In short
How to decide between owning your own fulfillment/warehouse vs using a 3PL, with “red flags/green flags” for selecting providers; also discusses when to bring fulfillment in-house (growth stage, product complexity, personalization, hazmat/frozen/overweight, single- vs multi-node inventory).
Guests
Curtis (Portland Leather; vertically integrated manufacturing; uses 3PLs for fulfillment; manages thousands of SKUs and cares about inventory accuracy and Shopify integration) and Mike (Simple Modern; vertically integrated manufacturing; previously used 3PLs but now does last-mile fulfillment in-house for their smaller, on-demand product footprint; focuses on value-add like personalization).
Key claims
Early on, 3PLs win because they provide flexible capacity without long leases; owning fulfillment can become “brain damage” (space/personnel/liability) and distracts top talent. Later, vertical integration can make sense when growth slows or when you can create a competitive moat (e.g., personalization). Inventory accuracy and systems integration are critical; multi-node adds complexity unless scale and SKU structure justify it.
Notable examples
Curtis’ 3PL transition teams, on-site verification (videos showing correct palletization), and Flexport/Cart.com tech promises; Mike’s “single lease” lesson and COVID remote/unused space; personalization via embroidery/laser for back-to-school; multi-node complexity with ~5,000 SKUs and centralized inventory in Oklahoma.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOThe Debate: Owning vs. 3PL
0:45 to 4:00
Discussion on the advantages and disadvantages of owning a warehouse versus using a 3PL.
“Let's start with, is there a scenario in which owning your own warehouse is the right call?”
Vertical Integration Considerations
4:00 to 8:05
Exploration of when vertical integration in fulfillment makes sense and the challenges involved.
“They are more set up to handle capacity increases, right?”
Challenges with 3PLs
8:05 to 12:05
Insights into the difficulties faced when working with 3PL providers and the importance of flexibility.
“putting it into product or into marketing or into something else that is actually, I guess, like further up the value stack.”
Understanding 3PL Challenges
14:00 to 16:00
Learn about the common pitfalls and issues faced when working with 3PLs.
“privately, securely, and you can start talking to your data like your favorite chat bot.”
Navigating Personnel Issues in 3PL
16:00 to 19:20
Explore the complexities of managing personnel within third-party logistics.
“And all of a sudden we filled up on Shopify.”
Evaluating 3PL Choices and Costs
19:20 to 22:00
Discover the factors influencing the selection of third-party logistics providers.
“I really love the people in our facility, but it is more challenging.”
Technology and Trust in 3PL Partnerships
22:00 to 27:20
Understand the importance of technology and personal connections in selecting 3PLs.
“And when you're spending tens of millions of dollars a year, that's a lot.”
The Entrepreneurial Agency and Choosing Partners
28:00 to 29:40
Learn about the importance of agency in entrepreneurship and selecting the right people to work with.
“It's funny that you're both going to people, like both you and Mike are talking like the, Mike more from a, you know, hiring and managing that type of labor force.”
Operational Evaluation of 3PLs
29:40 to 31:30
Discuss how to evaluate third-party logistics providers based on operational efficiency and systems.
“Then I think, Curtis, you hit on another point, which is you talked about it in the frame of technology.”
Single Node vs Multi-Node Fulfillment
31:30 to 34:10
Explore the complexities and considerations of single node versus multi-node fulfillment strategies.
“other, like it just fires me up and it just, it like makes me want to be that version of myself.”
Show all 26 chapters
Challenges of Multi-Node Fulfillment
34:10 to 38:33
Learn about the challenges and benefits of managing inventory across multiple fulfillment nodes.
“When I'm buying toilet paper, it's like, oh my God, I need toilet paper now.”
When to Own Fulfillment Operations
39:09 to 41:40
Discover the factors that make owning your own fulfillment operations a viable option.
“his ass off and he just like culturally their killer team.”
Direct Shipping from Mexico
41:40 to 42:04
Learn about the advantages of manufacturing and shipping directly from Mexico to retail stores.
“We actually use a great 3PL, but we try to cut some of this out because we manufacture in Mexico.”
Streamlining Supply Chain Operations
42:04 to 43:13
Learn how eliminating cross-docking can improve order fulfillment.
“So we're not, we cut out the cross docking of that.”
The Importance of Personalization in Products
43:13 to 44:39
Discover the value of personalization in boosting product appeal and sales.
“So I want to do the marketing rather than deal with all this crap that we do in the 3PL.”
Scaling Personalization: When It Makes Sense
44:39 to 47:18
Understand the scale at which personalization becomes feasible and beneficial.
“and this is a huge part of actually why we're doing our own facility we have a period like with back to school and we generally kind of personalize stuff throughout the year.”
The Founder Reinvention Cycle
47:18 to 49:29
Explore the need for founders to evolve their roles as companies grow.
“You, you didn't even think about like layering back in personalization.”
Balancing Risk and Stability in Leadership
51:36 to 56:00
Understand the shifting balance of risk and stability in company leadership.
“How do you think about this at Simple Modern?”
Generational Perspectives on Leadership
56:00 to 1:03:10
Discussing how generational experiences shape leadership abilities and approaches.
“And so I'll go just start another company or I'll let, you know, like whatever.”
Sponsor: RichPanel
1:03:10 to 1:03:56
Promoting RichPanel's capabilities in reducing costs and improving customer satisfaction.
“I've been a paying customer for over 12 months.”
Navigating Business Challenges and Growth
1:03:56 to 1:10:02
Exploring the importance of adaptability, skill diversification, and leadership in business growth.
“So there's certain skills where if you just said, hey, I don't have to do anything more than just be a lead at this one thing.”
Identifying Green Flags in 3PL Evaluation
1:10:02 to 1:10:20
Learn about the importance of flexibility in 3PL partnerships.
“What is a green flag that you are looking for when evaluating A3PL?”
Recognizing Red Flags in 3PL Partners
1:10:21 to 1:11:08
Understand the signs of a problematic 3PL through firsthand experiences.
“Flexibility and a willingness to grow with your business and to modify their plans based on your business's changing needs.”
Communication and Systems Failures as Red Flags
1:11:09 to 1:11:52
Explore how inadequate systems can lead to communication issues with 3PLs.
“Like the worst thing in the world is when you have a 3PL and you cannot understand what the heck is going on.”
The Importance of Transparency and Technology
1:11:53 to 1:12:48
Discover why direct access to technology teams is crucial in 3PL evaluations.
“The 3PLs, you just like, you know, I want them to work better than they do.”
Client Size and Industry Experience as Green Flags
1:12:49 to 1:13:59
Learn why working with other companies in your space is a positive indicator.
Transcript
Automatic transcript. May contain errors.0:00All right.
0:01Matt Bertulli:Welcome back to another episode of the Operator's Pod. I got Curtis and Mike with me today. We got three topics we're going to dig into. The first is a longstanding debate in consumer. It is owned warehouse versus 3PL. 3PL, how do you pick them? How do you price them? How do you compare these things? We're going to just jam on this for a little bit about how we have experienced this topic. Curtis, you're super deep in it. Mike, you've got both. I've done both. And with all of this wrapped up in, Amazon's now opening up their entire logistics network as like an AWS for logistics. So I think it's time that we just hit this.
0:42Matt Bertulli:And I think I'd like to start it off, guys, with let's start broad. Let's start with, is there a scenario in which owning your own warehouse is the right call? Like you handle your own fulfillment mike how do you think about this and curtis i'll get your your read on this second but mike kick us off man where would you then own your own freaking infrastructure yeah i think if we're going to talk about this first thing i just say is it's just like owning your own manufacturing there's situations where like it makes sense to own your own fulfillment and to vertically integrate there and there's situations where it doesn't and not surprisingly actually a lot of the same principles that apply to manufacturing, I think apply here.
