Ecommerce Founder’s Guide to Owning Your Manufacturing & Factory

29:43And that's another way you can unlock value. I think what we're getting to is that there's several different ways you can unlock value here. And one of them is that you make your business more valuable by de-risking having all this exposure to other governments and other countries. One way is that you can unlock better economics potentially by being vertically integrated. One of them is that you can fast follow demand more quickly and stay in stock when other people can't. But the main thing I'd want people to hear from me is that I think making good decisions here is highly contingent on understanding your product category.

30:17And that was probably where I misstepped is that I didn't understand that my category was still moving around so much that it was going to be hard to be like, we're just going to make a gazillion of this one thing. And it's like, well, if the market doesn't move at all, that would work great, but it did. And so it was not as effective as I'd hoped.

30:36Matt Bertulli:The, I mean, Curtis, I don't know if you've done this, but like 5 million square feet is 87 football fields. Yeah. Right. It's like, it's almost the size of the Pentagon. Yeah. Do it hide by hide by like how much that, no, it's, if you actually, I, what we use in leather in a year, I figured it out with AI one time. If you take a semi-truck full of leather and take the entire truck and turn it up like this, it would be like 56 Empire States tall of trucks full of leather. Like it's literally crazy amounts of leather, right? So it is a commodity that we use and it's something that gets thrown away.

31:13I want everyone to know that like this leather gets thrown away if you don't make it into something. Now, the one thing I do want to, because I love the thing, the reason I was a big fan of the Operators Podcast before I ever started coming on here and I'd watch it. And I'm looking for those one or two things that really, really helped me. And the one thing I want to tell everybody watching is I did not start manufacturing think I was going to build this. I wanted product for three or six months in the future, and I wanted to solidify it. I was making quarterly and yearly decisions, not five and 10 year decisions, right?

31:49There's no way that I did this. The neat thing is in Mexico, it's very modular like Legos. You actually have a warehouse and when you're done with that one, you knock a hole in the wall and you have a warehouse next door and then the next one and you just build on as you're building. So we started as a small one and then you just start knocking out walls and building and creating something bigger because I don't want anyone to think I have to decide, do I go to China or do I manufacture? Do I build a million square feet and do it here? Curtis, I could not agree more. And I think very practically, if you're going to take on manufacturing, you should absolutely try and view it like starting a business.

32:32How do I break this down into atomic components to the maximum extent possible? And how do I try and prove out positive unit economics with the minimum amount of investment possible. And like, it's, especially in our case, the fact that we had capital worked against us because it's like, we can go and buy$5 million worth of equipment and this kind of grand opening of this huge facility. We should have never done that. It should have been like, how do we invest$100 ,000 and prove out a piece of the concept? And then if that works, we go to$200 ,000 and that we just incrementally build on top of that.

33:14That's what we did. Yeah, it's like, this is just how good operators think.

33:18Matt Bertulli:Yeah, we bought like a used injection molding machine. Yes. You know? Exactly. I think it was like 90 grand. It just should be like, as another example, we were like, well, we don't want to have dependency on China. So we bought an Aoki, which is this like kind of Rolls Royce injection machine, this huge injection machine, but they're three times more expensive than China. and we bought something new. So we bought the Rolls Royce that's three times more expensive than the Chinese version and we bought it new. If we had bought a used Chinese version, we literally could have gotten it for 10 % of the price.

33:53And if I could go back, first I would shake myself. But then I would be like, listen, start small, prove it out. And then as you prove it out, continue to lean in with capital. And so that would be my argument for anybody considering this is like, you should try it, but just make yourself prove out the concept along the way. Because the way you really get into trouble here is where you commit to a big facility and then you realize one year into the lease, uh-oh, we don't need all this space. You buy a million dollar machine and you realize, uh-oh, this isn't the machine we needed and there's not really a great resale market or whatever.

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35:19Matt Bertulli:So I got a couple of points. I think, Mike, you started off by saying going vertical is like standing up a double-sided marketplace, which are, for people who love business, some of the hardest companies to build is when you have to build a marketplace. So difficult because you're standing up two types of demand. for I would caution not even caution I would say that if you're going to go out and go vertical you shouldn't do it purely on the I think I can make it cheaper so I think I can get more margin for myself than I get from a third party manufacturer I really strongly believe that you should be doing it for like other strategic reasons that are going to increase enterprise value so like in my case what I have said before I think on this show is it's the money was going to get spent anyway.

