When you're grinding it out as an entrepreneur, it's essential that you develop the right routines to be able to go at it every day.
In this podcast, you’ll hear from Woody Kassin, Owner of Faucet Face, about the routines, habits and outside interests that helped him build Faucet Face into a successful ecommerce business selling eco-friendly water bottles.
In this episode, we discuss:
- Where you should focus when putting together a contract with a manufacturer.
- Does business school help with entrepreneurship?
- Why having lots of cash can be the kiss of death.
Listen to Shopify Masters below…
Felix: Today I'm joined by Woody Kassin from faucetface.com. That's FAUCETFACE.com. Faucet Face sells classic, custom design, and limited edition glass water bottles, was started in 2011, and based out of Los Angeles, California. Welcome Woody.
Woody: Thank you so much.
Felix: Cool, so tell us a little bit more about your store and what are some of the most popular products that you sell?
Woody: Faucet Face is a marketer of eco-friendly glass water bottles. We've been around since originally 2011, and we have a diverse set of glass bottles that we sell. We have three types of bottles. We have our classic design bottles, which include three styles which have been with the company since the beginning. We have limited edition bottles, which we launch periodically based on themes that develop from time to time. Current events, seasonal type things, that we like to highlight, et cetera. Then we also have our custom design bottles, which is a very rapidly growing part of our business. We essentially do custom bottles for private label purposes for stores and websites that want to resell them with their design and look and feel. We also do lot of work with promotional products, companies, and distributors who want to utilize our bottles for advertising purposes, for promotion recognition, things of that nature, to enhance their brand, reward employees, and use these as gifts for clients, customers, et cetera.
Woody: Interesting. It's been a long roundabout route, so to speak, but I originally started off my career in the financial world. I worked on Wall Street for a number of years, and then decided that wasn't something that I wanted to do for the rest of my life, and basically made my way into a career change through going to graduate school. I went to graduate school at UCLA. Got my Master's in business there, and then decided to become an entrepreneur back around the early 2000s. Through a series of entrepreneurial pursuits, both on my own and with partners, as a part of a larger company I should say, was an entrepreneur before being introduced to Faucetface.
I worked in a number of industries. Most were in the consumer product space. Health and wellness. Things of that nature. I was with a recent company back in the kind of 2003 to 2009 time frame which was a company called the Allen James Group which sold supplements. The company was ... Grew pretty rapidly. Basically was one of the founding members, which helped to build, manage, and then sell the company back in 2009, and after that acquisition or sale took place I should say, decided I wanted to go off and do something on my own.
Was looking for the right opportunity for myself to either start a company or possibly acquire a company and along the way met the original founder of Faucet Face, Mason Gentry, who was a terrific guy. Great product designer, and just we had a series of discussions on and off over a period of time, and into the 2013 time frame he decided he wanted to go off and do other things, and based on the nature of my background, which is much more focused on growing existing businesses in the consumer product space, health and wellness, things like that, we both decided it was a good fit for me to take Faucet Face to the next level. We worked out the transition of the company into my ownership back in mid-2013.
Felix: Very cool. Yeah, so definitely want to talk about that process, or that I guess experience of purchasing a business. Before we get there, you mentioned that you were already working a job, but then decided to go to graduate school, business school, and then came out and wanted look into entrepreneurship. Did you find that your business school experience helped with entrepreneurship? I think this is, I guess, a topic that comes up often and whether ...
Woody: No. It's a fantastic question. I actually majored in entrepreneurship at the Anderson school at UCLA, which is one of the top programs, and you know really it was an experience for me, because I came from a very corporate background, and so that was kind of the first step for me and really getting exposure to these concepts and these types of environments. I actually worked with a company while I was in graduate school that was a technology company back in the late 90s, which was a ... That was part of the time when the whole dot com experience was very much in place, so to speak, and it was a very interesting learning experience for me. Both getting into education and entrepreneurship, but then at the same time getting a first hand experience while I was in school.
To answer you question directly, I feel it was pretty helpful. Not in as much as it just really allowed me to transition from one career to the next, but there are things that I guess I really didn't appreciate as much without really understanding them from an academic perspective until I was exposed to them, as far as what it takes to manage a company with limited resources, what it takes to put together a credible business plan to present that to investors. I took a number of classes with some of the leading professors in this kind of arena, so to speak, and the education was super helpful to me, so I feel like I would recommend that to anybody as an option for them in considering a career in entrepreneurship.
Felix: Yeah. I think it makes sense if you ... Especially if you approach it from the mindset of I want to get everything I need out of graduate school, out of business school, so I can become an entrepreneur. I think it's a little bit different when other people have approached it where they think they will go to graduate school and then figure it out after they get out, but it sounds like you went in, knew what you needed to get out of it, and then focused on them. I think that's always key whenever you are trying to learn something, go into it with a goal in mind of what you actually want to get out of it. It sounds like that's exactly what you did.
Cool, so you mentioned that ... Yeah, obviously you purchased the business. Well before we get there, you mentioned that you had already ... Did you already co-found the previous company? The one that you were talking about for that frame from 2003 to 2009, or when did you join that company?
Woody: I was one of the founding members back in 2003, and I joined up with another group of individuals who I was introduced to. Collectively the four of us founded the company back in 2003, 2004. As I said, I was part of the growth of the company over a period of about 6 years. The company was ultimately sold to a big public company called Nutraceutical Corp, which is a leading player in the vitamin and supplement space. Yeah. I basically ran it from beginning to end, and when the company was sold, decided it was time for me to go do something on my own, and it was a perfectly kind of conciliatory move, so to speak, in a sense that it was ... I was very instrumental in the sale process. There was nothing that was hidden from that standpoint, and I was very supportive of managements decision to go ahead and pursue that direction, because Nutraceutical was able to take the company to the next level in a way that I don't think we were at that point in time.
