625: From $70M in Debt to $1B Amazon Deal in 45 Days | Jamie Siminoff

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0:39Just head to omnisend.com forward slash founder without the E to get started. All right, now let's jump back into the show. $1 billion. That's what today's guest business was acquired for by Amazon in 2018. And you probably recognize him as Shark Tank's most notorious rejection where every shark passed. A deal that today would have been worth hundreds of millions. His name's Jamie Siminoff, the founder and the inventor of Ring. So in this episode, you're going to hear how Jamie spent two to three million in R &D before his first sale by pre-selling products he hadn't built yet. How he negotiated the ring.com domain for one million with only 187 ,000 in the bank.

1:20How he went from 70 million in supplier debt to a billion dollar acquisition in just 45 days. Plus Jamie reveals while scaling from 75 to a thousand employees in 18 months was actually a complete disaster and how generating 23.6 million in sales in a single day on QVC actually saved the company from bankruptcy. This is one of the most raw and honest conversations I've had about what it takes to build a billion dollar hardware company when the odds are truly stacked against you.

1:56Hear the stories, learn the proven methods and accelerate your growth and future through entrepreneurship. Welcome to the Founder Podcast with Nathan Chan. Jamie, welcome to the show. Really excited about our conversation. You famously launched DoorBot in your garage because you kept missing deliveries. Can you take us back to that 2011 moment that led you to know, you know, this Wi-Fi doorbell prototype would be something that would serve millions and millions and millions of people around the world? So it was a slow burn. It wasn't a like a thunderclap of aha moment. I was in my garage. I was inventing other things, working on a bunch of like sort of random things.

2:50Snap garden, a modular gardening system, pokety poke, which is a conference calling system. So a bunch of stuff. Couldn't hear the doorbell. And so the first thing was just solving my own problem. So I just built it for myself. And then I should actually go back. Like, the first problem was I couldn't hear the doorbell. I had gotten an iPhone recently, and I thought, why wouldn't someone, you know, someone must have built something to go to the iPhone for this. And so I looked online for a Wi-Fi doorbell. Nothing existed. I then built it to scratch my own itch. And then it was really my wife that said, this makes me feel safer at home, which was the true, I'll say, invention of Ring and what really built us to where we are is this idea that we could reinvent how sort of residential home security was done.

3:35And that became like the really core part of your mission. And that's been a really strong, I guess, reason for your success in many ways. Like, you know, when you, you know, you, you got, you lost a hundred million in funding, there's, there's all these different things, but it tied back to that mission. Can you tell me about kind of, when it comes to building a company how important is it having that mission and and why was it so important for you yeah i mean i think there's not one way to do anything but for me if i if i've seen one common way that people are successful it's a strong you match a strong mission with passionate people that are willing to sort of like you know chew through walls and you typically have successful companies.

4:26And with the strong mission, like, you know, you just mentioned, like one of the many things that happened along the way, the strong mission keeps you focused on going like on the business, even in the times when everything's stacked against you, and it's very hard to sort of, you know, keep pushing forward. And so I do think, you know, when I look at it, I just think having a really strong mission that can align everyone, have everyone believe in is just for certainly for ring it was critical to our success but i think it is one of the most you know common things i see with other successful startups and companies yeah so you first conceptualized the product was 2011 right uh yeah to around 2011 yeah you went live the the episode on shark tank very very famous went live in 2013 i want to get to that but what happened in between like you you created this product you scratch your own itch how did you start selling it what did first sales look like how did you bring it to life yeah so so i mean for the first like year it was truly like scratching your own itch and kind of playing with it at the time I was I was still working on other stuff so as I said it was not an aha moment it was a slow burn and then Kickstarter in 2012 was not allowing hardware products onto its platform anymore there was like a problem they had done some they hadn't shipped and so there was kind of Kickstarter was like kind of this new pre-sale thing and so it's kind of up and down.

6:03And I thought, wouldn't there be an interesting business in having a hardware sort of centric presale business? And so I started this, you know, startup concept, whatever site called Edison Jr. I wanted to launch it. And it turns out when you launch a hardware presale site, what do you need? Hardware. And so I asked my friend, Loic Lemure, who ran the web conference in Paris where I was going to launch it. I said, which of these, you know, six ideas of hardware do you think we should put on here to sort of be best for the launch? And he said, Z doorbell. And so, uh, you know, just one of these lucky sort of things that, um, if he had said something else that we, you know, there was a lot of other ideas I had.