1:28So we, there were a number of kind of posts on social media going back and forth about this idea. And our friend Bill put together a really good one where he basically was making the argument that it's kind of a siren song, like doing your own fulfillment is a siren song that can actually slow down your growth and e-com. And so I guess I'll start here by saying like, The reason I think that fulfillment feels attractive is that it's not complicated. So when you're paying somebody else to do it, you're looking at it and you're like, nothing about what you're doing is complicated. I could do it, and then I could make more money.
2:05And there's a lot of good reasons. I mean, there's a reason why so many people rely on 3PLs, that doing the 3PL work is actually a lot more complicated than people think it is. And just like manufacturing, you need kind of economies of scale. And if you don't have economies of scale, then it doesn't really work. So just really simply, one of the things we've learned is, hey, you have to step into a lease if you're going to do your own fulfillment. And that means that you're paying a certain amount every month regardless of how much you use the facility. So all of a sudden, like, hey, you have to have a certain amount of volume, a certain amount of storage, a certain amount of throughput on fulfillment, or like this isn't going to make any sense at all.
2:48And I think the generalized advice is like, hey, if you're a brand and you're growing quickly, like the primary concern when it comes to fulfillment is to just have somebody that can keep up with you and can be flexible with you. so like we worked with a local partner encore and even though we probably have given them a bunch of gray hair they were an incredibly good partner in that what we really needed more than anything else was not cost savings early on it was like flexibility like we could tell them hey we think we need like 60 000 square feet and then we come back a month later sheepishly and we're like well we need 120 000 square feet you know or or vice versa as we have grown and matured as a company now i think i'm starting to like we are building a building we are going to be doing more of a fulfillment and we're at a different stage and i'd be happy to talk about like why that's true but i think the generalized advice to start with is like it's really great to have a good partner here early on and when you're in the growth phase and then as your business matures i think everybody develops this kind of urge to think about vertical integration and how can i do more
3:52Matt Bertulli:and i'd be happy to talk about how we've done that so initial variable here to think about for people is higher growth rate. 3PL is likely a better option. They are more set up to handle capacity increases, right? And I guess, Curtis, you've hit on this in the previous episode. You buy a building, you set up a building, and you quickly outgrow it. And now all of a sudden, it's like physical space in your own logistics is a constraint. Whereas once you're bigger, it's slower, right? So you can do it. So Curtis, take us away. Give us your take on this. I'm in Portland, and I'm in a 24 ,000-square-foot building that I bought.
4:29Now, when I started this company, it was just in a little room, 2 ,000-square-foot, and then we expanded out, okay? We have now officially bought and sold racking in the basement of this thing four different times. We need more racking. We buy this expensive racking. You put it down into the cement. You get OSHA approved, and then we change something, and they sell the racking off for 30 cents on the dollar. And then I'm out, and they do it again, and then they do it again. In your growing, you don't know how much you need. So if you're doubling every year, I love to tell this story. Every year, you're doing in one year what you did in the entire history of a company.
5:09So if you do 1 million, then 2 million, then 4 million, the next year you're doing 8, you've done more than you've done in the entire history. The next year you do 16, you've done more than the entire history of your company. So every year you're doing that. The first thought, if you want to set up your own warehousing is, oh, we need to get a space. Great. Sign a lease. Let's sign a five-year lease. How much space do you need? I have no idea. I have zero. Can you give me this amount with the ability to grow 10x if I need it? Well, no one's signing that damn lease. So you think you're going to do it in-house.
5:45We went to a 3PL that could grow. and I'm going to tell you what, they sucked. They really, really sucked. But it got us the ability to take our best people on manufacturing, on new product design, on marketing, on a lot of the other things while they are sucking at the 3PL. Then we moved to a second. Now we're at a third one. And I'm going to tell you, what's happened in that time is their efficiency has got better. Their price has got better. We've gotten better with working with them. And I love vertical integration. I'm a control freak. I want to control everything. I don't want a big, you know, 400 ,000 square foot warehouse.
6:29Matt Bertulli:Everywhere we turn right now, there is some world-changing AI announcement. And I think the trick for us operators is figuring out what's actually going to help our business. Is this stuff saving us money? Is it helping us grow revenue? Is it helping us grow profit? Like, where's the freaking ROI? Jason for Hexclad, tell everybody what is actually working for you guys. Yeah, look, I'm laser-like focused on implementing AI wherever we can. It just makes us more efficient. Fulfill has been huge for us. My team is constantly using Fulfill's new CLI tool and MCP features with Claude. They're now able to query Fulfill data.
7:03They can vide code up dashboards. I mean, we get these awesome dashboards on operations and Fulfill continues to build things that are actually useful for brands. It's hard to see what kind of AI work is valuable and what isn't. Sure, there's so much out there, so much coming at us, but Fulfill seems to be giving the things we can really use to get more efficient.
7:29Matt Bertulli:So Curtis, you don't do your own direct consumer shipping. So you're vertical in manufacturing, but then you use a 3PL to handle fulfillment. I think that's important. Is it fair to say, Mike, that the dollars saved? So like the allure, the siren song is that like, if I have my own warehouse, I save X dollars per package, I get my own rate, blah, blah, blah. Is it fair to say that that siren song, that allure is offset by the brain damage, what Curtis is talking about, which is like the focus of some of your best people are now going to be on how do you be a great fulfillment center instead of putting it into product or into marketing or into something else that is actually, I guess, like further up the value stack.
8:15I have come to think of businesses. It's primarily an order of operations exercise. You know, like when you learn with math that like, okay, first you do the multiplication and then you do this and you do the addition that like most of the kind of generalized takes that people have are right. but if you get them in the wrong order, then it can be wrong for your business. And so part of being an effective operator is not just identifying what are all the opportunities in your business. So you might look at your business and say, hey, I see these six opportunities for growth down the bottom line.
8:50But the hard part that takes judgment is to then say, okay, and what's the sequence? And to have the discipline to say, I see that. I see that way to produce more profit, but not yet. And I think the thing that typically makes great entrepreneurs great is bias to action. And so restraint in discipline when it comes to the order that you're going to attack things is something that we're not very good at. And it pulls against our strengths. So that when you see an opportunity in your business, I think the first question is just like, is that a real opportunity? And then I think the second question is, is now the right time?
9:31because I think the way that we tend to approach problems as entrepreneurs is like, question one, is that a real opportunity? And then step two is do it. And that's really actually not the most effective way to handle it, especially as your business gets bigger. Curtis made this analogy, and I think it's a really good one, about space. And how could you possibly know if your brand is growing at 30 % or 40 % how much space you're going to need in five years? like you just have to guess at an unknowable future and it reminds me of we we first when we first started the company we had no money and so we had no office we we met in the upstairs of my house and and like Panera and stuff and then we finally got an office it was like 1100 square feet it was basically one big common area and it was kind of chaotic and eventually we got enough people where we were like I think a year into that lease where we had to move and I remember when we got the initial lease, like my, the guy who negotiated it on our team, he was like, do we feel good about signing a five-year lease?
10:34And I was like, well, you know, like if we're getting so big that we've outgrown it, then that's a good problem to have. And so then we moved from there to another building and we got into another lease and guess how long it took us to outgrow that lease a year. And so we get into the third building and we sign a lease and two months into that lease, COVID hits. And so we're now working remote. I have three leases on three different buildings and we're using none of them. And what the process taught me is I was like, okay, from now on, I'm going to have one lease on one building. But it was just like an illustration of it's very, very difficult to understand the amount of physical space your business is going to need at different stages in its life cycle.
11:15And you really shouldn't be trying to guess at that until you're in a more mature kind of stage, a more mature growth curve. So with Simple Modern, I'm 11 years in almost, and it's a lot easier for me to have some concept of what our physical space needs might be a year or three years from now. But it was a total fool's errand in the first five years of the company, and we made tons of mistakes as a result of that.