Felix: Makes sense, so what was your experience like co-founding or being a founding member of a company that ran for several years, and what did you, I guess, like and didn't like about it that you want to make sure you kind of got right, I guess, when you start a new company?
Woody: There's just so much to do when you start a company, that I don't think you really can appreciate the magnitude of what you're getting into until your actually doing it. I mean I'm for sure, like when you get the education and you kind of understand what's involved just from a textbook standpoint in building, growing a business, I think you have a reasonable appreciation, but once you get into it and really feel the pressures of dealing with both the vendors and customers as a small business, for me that's the biggest lesson that I learned. I wanted to make sure I highlighted this point in our discussion today.
When you're a growing business and you're dealing with vendors, typically as a small customer, and then on the other side of the equation, so to speak, you're dealing with customers who are bigger than you and you're a small vendor, you're kind of caught in the middle as basically being someone who gets pressure from both sides. It's really important as an entrepreneur and someone who's trying to grow a business to just stand your ground and to make that you can negotiate arrangements that are favorable for your company, because, candidly speaking, I mean if you don't actually have the wherewithal to stand your ground and make sure that you can get terms that allow you to be successful, you will typically find that as a small customer and, or small vendor, you can, in some cases, be taken advantage of, and that's something which can very impact the early success of an entrepreneurial venture.
Getting that experience firsthand when I was part of the Allen James Group, the company which I was part of building, managing, and then selling, was really an eye opener for me. It wasn't as if we were explicitly taken advantage of, but there's the subtle things and the negotiating points, and the deal points, that are important to really stay on top of, because you can get into situations which hamstring your ability to effectively manage and grow the business. That's one of the most important things that I took away from that experience, and I've utilizing in growing Faucet Face, and making sure that I'm always cognizant of those sorts of issues to make sure that the company is able to work through a relationships that we have and we don't get into situations that, ultimately, will not allow the company to be successful in the long term.
Felix: Yeah. I love that. I want to dive into it a little bit more, because when you're an entrepreneur you kind of get into the game, you, not necessarily get blindsided, but it happens so quickly that before you know it you're ... People are putting their hands in your pocket here, pocket there, and then all of a sudden, you're not in a really good situation like you're talking about. Are there any tips that you have for managing this kind of pressure? Like what kind of preparation can you do to make sure that you stand your ground like you were saying?
Woody: I would say in the first example, dealing with vendors, in the sense that the companies that I've worked with, there's always contract manufacturing and logistics, and things like that involved. It's always important to get one, or two, or three different options for every service or relationship that you enter into. Just so you can negotiate on group against the other, and I think that's really important. Establishing what the market is for certain products or services. If you are in a situation where you're short on time, or where you're short on cash, or possibly both, sometimes you can get forced into situations that are very much uneconomical and significantly impact your ability to grow the business.
Always getting two, or three, options for any product or service. Getting references. Making sure you take this slow. Get everything in writing with respect to agreements. Those are all important features that I would recommend highly to any person kind of thinking about going down this path.
With respect to customers, I mean my business sold to the largest retailers in the country. From Walmart to the top supermarkets and drug stores. Chains like CVS, Walgreens, and RiteAid. You can imagine when you get your products on the shelf with those customers, there are significant costs that go into setting up with those customers, in terms of fees to get up and running. There are promotional requirements. There are a whole bunch of things that are involved in selling products to customers like that, and so understanding all of those little things, so to speak, and selling to certain customers.
I mean it sounds great to have your product on the shelf at the top retailers in the country, but if you don't understand all the things that go into those sorts of relationships, you can find yourself pretty quickly under water. In some cases, I mean I've seen companies and products that had a great concept, great product, great branding, but they weren't able to manage the economics and ultimately they couldn't survive and grow, I think, to the extent that they had hoped. Those are the kinds of things that I think are important to understand from the get-go.
Felix: Yeah that makes a lot of sense. I think, you know, you had a lot of great things to say from the customer perspective. I think the other angle, which you alluded to earlier, that a lot of entrepreneurs run into is that they start working with these manufacturers or logistics companies that are many times larger than them, and could do with or without their business, when they enter this kind of agreement, these larger companies, larger vendors, might not even care, necessarily, that they are here with business. What do you think entrepreneurs should focus on to get a favorable deal when you are in a position that ... Maybe if the contract is soft or this specific rates, or specific terms, are there certain things that you always look for to focus on first, to make you get a favorable deal when you're working with vendors?
Woody: I would say with ... Let's just take the example of a contract manufacturer. I mean I've done enough of this over the years, but it hasn't been without a lot of lessons being learned along the way. It's very important to spell out everything that goes into the nature of the relationship, because the hidden costs that you don't anticipate that are there, those are the ones that get you. With respect to certain contract manufacturers, getting periods of time established whereby prices cannot be increased more frequently than has been agreed to is a very important feature include in these supply agreements.
For example, maybe it's every 12 months or every 18 months you'll have the ability for the contract manufacturer to pass along ingredient price increases, or things on the indirect side of the cost equation. Whether it's overhead or labor, or things like that, I mean understanding that the contract manufacturer needs to be limited in their ability to pass those things along is very important, because otherwise every 3 to 6 months they can come back to you with, you know, my costs came up in this area, my costs went up in that area, and you've already invested all this time with the supplier, and it's not as easy just to pick up and start that process all over again. Especially when you have customer orders that are anticipated or are actually ongoing.
