Advice Line with Serial Entrepreneur Mark Cuban

0:00 Yeah. Uh Hello and welcome to the advice line on how I built this lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. Each week, I'm joined by a legendary founder, a former guest on the show. who will help me try to help you. And if you're building something and you need advice, give us a call and you just might be the next guest on the show. Our number is 1-800-433-1298. Leave us a one minute message that tells us about your business and the issues or questions that you like help with. Alright, let's get to it.

0:36 Joining me this week is Mark Cuban. He is, of course, a legendary serial entrepreneur, best known for his early software and streaming companies, and then as the owner of the Dallas Mavericks and one of the sharks on Shark Tank. Uh Mark's invested in Tons of startups and early stage businesses. He's now trying to revolutionize the prescription drug market. Mark, it's great to have you back on the show. It's great to be back.

0:58 Thanks me, Guy. You were first on back in twenty sixteen. You were one of the f our very first episodes actually. Well almost nine years ago. And uh just some amazing story. If you ha by the way, if you guys haven't heard that episode, go back check it out. We'll put a link to it in the episode description. Um you have had An incredible career. And I you know, I often repeat a piece of advice you gave on that episode nine years ago. When I asked you what you would do if you lost it all and you had to start over

1:24 Uh, what would you do to start up again? And do you remember what you said? I think I said I'd be a bartender at night and get it get a a sales job during the day. That's exactly what you said. And it's a incredible advice'cause you get tips as a bartender, and then you've got the daytime to sell. Yeah, I mean, you gotta lean on your strong skill sets. You know, and for me bartending to have to be in a shot in a beer type place, not a fancy place,'cause my skills haven't kept up with the changes.

1:50 But at the same time I know how to sell. And anybody who knows how to sell and is willing to learn and is curious can get a job and can achieve success. Mark, you came on a couple years ago to talk to us about cost plus drugs. This is uh basically your your business designed to change how prescription drugs are priced and accessibility. You actually built a production facility now. You're making Prescription drugs.

2:17 Correct. We we have a um robotics driven um manufacturing facility in Dallas, Texas, and we're making sterile injectables. Right now we're focused on drugs that are on short supply. Believe it or not, in twenty twenty six. Things like pediatric cancer drugs still go on short supply. So we're solving that need for hospitals and we're looking to expand it to everything so that there's nothing we can't make. So many generic drugs are made overseas. What what's the biggest challenge in making them here? I mean you you have a facility now, it's taken you a couple of years, but why is it so hard to do it in the US? You know, that's great question and a timely question. I'm glad you asked. Um It's not hard for us to do because we're robotically driven, we can change the drug we're making in a four hour period, you know, so we can make a one month or one year supply of something, then roll it over to another drug.

3:08 Our biggest inhibitor and why we haven't done it yet is all the fees that the FDA charges. So it's about three hundred sixty five thousand dollars to set up what's called an and a new drug um application. And if you want to do it For a hundred drugs, that's thirty six and a half million dollars. You want to do it for a thousand generics, you can do the math, right? And so because of that, that that is what ruins the margins here in the United States. And so we can make

3:35 generic pills here in the United States cheaper than what we can buy them for from India or China. We just have to deal with the associated cost of all the applications. So how do you solve that? I mean it sounds like this is a legislative solve, like you basically change the law. Well actually it's an FDA issue. You know, they have the opportunity to waive those fees.

3:57 And we're talking to people in the FDA and obviously in this administration, they want to bring manufacturing back home. They want to prove that we can compete in manufacturing in the US. Hopefully we'll get, you know, a positive response from the head of the FDA because once they do that It takes us about twelve months at the most to start turning everything on. And then there's no limit to what we can scale. And the reason we're able to do it so much more effectively is not only because of the AI and robotics we use, but because we did it on a modular basis. Well, literally we can put all this stuff in a tractor trailer. And not only make it in Dallas, but take it wherever and manufacture the drugs as close as where they need to be. The idea behind this is essentially to to boil it down is to make prescription drug prices Lower, right?

4:43 significantly lower. Um I mean to do that um requires a lot of upfront capital and you've mentioned this in the past, which is if you just break even, that's great. Like you don't need this to be a billion dollar business. You don't need to walk away making tons of money. So I think I know the answer to this, but what is it what is motivating you to like spend a considerable time of your energy on

5:05 On this business. Everybody hates the economic side of their health care. Everybody. I want to fix that. And when it's all said and done.