36:09Matt Bertulli:So I was either going to buy inventory or I was going to build a factory. Now by building factories, you pull the money forward. So you need to finance that, right? We went to outside investors to do that. But we, the reason we did this was now we are much more cash. We call it a cash cycle efficient. It's like we're a negative working capital consumer business. When I sell things, I make them. I don't buy them and then hope to sell them. So for us, that was like, that's a good reason to do it. You know, I make them and I traded margin. That's the fun part. We are still about 20%, 30 % more expensive than if I just bought the crap from China.

36:53Matt Bertulli:But I'm negative working capital. That is worth the margin. And it's no different than if somebody was to tell you and this is common advice in consumer be willing to trade margin for better payment terms that's the same advice right i just we set up our own we're basically our own bank like we set up our own payment terms that was excellent clarity there that i'm gonna i always like to tell people how smart our manufacturing is i'm gonna tell you how dumb it is right now right because it takes me the marketing mind of our company to 90 of my time is spent on making the product. I always like to talk about how smart manufacturing is once you get it set up, and it is really hard, but it is also really, really dumb.

37:38What we're finding out right now, I found out yesterday, is that, yes, we're kind of even par in making with China. You said it's a little bit more when you're making, but now China is going into Cambodia, and they're coming back and saying, hey, we can take your material from Brazil, airship it into Cambodia, make it, pay the tariffs, put it on a boat and take it to Dallas cheaper than you can make it right there and put it in a truck for a few hours and send it into Dallas. So you're like, well, that's good, but you need both. That might be good for long term, but I need products next week. As I was mentioning, we had a product that recently took off.

38:19If I had that in a traditional thing. I would go give them the specs. They would make samples. We would approve, put a PO. We would send materials and I would get that product in October. Last week was some Monta Santa, which was Holy Week. Everyone has the week off. We had people volunteer and say, anybody want to work for the week? And they came in and made that specific product. And we produced 12 ,000 of those bags last week that were on a truck within a week to Dallas to make sure that that flow was good. So there's good and bad that go. I wish I didn't have the manufacturing. I'm going to tell you this.

38:55I love it. But if I could just sit back in the United States and have people order the things and it would work as well, I would do it. I just don't think it would work as well.

39:05Matt Bertulli:Have you ever thought of splitting the company, Curtis? So like owning a manufacturing company that is in service to Portland leather goods, but it's also in service to other companies? so that you build up the B2B sort of like this stable base of capacity. Because that's the double-sided marketplace part that's so hard of this. Because you're in charge of your own demand. Yeah. But there's a big problem with it, Matt. And once you've run it, you get the problem. You want – Curtis's manufacturing has to be captive to Portland Letter Goods because it is incredibly detrimental if he says, and actually I'm just going to zoom out.

39:50I'm going to give a bigger concept we haven't hit on yet. Here's where manufacturing works. Consistent, significant volume. If you know that you can get consistent, significant, especially predictable volume, then you can make manufacturing work. What is the problem? That is actually really hard to deliver on. That volume is lumpy and what people want changes. And it is very difficult. Your people are hourly and they want you to say, hey, show up for 40 hours a week. But your demand profile is almost never like you have to bust your butt to try and smooth out your demand profile where it can line up with your people and your production.

40:32And so what you just said is the kind of siren call of like, well, what if we split this company out and we brought on other customers? Then we'd have more volume and we wouldn't have weeks where we have nothing to work on or whatever. We could kind of smooth it out. But the problem with that is that none of this makes any sense if Curtis is manufacturing when he needs them to do something if they can't do it. And when you start to get other clients, you start to get these bottlenecks where there's a week where everybody needs something and you've got to choose. And like you absolutely have to choose Portland leather goods.

41:12And so then if you're another person buying from his manufacturing, it's like, well, I know I'm going to get big boy at any point if Curtis needs something. Right. And so this is probably not the best solution for me from a manufacturing. And this is anyway, it all goes back to and you mentioned balance sheets, Matt. But ironically, one of the places where you can get the worst balance sheets is when you own manufacturing because a factory has to run. If the factory isn't running, I mean, you're paying rent, you're paying you're paying on notes on these machines. You're paying people salaries.