Establishing what the ability is of the supplier to increase cost over some period of time is very important, because they can come back to you with, "oh my cost of labor went up," or "oh I had to pass along this cost increase on the ingredients side of things," and making sure that they're only able to do that every so often. Whether it's 12 months, 18 months, or 24 months, whatever the period is that you've established is very important, because if you don't have visibility and predictability into how you're costs are going to look, it's impossible to understand what your profitability may or may not be. Just setting the guidelines on the cost side of things is very important in kind of putting in place a relation that can be successful.
Felix: Yeah. I love the idea of setting these caps and these ceilings, because that's the only way you can really predict what can happen in the future, so I really love that idea. You mentioned earlier about one of the key benefits of going to business school for you was the ... One of the things was creating these business plans, so does Faucet Face itself have a business plan.
Woody: Well it's interesting Felix. Things have changed since ... I mean I'm not ... It hasn't been that long since I went to business school but there's different schools of thought now in terms of just how you plan and manage a business. A philosophy where you are supposed to lay everything out in advance and do these elaborate 50 pages business plans, and all the projections and sort forth, and believe me, I've spent enough time working on excel and business plans in my career that I probably am pretty proficient at this point. The mechanics of doing that is not a problem for me, but what actually happens in business is ... At least with my recent experience in the last five to six years or so, is that things change so rapidly that when you spend all this time in a vacuum analyzing something without really testing it out in the marketplace, you find that things change so much that some of the assumptions and expectations that you had initially change to such an extent that almost you really need to revise things much more quickly than a business plan, in the traditional sense, would allow.
What I've found with Faucet Face over the last couple of years is I'd try something ... I mean I have an overall strategy of where I want to take the business, but I'm much more flexible in terms of shifting in and out of certain strategies if I don't think they're being successful. I would think that's one of the biggest changes that I've found in terms of my recent experience with entrepreneurship, is that it's very important to have a foundation in place and an overall strategy that guides you, but you have to be much more flexible in adapting to what's happening in the market in what's working and what's not. Otherwise you can get too far down a path that ultimately won't be successful, and I think you spend too much time trying to do something that isn't working instead of shifting gears into something that might be more successful.
Felix: No. I love that. I think that's a key point about how the speed of business, the speed of the environment, change so much that's so quick that by the time you finish your business plan it's time to start a new one. For you, how do you keep track of all the direction that you're going? I know you were mentioning that you tried things that ... You have an idea of things you want to try. You try it out and see what happens. How do you ... Are there like documents, I guess, that end of the day that you keep track of to make sure that you and if you have a team that everyone is kind of on the same page?
Woody: I'm by nature a pretty organized and analytical person. It's just a function of just my background and the way my mind works, but I have all sorts of documents, and I have all sorts of calendaring features where I plan everything out. I mean there is a sort of kind of flexibility that needs to be built in, but at the same time, I do have documents and ways of communicating with our team that allow me to stay on top of things that are necessary for me to stay on top of.
To also mention though at the same time, you also need time to think and to strategize, and I find that if you spend too much time in front of a laptop, or too much time on social media, and too much time being reactive, in terms of just always responding to emails and you know, you can lose sense of where you want take things strategically, and so I always make sure that I set aside time at least once a day, or at least multiple times a week, to make sure I'm thinking about how things are doing, where I want to take the business.
Maybe that's even on a Sunday morning or something if I'm out exercising. It doesn't have to be so structured that it's always at the same place and the same time, but it's important to be able to keep tabs on where the business is on a day-to-day basis, but if you don't have time to step away and really think things through, you wind up becoming too reactive, and that is not the best way to spend your time, in my opinion, because as an entrepreneur and as someone who is trying to grow a business, you can basically work 24, 7. There's no limit to how much you can work. The key that I've found is really how you spend your time, and so every morning I set out what my schedule is going to be for that day, and I try to be proactive as opposed to being reactive.
Now things come up throughout the day that I need to deal with, but if you don't plan your schedule and try to establish what it is that you want to accomplish then the day-to-day can kind of take over, so I would encourage all entrepreneurs to really make sure that they're spending their time wisely. They're always having checkpoints in terms of what are the top priorities to focus on, because you can spend a lot of time doing things and not be very efficient or effective, and that's not going to allow you to be as successful as you can be if you're spending your time wisely.
Felix: Yeah. This is the whole battle, what you're talking about, this is the battle between working on your business versus working in your business, and it's funny, because when you first start off any venture you have so much time to plan and so much time to work on the business, and then as you get into, as your business becomes more successful, you become more established, you spend more time working in the business, and it starts becoming a battle, like I was saying before, about how do you separate yourself and get that time, because it's a ... I think all entrepreneurs know that they need this. To step back and think about their business strategically and from a higher level, but how do you personally stay disciplined to make sure that you carve out that time? Especially when fires are happening all the time, and like you're saying, you could be working 24 hours a day in your business.
Woody: Well I just know I have enough confidence know, I've been doing this for a while, that I know that if I don't step away and strategize, and that's absolutely where my best ideas come from. If I'm out hiking on a Sunday morning with my dog, I mean that's a great time for me to think because there's no interruption. If there's time early in the morning, I usually wake up very early in the morning before most people are up, so that allows me to kind of get my day started without being inundated from the get-go. I just by now that if I am just constantly being reactive, not only is it not satisfying from just a personal standpoint, because I'm letting the day take control of me, as opposed to me taking control. I just know intuitively that that's not going to allow me to be successful.
I've also tried to model others in terms of just the kind of things that other successful entrepreneurs have done, and the lessons that they've learned. I do a lot of reading throughout online, magazines, just podcasts, whatever it might be to try to learn from out entrepreneurs and other leaders that have been successful to try to identify the traits that are most relevant to being productive and successful in my business, and I identified those early on as things that I need to build into my day-to-day. I've been able to do that. I'm not going to say it's never a struggle. I mean there are days where I just I kind of lose sight a bit about what's happening. You just have to be responsive, because otherwise things just don't get done.