11:40Matt Bertulli:And you wind up in sublease situations. Now, not only do you have multiple leases, but you're probably trying to sub it out to somebody else. So you've turned into like a sub landlord. We're in this beautiful building. And ironically, the way that I got into it was subleasing it from somebody else who had moved out and was just paying rent on a building they weren't even using. And I ended up buying the building at like half of its market value during COVID. But like one of the best investments in my life was actually somebody else making the same mistake that you're talking about. It's, you know, Curtis, you and I, the thing that we share is that we're both vertically integrated on the manufacturing side.
12:15Matt Bertulli:I think the difference between us though is my end product is quite small. And because we make everything on demand, we actually do the last mile fulfillment. Like we just manufacture and ship out of the same building because it doesn't take up a lot of space. And it's actually probably the easiest step in the entire process of making the thing and shipping the thing is just putting it in a box and shipping the thing. So we've, we have no 3PLs anymore. Now we used to, except we were one of those people that the 3PLs did not want. And a part of that was skew variation. And apparel companies, I think in particular, are a good example of like sometimes an apparel company does need to run its own fulfillment simply because the skew variation is so freaking insane, right?
13:01Matt Bertulli:Like they have thousands and thousands and thousands of actual skew variations, which means the bins required are high and you get deprioritized as a, as a client to these three PLs. I am curious as Portland leather, like as you guys have leaned more into three PLs, like how have you handled this? Because you guys have a lot of skews. Like how, how do the three PL deal with you? 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, it doesn't have to be your headache. You can hire Serious Analytics to handle that stuff for you.
13:39Matt Bertulli:Serious IQ gives your leadership team a single shared view of the truth. Contribution margin, channel performance, customer economics, all can be answered instantly with the power of Serious Analytics. Do not fall behind. Serious Analytics is experts. They've set it up for Ridge, Hexclad, and hundreds of other brands. Speak to them today. Connect whatever AI tool you already use, and you can put that right on top of your personal data, privately, securely, and you can start talking to your data like your favorite chat bot. First of all, let's explain that 3PLs want everybody to be really easy and to pay them way too much money, right?
14:17They just like come in and they'll complain about any work they actually have to do. So that's like something to always keep in mind. We just got, when we did everything ourselves um it was a lot of work but we really were good at what we did and when the 3pl came in they mocked us they basically were like well let's explain how we're doing it how we care about our customers and like oh this is a science we're experts we don't need to listen we got this we got this they didn't have it right they were just trying to sell us and they showed us a big warehouse and we said yes I think that any 3PL you need to work with and have people on the ground in their 3PL every single month we currently have a big transition we have two employees full-time employees they're on site for the first six months yeah just to make sure they're doing things the right way because one screw up can be really big and uh they have different priorities these are huge companies and they'll send the priority down and sometimes i say i want these 10 000 products found put through the system before anything else we just recently did that and they're like oh we'll get to it and i'm like no not get to it i want them today and i made them go out with a cell phone with a yellow piece of paper, go find what I wanted and show me on a video that they're putting it on the right pallets.
15:50And then I say, I want the name, show me a video of the guy waving at me with the cart, taking it and putting it into what I need to have. Right. And they thought that was funny and they did it. And all of a sudden we filled up on Shopify. Our sales went up and we did 200 ,000 more because I made them do that. They had waited a long time. these are not bad people they're good people they're in very very very big systems i think learning how to do a 3pl like you're doing matt when you start like mike did when he started and then after you get better coming back to it i would love to in a couple years go back to owning my own and taking some of that money that they're taking from me but right now my growth in other
16:35Matt Bertulli:areas is just worth too much you know so so mike you you mentioned this complicated thing because I think what Curtis is saying is like, it's just the complexity of it is not worth it to him right now. What are other areas? Like when you think running your own fulfillment, I mean, we're not talking about like, I don't run a 3PL for other brands. Right. And I don't think Mike, you're going to either. It's like, this is just your owning fulfillment for your own brands. What about it? Like what, what complications are top of mind for you when you think about this? Like, Where is the brain damage for people considering it?
17:08One thing that is pretty obvious but is definitely a drain is you just attract a different type of person with those type of jobs. And it just has to be said. And it's like you're not managing white-collar workers. And there are some great people that work in 3PLs. but they do tend to have different lifestyles. They do tend to stay in jobs shorter periods of time. And, and you do tend to have, you know, problems like we've, we've had caught people doing drugs in the bathroom and had to let them go. You know, we, we had like when you get your, so we've been talking about the space planning. Well, not only do you have to like plan out the space for what you think you'll need you plan out your personnel and so when you're wrong you don't just have a space problem but you also have a personnel problem and that means you're going into temp workers and i think working with temp workers is quite challenging so like there was a period where we had to use temp workers for a while and we found one of them had stolen like a thousand water bottles and it filled their garage with water bottles uh by the time we caught them and and like you know like i'm not this is nothing against temp workers right it's honest work and needs to be done but just you're gonna get a much higher variance and a much bigger spectrum of the types of people that you're managing and and quite frankly most white collar people don't want to manage that and and it's just headaches you know it's just like it's just complexity and liability that when you're growing a brand, you're like, hey, I want to sell more purses.
18:58I don't want to worry about somebody's background check just came back and they flunked their background check. And we haven't been able to fill this position because people keep flunking background checks. And so anyway, that piece has to be said. Now, with that said, I do think this is an area that's going to get fairly revolutionized because, and I just want to reiterate, we have a great team. I really love the people in our facility, but it is more challenging. But one of the ways that this is going to be revolutionized is the robotics thing is already coming for 3PLs. But this is just the beginning.
19:34Optimist robots and all this stuff, you look at some of the videos of what's possible. And I think that just like customer support is one of the most obviously disrupted jobs via AI, I think the most obviously disrupted job via robotics is 3PLs. And one of the worst things is having shipments that go out to the wrong address or have the wrong stuff packed in them or whatever. These are economically pretty devastating when mistakes happen. And machines are just not going to make the same errors. And they can work whenever and hit whatever shipment deadline and they don't have overtime and they don't have benefits.
20:17And so I think that this, this is one thing that's going to tip things in some ways that if you have the capital to invest in robotics, I think it's going to be more interesting and compelling to run a 3PL than it is maybe today, but the people side of it cannot be underestimated. And I think that this is a more generalized take on business that you think being successful in business is mostly about having a good strategy and executing on it and you just don't think about how much business is really just about managing people and that's really the job you know curtis the uh you mentioned
20:51Matt Bertulli:what mike's making me think of here is uh three p like running a warehouse there's a lot of difficulties with it you've you've said that uh you know you pay these companies a lot of money right so like they're definitely in a that's the attraction it's like maybe i'll do this at a certain scale and my growth rate will slow down it'll make sense to run it myself how do you then so let's let's just look at like as you are today how are you evaluating which 3pls you choose uh is it purely price driven are there other things that you look for when you've made these choices in the past like you've got a lot of reps here yeah but first of all let's just say how different it is, Mike and Portland Leather.
21:34Because I'm in our Portland Leather. He said they catch people doing drugs in the bathroom and they let them go. Here, we have to give them a promotion and talk to HR. And Portland, you get in trouble for interrupting them for using drugs. Exactly. I get in trouble. Would you please give them a few more minutes so they can complete the task? So that's a little bit different right there. I'm going to tell you we really try to work with 3PLs and the last move we made was a company called cart.com who were very nice people and they really tried and we went to a biggie, we went to Flexport and the reason we did it is the technology was better or promised to be better and our people thought that it did and they saved us just a load of money they like literally guaranteed 23 % savings.