5:13 Some people will be happy to have their names on buildings. I want when it's all said and done. He fixed healthcare. Now whether or not I'll get there. Who knows, right? But Having that as a mission, I mean, to me, it's fun.

5:26 It fills my competitive juices. It keeps me motivated. You know, I'm I'm the very curious type. I'm always having to learn. I'm reading hours a day on how the whole medical system works and where the problems are and where the opportunities are for change. And I'm able to connect all these dots which is really my skill set. And We've made a lot of progress. I mean, we've saved lives, we've saved millions, we've made millions of people happy, let's put it that way. And we're changing an industry and we won't stop just with pharmaceuticals. We'll we're working to get into the medical side as well. Awesome. All right, Mark, let's take our first caller. You ready? Great.

6:03 All right, hello, caller. Welcome to the advice line. Uh you are on with Mark Cuban. Tell us your name, where you're calling from, and uh just one line about your business. Hi Guy, hi Mark, I'm Lucy. I'm calling from Washington, DC, and I am the CEO and co-founder of One Trick Pony. We are flipping the peanut butter aisle on its head, quite literally. So we make two ingredient delicious peanut butter with just organic peanuts and salt in our custom upside down jars designed to help you fight the oil separation and natural peanut butter. Awesome. Thanks for calling it. So Lucy, one trick pony peanut butter, peanuts and salt, but it's An upside down jar? Can you like explain that?

6:41 Sure, so It's natural peanut butter, so it's just peanuts and salt, which means that there will be that oil separation that everyone hates. Yeah. So the jar sits on the grocery shelf upside down. Um, so the oil is rising to the top of the jar when it's sitting. And then when you bring it home for the first time and flip it over, the oil will actually be on the bottom of the jar. So you're not met with that um oil when you open the jar and you're not like, you know, splashing over the edges on your first open. And just br briefly, how did you start how did this start? Yeah, so we are a family founded business. So I started this with my brother and my sister-in-law. My sister in law is from Argentina.

7:19 So we were in Argentina for their wedding. We were doing what we do on vacation, which is try the local peanut butter wherever we go. And we were just blown away by the taste and the texture of what we were trying. So came home, did some research, realized that peanuts are actually indigenous to South America. So it's like the original climate where they're supposed to be grown. Um, and we kinda looked at each other and said, Hey, should we start a peanut butter company celebrating these peanuts? And here we are. Wow, and what tell give us a sense of what how you guys are doing. Like what what do you do in sales this year? Yeah, so we actually launched in November twenty twenty two, but we were in different jars. So we were just in like, you know, off the shelf jars. Um, so our first couple of years it was going okay. We were, you know, like in the low hundreds of thousands. Um and then we just launched this new jar in July of this year after talking to a bunch of customers and kind of hearing this pain point over and over again. Um, so this year we're hoping to finish out at a million in revenue.

8:14 Amazing. Okay, congrats. And before I bring Mark in,'cause we've got lots more questions, what is your question for us? So so far in retail, we've only launched in natural grocery stores, kind of like the whole foods of the world, where we're on the shelves next to other, you know, premium organic products at high price points. And next year I have the opportunity to launch at a big box retailer, one where We would be on the shelf next to more conventional products and also targeting a more price sensitive consumer. So my question is, how would you approach this opportunity to succeed in this new channel while also maintaining what makes my brand premium now? All right, Mark Cuban I want to bring you in questions, thoughts, comments for Lucy. Sure. So you said this is a family business. Do you have other peanut butter based products that your family sells?

8:59 So we have three main skews, smooth, crunchy, and unsalted, and then we do some seasonal drops. Um you don't have any other products that you're selling. It's only peanut butter based products upside down. Correct. That's important to know because you can't leverage those other products. Number two. to get into the bigger stores, you're looking at stocking fees. Right. And so The big question is how much are they going to charge you for those stocking fees? It's going to cost you a lot of money up front. So this is where you have to do your budgeting and decide whether or not you're willing to go all in. because I like the look of it. It obviously is going to stand out. It's something completely different. Peanut butter looks primarily the same across all the other products. So you're going to stand out. And I think people will be okay with paying a premium, but you have to do the math in your own budget in terms of

9:46 um whether or not you can afford the stocking fees and advertising and promotion to sustain that. Are you doing any advertising or promotional stuff now? Yeah, we do meta ads right now, so we are omni channel, so we sell on e commerce and also in retail. So where's the majority of your sales right now? Retail? It's fifty fifty, actually. And what about your margin dollars because of the cost of shipping, what how do your margin dollars play out?