6:50And if he had said one of them, you know, who knows what would have happened. And when we launched the, the pre-sale site in 2012, it was the doorbell that everyone talked about not the pre-sale site and so that was kind of like where and and where we kind of saw this sort of starting to come up and that led to shark tank and then you know kind of kept going from there got you so talk me through because a lot of uh a lot of our listeners are inventors at heart or they have a physical product idea in mind like how how did you source like you you handmade the product it was a hardware product um how do you even work out how to do that it's like talk us through that yeah it's i it's like one of those things i wish i had some like great tidbits of advice that you know someone could just like take a pad out and write down like here's the five things you have to do um the reality is hardware is just so hard it's so unique um unless you know how to do it unless you have some sort of edge in it.

7:52I mean, I did not. So we kind of just flailed through it by first working with a friend and then that didn't work. And then finding a factory that was based out of Taipei. And then that's just, we sort of just, you know, scratched around and found stuff. And I flew to Asia and asked people and, but we certainly, I would say we did it right. But the other side is, I'm not sure if there is a right path to doing it. I think, you know, it's such terrible advice, but sometimes like, yeah, you know, the only way to go and do it is to go and do it. Like, you just have to sort of just go out there and do it.

8:30And it's scary because there's certainly a high risk, you know, with doing that, especially in hardware where there's so much capital cost so quickly. But I don't know how else to do it. And I'd say like, you know, the people that I've talked to that have wanted to do hardware things, each one is usually unique and different. And you have to find, you know, someone to make it. You have to find someone to help you. It's, it's, there's with hardware, there's a lot of different expertises. It's not, you know, software, if you can figure out a software business, do a software business. It's like, it's, it's, you know, you use AWS, all the services are there.

9:06A couple engineers can sort of usually build and mock up and even create something scalable and you get to go. You know, hardware is really hard because each piece is unique. Like the camera chip is unique to work on the, the, the, the computer onboard is firmware, not just software. And so, yeah, it's, I, I, I wish I had a better answer other than just saying, just go out there and try to fail and hopefully succeed at some point. No, that's okay. I respect the honesty. It is tough. It is not easy. Uh, when I spoke to the founder of whoop, like the amount of times trying to bring that product, the amount of variations, like the amount of times that company almost died, the amount of money he had to raise to keep it going to even get to the first original prototype, no one would have got that.

9:51Like it's insane. Yeah. And I actually, I've heard him talk about it and I think it's very similar. And again, it's hard to find someone who started from scratch in hardware and has not had that experience of just, it's like kind of near death the entire time. Because it's just such a scale business that going into it so small, it's really hard to make it without blowing up along the way. So let me ask you a better question then. How much would have you spent to be able to receive your first sales? How much would have you spent in R &D, prototyping, all of that stuff? so we probably spent you know it's probably it's definitely more than a million at that time um you know i would say probably closer like two and a half to three million is what we spent which so it's like it's like did you raise that money no so how did you have the r &d money to spend the three million is like well we pre-sold the product well how did you pay for the pre-sales well we didn't um that was the problem so like we got lucky that we kept selling and then we use that money to buy the product but the reality is we use the pre-sale money to fund the development because it was way more than we thought it would be um and and even that product at a couple million dollars of investment was a very very challenged you know not complete you know, as you think of a product today kind of product.

11:27And so that's how you found yourself on Shark Tank. You know, you went on with many, you know, many sharks absolutely tearing you apart. Yeah. You were asking for$700 ,000 for 10 % equity. All sharks passed. You got absolutely teared apart now with true context though knowing how much you'd raised previously and it was a pre-sum or like it wasn't that far-fetched it wasn't like you were just going on there for press like you legitimately were looking to raise money correct oh i i totally needed the money and it's funny because today you know everyone always like hits me on the shoulder and it's like yeah of course you didn't want that money you know because they're looking at it as the success that we became and what they don't realize like no not only did I need that money like we still had to raise that money after I was on the show like it was like we were dying like we needed that cash and I I was so certain that Mark Cuban um you know this sort of tech guy he's on there and I'm like Mark Cuban's gonna put the money in like I'm just sure that Mark's gonna do it and um you know it the taping of it they edited a little bit but Mark was out within like minutes of us being on the show or me being on the show yeah so some so the first shark tank that came to australia i almost got on for for this for for but but not for a physical product for a founder we're a digital magazine still are um didn't get on right they tend to choose inventions or something more out there and uh i got the last part when they brought it to australia the first season didn't get on and uh you know for me i felt like it was a blessing in disguise i didn't need the money I just wanted to do it for press, honestly.

