Creativity - Uncommon Leadership - Profitable Pivoting - Luke Peter’s Path to $600 Million in Revenue

0:28This is the story of the one. At the time, Yahoo showed that there was a lot of searches for portable air conditioners. That's literally how I got into this business. And just from the beginning, we were just cash flowing it. It was super easy to show up and search. I didn't even think there were paid ads at that time, 2001. There may have been, but early on the paid ads were super cheap. This is Right About Now with Ryan Alford, a Radcast Network production. We are the number one business show on the planet with over 1 million downloads a month. Taking the BS out of business for over six years and over 400 episodes.

1:03You ready to start snapping next and cashing checks? Well, it starts right about now. What's up, guys? Welcome to Right About Now. I hope you're doing great wherever you are, whatever you're listening. We appreciate you for making us number one in business and marketing on Apple Podcasts. Today, talking one of my favorite subjects, entrepreneurship, success building, and hey, I like little mini fridges, baby. You know, you'll know what that means shortly once we talk with Luke Peters. What's up, Luke? And stoked to be here. Thanks for having me. Looking forward to it. I know. Hey, avid surfer, too.

1:44I heard. The waves are right here. So, yeah, love it. In Huntington Beach. It's a great place to surf, I hear. it's it's beautiful we've had uh last month's been really nice kind of small right now but the weather's gorgeous so um yeah blessed very lucky i mean other than knowing you know i'm in south carolina i don't know how you'd necessarily deal with some of the california bullshit but other than that it's a beautiful place to live you got a little bit of the beach right well believe it or not we are in like the sanest coastal city in california so So it's a very, very patriotic city. We have a huge 4th of July parade, American flags everywhere.

2:24So we lucked out where we are. But, hey, South Carolina is beautiful, too. We had a warehouse distribution center out in Spartanburg. So I know the area. I've been out there. I've been out to Lowe's, of course. It's in the area, right? And then Spartanburg, we opened up over there. Yeah, GSP, our airport code. Greenville. We don't even bother with GSP, man. Just flying to Charlottesville. Oh, come on. GSP is a model of efficiency. I used to fly to New York every week. 6 a.m. flight, I'd get up at 5.30 and be the first one in line on the plane. Oh, yeah, yeah. Tiny airport. Tiny airport. Tiny airport.

3:12It's almost like flying private, but commercial until you get into the plane itself. But Luke, I know you're a former CEO of New Air. People probably know that. They're like, I know that name. You know, like when you first hit my radar, I was like, New Air, I know that name. I know that name. Then I read a little further. I'm like, yes, mini fridges. Yeah. Yep. I remember them. Were you guys like one of the first? Were you one of the first like big names in mini fridges? in many also in wine. So we do like just, yep. It's a wine, the beer, the cigar. So we cover the fun, portable, uh, refrigeration categories.

3:54Okay. And you put all those together and, uh, it's, it's fun. You know, the employees love it. People love like, like now we've got a whiskey ice maker, um, that makes the ball ice, you know? So these are the fun categories that people can get behind. Fun refrigeration. I like it. You know, we put the fun in business, you know, I like to let our hair down a little bit on our show. So I like, you know, you don't naturally go refrigeration and fun necessarily. But, hey, the wine coolers, the mini fridges for your Cokes, I mean, beers, I mean, Cokes, you know, all that stuff. I always think back to Chris Farley.

4:29He was doing, you know, Tommy Boy. He's like, oh, he got a mini fridge and everything. I can put all my beer. I mean, Coke. He talked to his dad. No, we had it. It's part of the culture. I mean, everybody's responsible, you know, but we had Keggerators in there. We testing those out. We had we've done different, you know, licensing and partnership deals with different beer brands. And so we'll do cool wraps. It just, you know, different events that the products will be shown in. So it's listen, when you show up for work, you got to have fun, too. So it's great. You know, we were very fortunate to be in that fun category.

5:03Luke, how'd you make New Air so successful? That's a loaded question. five hours. There's a lot of luck and it's a long story, but you know, you want me to take you back to the beginning then? Yeah, man. Tell me, let's, let's set the table for the audience. How do we build a, you know, a 460,$80 million company in sales? Right. Right. And we did 80 million the last year. Yeah. Over the course of, of, you know, we did well over half a billion total, but then grew up to that size of a company. Yeah. So what happened was, so the beginning is kind of funny. I come from a big family. So I come from a 12 people in my family.