10:10 It's a little better on e commerce right now. Kind of what you're saying our margin when you go to retail or the distributor takes a fee, everyone gets their cut. Exactly. Okay, so in terms of that, so you've got a return on ad spend. So here's what I'll tell you. The biggest mistake startups make is chasing sales Over margin dollars and profits. Because you there's internally we all want to get to that hundreds of thousands, then that millions, and then five millions, and then you're hoping once you get to ten, twenty, fifty millions, either you're making a ton of money or you're going to get bought. And so

10:42 The challenge is trying to rush it there without enough capital. So people will take the money that they have. Spend it all on stocking fees and advertising. Say, look, our numbers are going up, but then your sell through may your turns aren't maybe as good in certain stores, and you're fighting a battle to stay on shelves. What I will tell you is Take your time. Mm.

11:03 What you've got to do is make sure that where you're at. You are selling through. If you can't sell through based off of the advertising that you're doing, it's not a bad thing just to go straight e commerce. Because you can take all the money you're giving that distributor, you can take all the money in stocking fees that you're giving to Whole Foods and whoever, right? And put that into advertising. And if you're getting, you know, a two plus return on ad spend, which I'm guessing you are. Right.

11:31 You know, if you can get that up to three or four, you're killing it. And then you also have some more money to give to influencers, right? Because every now and then when an influence says something and say, Oh, how cool it is. Hey, watch me as I open up my you know my upside down peanut butter and then you know smell it and say it's not gooey. That's when you get a blip in sales, right? So moral of the story is Don't chase sales. Chase profitability. Particularly because this is a family business, I'm assuming you haven't gone out and raised a lot of money.

12:02 We have raised a seed fund, um, to fuel our, you know, early retail growth and new jars. Is that mostly friends and family? Uh no. We raised from a V C last summer, so we did raise our like a yeah, institutional capital last summer and then also, you know, from What percent of the company do you still own? Uh all of us together a little over fifty. Okay, that's important. Yeah. You're stuck.

12:25 You're in a really tough place right now because if you chase sales, that's part of what the VC wants. Yeah. Right. The V C want you to chase sales because they want to get an exit to get a return on their capital. You, on the other hand, if you can't get the return on the capital you already have in the bank, then you're gonna have to raise more money, which is gonna take you under fifty percent. Mm-hmm. And that's really bad news.

12:49 And so Don't tell your VC you're on guy's show. And if they do tell them earmuffs. Okay. 'Cause what I'm gonna tell you is to ignore your V C no matter what they say.

12:58 Okay. If they tell you to chase sales, ignore them. Because They'll be right in saying this is the only way to get huge. But you don't want to be in the position where you lose control of your own company.

13:10 Yeah. Caveat, they are very supportive. They don't say Chase they're in it for the long haul. So yeah, I don't want to get the wrong idea. Brands that have been on the show. Have had opportunities to go into Target or Walmart and have waited. Some For years, three, four, five years. That opportunity і will be there.

13:32 But you've got a at least you've got a premium brand. You're not going up against JIF and you know and the mass consumer brands. You're going up against the Justins. Rx Bar, for example, which is on the show. And if you can really focus on that premium promise, right? Which is what Sounds like what you're doing. That's really where your advantage comes in. Yeah.

13:56 And you don't have to rush. Yeah. When you've got a great product, yes, somebody can knock you off, but they're gonna knock you off anyways. But if you've got a great product and you build a a fan base because The thing about pe peanut butter is people reorder it.

14:08 You know? And if you build up a a really committed um customer base, just keep on doing that and you'll just see as long as it's going up and to the right, and as long as your cash account, your bank account is growing. You're way ahead of the game. Your stress level goes down, you know, because you're already dreaming about work every single night. All you do is think about peanut butter and everything related to peanut butter. And so when you do that, you wanted to do it without your heart pounding a thousand miles an hour. Yes. You want it you want to do it just thinking of great ideas and being innovative. And then you can take that time and go out and reach out to influencers and it brings you even more attention. And so You're on a great path. I agree. Lucy one quick question. I I'm your jars are opaque and peanut butter's often jars are often clear. Wouldn't that make sense to try a clear jar'cause you would see the oil at the top.