41:46You can't just furlough people. And so you get this temptation to make product even when you don't know where it's going. And that's exactly how you absolutely burden your balance sheet with a bunch of inventory that you don't know where it's going. Mike, you're so smart. You say that in such a great way. I would say it in a much more simplistic way. I've always been blessed to have people in my life who are kind of messed up. And so they do things so dumb. You say, I don't want to do something that dumb. right? Like I'm a long-term recovering alcoholic. So if you're around a lot of alcoholics that mess up their lives, you're like, well, if I just don't do what Jim does, I'll be better off.

42:28I live in Leon, Mexico. They're a manufacturing and you watch these people struggle. They find somebody, oh, you want us to make this product? Great. You spend all the time in courting them, making samples, developing, starting a run. You make a few of these things and they're like, yeah, that didn't work. Let's try something else. You're like, well, all my cost was up front. Like I just want a manufacturing line to run. Somebody told me one time, if you want to see how efficient your manufacturing is, look out at those machines and that needle needs to be moving up and down at all times. That means you have the right materials at the right time beating those lines.

43:03If you're always changing product out for somebody else, you're always slowing the process down. There are some lines that I have probably maybe 20 of my lines never change product. They're making the same product, just in a different color all year long. That's pure efficiency. You can't get that if you sub it out to somebody else. I also know a lot of American companies are really bad at stretching you out and then getting in financial difficulty and not paying you. And you get stuck with their materials and the losses. And then when you have to lay people off, it's Mexico. You have to pay there for months.

43:40You have a lot of money that you have to pay, you have your fixed costs. Matt, we've all thought of it.

43:46Matt Bertulli:Yeah, I'm asking because everybody thinks about it. It's totally, Mike nailed it. It's the siren call of manufacturing. I guess the caveat here would be in consumer manufacturing, right? So if you're, and I think, Mike, what you're calling out is which business is the priority at that point. So if Portland Leather Goods as the brand is always the priority because that's where you feel the most enterprise value is, of course, the capacity of the factory business needs to be subservient to PLG. And if it's the flip, then it's just being okay that like the consumer brand, like I do know there's, I think there's a t-shirt brand or like a basics brand in Canada or in the US where they actually own their own loom.

44:31Matt Bertulli:Like they are the actual manufacturer, but they were the manufacturing business first and the brand came second. And sometimes I go to buy a damn t-shirt and they're freaking sold out. And I'm like, and I know what's happening behind the scenes. It's like, yeah, they just, their manufacturing customers took all the freaking material. Like that's what it is. And the consumer brand is just left sitting there saying, hey, we're sold out for now. Implementing AI with our trusted data is shooting in the dark and building that tradition from scratch, dealing with Tableau, dealing with data pipelines, dealing with all that.

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45:39I have two observations I just want to make. And one is there's a reason why China has all the manufacturing, and that's because it's generally thought of as a crappy industry. Right. And I think one of the points we're kind of making here is that it is a crappy industry to be in unless you have some way to make it less crappy and by and vertically integrating is one of those ways. And there's and there's even some things we haven't mentioned like, hey, if you have kind of proprietary processes and you don't want those leaked out to all your competitors or whatever, like keeping it in-house. But all that to say, manufacturing, not sexy, not fun, not good margins, real competitive, lots of ways to go bankrupt.

46:21You should only do it if you're able to layer on value in some kind of a way that makes it better and makes it more attractive from an economic perspective. Now, one of the few ways that you can kind of consolidate things where it does make it more likely to work and more value accretive is by adding some of the operational things like fulfillment and logistics. And we have definitely seen that. Even though we failed in many of our vertical integration with manufacturing, it pushed us to develop a lot of capabilities around warehousing and around fulfillment that have been great for us. Like a really simple example for us is that we were making things from Walmart in our facility.

47:07And so we started fulfilling all of our stuff from Walmart from our facility instead of somewhere else. And then as we were doing that, Walmart's like, hey, you know, I don't know if you guys want to do this, but we actually have this pallet program where we don't send you a PO where you have to go pick everything, but literally we'll just come pick up pallets from you. And it was wildly more efficient. It was like, you know, Walmart could and it's a huge PO and one person could pick it in three hours or some kind of crazy because they're literally just going and grabbing pallets with a pallet jack and tremendous savings there.