22:31And when you're spending tens of millions of dollars a year, that's a lot. And they gave us a$2 million bonus for transferring over to flexible. And so when, here's the key, when I said this to cart, they said, Oh, we'll match that. And I said, you son of a bitches have been making that much on us. Now I'm so pissed. I'll never stay with you anyhow. Right. We kept waiting for the efficiencies to catch on our last 3PL and for the pricing to go down. And we kept promising that that was going to happen.
23:09And it just never actually came through.
23:13Matt Bertulli:Well, okay, so go back though. Like, why did you choose them in the first place? I guess every time I talk to somebody, just to frame this up, this is the most requested referral I get. I don't know about you guys, but in our network, when somebody is, I get a message about, hey, do you have a referral? I need a referral to somebody. I'm like, what's it for? It's 3PL. It's the number one thing I get asked about. So Curtis, how are you choosing? How did you choose the, if you look at your history with each 3PL, is it just cost? is that always the like number one thing or are there other criteria that you're also looking at let's admit that as an entrepreneur i can be very stupid sometimes okay let's just all jump we were all good with saying that we like to sound smart on here because mike's been doing this 11 years i've been doing it 10 plus i mean matt you've done this forever the thing is we made thousands and thousands of mistakes.
24:09I love how Matt just, our mic just briefed through. I was paying three leases at the same time and like joking about it. But at the time you're like, what in the we're throwing money away, right? This is crazy. The first one I chose because they showed me a big empty warehouse and said, look, we can move your stuff in here and we can do it efficiently. And I'm like, wow, rather than the basement of my current building, that sounded like a really, really cool thing. Then when they failed, we went to a bigger, shinier building that promised better technology and better service. And the people seemed to know what they were talking about a lot better.
24:52After several years, it came down to a price. As we've scaled bigger and bigger and bigger, we need the technology to work with Shopify seamlessly and make sure our inventory counts are right. the sinking problems will kill you if you have thousands of things and they haven't moved it in the right thing or if we have a big sale we'll sell 20 000 bags in eight minutes sometimes we'll do something called the c-grade sale that's a lot and if it's not updating every couple seconds you could oversell five and ten thousand bags and that is a months and nightmares and a million dollar problem that you have.
25:31So it's the technology. It's do the executives seem to know what they're talking about? So they all have transition teams. You're going to always talk to a salesperson. Salesmen, they're idiots. They don't know what they're talking about, right? Yeah, they convince you that you should go with them. But you have to talk to the transition team before you sign the contract. How would you do this? What is the time? And you have to judge their integrity as a person, not as a what answers they're giving you. It's, do I really feel they've done this for 10 years? Do I trust that if there's a problem, I can talk to this person?
26:10Is there something about this person that I connect with? Because a company is people. And people for you are the people you can call up or you can email and say, this is a problem. Can you help out with this. And this recent one in working with Flexport, first of all, I met the press, I met the founder, and he, we can do it. The next thing is we talked to their chief financial officer, then we went right down the line, talked to 20 different people, they assured us they can do it. And I'm going to tell you right now, when there's a problem, I call up the scale. And within a half hour, something is happening and getting taken care of.
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28:04Matt Bertulli:It's funny that you're both going to people, like both you and Mike are talking like the, Mike more from a, you know, hiring and managing that type of labor force. I'm happy you said it, Mike. Nobody wants to say it, but it is true. It's a very different animal from hiring a head of growth or a CMO or a CFO, all that stuff. Right? Listen, when you're an entrepreneur, part of the reason you're an entrepreneur is that you get to choose. You get to choose. You get to choose the problems you work on. You get to choose the people that you work with. And that's why we do this, right? Everybody goes to work, and you get paid to solve problems.
28:42That's what you do. Entrepreneurs say, I want to have agency on what I work on, how much upside I have, and who I work with. And so it's not rude to say that you should make decisions around who do you want to work with because it largely influences the problems that you're going to solve, which is the other big thing. And so that's what entrepreneurship really is. I don't think I've ever heard it described that way, but that's what it really is. And I think that that's my own personal philosophy is that I want to have high agency where I work on the type of problems I want to work on with the type of people I want to work with.
29:20And there is nothing wrong with that. That's what every single person is doing.
29:25Matt Bertulli:Yeah, I couldn't agree more. And I think, yes, I'll just leave it at that. Yes, 100 % yes. And you're both coming at the same topic from two different angles, right? Curtis is like, how do I evaluate these companies? People first. Mike, do I even want to do this? people first? Like, do I want to own this? Then I think, Curtis, you hit on another point, which is you talked about it in the frame of technology. So like, do they have the systems to handle us? But what you're really getting at, what you mentioned is like right underneath that is inventory counts need to be accurate. This can screw up my financials.
30:02Matt Bertulli:It has like meaningful balance sheet impact. It can have tax impact. All that stuff actually needs to be really dialed. That's like one way to evaluate, right? It's like, how tight are you operationally as a 3PL? I think the other one, Curtis, and I don't know if you guys do this, but are you going sort of single node or multi-node, right? So like when you're evaluating a 3PL on the size of your business, like are you shipping out of one location? Are you shipping out of multiple? That has an inventory impact. So this thing gets real complicated real quick, right? so yes okay single note oh first of all mike again people say why are you on this podcast like why do you get up and do this podcast it's to listen to mike tell me informative shit like that because i'm like wait i thought i sounded smart but he brought it down to yes i get to choose the people i want to work with that is what high agency people charge each other up.
31:02Paul Graham has a great line about this. He's like, you can't actually see ambition fully when people are young because they haven't been able to self-select into groups of other ambitious people. But when you put ambitious people around other ambitious people, it's like a wilted plant that all of a sudden is getting water. It just perks up. And I'm the same way. The reason why I love doing it is the same exact reason that you love doing it, Curtis, that when we are around each other, like it just fires me up and it just, it like makes me want to be that version of myself. That's the really high agency version.
31:38And I think that this is like the power of the internet really is that like 200 years ago, I would have just had to make do with whoever was around me that was close enough. And now I can get crazy Curtis in Portland, you know, and Matt in Canada. And I get the, and so like, I'm amen. I'm right there with you.
31:57i'm going to go to that single node multi-node yeah tell me about that because i think that's
32:03Matt Bertulli:an important one for people to hear um i'll give you some context what made me think of it is i think about two years ago mike i don't know if you remember but jason from hex cloud they did this huge analysis of their business and they were basically shipping everything out of like a single node. And then they ultimately went to, I think, three across the country, all of it based on like cost and margin, right? Like they're just, they're at the size where they had to do that. You're also at a size with a lot of product. And I don't know how, I wanted to just hear how you think about that part, because that ties into your whole like inventory counts matter.
32:39Not just inventory counts, but are we make in Mexico and we send right across the border and we go to Dallas. Okay. So ironically, our biggest market, which is Portland and Seattle, get their packages the slowest. So you, and you're really, and Hey, let's talk. These are entrepreneurs. Let's talk real people in Texas who do their first buy, who get it like within 48 hours or LTV skyrockets over to people who it takes four days to get it to. Yes. Yes, absolutely. So we know for a fact if we can get those first purchases there much quicker, their LTV, their second purchase jumps immediately, right?