15:01 Yeah, it's one of the gambles we took when we designed it. Um, just with the manufacturing process, we had to make them opaque, and I thought people would really push back on it, and we actually haven't heard anything about it. So But what are you saying? It's an opportunity. What you might want to do is look at the cost. And just try it to see if there's a difference in sell through. Anything that differentiates you even a little bit to get attention on the shelf without costing you too much. And so I'm sure there's a difference in cost.

15:27 But it may be worth and guy I think guy kn hit the nail on the head, it may be worth Doing a see through version where it's just see through in the top. You know, a little peekaboo peanut butter. Could be cool. New tagline. Yeah. Could be cool. Uh Lucy Dana, the brand is called One Trick Pony. Congrats. Good luck. Keep us posting. Well done, Lucy.

15:47 Thanks. Yeah, I mean it's super cool, super innovative. totally different way of thinking about it.'Cause it's a you know, there's a lot of competition in peanut butter and nut butters for sure. And she's gotta find a way to stand out. But you know, the key is don't rush. Yeah. Just take your time and get it right.

16:02 Nobody ever gave awards out just for having a lot of sales. Right. And a lot of brands have gone out of business by going into Target and Walmart too quickly because they give you one shot. Yeah, so many companies have. You know, people just get all excited thinking, okay, this is validation. If I get into Target, if I get into Walmart, if I get into Whole Foods, that's validation that this is great. And they presume that being on their shelves is going to generate a ton of sell through. There's a ton of products that are long forgotten that used to be on that shelf before you and you have to always remember that.

16:36 All right, we're gonna take a quick break, but we'll be right back with another collar and another round of advice. Stay with us, I'm Guy Roz, and you're listening to the advice line right here on how I built this lab. Welcome back to the advice line on how I built this lab. I'm Guy Raz, and my guest today is the legendary Mark Cubin. Uh, Mark, you ready for our next call? I'm ready to go. Welcome to the advice line, you are on with Mark Cubin. Tell us your name, where you're calling from, and just a little bit about your business.

17:14 Hi Mark, hi guy, my name is Macy Schmidt. I am the CEO and co-founder of Girlish Skincare. We are based in Provo, Utah, and we are a youth safe skincare company for teens and tweens. Awesome, welcome to the show. So what does what does a youth safe skincare company mean? Yeah, so we have a three-step system of cleanser, moisturizer, and sunscreen. These three steps are all that dermatologists recommend teens and tweens have in their skincare routine. So very simple and all of our products are youth safe. So that means that we don't use hormone disruptors. anti-aging ingredients like retinols, no fragrances, just very clean and gentle products for developing skin. And so are teen and tween girls

17:56 using products like that you mentioned? Yes. So that is actually why I started this company is because when I was in my senior year of college, I heard about Sephora twins. And I don't know if you've heard that term. Yeah. But it was all over social media in the news of these 12 year olds, even as young as eight, going to Sephora and using retinals and all of these anti-aging ingredients that were harming their skin because their skin barrier's developing and they can't be using those really harsh products, but they were pink and they were on TikTok, so they wanted them. When did you guys launch? So we are still in our first year of business. We launched with our full product line. This last May, so still brand new. And how how have you how have you done so far in sales?

18:38 So it started out slow. It's picked up a lot the past few months as we started going to events around Utah and then um The end of the year hoping to end around twenty five thousand dollars. Great. And and before we bring Mark in, what's your question for us? So my question is about marketing. We have a unique marketing landscape where teens and tweens are our users, but our purchasers are mainly their parents or the adults. So we have been struggling with this question of where do we allocate our marketing dollars and do we put it towards trying to reach those teens or trying to reach the parents. All right, so Mark, the parents are making the are buying the thing, but but you really gotta reach the tweens because they're the customer. This is a cool idea, right? Skincare

19:22 for younger skin when these gala these girls are buying products that are really for Older people. Yeah, as a two girl dad, I can appreciate it all. And I've been in Sephora with my dog one of my daughters. And it was just not even her, she was nineteen or twenty, but everybody else walking in the store, it's eye opening. But you know, where are you selling it right now?

19:43 So we're just selling on our website direct to consumer and reaching people mainly through social media. Well you kinda answered the own qu your own question on who should you market to because kids typically aren't gonna have the credit cards. And they care more about the brand and what it looks like and how they're perceived than even the actual skin care. Right. They want to know they have Kylie's brand or whatever, right? And so they want the pink color like you mentioned. And it sounds like you're doing are you going to flea markets, or you going to events, or where you going to right now? Yeah, like expos, small small business markets, things like that. I think you want to go and set up

20:19 Wherever you can reach parents. And particularly if it's a place where they can bring their kids. Because your whole sales pitch is education. Yeah. And And your education is really a fear based education.