13:16And for you, you know, it was an extreme blessing in disguise because, you know, that rejection, like that, that really kind of helped catapult the business in many ways. but i wanted to ask you like because i if you're listening watching this you've got to see like this this this pitch like i've seen it so many times all online there's so many memes around like you know like it's the most i guess the you know like one of the biggest uh kind of shark tank failures they would say because then you've you've gone on to to sell ring to amazon on for over a billion dollars and uh everyone everyone backed out but i have to ask like what happened like like how how long was the season airing before like like what was the time gap because sometimes it's like a six month wait sometimes like how how fast was it and did you think you were gonna get a rough edit because some people they get a rough edit and like it it's really bad for them yeah so there's like so i mean like so many sort of questions and that and so many things is, you know, you get on quote unquote, like on Shark Tank, which means you're going to go on and you tape and you, we, we taped in September.

14:39That didn't mean we were actually going to be like airing on the show. It just meant that we taped an episode. Sometimes they don't air because when they go to edit it, it's like, yeah, it's boring. It's just doesn't, you know, it's like sometimes like the chemistry is not there or whatever. Like it's just not good. So, you know, some percentage of people don't even get on. We, that was a worry. The other thing was we were running out of cash and the season started in like October and went to, I think May. And they don't tell you like when you're going to be airing. And if we had aired at the end of the season, I don't, I don't think we, I'm almost certain we would not have made it.

15:18Like, I don't think we would have made it that far because we, you know, we tape in September, I'm still trying to raise money, but then we air in november right when we were about to start having product to ship and basically i mean if you think about again going into the holidays like if you're if you're a product company no matter what you're selling people buy products in november and december and so like it it was like the perfect storm for us of a in a good way of we go on the air in november it's like a 12 minute commercial you can't i mean there's just at that time was a huge show you could not have gotten more awareness and credibility from it.

15:57And so it, I think it might be the single biggest factor of our success was getting, you know, in the end was airing on Shark Tank because I, I don't know if we would have made it over the hump without that. Yeah. So you, during that time period, you're still trying to raise money. Did you have any, like many bites, much commitment, like how was that looking? It was, you know, it's just a lot of like maybes and like thank yous, but you know it's like you don't get like it's funny people always say you get no's like you never get a no you get like a thank you follow up like let's talk again um you know like great to see you like you get a lot of those you know you don't it's like and you don't find any yeses so it's really a tough thing but yeah you don't sadly you don't get like actually like no um which would make it a little bit easier in some ways more and more transactional but yeah we were we and trying to raise money and it was super hard and we kind of stitched together a little bit more but then when when shark tank aired i mean not only did we get the sales but it also then gave us this sort of like you know it's just extra boost in every position including raising you know a little extra capital yep got you so that really got to put you guys on the map in a big way uh you made a hundred on the first day you made a hundred thousand dollars and a hunt and to by the third day you did a hundred and seventy five thousand dollars in sales what did you do immediately after that sales bump to make sure like you could meet supply logistics all of that and customer demand you know it's funny like luckily i had over ordered the door bus i mean it's more the other question, which is what happens if you had not gone on air is I would have had a ton of inventory and no one to sell it to.

17:50So, you know, and this is like, it's like why it's not advice, because it's like a, like, this is like the worst thing you could ever tell someone is order too much and then pray that something good happens. I mean, it's like such a, it's, it's, you're praying for a lottery ticket. We got the lottery ticket and the lottery ticket was Shark Tank because we had to order that stuff way before we even knew we were going to be on Shark Tank. think i mean you and and that's the problem with hardware is like the minimum order sizes are so big especially for a startup i mean you're talking about ordering 20 30 000 units like you know it's it's like you know five six million dollars worth of stuff like how do you do that when you're literally haven't sold a single thing yet and have you know zero um marketing distribution whatever Yeah, it's wild.