33:22So then it's like, well, that makes sense. Let's do this. Okay. The average number of products that someone buys from us is 1.68 per purchase, right? So they're buying a bag and they're getting a wallet or something small along with it, right? So they want all of those colors. And so all of our SKUs in like 8 ,000, 9 ,000 have to be in stock. And if we're trying to send that all around, we can't keep in stock in three different locations. so we have to get to the north california and the northwest and huge in the northeast new york uh connecticut boston is huge for us right so we would have to have several different nodes we don't have the product to fill that at this point oh yeah so it is it's genuinely like how
34:13Matt Bertulli:the hell do i inventory because if you do multi-node it's like you need everything everywhere all at once if that's how if you're truly going to do it you know like this is this goes back to when I saw the Amazon news that they're basically going to open up their network now in an AWS way, I'm like, I've never really had a strong opinion on how much speed matters outside of an Amazon. When I'm buying toilet paper, it's like, oh my God, I need toilet paper now. But if I'm buying a purse, it's like, can I wait two weeks? Do I really care? And you saying that that matters makes me think this is where an Amazon genuinely has an advantage because their fulfillment infrastructure is just like it's clearly the best like there's no question it's the best um it's what they do um mike are you guys when you think about like building out your own facility or or bringing it back in house would you do that in one location would you do that multi because you're also incredibly omni-channel and i think that's a variable here is like are you fulfilling largely consumer are you fulfilling largely retail like those are very different packouts those are very different fulfillment lines like can you break that down for me a bit there's a lot of nuance here i'll just give a few kind of high level principles i think the number of skews you have really dictates whether multi-node really makes any sense and like we have 5 000 skews with simple modern and when we went to multi-node the biggest thing we learned was that for any savings for any benefits you introduce five new problems where it's like, hey, why is this not live on the website?
35:50Oh, well, it's active here, but not here. And hey, why do we overorder this? Oh, well, we forgot we had 10 ,000 units of it in Unis. They were receiving it and it wasn't yet in our system for some reason. And so I just think that in general, if you have a single SKU and you're at insane scale, okay, maybe multiple locations like in the United States. Now, obviously, international is a different thing. But if you have a bunch of different SKUs, if you're really rapidly growing, it kind of comes back to the same principle that like there is plenty of complexity that already exists. Do not introduce more complexity in your business unless there's a very clear path to why that is an amplifier for your business.
36:36And so we've actually kind of collapsed down towards a more centralized. We're doing almost everything kind of in Oklahoma at this point. And there's some cool opportunities that are only possible that way. So like we got on a program with Walmart where they just pick up entire pallets instead of them giving us purchase orders where it's a certain number of units and you kind of have to compile it or whatever. You just are like, hey, you can order in pallets. And they just come up and the truck pulls up and then you get the forklift and you just drop the pallet on their truck. And so like the efficiency is like through the roof.
37:12so we've collapsed down to one i've seen use cases like i think hexclad has multiple nodes and they did a big uh analysis on it and it was worth millions of dollars to them so it's definitely possible if you get really big that and you're doing a lot of individual fulfillment where multiple nodes can make sense i just think that you have to have some pretty extreme scale and you have to have a more narrow skew band to really make it work otherwise it's just unnecessary complexity that you're adding to your business.
37:46Matt Bertulli:Call me a nerd if you want, but one of my favorite things is when one of my existing software partners, in this case Northbeam, adds something that I would have had to have normally paid more and separately for. Incrementality was broken and Northbeam decided to fix it. Matt, you're not just a nerd, you're also cheap. Yeah. And one of the things my team and I are looking forward to with this is now having MTA and incrementality cleanly tied together. It's really nice having multiple views of a test totally integrated. From design to monitoring, we can just focus on the insights and not the logistics.
38:22So now your incrementality test results, they just feed right into your NorthBean MTA dashboards that we're just used to looking at every day.
38:29Matt Bertulli:Yeah, I don't think any of us are going to say no to less work and making life easier for all of our teams uh if this is interesting to you go to northbeam.io and ask for a demo and feel free to tell them that the operator sent you we've been talking about like 3pls how do you evaluate them we've mentioned a couple things that would drive you guys bringing it in-house right so like growth rate is a really interesting starting point um sharon Shroon, we'll drop a link to his post on X because he jumped into this conversation, right? Shroon being the CEO of Fulfill, who's one of our sponsors. One of the reasons I actually like Fulfill as a sponsor, Shroon is freaking smart, works his ass off and he just like culturally their killer team.
39:14Matt Bertulli:But he put together like this list of, and I'm going to just rifle them off for you because I want to get your take on this. This list of like, when would owning your own fulfillment make sense, right? And he talks about manufacturing, Curtis. So like if you already manufacture the last step of just shipping, it is easier. Mike and Curtis, the retail store thing is another variable he threw in. Like if you own a lot of your own stores or you're having to do that kind of fulfillment, 3PLs kind of suck at cross docking and they kind of suck at like DTC 3PLs typically don't do B2B 3PL work very well.
39:52Matt Bertulli:At least in my experience, that's true. So that's another thing for people to consider. The third one is you personalize almost every order. I know if Katie was here, she'd be screaming at us saying like she owns her own fulfillment. And she does like, I think 30 or 40 % of her business is personalized. But she just ran into your problem, Curtis, which is she had to double the size of her facility. And so she's now working on that issue. The fourth is apparel. We hit on this, which is skew counts get into the thousands. So that's the thing. Here's a fun one. Never thought of this. Hazmat. So if you sell anything with aerosols or alcohol or lithium batteries, these are very specific requirements.
40:29Matt Bertulli:I didn't even consider that. Anything over 50 pounds, furniture, fitness equipment, that kind of stuff. He's like, that actually might be better if you own the dock, you own the LTL relationships, the lift gates, all that shit. And then frozen food, guys. I didn't even consider this, but how many people listen to this show are in CPG in some way might have very unique product requirements that, again, there's not a lot of 3PL options. I don't know if you have any others that you would add to this list, but when I was looking at Sharoon's list and I was looking at Pila, I'm like, okay, so we manufacture, we do retail, we do personalization, we have a crazy-ass SKU count.
41:18Matt Bertulli:I don't think our products have a hazmat problem. They definitely don't weigh 50 pounds and they're not frozen, but I checked a lot of these boxes, right? And Curtis, you check a lot of these boxes. I am glad that I didn't think all these things through before I started my business or I never would have been an entrepreneur. This stuff sucks. And I don't know how I get through it and still stay so optimistic. We actually use a great 3PL, but we try to cut some of this out because we manufacture in Mexico. And we have an enormous, enormous what we call a SETI, Central Distribution Unit. They are in a system in Mexico.
41:59We are now shipping directly to our retail stores from Mexico manufacturing. So we're not, we cut out the cross docking of that. So they can now get the orders. It's all put together and goes directly from Mexico right to the retail stores because that became a problem of making sure that they have the right things. So that was one of the solves that we did on that.
42:25Too many things can go wrong on that. I've seen those cooling units and like having to deal with like beverages and cold and meats and all that. That's just an entire huge industry. We're lucky enough to stay away. Katie Mamari is amazing that she does all this plus the personalization. Like, I just, it's staggering. But again, for entrepreneurs, I'm an entrepreneur, everything inside of me. I prefer growth than all of the little things you have to do. So I looked at yesterday, I'm in here in Portland, and we met and we said, hey, I think we can add$40 million more this year onto our revenue, right?
43:07I really believe that. From what we thought we were going to do, we can add$40 million more. So I want to do the marketing rather than deal with all this crap that we do in the 3PL. Mike knows about some of this. Mike, what do you got? I think you're alluding to a really good point with personalization stuff, and that's something I didn't really touch on. And it's one of the best arguments for running a physical space is that you're able to do something differentiated and create some kind of competitive advantage with it. And when you can do that, you should absolutely think about doing that. So for us, one of our big value adds, our kids' business is just crushing it.
43:47It's just it's actually kind of shocking because our kids' business is kind of like this aspect of our business that we focus more on adult and kids just keeps growing faster than adult no matter what we do. it's kind of like the market's just like we want more of your kids stuff but one of our things like back to school uh has been huge for us it's our best kind of d2c window and the reason is because the carts are really big and because embroidery and laser engraving is huge i mean if you've had kids they lose stuff all the time and they they all have a water bottle that looks the way that you know 15 other kids at their school's water bottle does and so actually like basically putting their name on stuff has a huge value add in a number of different ways and and it looks good and so like we've we've got several embroidery machines we have probably 20 something lasers and this is a huge part of actually why we're doing our own facility we have a period like with back to school and we generally kind of personalize stuff throughout the year.