20:32 You're scaring the heck out of a parent for the most part, because kids are fearless at that age, right? They don't care. I mean, we all remember, you know, how we were. And while it may seem like slowness, you may be able to go to one flea market and set up over a couple of weeks and start, you know, get to where you're selling. five thousand a weekend, then ten thousand, then twenty five, and make sure you collect all emails and make sure you collect all credit cards and all that so that You can um We sell to them, but that's really where you have to go to and where you have to start. All right, so let's talk about a farmer's market, for example. Can you do two uh a version of the of two different things at the same time, right? On the one hand, parents want safety, right?

21:11 The parents are gonna be a attracted by the gentle. formulations and you know, what all those things you're talking about. The teens want like the get ready with me videos, right? They want like the pinks and the fun and the trendy stuff, and so Can you like Set up that kind of fun demo. But also

21:31 You know really target that safety message. uh in the same booth but sort of in a way where the teams don't really see it or care about it. Yeah, and that's what we've kind of been doing so far. So we've noticed that when we go to these markets we get Two different, you know, responses. Either the mom's like, Oh, my daughter's starting to see some pimples. I really want to get her into skincare. Or we see the young girls that think this is so cute and they're dragging their moms and saying, Mommy, mommy, I want this. So that's why we're kind of juggling with the

22:03 Do we reach out and get Those girls that are all over social media and try to go viral on social media and go that way. Or straight to the parents. No,'cause with twenty five thousand in sales.

22:15 for the year, you're still trying to figure things out and you're iterating all the time and learning, learning, learning as you go. And so you don't want to spend any more money than you have to to go through that learning process. Once you start getting some education about your customers and also about what their rebuys are, right? Do they buy again and how long before they buy again? And can you build up a um a database of email lists, you have to go through that process. And so don't get too far ahead of yourself. There's still so much you have to learn about your product, the response to it. The good news is there's the margins are huge. Right. You know, and you even have to understand the best way to price it. It may well be you're underpricing it because you think, you know, well, girls can't afford as much and you know, but moms can afford a little bit more, so we'll price it in the middle. Well, depending on the response you get from the parents, if they're so convinced that this is so important and it's, you know, an imperative for them to protect their their daughters and their skins, you may be underpricing it.

23:18 Yeah, but these are the things you need to learn. Yeah, yeah, I'm looking at your prices and they're I mean, eighteen bucks for a bottle is is a pretty great price, forty nine dollars for the whole package, which is three bot three bottles. Your your branding, by the way, is terrific. It's it it's a great colors, really simple, clean. Um but I I do have a question about paid marketing for a moment, Mark, because even with thirty grand in sales, right, is there a world where she could experiment with even five thousand or three thousand dollars or two thousand dollars in some

23:50 Where she is right now though, it's hard to do paid marketing. Even two thousand dollars is a lot of money right now. That's the issue. So when you're starting like that and you know there's one path, the flea markets or in person marketing where you do a great job, and it's you and probably the other people in your family, maybe a cousin, a sister helping you, right? And so your their time. Is basically free.

24:13 And so I would build up Until I got to the point where my cash was growing. I had repeat customers. They you know, I knew I had $15,$20,000 a month and 15,000 of that was margin. Then I could say, because I have this base of cash revenue, let me experiment with$5,000 and see what happens. The challenge in doing that. is there are so many skincare products out there that when you go on Meta or any of the platforms, you're competing to get the best slots with all of them, which means you're paying a premium. You may be better off advertising On next door.

24:53 then you are advertising on Facebook. I don't know. But that's but you want to build up those repetitive sales so you know Because The stress.

25:04 Is is real. Yeah. I mean, my first business, Micro Solutions, I remember thinking I got fifteen thousand dollars in the bank. Oh my God, I can eat. You know, I've got twenty five thousand in receivables. If I collect these, I'm good. I can pay my, you know. And so you want to do things that put cash in the bank where you can control your own destiny as much as possible and Going to the flea markets or wherever you can set up, then you can say, Okay, now we can replicate what we're doing and go to two of them at the same time. And then that turns into three, then that turns into four. And now all of a sudden, to Guy's point.