18:36You talk about fear. You must have been so worried, afraid, stressed. No co-founder, right? It's no co-founder. I think I'm more worried, afraid, and stressed today thinking about it. It's almost like in the moment. I was so in the moment that I didn't have the time. It's almost like I didn't have the luxury to be stressed. I mean I was stressed I shouldn't say like I was I was stressed about getting stuff done I was stressed about like are we gonna get this out is it gonna work like I was stressed about like the the execution parts but I wasn't you think I'd be more like holy cow like we're gonna go like I'm gonna go out of I'm out of money I'm gonna die you know like it's this is gonna be terrible and I sort of had it but not I was like thinking about thinking about it now makes me more stressed than actually in the moment of it back then.

19:33And I think it's how like professional athletes, when they're at that big moment in the game and you're like, how do they do that? How do they make that shot? How do they make that whatever? And I think you do it by like, it's actually, you're not thinking about it. It's like in that moment, like that's when like a professional really rises up to the occasion. And if I'm a professional in anything, I think that is when I'm the best is like when that pressure is like, you know, unimaginable. Yeah. And where do you think that comes from? You know, I, I'd like to say you could sort of learn it. I, I think, I think it's a little bit of just who you are and it's why, you know, people should find who they are, what they do.

20:15I think so it's who you are. That's also like having a mission that you care about. So I think, you know, when you, when you match something you care about with, um, you know, uh, uh, the ability to sort of just keep pushing. I mean, it's, you know, one of my, I don't have a lot of good traits, but like one of them is like, I never stop. Like I just keep grinding and I always have, I just, I just always have. And so I think, and I, and, and overall, you know, there's always people that get lucky in startups. And I think that's a good for them, but I think it's tough for the community of people that are entrepreneurs because it creates a lot of like mental health stuff where you see someone just, you know, do something for three months and they sell it for a ton of money or they get, you know, whatever.

21:00And it's a huge win and you're out there grinding for most of us. I think for 99 % of us, it's, we're just grinding. It's tough. And it's like, it's, it's a, it's like a mental health thing. It's really, really tough. And so how do you keep going is, is a, it's brutal. It's a grind. Yeah, I agree 100%. And along the way, you know, you've had these trials and tribulations, I want to go through them. But before I do, in 2014, you know, autumn, you changed the name of the company, it was doorbot to ring. And you said, you know, your wife helped you identify, you know, changing and getting really clear doubling down on this central mission around creating a ring of security.

21:47around the home, not just selling a doorbell. How did you make sure that you were able to make sure you'd already had millions of dollars in sales? How did you make sure that the transition was successful and the mission was really clear with the new name? So one of the other things I fairly quickly came to with again doorbot ring like the the company call it was that i wanted to sort of go big or or die trying but i didn't want to um i didn't want to like have a small business like i didn't want to limp my way through um and i've seen a lot of companies especially companies that raise money that end up like it's almost like they're i call them ghost ships it's like they have enough money to stay in business but they don't ever actually achieve anything And so it's like, to me, like, that's like, that's actually purgatory is being stuck where you're sort of in the middle.

22:42Like you're not going out of business, but you're also really not like making an impact. And so I had this idea, like, we are going to go for it on everything. Like we are just going to drop the hammer and go for it. And the name was one of those things, which is like, we saw quickly that DoorBot was a bad, it turned out terrible name for a product that goes on your front door. People, the front door is like a cherished area in their minds, how you enter a home. They want names and brands and things that fit that emotional sort of concept that they have for the front door. And door bot was like a punch in the face.

23:23It was just a terrible name. It didn't fit how they felt about that area of the house. and we got and you know again this is where ground truth is so great like i was on every email like i saw the feedback very quickly and realized like we have the wrong name we need to rebrand this business um at the time it was also we need to also rebuild the product we need to like it was kind of like a we need to redo everything um and again i guess i'd say the lesson that is good is you know we were able to we were willing to iterate fast we were willing to sort of break not have any of these sacred cows where you know you can't change something and we were learning fast because because we put it out there and i think a lot of times people try to like they iterate without putting something out there because they don't want to sort of have the embarrassment of the fail whereas like doorbot i'd say in some ways is a complete failure except it was a complete success because we learned everything about the video doorbell market quickly and iterated on it by learning that directly with ground truth data from customers yeah and when it came to the rebrand as well i'd love to know uh was there much confusion uh or like like what happened you know when you made that shift was there much confusion So we were lucky that we had not hit physical distribution yet.