44:53And then we have a really good custom business that's kind of high seven figures, low eight figures of custom orders that we do for corporate partners and different people that are just wanting to order, you know, 50 or 500 tumblers or whatever for something. And that's a great business to be in. And it's another example where having centralized inventory and stuff can really pay off. So I would say like we're kind of coming back to a thing over and over again, which is you shouldn't do this just to do it. You shouldn't do it if it's adding complexity when you don't need to add complexity. But there are certain situations where your product demands it or where you can build a competitive advantage off of being willing to work in the physical world.
45:38And then I would heavily endorse it because e-commerce is so competitive and it's so easy for somebody to put out your exact same offer, competing offer. You've got to be looking for surface area where I can offer something that other people can't or won't.
45:56Matt Bertulli:Yeah, I think that that's actually a really good point, Mike. And Curtis, I suspect at some point, you're going to hit this where the growth rate slows, right? And you're going to start to look at like, okay, well, where else can we actually build moat and build, like be very different? I'm not making this up. I'm not exaggerating. We started our first years on Etsy where we personalized. So we'd get an order, we'd handwrite it, and we'd pass it along, and we would make every piece for that person. And then we got too good for that, and we moved on and said, to scale, we can't do that. Mike has just recently – I have never thought of bringing personalization back until Mike just talked, and I'm like, oh, that's a really good idea.
46:41And you guys would crush at it. At your scale, you would. It would kill bringing that back. But even something like personalization, it just requires scale for it to make sense. And we've run into this early on. It's like, oh, we've got to have personalization. And it's like, okay, it's on. We're doing 50 units a day or 30 units a day. And it's like, ah, it's hard for that to be worth it. You need hundreds of units a day. But when you do get to a certain, and this is the order of operations thing. like curtis in your business i don't know your business the way that you do there is a definitely a scale where personalization makes sense and then that's the order of operations thing of just kind of like deciding when are we at the scale where this is the right move for us it's so like
47:26Matt Bertulli:now i'm listening to you curtis here and i i the second thing i wanted to actually talk about today is this idea of like the founder reinvention cycle and what you're hitting on here curtis is like a perfect example. Okay. You, you didn't even think about like layering back in personalization. And the reason I'm tying this in is because like, it takes, it's such a different animal to run a company where like all you are as a marketing company, which is what you've kind of been talking about, Curtis. And I know Sean talks about this. Like I look at it, like everything I do is marketing first. And when you start to run your own logistics or your own manufacturing, like this is now a very different company you know and i think mike you're hitting on this too and that are you the right ceo to do that are you the right guy like or can you get the right people and there's this constant like reinvention thing that happens and of course you've been a big advocate for talking about this in the show but like this past couple weeks you've seen tim cook is stepping down doug mcmillan from walmart is stepping down you got a lot of ceos putting their hands up saying like i think this next generation of the company needs a different kind of leader and a different kind of leadership i when i see this i inevitably go to uh is this possible at companies our size like can you do this at this scale or is the founder founder mode founder juice just too damn too damn valuable still yes it's too damn valuable but you know you you guys are whippersnappers okay you guys are just these young folks doing this stuff and I've you know I'm easing to that a little bit later years and something's just I'm gonna be honest I'm very flexible my mind does things I have thought that maybe somebody becoming CEO would be a better thing for the scale that we're going to.
49:26And every time I do that, it takes me about a night to go home and then cock egotistically think, no, they can't do what I can do. They don't got the energy. They don't got this. They don't got this. And there's some amazing people. Maverick said something to me one time. He said, Curtis, could the best CEO in the world take our company from 250 million to 500 million i'm like the best one well sure the best one could do that right so then it's just a degree from me to that person can we find someone who could do that better than me in certain worries and i think that it's probably possible of course they're not going to have my energy uh but my energy creates problems too right mike's always saying these wise things about order of things.
50:17I'm just like, hit that shit really, really hard. And most of it works out. And if it doesn't work out, I just say I meant to do it that way. And I keep moving. Right? So I believe that there is a, and I believe that there's new technology coming that is going to take new minds in order to do it. I really do. I don't think I'm going into AI hard enough. I'm not going into certain technologies. I'm not writing some of this as fast as I did. I think I've got years. I don't got a decade.
50:51Matt Bertulli:Every SaaS company says they are AI powered, but very few can explain what it actually does for the revenue of my brand. This is why PostScript's approach stood out to us. They don't just build AI for demos or buzzwords. They built it to drive real incremental revenue. PostScript's AI called Shopper, it shows up inside of SMS at moments with real buyer intent when shoppers are likely asking questions, hesitating, maybe even about to drop off. Shopper can answer product questions instantly, answer questions about fit, availability, recommendations, order issues, the kinds of stuff that people usually bounce for.
51:22Matt Bertulli:This means more conversions, higher A, 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. Mike, I think we've talked about, we've danced around this topic in past episodes but there is a certain element of what curtis is saying which is like the job of the founder sometimes is to inject risk into a company and that like at a certain stage it's like that you should be injecting risk into a company and then at some point it changes right and that like companies maybe are wanting less risk less founder energy uh and a little more stability simple modern uh as a company is like this massive omni-channel machine you know This whole Curtis view of you have to reinvent the company every year.
52:13Matt Bertulli:How do you think about this at Simple Modern? And how are you thinking about long-term succession and your role? I mean, I guess all of it when it comes to this type of thing? Yeah. Well, Curtis and I, and really this is true of several of the people we've had on the pod. it is very rare to found a brand and then to CEO it from zero to hundreds of millions. And the reason for that is that it just is very different at the different stages, what it requires to be an effective and successful leader. And it takes, I would say, a pretty tremendous amount of neuroplasticity to be able to continue to grow and be willing to make the changes that it requires from you as a leader.
53:07And one of the observations I've made is that, so like when you're zero to 10 million, let's say like you're the quarterback and you've got to be great at throwing touchdown passes and reading the defense and like, that's your job. And if you're not doing it, you're not scoring. and so then you get to like say 10 to 30 million and it's like hey i i've got to add people to my team or like i cannot like do everything right now but i've still got to be like throwing touchdown passes but i also have to kind of simultaneously be like coaching the offensive line on what they're doing and like telling the running back hey you need to be lined up here or whatever and then you get to like 30 to 60 30 to 75 million and it starts to be like hey i actually need some of these players that I've hired, I need them to start doing some of the, the kind of directing people.
53:57And I need to start, you know, doing less and less executing and thinking a little bit, you know, abstracting up and being a little bit more of like a coach role. So maybe you're a player coach. And then there's a point where it's like, Hey, this thing's getting big enough where it's like, you need to kind of just exclusively coach. And these are all transitions that are like, I mean, how many times have we seen somebody who was a great sports player who tries to be a sports owner and totally fails at it. It's just like, it's totally different muscle sets, totally different skillset. Michael Jordan, greatest basketball player of all time, terrible basketball owner, because it's a different skillset.
54:30And I think that entrepreneurship is the exact same way that you've got to wear all these different hats as the company continues to grow. And it's like, are you willing to like make those transitions? And if you're not careful, what happens is you'll develop elite skillsets at certain stages. Like I have these elite skillsets as an individual contributor. I use this example for me, like I'm great in a spreadsheet, right? I'll put myself in a spreadsheet up against almost anybody. Very fast, very effective, very good with data. And so obviously in the very early days of Simple Modern, it was like huge asset, right?