47:38And so if you're going to really think about this, you had better have some kind of a justification around why you want to be in manufacturing. And it has to be around the way to bundle a bunch of services together or to create some kind of unique proprietary value because of the brand you own. Otherwise, I don't think you're going to like the experience very much. Wow. You know, I'm a bootstrap guy. I always brag about it. I talk about it. That's just who I am. I don't want to give up that control. Mike, you had to go out and get investors to build this up. No, I lit my own money on fire, Curtis.

48:14I'm staring at my computer at Matt and I said, Mike. Okay. So I had my alliteration right and the name wrong. I don't even know which is worse, Curtis, burning my money or somebody else's money. They both suck, but I set my own money on fire on this particular case.

48:29Matt Bertulli:No, I set investors' money on fire. Yeah, no, look, this was sort of one of those rare examples where I do think consumer has business with outside capital. Like, I'm sort of in camp 99 % of the time, you should probably bootstrap in consumer. Like, your life will be better. Building factories, like large CapEx, that kind of stuff, that is where investors can be very, very helpful. right so that's kind of why we started down that path and then ultimately we raised more money for loamy because of the r &d piece but that's that's a that's a whole other game right like real r &d costs real dollars um you know pila r &d is like tooling you know what are we what are we cutting steel on and which is a whole other set of challenges like i i when mike is talking about tooling in china man like god do i feel that pain i have i have three sets of 64 tools right now uh at six thousand dollars a piece or eight thousand dollars a piece so like and and they weigh like a thousand pounds each you know so you got to move these damn things around inside these facilities i think mike is just like the the point you're making on manufacturing around like you need to see it through this lens of a bundle of services or value like a value add wrapper and that that's the justification for doing it and again i want to like emphasize in consumer like i have a my i'm my family is in aluminum extrusion it has been for almost 50 years uh great freaking business massive contracts are decades long like the world needs steel lots of it so that's an awesome manufacturing business it's in italy they've been doing it forever great great business to be and now it's a commodity business there's downsides to it but that's all b2b and i think just like b2b sass that's a different animal so i think like put all that aside and just like this is consumer i would love to hear uh mike you talk a bit more on the fulfillment the like warehouse running part because i think like we've been talking about like criticism staring at this like giant leather factory then the the next level up is like should you run your own warehouse you know we know a lot of people that run their own warehouse instead of the videos that get posted on am or on twitter you know it's funny i will never call it x i don't i just don't even think it can be it's like i i'm making myself more of a unk in everybody's eyes like the longer i call it twitter but i don't care but like if you look at all the videos the example videos that people are putting out of these robots they're like folding laundry putting dishes away or sorting packages you know it's like always like one of these like three or four use cases and it's like yeah exactly or you know preparing for judgment day but it's like it doesn't take you being particularly uh i don't know intuitive to understand that one of the places we're going is people are going to do zero percent of pick and pack you know for most of these companies like that is just all going to go robotic and and in some ways my view would be if you want to take on vertical integration vertical integration around your inventory storage and your fulfillment is maybe one of the easiest things to do right off the bat.

52:05Because if you are doing your own storage, you are going to be way better than market rates. And that fulfillment, I mean, if you're doing your own fulfillment, you're going to be better than what the market's offering you. But also, you can start to look at your first CapEx expenditure. And I think it's kind of breaking the seal on your first successful CapEx expenditure is kind of like what we're talking about. And so like, it doesn't take much imagination to say, if you have a building and you're doing, you know, your fulfillment of 1 ,000 or 500 or whatever orders a day, then, okay, if a robot, if an optimist robot costs me$40 ,000, how many fulfillments does it have to do to pay itself off?

52:48And you start doing the math and you're like, these things can pay themselves off in six months. And just to take a step back, in some ways, because we've talked about this idea of LTV to CAC before. I think you want to think about equipment the same way. It's like the quicker you pay it off, the better it is. The end, right? And the longer that payback period is, the more likely you are to someday very much regret that you made that purchase. Just like the longer you go out to pay back your customer acquisition costs, like the more likely it is that you never pay it back. And so if these robots are$40 ,000, then how long, how many activities would it take you?

53:28Or like a really simple thing is if you can save$1.50 in pick-pack fees per order, okay, it only takes you about 27 ,000 orders to pay off a robot. And you can just kind of do the math. And then you're like, wait a second, I can pay a robot off in six months and nine months. And then I've got a fully paid off robot. And who knows what I can do with this thing? And so like my my sense is that that is where we're going to go. It's interesting because Calcanus went and toured the Optimus facility. And one of the crazier things he said is he's like, people are going to forget that Tesla ever made cars.