5:40Okay. 12 siblings and growing up here in orange County. And, um, it was always just, if you want something, you had to go make it, buy it, uh, you know, fight for it, whatever you had to kind of, you know, make your own way. Right. Well, anyways, I wasn't that great of a student, but I did finally graduate college and I, um, but I got excited about science. I became a hazardous waste scientist. So I'm working for like a part of the government and this is after hustling as a kid. Right. And it's, it's kind of boring, you know, and all the old guys are like, man, what are you doing here? You're young, you know, come back here to retire.

6:10Like you got to get out in the world. Meanwhile, my little brother was selling stuff online. Okay. And at this time I'm probably, you know, 24 maybe. And he's, you know, I don't know how 18, something like that, 19. And he's selling stuff online, making tons of money, driving a sports car. I'm driving a beat up truck, you know, an hour and to LA and I'm like, wait, something's wrong. So I just start burning the midnight oil. Uh, I see that HVAC is actually an untapped category. Okay. Back in the day, it was like, you know, the digital stuff was being sold online. Okay. And, and I know you're a marketer.

6:46So it's like, even back then people are selling Ram computer stuff, but this is like 2000 and 2001. Right. But nobody's selling anything semi-commercial or HIV. Nobody, and the people who were selling it, they sucked. And so I just learned HVAC or learned SEO and just stumbled on that category because it showed, because at the time Yahoo showed that there was a lot of searches for portable air conditioners. That's literally how I, how I got into this business. And just from the beginning, we were just cashflow in it. It was the search. It was super easy to show up and search. I don't even think there were paid ads at that time, 2001.

7:25There may have been, but you know, early on the paid ads were super cheap. And so we just, it was all D to C up until like 2012. And of course paid ads came in, you had paid ads, you had, you know, all the typical things except social media wasn't that big back then. And so we just kind of grinded D to C earning our customer, but it's, we're like a, we're like a one sale and you're done. Cause you don't need, you maybe need a fridge and a nice maker or whatever, but you're not like coming back six months later. Right. So it was, you had to be profitable on sale number one. And then what happened was, you know, and this is kind of a big pivot was then all of a sudden, you know, I'm ranking top three for all the big terms.

8:10And all of a sudden I see Home Depot showing up, Walmart showing up, all of these guys woke up around 2012. Okay. And they got big freaking marketing departments. I don't, you know, and I, and I'm thinking, okay. And then of course, you know, your, your paid ads starts to get more expensive and more competitive. And I'm like, whoa, this is, this is going to be a problem going forward. You know, as it is today, DTC is challenging. Right. And, um, if you're selling a product and you don't have recurring revenue. So what we did is we just totally changed the whole business and focused, put everything into brand.

8:42Okay. Just everything was focused around newer brand, creating the best brand, the coolest brand, the most trusted, our motto was the most trusted brand and compact appliance. So we're all after trust, customer service, all of those things. And we sold to those guys, right? So we're still direct to consumer roots, hustle, understand copy, understand messaging. And we're going against guys who are real slow because they're just, they have no idea how to reach the masses. They just know how to like talk to a buyer. So we were a nice, you know, kind of blend of that. We were actually back, you know, back around 2012 to 2018, we were very unique in that respect.

9:25And, you know, that's kind of what kickstarted the growth is selling into these large retailers. Yeah. That 2012 rings true because that's right around, I think when all the, all the big boys woke up, that's when Facebook stopped working organically for the most part, 12, 13, somewhere in there and Google, all the big boys came in. I think they realized where they could get the ad dollars from, you know, versus given the, the young scrappy guys that rode the train, you know, the end, then they let, they knew, Oh, I can sell a million dollars a month in that pay-per-click ads to Home Depot. Yeah.

