back out and raise capital. I'm sharing this because like, it's easy when you're, when things are going right, it's very easy to fall into this trap that it's always going to continue to go right.

53:22Like you just, you feel good, man. Well, you just project it out into the future, you know? Yeah. Like things are awesome. And then Mike, to your point, like sometimes things are just out of your control. And in our case, like I would actually say, I would say like 20, 30 % of our problem was out of our control. So like the markets were really changing. Consumer sentiment was changing, like things were just getting harder. And then 70, 80 % was just like our, we had never seen anything like it. So we just assumed like we've got a dragon by the tail. Yeah. Let's chase it. And that proved to be pretty damn dangerous.

53:58I just think human nature is such that it's impossible when a trend is ripping to say, hey, it's going to end tomorrow. Nobody thinks that way. You know, when the COVID stuff and the things that were ripping during COVID because of stay at home and all this stuff. Yes, a rational person could have said, hey, this is unsustainable for all these reasons if they had foresight. But nobody was going to bet on that when you're in the middle of the trend line. Like when your business is ripping, it's like, we need to lean into this, you know, we're running out of inventory. And so I think the question that I'm the most curious about, because, you know, even Jason with you guys, when you grow as fast as you've grown, eventually there's a quarter where it's like the growth's a lot harder than it was last quarter.

54:44like this comes for everybody that there are times when you miss a forecast and you're blowing it away and then half the time you're missing a forecast and it's you're underperforming and I think that we're making a good distinction here between how you manage that internally and how you manage that externally is probably different but I'm curious for both of you Matt you're given an example here which I think is really vulnerable and I appreciate and I think it's one of the best things about the show is when we don't just say, hey, look at us, our businesses are awesome. But when we say like, hey, here's everything that comes with it, the good and the bad.

55:23But how did you message internally, Matt, when you felt financially distressed? Jason, the first quarter you guys had where the kind of hypersonic growth that you've been going through felt like it was slowing or the CPAs were blowing out in the wrong direction. How did you guys manage that internally with your teams? 2024 was our year that was a come down from 22 and three, even though it was an amazing year by just about anyone's standards, it wasn't by mine. And there were just a lot of conversations among a lot of senior people about what was going on. And we were just looking for solutions.

56:03You know, we were really, we were looking for solutions. We were trying solutions. A lot of the solution in our business and all of our businesses is about marketing spend, because at least in the short term, marketing spend is a lever. You know, in the longer term, it's about product development and new markets. But there was just like, there was a lot of, there were a lot of different conversations and it was, there was definitely a little bit of a like, hey, this is a wake up call people. just like the tariffs were a different wake-up call for us we've we're managing better than most with it but like these these are just these are two out of 2024 wake-up call and a 2025 wake-up call i'm hoping that 2026 we have no wake-up calls and the business is still incredibly stellar but that that's all it is it's like you get these wake-up calls you got to rise to the occasion You got to sharpen things up.

56:57And we've done that. We've just gone through like a review cycle here. And I'm giving reviews to my direct reports. And I'm very, very pleased with the reviews. Like everyone has really risen to the occasion. And of course, everyone has things that they could improve. And I've given them that. But yeah, these times, even like what Matt went through in late 22 or early 23, Like everyone's going to go through something like that. And that's, that's just really separates the wheat from the chaff, right? That's like, that's where winners win because you're going to have adversity and figuring out like how to, how to get through it.

57:39Time in the game, right, Matt? We talk about that all the time. Like time in the game, just like, just like, I mean, like the baseball lifestyle guys, like talk about incredible story and look at, you know, they didn't do much for a few years in a row, right? Like they just kind of were like there and they had a nice little business. And then like they were in the game long enough where it just got figured out. And then they hit some products and like it just goes right. That was I think that was that's kind of what caught us with Lomi is like we just we took a flyer on this product. It cost us millions to develop.

58:14We had the cash like that was the whole point of raising money. You know, like you've heard me say this, like I do not believe consumer companies should have outside investors. 99 % of the time. These are not land grab opportunities. There's no winner take all in these categories. We raised outside money because R &D is very expensive, as you guys know. When you start taking real product development swings, that's expensive. And we were a small company at the time, so I raised some money. I think what kind of came out of it was a couple things on how you messaged this so I could pass on. So the first is just go ugly early.