You have to have the confidence that you are able to set things on the right course and not let the minutia take over. I don't .. I'm sitting here. I'm saying that I have that now. It's taken me a long time to get to that point. I probably didn't have that a few years ago, certainly not five, ten years ago. Some of this is learning by doing, and experience, and confidence gaining, and knowing that when I have that time set aside for me to strategize, and I see the results of that be successful, that allows me to know that the next time that I'm going to do that, that it's the right thing for me to be doing.
Felix: I love that. I think that's really important this kind of feedback that you have to give yourself, because I think confidence comes from just trying something, seeing the results of it, and either seeing that it was helpful or it wasn't as bad as you imagined in your head, and that kind of helps to build confidence, because I think a lot of entrepreneurs, we have this fear that we let our foot off the gas pedal everything is going to fall apart, but you're saying take your foot of the gas pedal, take the time to think about your business from a strategic level, and then you see at the weeks or months down the road that things are actually starting to come together a lot better than if you were just focusing in your business the entire time.
Then this moment that you're talking about, this pause and looking back and realizing, hey I've been in this situation before where I had to decide whether I should work in my business or on my business, and I made the right decision by working on the business, it worked out better than if I were just to work on a day-to-day thing. I think that's really key, and that's kind of the idea of building this habit of making sure you are working strategically on your business instead.
Just hearing you talk about your analytical approach, and hearing you talk about what's been successful for you, I feel like you, and probably a lot of the other successful entrepreneurs, have routines and habits, daily routine that you get into. Do you have a daily routines, or a good morning routines, that you always make sure to hit when you start your day?
Woody: Felix. I feel like you're getting to know me pretty well by now.
Felix: No. I mean just hearing you talk. I'm like this guy has ... I mean I'm the same way. I feel like ... I think we're all kind of creatures of habits to some degree, and I think if you can latch onto that and build on top of it, you're just going to eventually become successful, so I would love to hear more about how you kind of structure your day.
Woody: Sure, and those close to me will substantiate, I guess, your assessment that I likely am someone who is structured in that sense. I'm up early. I'm out here on the west coast. I'm typically up at five. I will work for a few hours in the morning, and then take a break, and then ... I work best throughout the day in kind of two to three hour blocks.
I definitely find time, five or six days a week, to exercise in some way. I have a lot of outside pursuits outside of business that keep me grounded in terms of a family and in terms of just outside interests that range from animal rights, to the environment, to just health and wellness, to just entertainment, and just I have a lot of outside interests that I feel like are additive in terms of my being successful as an entrepreneur. If that's the case.
Just having different perspectives and getting the kind of insight that different disciplines allows I think is very important. I think, like you said earlier, if you are just doing ... If you're working in your business all the time, you're just not at all getting the outside perspective that I think is necessary. Not only in terms of the tangible things that are essential to run a business, but it's the intangibles as well.
Yeah. I mean I'm definitely a creature of habit. I kind of have found a routine that works well for me and knowing that I don't like to work late into the evenings. I'm much better in the morning, and if I don't find some time to exercise, I'm usually not effective in that sense. It's also having the diversity of things in your life that allow you to, I think, enjoy the time outside of your kind of work and your business.
It's funny, when I was working with a big company in the financial work, I just ... You have that feeling on a Sunday night where you're just dreading going to work on the next day. Someone was mentioning that to me recently, and I just haven't had that in so long I can't even relate. It's like I'll work on the weekends, I'll whatever, or whenever, I need to to get the job done, but I don't feel like I'm being forced to work. Even on a Friday afternoon, there's other things I could be doing if I wanted to, but I find time to get parts of the business, or give parts of the business attention that maybe haven't, and that's enjoyable for me.
I don't look at it as work in the traditional sense. Creating a lifestyle for me was always very important in the sense of making sure that my work life and my personal life, or ... There's definitely separation, but I didn't want it to be something that was just so cut and dry, like where people go to an office and then when they leave it's like they completely shut down. I wanted to have some mixture between the two, and really find something that I enjoy doing, that reflected who I am as a person, and this type of business and this type of lifestyle fits me to the tee. It took me a while to figure that out, but I'm glad I did. Sometimes you have to go through things and situations that aren't a good fit for you, to find out what the best thing is that's going to make you happy.
Felix: Yeah. I like this idea of balance. You said that you have a lot of outside interests, and I think the other side of the, I guess the other camp in this, is that people will say you have to be obsessed with your business. You have to be completely absorbed by it. Is there ever a stage that you find that you should be obsessed by your business? Not have outside interests? What's your experience with that?
Woody: Well yeah. I mean let me tell you a story about back in the late 90s when I was in grad school I was with a technology company. This was a B to B company during the time when B to B was very, very popular. I was with a company that raised a bunch of money. We were moving a million miles an hour. We had top tier strategic backers, top tier financial backers. This was back in the time when I was in my late 20s and I just ... You felt like there was such pressure, and such intensity, and there was such a kind of soul focus that needed to be in place for you to be successful, and so I didn't know any different at the time.
I felt like what everyone was telling you, what was going on around you, was the only way to make it happen. The company didn't wind up being successful. We weren't able to raise addition funding. A lot of the companies at the time found a similar fate, but I took away from that experience where I did sacrifice things on the outside of work that I probably, in hindsight, regret a little bit, but I use it as a learning experience.
I just found that being so singularly focused and so in the sense of just not allowing yourself to shut down, it didn't prove to be successful for me or the company, and just took away from that that ... Look there's nothing. I love what I do. I work a ton. I don't clock my hours. It's not in the sense ... I'm willing to do whatever is necessary, but you got to see the big picture. If you're not doing things outside of work that make you happy, and you don't have relationships and things in your life that allow you to be happy outside of work, I personally don't believe that you can be successful. I think maybe others would disagree. That's perfectly fine, but I've found what works for me to be a good mix. A lot of that was through personal experience, but I encourage everyone to find their own path, but I feel like I found the right one for me.