10:02Exactly. That year. And, and the big guys don't care. They'll spend whether they're profitable or not. You know what I mean? So yeah, it's, it's a whole different game. So out of whack, like it's like, they got to hit a certain number, no matter what the expense is kind of like the government, you know, that's true. That's true. That's a great parallel, actually. Up until a few years ago, then all of a sudden they got wise. Cause you know, they're getting crushed by Amazon and Walmart. So they all had to compete, but yeah, there, there is that grace period in the middle. You know, 20 years, I mean, like as a leader of a company and doing the marketing that you did and having the growth that you had, when you reflect on the, both the success and what you learned, are there like, are there like light bulbs that kind of key points or things that come to mind?

10:57Yeah, for sure. So we ended up selling in 2001. Okay. And for me, you know, personally, that was a big thing, you know, cause it's like, if you sell, you've created something that is proven value and then private equity is coming in and buying. And then I stayed on for a while and then I was, and then I, and then, you know, I've got a great new CEO running it now. And so I'm able to take time and reflect on it. And, and I would say that there are definitely a couple of things. Like the first one is when you can afford it, like as a business leader, as a business owner is getting the best people in and getting some skin in the game for the best people.

11:30Okay. And then creating a vision and letting them know what that final outcome looks like. So for example, you know, early on, I probably would have been, I was more tight, you know, because I'm thinking, okay, if I, you know, how much should I share? And then at later on is, is I, you know, kind of learned the right way to lead. And there's a lot to it that I learned, but I'm just simplifying it here. It's like when you get good people and you say, Hey, let's, let's sell them three years. And if, and if we do, this is what it looks like for you. Like they're going to just run through walls. Like there's a huge, cause everybody's motivated by money.

12:05Okay. It's like, sure. You want people who are just going to always do the right thing, but you got to show them that this is what it's going to look like for you. And they're going to work their asses off and get there if there's a big payday for them. Um, and they're going to do things that you could never do on your own. So that was a big one that I learned, you know, as far as like getting the right people. Um, I realized early on that can be hard. Like if companies don't have enough scale, like they can't hire in, you know, that CFO for two 50 or 300, or they can't hire the CEO, but you know, you can still prioritize getting the best people over saving a few dollars is how I would say for most companies.

12:39Um, and then, um, just another quick one is just focusing on margins. You know, too many companies are, um, they're, they're churning, they're churning revenue, they're churning top line, they're building in lots of expenses into their business system. Okay. And they're saying one day, you know, one day I'll get scale one day I'm going to get leverage. And that does work for some companies. Okay. And especially people who've already done it, they're really smart and they come at it round two and they really know how to get to that point. But for a lot of people that doesn't, it doesn't work. It's like make, It's like before you go build like a 10 or$20 million company and then try to figure out how to make money, like make money from day one.

13:20Because the thing is that can actually, basically what it's telling you is your brand is not valuable enough to the market. Like if you're not profitable when you're a couple million dollars at the transaction level, you know, there's a good chance that as you're 10, 15, 20, you still may not be that profitable. because the market's telling you like, this is all we're going to pay for your brand, you know? And so you want to figure that out early on. What do I need to do with my product or service? How do I add more value? How do I, you know, stretch these margins? And so that's, that's a huge one.

13:52You know, right now I do CEO coaching and that, that's a, that's like one of my main focuses, like, what are your margins? Okay. What are, how can we get creative and really think about your product and big focus on the product? Talking with Luke Peters, former CEO of New Air and now executive CEO coach and mentor. I'll call you a mentor. I already feel like you're mentoring me a little bit here, Luke. I'm like taking notes, mental notes while you're doing it. Luke, tell me, I want to go back. There's a lot to unpack. There's a lot of good stuff there. My ears perked up like four to five times.

14:33My radar as a host went off a few different times. And this is why I do this because I just take so much from our guests and how knowledgeable they are. But the finding great people where you feel like you should share equity, give me some attributes that you look for in those people. Like you said, ultimately, you've got to give them skin in the game because everybody's in it. Look, we're all in it for ourselves. They need to be. Then they should be. They should be money motivated. If they're not, they're probably hard to even motivate, period. But what are the biggest attributes in key, maybe not all chief officer level, but key component people that you hire?