58:48There is no point in sugarcoating bad news. right? The key to it though, is for your team and especially actually probably more for yourself, but definitely for your team is you also need to always make sure that there's hope. Like if things are bad, it's, it's what, like, what can we hold onto? So like, what, where is the hope? Because if people lose hope, you're screwed internally, your team is just done. And that kind of mess up on my part probably triggered two years of underperformance in the business, really having to fix some stuff. Two years of just wading through. And not everything in the business was bad.

59:33We've got two brands. One is growing. One we had to completely tear down, rebuild the product, rebuild the supply chain. And so like, it's really difficult when you've got some stuff working really well, some stuff is really going wrong. So you're, you're, you have a communication challenge. Like that's kind of how I looked at two years. I'm like, this is a comms challenge. And I, I think there is a massive difference between missing forecast, right? So like you have a plan, we're going to either, we're going to always miss it, either to the upside or downside. And then there's underperformance or overperformance.

1:00:04Those are two different things. You know, I had two years where we missed our plan, but we massively overperformed as a business. And then I had two years where like, I felt like I couldn't do anything right. I would go home to my wife and I'm like, I thought I was pretty good at this. You know, like 18 years, I've sold a company, made a load of cash. Then I had two years. I'm like, huh, well, this is humbling. You know, like every turn was like, wow, there's more poo in that corner. So I'm just sharing it Because I think as leaders, ultimately what happens as you get bigger, or even just like time in the game, to Jason's point, you get very good at messaging, right?

1:00:46Like that's probably one of my big superpowers is I can sort of sit in front of people and I can give them very bad news and I can probably still get them to follow me. All right. Operators, real talk. If your dashboards are a week old, they're not insights. They're history. You probably heard me talk about cleaning up our data. Well, we finally have it dialed and it's because of Sarah's pulse. We have a data foundation we can fully trust. Pulse connects us to over 200 sources. We've got to connect it to so many sources, Shopify, Amazon, TikTok, Fulfill. Every dashboard is complete, accurate and exhaustive.

1:01:23My team is in the dashboards all the time. No gaps, no mismatched numbers, no manually assembling spreadsheets. I'm so glad that we killed, we must have killed 12 spreadsheets and combined them into one dashboard. Our daily growth dashboards are integral to the growth team, showing the true CAC by channel, by country. Our executive dashboard ties revenue to contribution margin down to the skew level. And more importantly, like we get this fast. And these are actuals, not estimates. And in today's environment, every percentage point in margin with tariffs and costs, marketing costs going up, every percentage point matters, right?

1:02:06And for us, it's all automated. So the team could focus on doing what they do best, which is growing the business. And so we're also testing something brand new with Saris IQ. It's an AI chat layer that lets us just ask, which SKUs drove margin in Amazon, for example, Canada last week, and what promo impacted repeat purchase rate? And it gives the answers quickly backed by clean data, unified data. And so here's the part you want to hear. A few operators, podcast listeners, can get early access to the beta. Saris will even co-design an IQ proof of concept tied to the top three KPIs that you want to move.

1:02:49It's not a canned demo. It's your data, your metrics, your insights. This is huge. Just to see it, like see it alive. It's extremely limited. Only a handful of brands will get in as a launch offer. If you want dashboards that you can trust and instantly answer your toughest question, talk to Saris Analytics. And yes, this is just for our podcast listeners. Saris has just been a great advocate for the pod, a great ally of the pod. And there are going to be a lot of AI tools coming out from Microsoft, Shopify, etc. But they can only be as good as your underlying data infrastructure. That's the thing.

1:03:23Having your data infrastructure set up properly is everything. That's why we started with Saris and then they keep building more on top of it. But no matter what, in the AI world, you need to have a data infrastructure that works. And I don't think there's any better place to do it than Saris. So you can also take an assessment and understand your business's AI readiness with Saris at sarisanalytics.com. So get AI ready the right way. Get your data in the right place. Go check out Saris Analytics. I think there's a big key that you stay on the right side of that where people don't start to perceive you as a spend doctor.

1:04:01Totally. And that's where you really start to lose people. And I think you actually gave a really good piece of advice. There's a euphemism like if you're going to eat a crap sandwich, you don't nibble. I think there's some truth to that with bad news that it's like dripping out bad news is way worse than just kind of ripping off the bandaid and being like, if anything, overstating the bad news and just kind of getting that flushed out of the system. And I think this is even what PR specialists would tell people. But then because then once you kind of rip the bandaid off, you can actually start to kind of heal from that.