24:51So the reality was when you kind of boiled it down, the only place someone could buy our product was at our website. And so changing the name at that time was simple because you just redirected the website. Like you were able to control, if you think about it, all the traffic, like all the links, all the news things, which we actually had a decent amount of. So you don't want to throw it all away. But it all went to doorbot.com or get I think it was get doorbot.com. We didn't even have doorbot.com. And so it all went to get doorbot.com. So you just put a interstitial page that you get doorbot.com is now ring.com and then you hit them to ring.com.

25:31And so we were able to move the traffic. So we didn't lose any of the sort of the other stuff. The other thing we found is that on like the press people, like they love this kind of a story. So like the press gobbled it up. They loved a rebrand story and a like underdog tries to, you know, go like, like Dorabot had certainly challenges and they were very public. And so it was like, I'm not stopping. I'm doubling down. We're going for it again. And it was incredible. Like at that point in our sort of cycle of, of startup, that's when people wanted to build us up. Like the press actually wanted to help us.

26:11They wanted to support this up and coming entrepreneur. They then turn, you know, when you get big enough, they then turn the other way. They want to just tear you to pieces, which is, you know, that's fine. Also, like, I guess, like when you're, when you're big, you can handle it. Yeah. And I'm curious as well, the domain name, are you able to share how much did it cost how'd you get how'd you get the money to pay for that well so i i did write my i wrote i wrote my book and so it's it's it's in there um but yeah i i the domain name was crazy because i i went to one of my venture capitalists you know uh who was one of our seed investors and i had i asked them for a meeting not to get more money but i needed to sort of run by them the pitch that i was going to be putting out there to try to raise more money as we transitioned from doorbot to this new thing.

27:00And I pitched them on this whole, like what we learned and what that new thing was and what that product would look like. And at the end of it, it said, we need a new name. Like the doorbot name is not good. We know that we're going to rename the business. And so we're looking for a new name right now. And I didn't mean it like to have them help me. I just meant like FYI, we're going to rename the company. And one of the partners there, Hameiwatt, as at Upfront Ventures in LA said, you know, basically just quickly was like, what about Ring? And I was like, it was funny too, because I'm like, eh, I don't know.

27:34It was like, it was a good, but like, he's like, you keep saying the Ring, you keep saying ring.com, Ring this, or not Ring.com, he said, you keep saying the Ring of security, like you've used the word Ring a thousand times. And I didn't even notice I was saying it. And then I saw that Ring.com was available for$2 billion, I think was the first offer. and through a crazy set of negotiations, we ended up getting it for a lot less, like, you know, about a million bucks. And we also were able to create the payments. And again, great, you know, from a, you know, advice or whatever, whatever I call it, or learnings to other founders is just because something's a million dollars and you can't afford it doesn't mean you can't have it.

28:15You just have to break the payments up. And so I asked, you know, I sort of said to the guy that owned it, I said, like, I'll give you this down, which I had$187 ,000 in the bank at the time. So I said, I'll give you$175 ,000. You know, it was like basically about what I could give him. And, you know, today it will pay you over X years and do this payment. And he, you know, it was kind of like, okay. And, you know, and from their side, what was the harm? Like he was going to get that money. And if I stopped paying, he was going to get the domain back. So like, it's, you know, it's kind of like not that bad either way.

28:46And so it was a good way to figure out how to kind of finance something uh you know when we didn't i certainly did not have the money to uh to to buy it yeah that's a great story thank you for sharing uh i'm the same like for the founder f-o-u-n-d-r we're not we're not founders correct spelling that's a big chinese company we can't get that one but um our brand is founder without the e that cost around 80 grand and i didn't really have that money at the time either and uh i met somebody that was like a domains acquisition expert and she helped me negotiate and we broke it up 12 payments you know 12 12 like 12 payments over over literally 12 months like it was yeah it's 100 like and i didn't have the money like 80 80 grand for a domain is a lot of money right for early business yeah and again i just take that it's not just domains like take that into anything in your business you know a lot of times people will lean in.