Felix: Yeah. I think it really depends on your goals and the day. You were saying that you really wanted to create a lifestyle for yourself, and if you're just working non-stop and you're solely obsessed with your business, then what is that point, I guess, is what you're getting at. What's the big picture at the end of the day. Makes sense. Cool.
Let's talk about the business itself. You said business was started in 2011. You were not the original creator of it, but then you had purchased it, so talk to us a little bit about how you found about Faucet Face, and ... We'll start there. How did you find out about Faucet Face?
Woody: The original founder was looking for someone to be brought on as CEO. This was back in 2012. We had talked a little bit. It didn't wind up being the right fit at the time, and we stayed in touch, and over a period of time he just decided that he wanted to go off and do other things. I think, as I alluded to previously, he was a fantastic product designer. I think that's what he enjoyed more than actually building and running a business, and I ... A period of a couple years was on and off looking for other businesses.
I looked pretty closely at buying a few other businesses that didn't wind up working out, and this really fit a number of parameters that I was trying to check off on my list, as far as potential companies to buy. It was in a consumer products business. It had a lot of growth potential in terms of just my background. What I felt like I could add. There was great brand possibility. The initial building blocks were in place. We had all the essentials that I felt were right for me to take the company to the next level.
I think from the time that Mason and I met to the time I actually wound up acquiring the company, it was a period of about 9 or 10 months. As I said, there was a lot of on and off. There was a lot of pausing in communication. There was little negotiation and back and forth, but once we actually agreed to the initial set of terms, we went through a period of due diligence. That was pretty quick, by my experience, it was about 60 days, which is ... There wasn't a ton to go through. I focused on the key points that I felt were relevant, and we actually wound up closing the deal in June of 2013, and he helped me for a little bit. Maybe 45 days after that, but I feel like I picked it up pretty quickly, and I was off an running from that point forward.
Felix: Very cool, so you said that you were obviously looking to purchase this business, but you were also looking at other businesses to purchase previously. What attracts you to buying a business instead of purse an idea from scratch?
Woody: You know I have looked into doing things from scratch, and this was also part of that self realization that I felt that ... Personally, Mason, the found of Faucet Face, the original founder, was a fantastic product designer and a concept person. I just decided at that point that was a better executor of an existing idea, or product, or business, and much better suited to taking it to the next level based on my attributes that I had learned over the years and my personal attributes as well. I felt that was a better way to spend my time. I obviously had a lot of familiarity with aspects of mergers, acquisitions, financing, just doing all those sorts of things from the deals side of it. That came naturally to me. I just felt like ... I tried coming up with concepts and kind of getting them from concept stage, to product stage, to the point of rolling it out onto the marketplace, and I just decided to go the route of an acquisition.
As I said, I looked at a number of companies, and whether it was the economics, or whether it was the niche, or the product, or the brand, or the business, or just whatever it was. I looked at a not an insignificant number of opportunities. Probably about five to ten in total over a period of a couple of years, and wound up settling on Faucet Face as the right one for me, and I'm glad I did.
Felix: What did you, I guess, notice about the business, or the idea, or the market, that made you feel like it was a good fit? That it was the one? Especially after spending so many years looking at other businesses.
Woody: Well I just felt like the brand was great. There was a real sense from customers and from people that had been affiliated, either directly or indirectly with the company and brand, that it stood for something important in terms of, I'll get into this a little bit later, in terms of the charitable aspect of the business. It stood for something in terms of just trying to eliminate all of the plastic bottles in terms of the environment. Promoting the consumption of water has essential elements of health and wellness tied to it. A lot of the themes that are important to me personally and that were part of the most recent full time company that I was with, I sold back a few years ago, it was kind of a natural merging of all these worlds in one.
Evoking the themes that were personal the me was very important, but in terms of just the way the business was set up. It was set up in the exact way that I wanted a business I wanted to acquire to be set up. In terms of the virtual nature of it, in terms of having relationships with contract manufacturers, third party logistics companies having everything flexible and automated from the customer, and from the order processing side of things that allows you to scale it quickly were very important to me.
I didn't want anything, for example, like a retail store or anything like that. Nothing like with a manufacturing facility tied to it with in terms of property or equipment or anything like that. It was really a mixture of the themes that the business stood for, the nature of the way the business was set up, and honestly I felt like the business really played to my strengths from a personal side of things. I knew I could grow it just based on the fact that I had done it before. I tried to keep that in mind. That was also one of those examples where just having the confidence that I had grown a business that was similar to this before, I felt pretty strongly that I could make it happen again.
Felix: Yeah. I think for any entrepreneur out there that is thinking about buying a business for their first time, or they already have a business looking to buy another one, and there's always this fear that if it's such a good business, why are they selling it? How do you approach this when you're looking to buy a business? How did you even find ... What's your approach to looking for businesses to buy, and what do you evaluate?
Woody: Well, so for me, I'm not the kind of person that's looking to overpay, so I will pass on a lot of deals that I feel like are up for auction, that are going to go to the highest bidder, that are going to be all cash deals. That's not for me. That's fine for someone who has a different set of parameters in terms of the way they do deals, but I prefer to look at undervalued assets that, for whatever reason, have not been fully exploited to their potential. I think that allowed me to utilize the skills that I have to take it to the next level. What that does is, Felix, it required a lot of patience, because findings deals like this isn't easy. I also think that that is an essential element of the way I approach things, because I'm very persistent, I'm very detail-oriented, I'm very willing to wait things out, and do the work necessary to uncover opportunities like this. I build relationships. I look at opportunities all of the time. Over the years I still look at opportunities, even if I'm not looking.