54:07Now, that is a crazy thing to say as somebody who owns a Tesla. but it is at least semi-plausible that robots become so ubiquitous that they are the next iphone product and this would be one of the use cases that's just like right off the bat doing

54:24Matt Bertulli:so are you pro own your own fulfillment then like i guess if you're looking into the future because there was always at the counter to this uh the whole 3pl versus own fulfillment was always when you grow, what do you do? The problem with 3PLs is that, and the reason why most people use 3PLs is the reason why most people use contract manufacturing. It's the same business in disguise. It's like, you have to have a somewhat steady flow and predictability or it doesn't work. If I think I need 10 ,000 square feet of space and I actually need 20 ,000, then I have a problem. Or if I commit myself to 10 ,000 square feet of space and then I actually only have 3 ,000 square feet worth of product, then I've got a bunch of dead stuff that I'm paying for.

55:10And the same thing, if I've got hourly employees who their job is to come in and pick and pack orders and today I have 100 orders, but tomorrow I might have 1 ,000, well, I'm gonna have a problem. And so it's the same kind of like, if you have consistency, I mean, you mentioned your family and aluminum. There's a reason these contracts are multi-decade. It's because they have to be. so that you can work it out. And so I guess what I'm saying is I think what people are going to find is it's, because we have a lot of, you know, 3PLs in America. I think people are going to find it's much easier for me to kind of bite off that piece of the physical world than manufacturing is a first step.

55:52And I think the robotics is going to make that even easier. And so, again, this is not sexy stuff. Like, you're not generating massive amounts of EV here. But, that once you have it, there are certain things that you can do.

56:07Matt Bertulli:There's definitely defensive maneuvers in having some of this stuff, right? I do, listening to you guys talk, I think that if I was going to guide the listeners in this, your level one move would be to go from 3PL to owned fulfillment, right? And if there's real advantages to it. Level two would be, I'm going to personalize, So I'm going to do like printing, embroidery, engraving, like that kind of thing. Like we call it like light assembly, light manufacturing. And the level four would be, I'm going to Curtis it and we're going to do like cut and sew. We're going to do cutting. We're going to like, we're actually going to manufacture.

56:48Matt Bertulli:We're going to build tools, like do what I do too. And the level five above that would be like even more vertical. So like Curtis is buying and storing massive amounts of leather. um i i guess like maybe at some point he could raise cows but like there's at some point you got to stop with the like how deep you go in this because it gets less sexy and there's less enterprise value the further you go well for the people just starting out uh you know we doubled every year we went literally made our goals in here one two four eight sixteen thirty two sixty And what I used to tell people is it's not intuitive that every year you're making as much that year as you did in the entire history of your company.

57:33So when you're making eight, you did what you did at one, two and four. Right. When you're at 16, you did what you did. So every year you're making the entire compound of what you've done to that point. So when you're looking at a 3PL, what we want to do our own fulfillment. Yeah. And we're like, OK, how big of a building do we get? Well, take six months to get in. We're going to be here this year, but next year we're going to be again. And at this, well, are we going to get a building 16 times bigger than what we actually want? So we're fine in three years? Like the reason we never went 3PL was because I didn't know how much space to get, how many racks to buy, and I didn't want to screw it up.

58:14So I went safe. Now, should we have? I think we should have. And I'll tell you why. We just switched 3PLs. And I get a lot of questions about 3PLs from people. We started one 3PL. They didn't know what they were doing and they didn't care. And they were like the worst 3PL you could have. So we moved to somebody who cared, who still didn't know what they were doing. We recently got an offer to save us$8 million a year by moving to another 3PL. 8 million, guaranteed 8 million. And I'm like, well, I like that. And I went to my old people and I'm like, oh no no we'll just give you better prices we'll save you the eight million i'm like you were making eight million in on me you gave me that bad a service you were fighting over a fifty thousand dollar charge that was your fault and you could have you're making more than eight million on me you jerks of course i have to leave right now right so there's a lot of money in that efficiency in what you're doing man i thought it was brilliant that's what mike does if you can value you add in something by having your own 3PL, I think that's great.