29:43And especially, you know, I looked at it as if we couldn't pay for the domain, it meant the business went out. Like again, to this idea that like we wanted to be big or zero, if we couldn't pay for the domain, it meant we went out of business. If we went out of business, who cares if the domain went back to the owner? Like, what do I don't care? Like, so from our side, it was so simple of just saying, I'll pay you over X years. If we stop paying, it's because our business failed, which means you can take it back, which is good for them. And so again, I think like align with that, if you're trying to finance something and you can get someone to believe in it with you, like get them along for the ride.

30:23And worst case, if it goes back to them, who cares? Yeah. And I bet you, uh, the person that sold you the domain, wish they had to take an equity instead, if that was up for grabs. I mean, that's the, you know, the craziest thing is I would have given any equity at that point because cash was so, I literally, I gave, I literally gave this person like all the cash I had left at the time. Um, and so, yeah, I would, I would have done anything to have reserved that cash. Um, you know, who knows exactly what I would have given in terms of percentage, but it would have been high. Like it would have been much more than the million dollars because to me, a million dollars of cash was probably worth, you know, of$10 million of cash in terms of like, you know, from, because I just couldn't get the cash.

31:06I couldn't raise the money. Um, so I, I, I would have given a lot. I bet you would have given like five or 10 % of the company at that time. Um, which would have been, you know, after dilution whatever, probably 30, 40, 50 million. So probably 30, 30, 40 times what it was. Yeah. There's a lot to be said in like one word domain names, the strength of it from a branding perspective and you see like a lot of silicon valley startups and like it is a strong branding play like the like they're not stupid they they always encourage startups to do this for a reason and it's so powerful to build immediate trust um but yeah i think i think it's a smart move so and i do think i think to your point brand i actually used to not think this so like i i would have been on the other side being like, it's so stupid that someone's going to pay this much money.

32:00Why would a company that's basically like doorbots a ring? I mean, a friend of mine was, I mean, he literally assaulted me. I was saying like, you are going to bankrupt your business buying ring.com. Like, this is so dumb. Call it anything, like call it whatever you want. Like just get a$9.99, like get a$9 domain name. Like, why are you doing this? And I think that as silly as it sort of can be, it's like, I think brand does matter. Like I I actually, I really am at this place where I believe it maybe even matters more than sometimes like the tech. I mean, and I don't want to discount the product, but brand matters.

32:34A hundred percent. And your domain name matters. Like if someone's never heard of your product and you've got a one word domain name and it's a known word, you're like, wow, okay, this is the real deal. It's not just some random drop shipping Shopify spun up type product that's bought off Ali Express. rest is like okay like even just subconsciously in that first second you're like your mind goes you you trust like that this is legitimate so yeah it speaks volumes yeah especially for a mass market product if you're going mass market want to appeal to a wide wide range of people i think it's yeah it's clever and if you can afford it why not um yep so i want to talk about margins so you we've talked about scaling a hardware business it is expensive and it is so difficult uh for a business like ring in order to you know have inventory of six to twelve months in advance what what kind of cogs or gross margin targets were like were are non-negotiable where you use to just kind of work through the risk piece so i mean again to start and this is what's scary is like the first ones that i bought i was upside down on every sale um not not doorbot we actually made a little money on and that was okay but we started doing the ring like we we just like i you could here's the problem with hardware like you know how many how much it costs by a hundred thousand chips a million chips 10 million chips you can see how like cheap it gets and if you want to access like it really starts at about a million units i would say or a hundred thousand into like a million units where you try to get these like big drops of cost across the board.

34:18And so, you know, I kind of took the approach that we're going to lose some money to start, but to get to higher volume so we can make the cogs, which that was really tough. And so we definitely raised some money around that. We then did have, though, we always had like a path to profitability. So for, especially on the economics of like the unit economics of the customer. And I think that's when people see a company losing money and they think like, oh, look, like you can just go lose money. And it's like some companies by the way do, and they don't actually get themselves out of that because they didn't have a plan.

34:56Like we weren't losing money without a plan. We knew that when we got to a hundred thousand units, it would, the cost would be, you know,$10 less,$20 less than we could do. Like we knew all like where we were getting to and what we'd have to invest to get there. But that's part of our problem the whole way is as we grew, we went from revenue. When we hit revenue, we did 3 million, 30 million, 170, 480. And the cash, it's crazy. And the cash need, you're asking about how do you order inventory? It's like, you're talking about when you're a$30 million company, you're ordering like$200 million of inventory that you're paying partly for.