I have no problem passing on things if I don't think they're the right fit, but I am not at all willing to overpay for something. If it's going to an open auction that is going to the highest bidder, that's definitely going to be for me.
Felix: You're not going to a site that's selling it publicly or auction or stuff like that.
Woody: No. That's not going to be for me. I'm just not interested in that. For me, it's got to be an off the run ... An undervalued type situation, where there's not going to be a lot of interest necessarily tied to it, that is more kind of like an undiscovered gem, that I'm able to uncover through hard work and research and persistence. If it's out there and everyone's looking at it, that's probably not the right deal for me.
Felix: Makes sense, because you have so much experience in your job, and obviously with this particular purchase, what are some key points in a deal like this, that an entrepreneur that's maybe buying a business for their first time, that they should pay attention to?
Woody: The most important thing for me was just the nature of the intellectual property. For business like this, back at the time, there was no patent, there was no trademark even, there were, obviously, domain names that were owned. There was inventory. There was some of the things on the manufacturing side, as far as like molds for the glass bottles that we sell. Understanding what the intellectual property is that exists, or you need to have transferred properly, is the most important thing.
Then the way I structured a deal like this, without getting into too much of the esoterics, is just I structured it as an asset purchase. Basically what that allowed me to do was to basically only buy the assets of the business that I wanted, and I didn't inherit any of the liabilities or debt. Basically that way you are insulated from anything that may have occurred prior to the acquisition that was done without your knowledge. In terms of just obligations that weren't paid, procedures that weren't followed, things like that.
That's the deal structure that I've used many times in the past, and that's exactly how I did this one, knowing that that was the best way for me to do it. That way from the date that I owned the business going forward, anything that happened was on my watch, which is perfectly fine, but I wasn't going to have anything coming out of the woodwork that someone didn't pay their taxes, someone did something that was not in accordance with the FTC as far as what's required in terms of advertising requirements. I knew that I wanted to structure the deal in that way to protect myself, and I was able to make it happen.
Felix: Yeah. I mean to be honest this sounds quite daunting. Would you recommend that a first time entrepreneur buy a business as their first?
Woody: I would say that I have full confidence that most smart, entrepreneurial go-getters can do this. I would get advice if they are not as familiar with some of the deal points as I am. Then there's a lot of good attorneys out there, there's a lot of good CPAs, there's a lot of good coaches, there's a lot of good mentors people have that can provide the same guidance. I just have done a lot of this myself, so I didn't' really need any of that. I had any attorney that worked with me, and that was fine, but I was the one kind of driving the whole process. As I said Felix, this type of arrangement played to my strengths, which is why I sought it out.
I feel like anyone can do this if they surround themselves with the right people, but if there's a different path that allows someone to play to their respective strengths better than a situation like this, that's perfectly fine too. I think it's all about knowing what your lean is and what you're going to be successful at. For me, I felt like in this kind of structure I probably could be successful. The way the deal was structure at least I felt was very much in my favor.
Felix: Makes sense. One thing I asked you before we had the guy start it, when we were first arranging a time to chat, you mentioned that your most successful marketing strategy was utilizing a combination of email marketing with targeted social media initiatives to leverage offline PR efforts. Can you explain this a little bit more, like what does that mean?
Woody: Absolutely. You know, and this is part of the trial and error over the last couple of years. I have done ever kind of marketing known to man, and so I have done all of the paid options across social media. Whether it's Facebook, Twitter, Pinterest, Instagram is having some online advertising now, I've done all that. For me at least, it hasn't been successful on Faucet Face. There probably are reasons why, and I may revisit it at some point in the future, but I've tried all those, and I analyze the metrics, and I decided over periods of time in each of those instances that it wasn't working as well as I think it could've.
We have done paid search. We have done SEO. We have done retargeting. We have done all of these things that are options out there for e-commerce business and they just weren't successful. I think, through a lot of trial and error, we eventually settled on a strategy of just utilizing social media, in terms of an organic approach.
Now I have a team that manages our social media platforms, Facebook, Twitter. I personally do most of the Instagram and Pinterest, and we're leaning into some other platforms as well. We have a top group now that we're working with that's doing our email marketing. It's funny. I resisted doing email marketing for so long, because as a consumer I was concerned that people were getting inundated with too much email, but looking at the number, at least for right now, email marketing, to me, is still continues to be effective, in terms of our return on investment. That may change at some point in the future. For right now it's become an integral part of our marketing strategy.
Then in terms of offline efforts, PR initiatives like this. We do a lot of work with events in terms of donating our product in exchange for publicity. I have done a number of arrangement with, for example, awards shows here in Los Angeles. Working with he prime time Emmys or the Grammys, or things like that. Where we set up a booth, and talk about our company, and give away our product to potential endorsers and things like that.
Right now this is the mixture of marketing that we're using. It may change, and it probably will change, but for the company size that we're at right now, I found it to be most effective. I just would think ... Say to other entrepreneurs out there, there's a lot of interest nowadays in utilizing things like Facebook and Twitter from an advertising standpoint. I think that big brands have been very successful with utilizing those platforms, but they do require a significant budget spend that you need to be willing to allocate over a significant period of time to build the consistency in your messaging that a lot of growing brands cannot withstand.
I think it's a matter of finding what's best for you and what works for your business, but above all else you need to be flexible. We watch this very closely, and the minute that I see things shifting or changing, we're going to be willing to try something else.
Felix: Yeah. Let's start with the social media approach, because I'm assuming, based on what I know from you, just from talking to you, I'm sure your team is not just randomly posting things on there. What is your analytical approach to this organic social media initiatives?