1:04:38But I think you're right, Matt. People need something to believe in and a reason to believe that the future is going to be brighter and better than today. there's a kind of a related idea that we've been we've tried to be really proactive in compensating well within our company and we do a lot of surveying and looking at how would people describe their compensation level how how satisfied are they we do this great places to work survey and usually these surveys it's like on a scale of one to ten how satisfied are you with this or that whatever. And no matter what we did, it was like, you can't really get past eight or nine in terms of how people will decide their, describe their comp.

1:05:20Now listen, eight or nine out of 10 is like, great. But I was like, literally, what else could we do? Like, what does it take to get 10? And then I realized that basically nobody's ever going to put a 10 on comp because it's basically saying there's no way things can be better in the future. And nobody wants to believe that ever, right? Like, I don't want to believe that. You don't want to believe that. It's kind of like, even when things are good, you want to believe, you need to believe that the future can be even better. And when things are bad, you need to believe that the future can be even better.

1:05:51And I think that that's definitely part of what I've learned this year is that people are actually more resilient to bad news and to hard times than you think they are. that this has actually been proven out quite a bit through psychological studies and different things. Like you ask people, if X happened, would you be able to handle it? And they'd be like, you know, your child dying or getting fired or declaring bankruptcy or, you know, something, something really difficult, getting diagnosed with cancer. And they'll tell you, no, I wouldn't be able to handle that. I think that'd be the end. You go to people where that's actually happened to them and you see like, oh, they actually are more resilient than they think they are.

1:06:29People People are able to, by and large, work through these. I mean, not always, but they were able to work through these really adverse events. So people are more resilient than we tend to think they are. And I think as a leader, one of the ways that I've erred in the past is that I've treated people as more fragile than they are. There is a little bit of a self-fulfilling prophecy also where if you treat people as fragile, they become more fragile. So I think the idea that you have to be that leadership, there's something in Good Great where they talk, I think it's the Stockton Paradox or whatever, but they talk about this idea that people can deal with hard things and they can deal with bad news, but they have to have a belief that it will get better eventually, that the future is brighter.

1:07:17And I think that that's what leadership has to look like when there's a miss of some kind in your business. Like, this isn't what we wanted. This is hard. I'm not going to sugarcoat that this is bad. If anything, I might overstate a little bit how bad this is. But there's all these reasons why I feel confident in our future and I feel confident that tomorrow's going to be better than today. But we're going to have to buckle down and we're going to have to work hard. Yeah, there's two things. And I think that, like, there's two ways to handle this too, Mike, that I can think of that gives people confidence.

1:07:46Like you can lean into hope, right? So the first is in my case, I have been at this a while, like this business building thing. So I have a lot of stories and experience to pull on. So like we were eating, but I could look at people and say like, it's going to be okay. Like this has happened to me before. This is a story like, and you can build, you can give them confidence in you as a leader because that you still know what you're doing. If you don't have that though, like let's say you're at your younger founder, you're new, not even younger. Like you're just new to the role, new to being CEO.

1:08:15there's a lot of stories from other companies you can pull on that are going to be very similar to you. And it's like, how did they navigate? This is the wonderful part about the internet is like, we're swimming in examples now of like, and I like to tell my team, like, this is not new. Like we are not breaking any new ground here. Like when we're winning, it's not novel. When we're losing, not novel. Like there's somebody who has been through this before and probably us, you know, when you, when you've been around long enough. So I think that's like my first part is you have to find ways. Don't the spin doctor thing is so real.

1:08:47You don't want to be that, but you also need to find ways to build confidence in the team. So like, Hey, that sucked, but like, here's why it's, everything's going to be great. So that's like my, my big takeaway there. I think the other thing that jumps out to me is, is like, so obviously this is not all bad news, right? Uh, and my business partner has this thing, he always says. And sometimes it's like the most annoying thing in the world that he says. And I want to punch him when he says it. So it's like, if I'm because like, I'm the CEO, he's my chairman, but he's my co-founder. Like, and we've been friends for a long time, similar Jason to like you and Danny, right?

1:09:25Brad and I do a lot of life together. And he always says this thing. He's like, listen, man, it's happening for you, not to you. And when you're in the, you don't want to hear that. That's not, that's not the best, but it's true. So we went through 23 and 24, restructuring things, rebuilding things, like really hard work. I did layoffs, like we had to rebuild a lot of stuff, redevelop a product, the supply chain, everything. Well, dude, when 25 hit and tariffs came around, turns out we were in great shape. Everybody else is now like all of my competition is in a place where like, nope, now they got to do layoffs.