59:19I like to go into marketing is where your money's at, right? Can I sell more at a cheaper price? So we're a marketing company. So manufacturing is here. And I'm like, well, where can my time be best spent? Like, if you learn how to sell, you're just going to be better off. We are in manufacturing heaven down here in Lyon. When I came down, I was told that there were 400 tanneries and 800 shoemaking factories in Lyon. 800. I've had at least 100 of them come to me and say, hey, we can make this stuff. Do you want to set up a brand? And we'll sell the stuff in the United States. And you want to know what I say?

1:00:01Marketing is the hard part. Running a big manufacturing, as hard as it is, it's not as important as knowing how to create a brand and selling it to people.

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1:00:43Matt Bertulli:This means more conversions, higher AOV, less lost demand. So you are driving more revenue and doing it more efficiently. Check out Shopper from Postscript. We use it at PILA, which is why I am telling you to check it out. Why is Bezos going out and doing like, what is he doing? A hundred billion or 200 billion, some stupid number that he's looking to put together to buy or build manufacturing capabilities. I know nothing about that. Mike? It just seems like all the talking heads in the world are like, no, no, no, go high asset, low obsolescence. Halo is the new term I keep hearing. Bezos made, I was about to call him Jeff.

1:01:29My friend Jeff made his money. It's my buddy. on a first-name basis, guys. He just doesn't actually know it. I mean, Bezos made all his money by running this playbook. You know, like you could say the infrastructure they built out digitally with Amazon became AWS, and the infrastructure that they built out with the Amazon Fulfillment Network is the backbone of Amazon, and that he, you know, is whatever, a gazillionaire because of it. And so to me, it is very logical that somebody who has a bunch of capital and has made a bunch of money running that playbook would be like, I think I can do that again, but maybe even better with the technology that's coming.

1:02:14So, I mean, we've talked about this before, but part of being a successful entrepreneur is that you're able to kind of look at, well, what are my skill sets? Like, what am I like personal, my personality, my giftings, my talents, my abilities? What are my assets? You know, this can be capital. This can be experience that I've developed over the course of my career. It could be industry contacts, whatever, you know, know-how. and what does that allow me to do that I can do at a level that other people can't? And so if you said, well, who's gonna build the next generation of warehousing and fulfillment in America?

1:02:51It's like, I'm betting on Jeff Bezos. And so like for him now is Mike Beckham, should Mike Beckham be doing that? I don't think so. I mean, I can do that and I may do some of it, but that's not really my primary skillset. And that's really what you were talking about, Curtis. And I think that that is a good way to frame the entire discussion here is that whether or not you take on manufacturing, whether or not you take on fulfillment, comes back to how are you situated? What are your skills? What is your brand? And this kind of overlapping set of factors, and does it make sense in your particular Venn diagram how all these things overlap?

1:03:30And for some people, many people, the answer is no. Like anything that pulls you away from thinking about marketing and customer acquisition or product is just not the right focus of your time. And it's a lower return on your time. There's some people that are able to do it and turn it into a massive advantage. And this is why I keep coming back to the idea that success in entrepreneurship is as much about understanding yourself as it is about anything else. We, to use a quote that I used last week, there are many, many things where I am not the best, but there are a few where I'm situated where I can be one of the best in the world, it would be stupid for me to focus my time in areas other than those few things where I can be truly elite.

1:04:18And that all these, we've used this word before, but I like it. Anything else is just kind of a side quest. That's just a distraction. And for operators, the problem is we like solving problems. We like proving we can do things. We like taking on challenges. and that that can easily work against you. And so maybe this paradigm will be helpful for people. Anytime you're trying to take something on new, hey, is this a main quest or is this a side quest? And if it's a side quest, don't do it. You know, like get back to the main quest.

1:04:51Matt Bertulli:Is that a leverage thing, Mike? You're like, we're always just looking at where do I have maximum leverage? And I should probably be putting my time into those things. Yeah, I mean, one of the ways I think about it is My capital is not unlimited, but it's a lot less limited. But my time is very strictly fixed. And so I have to maximize the return and the leverage on my time. To be the most effective version of myself, I have to. And there's a lot of my time that's explicitly set aside for non-monetary reasons. I'm spending time with my wife. I'm spending time with my kids. I want to have interests outside of here.

1:05:30I want to have friendships. You know, I want to have a balanced life. I want to be in good shape. So like there's this very small pie of my week of time. I don't know what it is. Is it 40 hours? Is it 50 hours? Where it's like, this is to be used to generate economic value. And it literally can't get any bigger. So the game is, how do I most effectively get the highest yield out of that? And the way that you do that starts with having very clear-eyed understanding of exactly how you're situated, gifts, skills. Sometimes I don't understand the words you say, Mike. What is a balanced life? Like, I have no idea what you talk about.