Woody: There's a book by Gary Vaynerchuk, who you probably know is a luminary in this space, and it's all about jab, jab, jab, jab, jab, jab, punch. It's just basically utilizing a mixture, and this the mantra that I've incorporated into our business. You don't want to always be selling, right, your product. You want to be evoking themes that are relevant to yourself, and your brand, and your audience, that resonate with people, and that create a favorable impression. Whatever that ratio is of jabs to punches, if you want to use that terminology, whether it's 10 to 1 or 15 to 1, I don't know that we've figured that out precisely yet, but there needs to be a proper sequence in place where you are not constantly overselling people in terms of just discounts and things like that.
You want to be highlighting themes. In our case it's highlighting the aspects of our company that resonate well. Whether it's the environment, or charity, or health and wellness, or animal rights, things like that, so post on topical things. I like to post on our Instagram page things that are personal to me, ranging from things that I do in and around Los Angeles to just current events, or a fun whimsical look at the day-to-day things we encounter. Having that proper mixture is the most important thing, because you can see brands out there that are just overselling, and over promoting, and over discounting their products that ultimately wind up hurting themselves in the long run. Striking that balance is very important. I'm not going to say we're perfect at it, but we've learned a lot along the way.
Felix: Yeah. Let's talk about email marketing now. I totally hear your concern with it initially about there's just so way too many junk emails that people are getting today, as a consumer, you're really hesitant to do that. Just knowing the way you are, again, you approached it, you try it out, and it seems to be working for you. How did you ... How do you guys collect email addresses? How do you build up your email list?
Woody: When I bought the business we inherited the list, which was good. We grew it over time based on opt-ins when people purchased our products through Shopify. Then we just had people that come to our site and sign up. We've become much more focused recently on ... We created a kind of a, it's not a header, but it's a section on the bottom of each page on our website which allows people to opt-in to our newsletter. They get 20% off their first purchase. That kind of thing. We have a pop-up now across all our online and offline site visits that allow us to capture email addresses.
Then you basically have to work them into a sequence, welcome sequence. Then our traditional set of communications that we have in place for our customers. We actually segmented out into people that buy on our website, and then also people that buy our product for stores, and then people that buy our custom designs, so we have three separate email sequences based on the type of customer that you are.
Felix: Yeah. Let's talk about what your sending to them, because I think ... Are you still taking this approach of jab, jab, jab, and I think Gary calls it the right hook where you actually ask for something in return. Do you take the same approach with email?
Woody: We do, because, once again, if you're just emailing people just 20% off coupons all the time. It's completely useless. They tune out, and it's not interesting to them. We need to talk about things like why glass, or talk about our one for one hundred charitable program. We need to talk about the amount of money that you'll save by eliminating single use plastic bottles. These are the things that people want to hear, because look, we're all consumers nowadays. We all get this amount of email. If you really want to just focus on finding a coupon for whatever product is that you want to buy, and you have enough time, you probably can spend enough time doing it. That's not why people let you into their world in terms of just opting into your email sequence. They want to know about the brand. They want to know what it is you have to say.
I can't tell you how many people order our custom bottle that tell me, "Look. Could I go maybe direct to China? Can I got on Alibaba? Can I find a promotional products company directly that will just sell me any kind of glass bottle? Probably, but I like your brand. I like what you stand for. I like the kind of look and feel of your site. I like what you have to say across social media." That resonates really well with people, and it's really important to remember that, because you're not just selling a product, you're selling a brand. If you're just selling a product, it becomes a commodity, and then it's a race to the bottom where just competing on price, and that's not the kind of business we want to be.
Felix: Makes sense. Now when it comes to PR, how do you find the opportunities to get your products and influence those hands?
Woody: It's just a mixture once again. Some people find us. Sometimes we find them. We actually did a spot with Jill's Steals and Deals on the Today on NBC show back in January. That was a huge success for us. We actually, there was PR contact I found here in Los Angeles and she introduced us to the opportunity. We wound capturing thousands and thousands and thousands of new subscribers to our newsletter. We had a lot of sales from that. It was a very aggressive promotion we ran, but that's the kind of thing where it ran on Today on NBC with basically an advertised like a six million viewership.
For us, what I've tried to focus on now is exposing ourselves to new audiences, right. We've done the local celebrity thing in terms of just these awards shows. What I'm focused on now is trying to look at new opportunities to expose ourselves to new audience, because I feel like when we do, we have something good to say, and it's very positive, so I try to be selective now and not overdoing messaging to the same audience. I'm very interested in speaking to new people and telling them who we are and what we're all about, and trying to expand our reach so to speak in that sense.
Felix: Makes sense. One other thing that you had mentioned before the call was the critical importance of leveraging limited resources to maximize return on investment. Can you give us ... Tell us a little bit more about what you mean by that, and maybe some examples?
Woody: Well, absolutely. This is one of those things, it seems counter-intuitive, but I've seen both sides. You have companies that have a lot of cash. They raise a lot of money. Especially in tech space in northern California, and I'll tell you, from my experience, having a lot of cash can be the kiss of death. You make decisions that are somewhat sloppy. You enter into long term leases with large deposits. You enter into relationships with ... I'm not disparaging PR firms, but a lot of PR firms want significant retainers and ongoing relationships that, for a small company, is probably not the best fit. You wind up not negotiating things as favorably as you would if you had limited resources.
I try to keep things really lean in that standpoint. I'm not saying we negotiate every nickel, but it's really important to always remember that we are a growth company. Every dollar we spend has an alternative use to it. There's an opportunity cost to, you know, if I make this trip to a trade show and spend x amount, I could spend that money on online marketing, so what's the trade off there. I think always understanding that you, as a growing company, have limited resources. It's imperative that you make the right decisions in terms of how you allocate your hard dollars, and how you allocate your time also as well, to make sure you're spending the money in the right way.