55:07I'm running an e-commerce business and that's a huge asset. And then as we started to get a little bit bigger, it was like, well, it's still probably an asset, but sometimes I kind of feel like it's taking me away from talking to people or doing other things. that I should be doing. And then around the time that we hit about a hundred million in revenue, I realized if I am in a spreadsheet during time that I'm in the office, like it's just a fail, right? I'm not doing my job very well, but that muscle is so developed. And I'm so good at that, that it's like, when I get stressed, when I don't know what to do, you know what my first, like my binky is, my binky is Excel.
55:40I want to pull up Excel. And it's like, that's how I'm going to fix things. And it's just like, that's not how it works. And so ironically, the better you are at something, the more that that thing can then sabotage you as a company grows. And so like, I've seen that risk with me and it's very difficult to work against that. A lot of times people will just say, Hey, I'm awesome at this. I want to keep doing this. And so I'll go just start another company or I'll let, you know, like whatever. So I think that's one thing. And then I think the other thing that is probably going on here is that there is something that has to do with what generation did you grow up in and what were the experiences you had in your life and your ability to lead or manage a company is kind of prisoner to those things.
56:21So it would be very difficult for somebody who, let's say, was born in the 60s to really lead a company into the mobile revolution effectively. Right. It's not to say that some people didn't. It just would be hard because you grew up without mobile technology. And so you don't think natively in that way. Like a 20 year, as somebody that had grown up in the, you know, whatever that was born in 2000 and grew up in the 2010s, their understanding of technology and mobile phones and how they intersect with life and culture is like totally different than somebody born 20 or 30 years earlier. And so you do kind of age out in some ways, like maybe Walmart's not a good example of that, but especially when you're in e-commerce, when you're in technology, I do think there is something about like it's a young man's game because it's difficult to think ai native or to think you know mobile native when that wasn't a part of your experience growing up
57:20Matt Bertulli:you know mike i think what's interesting you're both saying similar things here but uh what the ceo transitions we are seeing at this scale they are actually pointing to like we're heading into a different world like this is a different time and companies are going to run in a different way um you know and these guys are are seasoned you know seasoned experts like they're putting their hands up and saying like this is my thing it's time for me to go uh or this is my moment it's time for me to go curtis do you like mike talked about his binky is like the spreadsheet do you have a a thing that you're like i'm exceptionally good at this i always go back to this one thing this is where I spend my time?
58:00Yes. And it's not spreadsheets. My ability is to memorize the numbers outside of the spreadsheet and have my brain work on unique situations and my subconscious while I'm just walking through the world. I tell everybody, if I ask somebody a question about what is that number, and they have to look at their computer and I'm like, stop. like that's an easy number you have to have that in your head why i'm very good at putting this in my head and then as i walk through our facility we're in meetings i'm in calls i'm at the store i'm in the car my brain is working on solutions because i have the numbers and it's moving it around in a new way so when someone shows me a spreadsheet i can show them new ways to look at that that they can't see um put in this number and build it to this number i actually can say no no no no i know that that's what the numbers say but it's wrong we have to do a system completely different have we thought about this this and this it's looking from a completely different angle than everybody who's looking at their computer that's i just it's like i'm like turn off your computer put it down stop do you know the numbers in your head let's talk about this let's figure it out in our minds and let our minds spend days on coming up with something unique because that computer is going to tell us the same damn thing every single time and everybody's staring at the computer what about what of us that's unique that we can bring to this situation you know i i would
59:34Matt Bertulli:say mine is probably performance marketing like i go if i'm like i'm bored or i don't know what to do and i don't feel productive i'll i'll start writing copy i'll start looking at ad accounts I'll go after creative. I'm thinking of angles for a product. It is such a muscle that I can't even help doing it with my friends. I was hanging out with my buddy who's got a company, and he's telling me about his business. And I'm like, have you thought about this? Have you thought about this? I immediately – it's the most overdeveloped muscle I have as a founder. So it's so easy to go over there. Mike, I'm like you.
1:00:09Matt Bertulli:If I feel uncomfortable with the silence, I'll start working on those things. but I think it's actually like it makes me think Mike when we talked to Tim from Eucalyptus he had this you should hire away from you as a skill set away from your core skill set I thought that was such a good take I think that one additional thing I'll layer on here I think that anytime a really gifted founder totally extracts from a business I think the business does worse I think your business will always be better if you're involved in some capacity. I think the wisdom is figuring out how do I inject the thing that only I can inject and then hire and build up those abilities other places.
1:00:57Nobody in my organization is going to be able to give the risk on nature, the let's freaking go, the ambition, the vision that I'm going to. And part of that is also like I'm the biggest shareholder. So like it's more my money than anybody else. So how can I expect anybody else to be as risk on as I am? It's an unrealistic expectation. so even if I someday abstract out of the CEO role I have to find a way to continue to inject in the organization the thing that I can only bring at the level that I can can bring it the one other thing I it's my one of my favorite sayings of all time but it goes back to this binky idea when you're a hammer everything looks like a nail and it's just like such a great self assessment is how are you like a hammer like what are the things where you like you always want to solve it in the same way, or you always want to apply the same lens to, to things.
1:01:52And it's, it's a great like self-reflection exercise to kind of find out where you are less effective than you could be because you just always generalize back to it's more marketing, more creative, more Excel, more whatever. And like, it's how you, I think this is the way that you make breakthroughs as a leader. And it's the reason why being a truly great leader is hard because it requires a lot of internal reflection and a lot of willingness to change. And that requires a level of security in who you are that few people get to. But if you don't do it, if you allow your insecurity, because basically what we'll do is like growth requires looking backwards and saying, okay, I can see now I was not as good a leader as I wanted to be because I constantly tried to find the answer in Excel.
1:02:44and a lot of people when you're insecure it's like you can't deal with that idea it invalidates you to a level of like you've done things wrong in the past that you just can't accept it and so you just ignore it you know this really effective leaders are like that's fine i could have been better i see it and now i'm going to try and be better tomorrow and i'll probably still struggle with it but i now see it and i'm going to i'm going to choose to kind of grow in that area
1:03:07Matt Bertulli:what's up operators welcome to the rich panel ad read rich panel has been a sponsor for over 12 months. I've been a paying customer for over 12 months. And guess what? I just renewed to pay again for another year. We have cut our SaaS bill in half and automation dropped our cost per ticket by 70%. Our CSAT has also improved from 88%, which is still really good, to 96%, best in class, all powered by RichPanel. I told them last year, hey, you guys need to do the same thing with returns. And now RichPanel has a returns portal. It's built to cut down your tickets and convert more refunds into exchanges.
1:03:38Matt Bertulli:They do the heavy lifting, data imports, self-service, retention flows team training all of it and it'll be live in two weeks if you want to save 30 guaranteed on help desk and now returns book a demo i guess i could probably argue the other side of that as a founder right i think what you're hitting on is like as a ceo you've got a lot of other jobs that are probably just that one area that you can be like a great individual contributor but then as a founder i could argue that if you're a great hammer you should go look for more nails right like they're just personal leverage maybe i mean maybe like i love i love a little conflict here because it's like listen it depends on what you're what skill set you're talking about if you're like i'm an amazing gatherer of talent and i'm just gonna be you know that's how i'm gonna try and solve every problem is gather more talent maybe that works out I still, I don't know, maybe if that's true.
1:04:38So there's certain skills where if you just said, hey, I don't have to do anything more than just be a lead at this one thing. But I generally have found that life is not so simple. The other, here's the other problem with that, Matt. It will maybe work in one area of your life, but it won't generalize to all the areas of your life, which will prevent you from being successful. So, right. Have you ever, have you ever tried to, in your marriage, tried to use the same, you know, like you see nail, you see nails in your marriage and you try and be the hammer and you tell me how that works out for you.
1:05:08So I think being successful in life requires like adaptability and flexibility. And maybe, maybe in business, you can kind of say, Hey, here's my elite skillset. And I'm just only going to focus on that thing. But generally like the most successful people are successful because they have a diversity of really elite skillsets. And then they kind of know when to pull the right tool out of their tool belt.