1:06:12You know, it's actually funny you say that because I do kind of hate the idea of balanced. It's more that I have multiple success criteria for my life. And I don't think there's this idea of like, okay, I want to spend, you know, for me to have balance, I've got X number of hours are always going to my family and Y number of hours are always going to my, you know, whatever. But I think it's more that like, if on my tombstone, if it's like, you know, he built 10 figures in value, if that's all you have to say, it's like, that's a pretty depressing tombstone is basically my perspective. And, and then the other perspective I would give is it is a lot of fun to build economic value.

1:06:52But I'll tell you what's really fun is to having people and relationships and community where you can use that money to do things. And what's really sad is that there's some people who are really good at the economic creation piece, but then they have nobody to celebrate with, nobody to spend it with, nobody to give it to. And that's like a travesty. So I want to have that kind of balance. Like I want to make a gazillion dollars. But what makes the gazillion dollars awesome is I have amazing people that I can go on vacations with. I have causes I believe in, I can give it to. And I have a community that I've been in for a long time I can invest it in.

1:07:28And to me, that's like winning in life. And like, I just don't know that you can be the best version of yourself as an operator if you don't have some kind of definition of like, what is winning in life? And if that, and that has to be at least a little bit different than winning in business, I think. Absolutely. Hey, Matt, I thought it was a great question about Jeff Bezos. And I didn't have an opinion when you said it, but it doesn't take me long to come up with an opinion. So I want to say it. I don't actually read as many books as I pretend to, but I do scroll a lot on the internet machine.

1:08:00And I saw him say, hey, I like to invest in things that take 10 or 20 years that I know are not going to change in 10 or 20 years. People are going to want faster service, not slower. They're going to want better products, not worse. They're going to want cheaper products, not with deglobalization that is happening right now. We have had deglobalization happen in the last 18 months like we never thought was going to happen. The U.S. is very, very well situated to have the raw materials, the resources and the market so that you can manufacture in your own area with the right power in order to do this.

1:08:33I think he's playing a very smart long term play of saying if we're going to bring manufacturing back. It's got to be smart. It's got to be high tech. It's got to make the things that are on this. And it's going to take us 10 years to do it. Curtis, on this, like the reason I'm asking

1:08:47Matt Bertulli:the question is we're living through a period of like pretty significant. It feels like pretty significant disruption. So like we're going into a future that definitely seems a little less certain than maybe what we've all experienced over the last couple of decades. Like we're all old enough to have been in business now for a while. And while I love the question of like, what what's going to be the same in 20 years i can't help but also ask like what won't like what what assumptions do i have on you know what is good decision making good judgment and good taste and being an operator that maybe isn't true anymore because like the inputs are changing you know mike you sent this article about the whole like boil the ocean thing like that would have been terrible advice a few years ago right and and like to go as an operator like the best advice ever is just focus on one or two things and do them really well and then you tell your teams that and that's how you scale up an organization and now we're in this place with ai we're like no you can probably boil the ocean because the nominal cost of doing everything is going to freaking zero what so i just have to like i feel like it's i feel stupid asking the questions because history tells me the answers but i still gotta ask them because like are the inputs changing and i don't know mike if you have an opinion on this but like it seems that we should be questioning everything i think it's the fundamental skill of um i think intellectual curiosity is like a core life skill and i one of my favorite exercises i think i do this a lot of days but in my business i certainly try and do it fairly regularly where what have I learned in the last week, the last month, last quarter that I didn't know before?

1:10:36And what are all the assumptions that that might change? What are all the possibilities that might open up? What are the, Mark Twain once said, it's not what you know that gets you in trouble. It's what you know that just ain't so. And so the, I think when you're intellectually curious, what it does is it prevents you from just running on autopilot with a thing. And that's how you get disrupted. You found a thing that was successful and you're doing that thing and you're just doing it, doing it, doing it. The world around you is changing, but you're not reflecting and considering the way that that's changed things.

1:11:12So I'm constantly doing it. I'm constantly trying to say, how has the change around me created new opportunities or changed my perspective on how I should be doing things, whether it's my personal life, business, whatever. And right now, I think the gift of this particular era of history is that it's pretty obvious to everybody that they need to do that. Like the technology is so disruptive and it's moving so quickly that even people that are not very into tech are realizing like, I need to kind of think about how this, you know, interfaces with my life and how I need to think about my career.