I think it's important never to lose sight of that. I know when companies get big, and they have large overhead structure, and personnel, and much more money in the bank, some of that kind of subsides a little bit, but me, personally speaking, I like to keep things tight in that sense, and lean, and make sure that I'm really staying on top of what our costs are, and the ways that we could be spending our money.
Felix: Yeah. I'm in the middle of reading this book now. I just got started. Called profit first, which kind of talks about this. About once you start having some degree of success, you start, like you were saying, entering into these long term agreements that are not as favorable as you would have structured them if you kind of had your back to the wall. How do you keep this kind of mentality going, because once you do start having cash and some success, it almost start burning a hole in your pocket, and you feel like, "Man, if I don't spend it I'm not investing in my business." How do you make that right decision?
Woody: For me it comes naturally, and this doesn't happen with everyone, but I've seen the downsides of businesses, and how ... I was part of this company in the late 90s that raised an obscene amount of money and spent it all, and so I know what the pitfalls are. I've been in a couple of up and down cycles, and that allows me to see past what's happening right now, and know that when things are good you got to capitalize on it, but things ultimately will ... You know, everything ebbs and flows, right, and so you have to have the big picture understanding that not to get too carried away with anything that's happening in the short term.
I want this company to be around for a long time. I want to grow this organically. I want to add to it in terms of acquisition. I'm not ... This is real personal to me. It's not something I'm just trying to buy and sell, and kind of get out of, and it's all about making money. I want to do the right things for the business, and so I'm very cognizant of the need to be careful with the way money is being spent, and I don't think that's going to change. As long as I'm as hands on as I am right now, that's definitely not going to change.
Felix: Cool. I want to talk about the charitable aspect of your business. This one for one hundred. Can you tell us a little bit more about this?
Woody: Sure. This was a relationship that the prior owner had put in place, and it's basically something for us to allow us to give back for each sale that we make. We basically have a relationship with an organization called TMA, which is based here in Los Angeles. It's called Third Millennium Awakening, and then they have an in turn relationship with a group over in India, which implements, installs, bio-stem water filters.
For each sale of our classic design water bottles, we donate a percentage of those sales to this organization, which then in turn donates this money to establish these filters in poor areas in remote villages of India where people don't have access to clean water. That's a big problem in terms of sanitary reasons in terms of being able to do things like bathe and clean your clothing, and obviously consume and drink water. It becomes really challenging to be able to do that in a healthy way with the ability to pick up all sorts of diseases and things like that, so we donate a percentage of each sale to this organization. They put this bio-stem filters in place, which basically removes about 90 to 95% of all the impurities in the water that they consume, and it's really helpful in making a difference in these peoples lives.
The way that it works is just for every one bottle, so to speak, you are ... The way the math works out is you're basically giving people one hundred liters of clean water in terms of just the way the donation works. That's kind of our way of characterizing the program and letting people that they are doing something by purchasing our product that can actually help people in need, and it can make a difference. That also is something which was very important to me. To just not keep everything purely from a profit oriented standpoint. It's very important to try to make a difference, and I think we're doing our small part in this way.
Felix: Yeah. I think that's an awesome initiative, and I'm sure it also keeps your motivated to keep on growing the business, because it has a direct impact on these peoples lives. What's in store for the remainder of this year? What are some goals that you want to hit with Faucet face?
Woody: We are working on a lot of different things. We're always introducing new limited edition designs. We're working on a couple different bottle styles. Small, medium, and large, which we're excited about. As I said, periodically we look at the opportunity to acquire companies that are complimentary to us that I think would allow us to grow the company, so there's some things that we're looking at on that side of things. In terms of just the customer base, we are looking at some interesting opportunities both domestically and internationally to expand our presence in stores. Specifically on the international side. That's been something that I've been trying to do for a long time.
We've had a lot of interest, and as you might expect, just shipping product from one party to another internationally, without an intermediary, can be challenging just in terms of just the shipping costs and things like that, so it's important to have relationships with people on the ground in different parts of the world to make that happen more effectively, so we're in discussions with a number of groups along those lines. Just trying to be more ... Get better at what we're doing just day-to-day. We're selling increased amount over last year, over the year before, so that's good. Staying on top of the trends in terms of marketing and social media will continue to be very important, and then opportunistically, as opportunities present themselves to us to continue to tell our message and get the word out about who we are and what we do, we're very excited about that as well.
Felix: Awesome. Thanks so much Woody. Faucetface.com. FAUCETFACE.com is the website. Anywhere else you recommend the listeners check out if they want to follow along with what you're up to?
Woody: Definitely visit us across social media. Like I said, we're very active on Facebook, and Twitter, and Instagram, and Pinterest, and we're going to be setting up a presence on some other platforms soon, but that's the best way to find out about us. Sign up for our newsletter. We'll promise not to bug you too often, but I think we have some interesting material to share for you, and we hope you give us a chance, and we thank you so much for your time.
Felix: Yeah. I think the email and all the social media links are all on the site as well at Faucetface.com, so that's probably the best place to go. Cool. Again, thanks so much for your time Woody.
Woody: All right Felix. Thank you so much. I appreciate it.
Felix: Thanks for listening to Shopify Masters. The e-commerce marketing podcast for ambitious entrepreneurs. To start your store today, visit Shopify.com for a free trial.
Ready to build a business of your own?
Start your free 14-day trial of Shopify today!
About The Author
Felix Thea is the host of the Shopify Masters podcast, the ecommerce marketing podcast for ambitious entrepreneurs, and founder of TrafficAndSales.com where you can get actionable tips to grow your store’s traffic and sales.