1:05:29Matt Bertulli:Curtis, what say you on this? You know, Tim Cook's leaving because he was around a long time. I'm just starting to get good at this shit after 10 years, right? Like I had a bunch of drinking in the middle of my life that stalled my life out for a while. Or I might have got better earlier on. But at 10 years, Mike's at 11 years. You're at 10 plus. Like we're all just starting to get good at it. Tim Cook did this thing for 30, right? I think things have moved past him a little bit. He was great at logistics. He was the COO. I get that. I think that we started from the ground. Tim Cook entered a big company and learned how to do it.
1:06:09Mike built the damn thing. He was meeting upstairs at his house. You built this, Matt. Sean built Ridge at past 4 million. We all built this thing, and it takes a while to get good at it. Now that we're good, we don't want to step all the way away. There's still a lot of growth that I need to learn about. I need to learn better about people. I need to learn better about 3PLs. I need to learn better technology. I need to continue to hire. I need to get all this shit. So 10 years is just like when you grow, I'm just like Tom Brady. Hey, in mid thirties, he was just learning the game. He was just getting really good at figuring exactly what it is and getting better and better.
1:06:47Now, physically, he was going to age a little bit. We're not going to age that much. We're going to be fine. We're smart enough. We got the energy so we can keep doing this and i think that if it's not just this company for me it's multiple companies and i think it is for mike and man i think it is for you like now that i got this knowledge i can look at other companies i can't help it i was at dinner last night talking to people and i'm just like talk to me about what you're going no no no no no and i could just see it i could see the pattern recognition of what they were not doing and what they needed to do so i think it's multiple companies, not just one big company.
1:07:24Well, really talented people get bored is what you're saying, Curtis. Like I might be the best pattern recognition ever at a particular thing, but that doesn't mean that's what I want to do for the next 30 years. It's like, I want to, I want to take on new problems and I want to expand my skillset. And I think this is what's true of ambitious people. Like I don't want, there was a great quote that I posted yesterday, which is like my ambition in life is to be defeated by greater and greater challenges. This is what growth mindset and ambition looks like. And so like, this is the other problem with what you kind of espoused, Matt.
1:07:57It's like, man, it'd be such a depressing idea to me if my tool belt and my ability to solve problems is the exact same 20 years from now that it is today. Like, I hope it's so much more diverse. I hope I'm able to take on so many more different things. I hope that there's problems that I'm going to take on and help people solve that I have no idea how to solve today. I think this is what makes business so interesting is it's like this infinite game where it supplies interesting things for us to work on and build on for the rest of our lives, which I love.
1:08:28Matt Bertulli:Yeah, I don't disagree with you, Mike. I'm thinking of it more. I'm manufacturing drama here, Matt, because you and I never argue. No, no, no. Here's the thing, right? But I raise it because I think what you're both hitting on is there is ambitious entrepreneurs, and that is a certain kind of person. There is also ambitious and driven non-entrepreneurs. And I would put Tim Cook in that bucket where he is the all-time greatest CEO if you just look at the numbers. Yes, he came into a big company, but he came into a big company that was worth$400 million and he's leaving one worth$4 trillion. Like that is an incredible amount of economic value created as a driven like operations guy, you know, like that's exactly what that company needed.
1:09:14Matt Bertulli:So like he was basically like, I have a very specific skill set. And he took it to the very top of business, which is what made me argue the like, maybe you just need a different nail. Right? It's like, you're so damn good at this. Like you're just in the wrong boat. Um, so I guess that was my, my pushback is in Tim Cook's where his perspective, he did just hammer a damn nail his whole life. He just did it in the right boat. Uh, and that boat got real big. Um, you're not supposed to hammer nails into boats, buddy. I'm just like, yeah, yeah. Sorry. Thanks for screwing up the analogy. Let's bring it right back around to where we started.
1:09:53Matt Bertulli:And I want to finish on the 3PL topic and let's play a little game. Okay. We're going to call this red flag, green flag. And I want each of you to give me – I'm going to basically call you out. Curtis, I'm going to start with you. What is a green flag that you are looking for when evaluating A3PL? No, I want to start with the red flag. Okay. You start with red. Let's let Mike do green. Okay. Flexibility. Flexibility and a willingness to grow with your business and to modify their plans based on your business's changing needs. Okay, Curtis, red flag. I'm going to say that. The red flag is when you go and see this big warehouse and they're showing you how fancy and how they can build your racking and do everything.
1:10:39If the people you're talking to are number one salespeople or the manager is new and they're bringing like the regional manager who says, oh, I spend a lot of time here, but they flew him in from Tahoe to show you It means no one on site knows what they're doing. It's new and there's no manager running it. And yes, those are specific examples that happen to me. Mike, do you have a red flag? What would you, what would cause you to look the other way? Bad systems, bad systems. Like the worst thing in the world is when you have a 3PL and you cannot understand what the heck is going on. Like, and we grew with a 3PL, but like there was an example that we had this print, no ship where they would print out labels.
1:11:22And we thought that that meant it had shipped, but that didn't. And it just meant that the label had been printed. And so we had a whole nightmare around trying to communicate with customers, not knowing what it actually shipped versus just what label had been printed. So I think systems is a huge red flag if they're not advanced in systems, especially in this day and age.
1:11:40Matt Bertulli:I'll throw in a red flag. I think if the 3PL has been around for 10 or 20 years and they don't have any customers that have been with them that long, I would also be concerned. Yeah. References, lack of references, red flag. Yeah. Curtis, green or red? What do you want? I'm going to go back to a green. Look at you being positive. I know. I want to do that. The 3PLs, you just like, you know, I want them to work better than they do. But here is what it is. They don't just promise the technology. They let you, when you're talking to them, talk to some of the technology people, and they'll start walking you through for an hour or two.
1:12:21Like, this is what we use. This is the integration. This is how we do it. And they give you examples of things that went wrong in the past, not just everything's easy. They're like, yes, we've had this problem before and it created this. This can be a problem. They start telling you about problems that can occur, not like, oh, we're so good at this. It's easy. We got a tech guy in Lexington and this guy can do anything. Nobody in Lexington can do that.
1:12:49Matt Bertulli:Mike, what do you want? Green or red? I'll give a red. a red is they have lots of really big clients because be careful you're not going to matter they're not going to flex to you like you're not going to be meaningful to their business oh that's good yeah you don't want to be the very smallest client um i'll give you a green flag uh they work with other companies uh in your space so they can kind of see how your product category works they know all of the nuances of like what it is to ship apparel or what it is to ship frozen food or something like that i love that i a lot of them always say oh and they give you the big names of people they work with well it's katy perry's new this or something like that and it's like yeah yeah i want to know more about a d2c company that's doing nine figures that has a bunch of skews that's a pain in the ass who's always switching just like we are and how do you work with someone like us because i'm d2c i move fast boom boom boom boom boom they have to move fast too this is an old system they've got to be updated for the way things are done and that means minutes and hours not days and weeks
From the publisher
Is owning your own warehouse worth the headache? Or is it a siren song that will slow your growth?
Matt Bertulli (CEO, Pela Case and Lomi), Mike Beckham (CEO, Simple Modern), and Curtis Matsko (CEO, Portland Leather Goods) dig into two of the most expensive decisions in ecommerce. Should you own your warehouse or outsource fulfillment to a 3PL? Can a founder ever truly step back from the company they built?
They break down the owned warehouse versus 3PL debate, covering when flexibility beats cost savings, and why high-growth brands get burned by leases. From there, the conversation shifts to founder identity and succession, what Tim Cook’s Apple exit and Doug McMillon’s Walmart departure reveal about leadership transitions, and why the skills that built your company can quietly become the thing holding it back.
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