1:09:59Now they have to rebuild everything. And I just went through 18 months of swimming through to do all this work and the trade war hits and now we're in a really good position. So I'm, I'm, it's, I'm only sharing that because like it will get better. Like the point is stay in the game, make the best decisions you can. And ultimately those macro forces that sometimes go against you, sometimes they go for you. And, and part of what this discussion is really about is about human nature and about expectations. And you guys have probably heard the phrase before, which I think there's a lot of wisdom in that satisfaction is the gap between expectation and reality that we tend to think, oh, I actually get happiness or I get satisfaction from just like the actual thing, the inherent thing.

1:10:43But we really don't. It's actually like, how does what has happened compare to what I expected to happen? So for example, if you took Mike from 20 years ago and you just showed me my bank statement, it'd be like, man, that's amazing. Wow. This is great. right? Because 20 years ago, Mike would just like his expectations around finances would be very different. If you showed Mike 12 months ago, my bank statement, I'd be like, what happened? You know, did something happen to the business? Like, I would think this number would be bigger because of X, Y, and Z. And I think that those can both be true because we relativize the way that we process everything to what we expected to happen.

1:11:25So for some businesses, making$10 million this year is just an incredible, you feel like you're on cloud nine, life couldn't be better. for other businesses. It's the end of the world if you made$10 million this year. How did we only make$10 million? And as a leader, what you have to do is understand what the expectations are of the people around you. And when you're going to get something that's quite a bit worse than their expectations, you've got to manage that. And I do think there's also something here to be said for, like, I tend to be the type of leader that's like, man, the future is awesome.

1:11:59And we're to do this and we're going to do that. And you do it because you want to motivate people and you want to get them, you know, you want to, you want to get them excited. But I've learned that that's kind of dangerous because what you're really doing is you're ramping up their expectations. And so as I'm getting older and maybe a little bit wiser, I'm realizing, hey, there's some real wisdom and under promise over deliver, you know? 100%, man. Have you guys read the book, The Gap in the Game? It's Ben Hardy and Dan Sullivan. I think everybody in leadership knows Dan Sullivan, but Dan Sullivan, Ben Hardy.

1:12:34It's a very fast read. It's on this topic, Mike, like the hedonic treadmill. It's particularly important for like highly driven people. So like entrepreneurs, Jason, Panzers, anybody who has like a lot of drive and is pushing and it's like grow, grow, grow. The gap in the gain is amazing. Everybody should read it because it will help you manage this, like, where are we going? And also how far have we come? You know, like the forever moving horizon. It's never enough. It's never enough. It's never enough. I actually think as a leader, it's a great book to read because it'll help you manage, number one, your own emotions.

1:13:15Because like when you are a founder CEO, you have so much permission and so much power that you are your own enemy. And you're the biggest liability and the biggest asset to the company. And I can say an experience, like when I am my biggest, when I am my own largest liability, it's because I'm not managing my own emotions or my own drive around something. So like that's where bad judgment comes from, at least for me, maybe for some people less so. But everybody should read The Gap in the Game. I think it's like just a killer book. So simple. Jason, any final thoughts, dude, on the whole planning and all this?

1:13:48This has actually been a great conversation. I like this. I just really enjoy learning from others in this space because we're all just trying to figure it out. You know, we're really all just trying to figure it out. There's no right way to do it. I'm hoping that Saris Analytics and some of their new AI stuff is going to make my budgeting and planning better. They were just in here last week and we did like a whole deep dive on it, doing some really cool stuff. Oh, very cool. I want to go into my data warehouse and just ask it a question and have it spit out. It'll allow me to - Build me a forecast, please.

1:14:23More easily, just report stuff too. So yeah, know your numbers, guys. Know your numbers. Be in them. 100%. Just be in the numbers. God, it's not that hard. All right, boys. Let's wrap it. That's the pot. That's the pot. All right, great. That was a great convo. All right, thanks for making it all the way to the end of this episode. wherever you are in the world. It is awesome to have you here. If you do not already subscribe to this show, that is my one ask, is please go to whatever platform you are watching or listening to this on. It could be YouTube, it could be Spotify, Apple. I don't care.

1:14:56Just go hit the subscribe button. Please pump our egos up. It helps. And before we go, one more thank you to the sponsors, Fulfill, PostScript, Northbeam, Saris, and Rich Panel. Awesome guys running these companies. We all use them. These are our vendors. that's the only reason they're sponsors of the show. So thanks again to those people.