15:15What are the attributes that leaders should look for in those people? Okay, perfect. Yeah, I mean, Ryan, first of all, hiring is super hard. I was just talking to a friend yesterday, and he's hiring. and I gave him a few ideas, which we can talk about, but it's, it's still super hard. So here's, here's the ways to like, um, if you can afford it, work with an executive recruiter for your C-level positions. Okay. Because a re and I'm not talking about a regular recruiter and the executive recruiters are super expensive, by the way, they're going to take like 30%, but they're going to do things that you could never do.

15:50And they have a network and a pool that they can pull from and they can get people who are better that you would never be able to attract because they're going to, they're going to soften up their ear a bit and they're going to pull them in. Right. Cause you're going to, you want people that might be hard to frankly hire for your company. Okay. Because maybe they have the, the, maybe like a younger company, not your company, but I'm saying like the typical company that's starting out, it's like, they may not have the reputation to pull that type of talent. Right. So, so that's one idea. The other idea is, um, this is something that's a long-term play is like, first, you got to make your place a great place to work.

16:22So we had, that was one of my main objectives was, win Best Place to Work awards because great people want to work for great companies. They don't want to go work at a crap company and think they can turn it around. So you have to, you're selling your business to these great people. So this is a multi-year thing. How do I become Best Place to Work? What do I need to do? What do I have to change in my culture? And so you should always be working on that if you're the leader because getting talent, it's like sports, it's like you want to attract the best players. This isn't just a one-year thing.

16:52This is like a journey you're on so you can pull these best players in. The other thing is, the specific is when you hire, have they done successfully the job you're asking them to do? So, too many times, you know, when we're hiring, you were saying, okay, well, I think they have the aptitude. And now, trust me, like that is, it's okay to think that way. But if you're hiring high level, VP, C level, whatever it might be, it's like my number one thing is, have they already done it? I want someone who's already done it because I haven't done it probably. You know, it's like, Like, dude, I'm just putting a team together.

17:24I haven't done all these things. I'm not able to, I don't have all these connections and know all these buyers. Let's say if I'm hiring a salesperson or if I'm hiring like a, you know, a marketing exec. Sure, I know my marketing, but, you know, can they, maybe they've got some skills I don't have. And that's what I'm, that's why I'm bringing them in. So I want someone who's already done it. So those are the things, Brian. And then the other one is just during the interview process, references. So first of all, it's like very detailed on their track record in their jobs. Super detailed. Put an eye mask on.

17:58I mean, I'm kidding, but it's like, don't be, be careful that you're tricked on personality and how much you like the person. It's like, what is their track record been? And then do something called top grading, which is a great book. And this is pretty simple. And what it is, is go through all the references. and typically they're going to, well, they're going to give you like their three best references, right? But go through all their jobs and maybe let's say they've had seven. So you, you say, who did you report to? You get the name of the report. And then later on, you've written down all these names.

18:31So at the end you say, okay, here's three references, but here's four people. They didn't list as a reference, right? Cause they just didn't. And you say, okay, you know, you, you worked, you reported the Jennifer over here. Can you have a, what would Jennifer say about you? First of all, you say, what would she say about you? How would she describe you? They won't lie. They know that now, oh shit, you can call Jennifer. So they're going to tell the truth of what Jennifer, and then you go through the list and then you say, okay, great. Can you, and this is of course, if you would like this person, you want to go to the next step, you say, okay, great.

19:02Can you have Jennifer call me and have so-and-so call me? Don't, don't, you're not out there like, otherwise take you forever to go get in contact with these people, Right. So they're going to do the legwork. And, you know, you put all this together and your odds are improved. Hey, thoroughness. I mean, at the end of the day, and I've been guilty of this, you know, like never time. There's an old saying, an old creative director I worked with said, and it drove me crazy. I was a young account guy. And I'm like, he's just saying that because he wants more time. But he's like, never time to do it right.

19:36Always time to do it over. that's true and it's like that with hiring you know like oh we gotta get them in we gotta get them in and you know but it is just takes a some thoroughness with which to vet candidates and i i love what would you call that last tactic as a name you said there's a book yeah top grading top grading yeah that's interesting yeah i like that i like that talking with luke peters former CEO of New Air. Luke, you know, my radar went off on that first little spiel on all the success you built with New Air and some of the tactics and things that got there. Really interesting. Now I'm going where the brand, you know, like your differentiation, like it is amazing sometimes, you know, I've worked with a lot of companies, good, bad and ugly over the years in marketing.