1:11:48And so I just think we should always be doing it, But especially now when the disruption is highest is when you should be reconsidering your priors the most. And so that's what I'm doing with my business. And like what I'm coming out to is some things are going to change quite dramatically the way that P &Ls are structured, the way that organizations are structured. Like one of my favorite things I read in the last week was basically in organizations, you're either building or you're selling. That's it going forward. And it's like, that's a cool model. That's very different. Like the middle manager thing may just be an idea that's headed towards extinction.

1:12:25But there's a lot of things that won't change as well, like you said earlier, that like we're still going to need the physical world, right? Like these products have to sit somewhere before they go to customers and they're still going to have to get on trucks or drones or something and get delivered there. And we're still going to need people that design these products and take on the mental overhead of creating companies around delivering these products to customers. And that's one of the reasons why I think being a consumer right now is great. Like parts of us are going to parts of what we do, we're going to get disrupted some, but there's still a huge need for what we do.

1:13:01You know, part of this. ability to, as we have on the Operators Podcast, to actually talk to people who are out there and building their businesses is I always do this. Matt, you asked the question perfectly. It's you've got to be a good enough person to figure out what the hell's going on. And you've got to be looking at what's coming new, but you can't be jumpy. You can't jump. I read this. We got to do this. I read this. We got to do this, right? You've got to have balance and you've got to be so curious and aggressive at the change at the same time. You have to be balanced, not in life, but in business and what's your growth.

1:13:39You have to be saying, I want all the new technology, but I'm not going to jump from thing to thing. I've got something that's working and I've got to build this over. And they don't seem like they work together, but they do. You look back after five years and you're like, wow, I'm glad we didn't do the same thing. I'm glad we grew, but I'm glad we didn't chase every trend also. So I know that's the hard answer for everyone. And it's like, hey, you got to be balanced when you look at these decisions. Make them. Don't go too deep. And if you get into something bad, get out of it and get back on track.

1:14:08So you know what? The best thing about this Operators Podcast to me is I used to have to watch it. And now I just get to sit here for an hour and a half and listen to you guys give me this wisdom and talk to me about this stuff. So I've got one last question for you to end this all up. What is the one thing you've done in the last 10 years that 10xed your business? like a simplistic one we all like to have people ask us like what's the secret no no no what is the one thing you can look back and say wow this 10x my business and i'll tell you what mine is right now this manufacturing that's a pain in the ass 10x to my business it did and it was really really really hard but i kind of just kept doing it year after year and got better and all of a sudden we got to where we are and now it's worth it now you guys are being very thoughtful you have

1:14:56Matt Bertulli:something there i was uh spent more money on meta like honestly like we just like we're a marketing company and we got really good at it and we just continue to obsess about it and that's the lever everything else is kind of in service of the lever that's it like it's it's that's the whole thing i love it some people overcomplicate it Yeah, that's a great one. Mine is probably, I really became an expert on Omnichannel. And at a time when the world's moving that way, and there's just not many people that are experts at it. You've got all the legacy players that have been in physical and are trying to figure out how to do digital.

1:15:37And you've got the new digital companies that are trying to figure out how to do physical with it. And I just found myself positioned where I was one of a small number that had kind of built both simultaneously. and it wasn't a bolt-on. Physical wasn't a bolt-on to digital or vice versa. And that's just really expanded what's been possible both in Simple Modern and the companies that we've added since then and even in some of the advising and different things I've done. I mean, even on this podcast, there are times when the conversation is really meta-heavy where I just kind of smile and nod because we just don't spend, you know, comparatively, we just don't spend enough on meta for me to have strong takes.

1:16:18But then there's other times where we start talking about things like Omnichannel where, you know, I know my voice is the loudest because I have the most experience. And so like that decision. And I think that there was this point during COVID where it's like, everything's going digital. And it's like, no, it's not. No, it's not. Like the future is hybrid. And so having that skill set has helped me dramatically. Love it. Wow. Wow, you guys, you absolutely killed it. Thank you so much. And everybody who made it to the end, thanks for watching the Operators Podcast. If you're not somebody who hit the subscribe button, we don't say that enough, hit the darn subscribe button.

1:16:57Bye.