20:34And it's real hard to take a, you can't make the bad companies good. It's really difficult. You can make the good companies great, but it's really difficult to make bad. And I do think, you know, there's a lot of truth to be had and a lot of mirror to be looking in, you know, to really determining if your product, service, or what you do differentiates and stands out and can be made to be, again, profitable. It seems like there's a lot of people that, you know, do things that a lot of other people do and they just assume that like, I mean, success will be guaranteed, but it just doesn't happen that way.

21:13Yeah, no, that's why it's important early on. Like, I think it's tough because a lot of times people give up too early. So it is really, really tough to say, you know, if it's not working, you got to tweak this. But I guess you should always be tweaking. But too many people, I would say it's a bigger errors to give up early. So you can't do that. But it's like at the beginning, you have to be smart and you got to look at your product and, you know, put have some way to measure your competitive advantage over, you know, what the market is offering. I guess I'd say it like that. Think deeper about your competitive advantage and even use things.

21:50I mean, there's all kinds of online tools. You can use SurveyMonkey. You can use your friends. You could use LinkedIn. There's ways where you can vet that. But often what happens is as you're growing your business, you kind of naturally do that. You know what I mean? The good leaders are naturally, like you're probably not even thinking about it, but you're learning. You're like, oh, okay, I got the sale here. What copy did I use or what pitch was I using? oh, okay, this is what they wanted. I thought they wanted this, but they actually wanted this, right? And you're sort of iterating along the way.

22:20But if you can do that without making it accidental, like from the beginning, if you could do your basic market research, and this is basic branding, right? So, it's like, what is your position in the market, okay? And can you create some sort of emotional connection? Now, not every product, a lot of people think, well, like with us, with fridges, how are we going to do that, you know? But you can do it. You can, you can come up with fun ways to create some emotional connection because a brand is a feeling that somebody has about you. That's literally what it is. So how do you make more people feel a certain way about you?

22:52You know? Um, and, uh, that, I think that would be a good, I think the guys, like, I don't drink a lot, you know, but the company it's like, you know, we're having all these beer, um, partnerships and stuff like that. And the guys in every year though, you can even do this in a company. It's like, I'm really not, I don't drink whiskey. I'm, you know, I like my IPA a little bit, but I don't drink a lot. Right. But every year we would, I would joke around and at our party, we'd have a shot of Jägermeister. Okay. Everybody hated Jägermeister. Okay. That was memorable. I've had flashbacks of you say that like, oh, Jäger Bomb.

23:30Jäger Bomb. That was like, I don't, it just come out when I was in college, It's like the, you know, mixing Red Bull with Jaeger. Like, oh, good idea.

23:39But you haven't forgot it. See, so I would do that at the urine party because it was fun. It's like everybody would be complaining. Ah, Jaeger. No, why is he choosing Jaeger? So it's making the fun memory stamps in people's heads. Like that's, you know, what I want people thinking about. Yeah, I think with people think with their head and they buy with their heart. that's one of my all-time sayings with clients they're like they get too rational i'm like hey baby this is this is all about emotion you know emotion moves the purse strings uh in the wallet uh luke what was you know what was that process like for you guys at new air i mean you know you're selling fun like you said in a way with what you did it sounds like you guys found to balance there of the functionality of, hey, the mini fridge, you need it in this tight space, all that.

24:30Like that's a very functional thing, but you brought the fun in somewhere. Yeah. Well, you know, early on I didn't. And so that's definitely something I had to learn early on. It was, it was about winning eyeballs. So it was about dominating SEO, right? It was like, how do I, you know, and that, that's, that's, that's what it was. Of course it was, it was good delivery. It was being agile, but that, you know, early on we're selling like just portable air conditioners, thermostats, fans, humidifiers, dehumidifiers. So if you think of those products, like, you know, you're not buying, you know, like a portable AC and you're like, you're probably not taking a picture of it to your friends.