25:42 Alright, we're making twenty five thousand dollars a month in profits. Let's experiment with a bunch of different sites and see what happens. Awesome. That's great. Thank you so much. Thank you. Macy Schmidt, the brand's called Girli Your Skin Care. Good luck. Thanks for calling in. Thank you, Mark. Thank you, guy. We do a lot of cosmetics on the show. We we've had uh there's a brand called Drunk Elephant, as you may know. Huge brand and that's become it was not designed for teen and tweenage girls, but it's become huge because of TikTok. Yeah, you just never know sometimes. Something can fall in your lap and that's always a good thing. But again, you've got to

26:16 Always remember sales are important, but the cash that they get it generates is more important when you're just getting started like Macy and Lucy were. Stay with us because after the break, we'll talk to another founder working to take their business to the next level. I'm Guy Roz, and you're listening to the Advice Line. right here on how I built this lab. Welcome back to the advice line on how I built this lab. I'm Guy Raz, and today I'm taking your call with Mark Cubin, and let's bring in our next caller. Okay. Welcome to the advice line. You're on with Mark Cubin. Tell us your name where you're calling from and

27:03 Just a line or two about your business. Hi, I'm Dan Jansen from Raleigh, North Carolina. I run Imperium Shaving. And we handcraft luxury razors that pair with leading blades like Gillette. Dan, welcome to the show, Imperium Shaving. I just

27:17 W uh open up your website and wow, these are beautiful wooden razors. Tell me the stor. You are you're Carving these yourself? Yeah, well they're all turned on a lathe and um Started in twenty sixteen.

27:33 I was looking around my bathroom that I had recently remodeled and I said, Everything in here is plastic, everything in here is ugly. I've been a woodworker since I was, you know. Since I could breathe pretty much. And I said, I can make things in here. So I started, you know, made a cabinet. Uh made a bench.

27:49 And then I made a razor and Some friends saw it. People who used to be a little bit. My bathroom when they came to visit. And off to the races after that.

27:59 I love it. It looks like like my grandfather's razor, you know, just beautiful. And and do they fit with like Gillette razors or Harry's razors? Well, not Harry's. Not Harry's yet. Yeah. But but some of them. Okay, I got it. And and Gillette's still the best selling, so it makes sense. And so you started this in twenty sixteen, okay. And How is business going? Well, business was going great. So from twenty sixteen till twenty twenty.

28:26 The first year was slow, obviously bootstrapping. I was working another job. Then twenty seventeen quit my job. Twenty eighteen grew even more. Twenty nineteen hired some people. twenty twenty, I had six people working for me.

28:41 Yeah. Um and then the pandemic hit. And The business Pretty much stopped. Wha what were you doing in in like roughly in sales w when that happened?

28:51 Um, well, in twenty twenty we were set to make about half a million dollars. Wow. Okay, the pandemic hit and what happened. It just since then It hasn't recovered at all? Well, when the pandemic hit, just for instance, typical month in sales, fifty thousand, let's say.

29:09 When the pandemic hit, we had three hundred dollars in sales. So and we had a a shutdown order in our city. So all my employees went home. And got unemployment as they should. But I had to pivot immediately. I had no money.

29:23 I had to pay all my bills. So I started a mass company with some friends. We turn that into an N ninety five factory. And I ran that for two to three years. I think we're the only factory in Maryland. I was in Baltimore at the time.

29:37 Working about six, seven days a week. And then um People buying masks. Yeah. So then I had to decide do I go back To do Razors.

29:49 And I have no team. Which is sort of my question. Um Please go go ahead. Go go on your question. Yeah. Yeah. So so I scaled once. Uh the pandemic put the brakes on it. Now I'm in a new city. I'm all alone. I'm in solo founder mode.

30:04 What do I prioritize over the next six months? So that I can grow again. I love this. Uh Mark, these are I don't know if you can see these on on on the website. They're beautiful. uh wooden razors and uh yeah they're going for like eighty bucks all the way to a hundred and more. I mean these are really beautiful piece of art. Um so let's

30:22 Jump in. Questions, thoughts for Dan? What got you um your original sales up to fifty thousand dollars a month, Dan. Was it all word of mouth or how how were you acquiring your customers? I was doing everything. So I was going to craft shows, I was going to networking events. I was reaching out to people, cold calling people.

30:42 I was walking into stores. I got into um Uh Whole Foods. Three Whole Foods just by going into them and talking to them. And what city was that? Uh Baltimore. Baltimore. And what city you in now? Raleigh, North Carolina.

30:56 Okay. And I'm guessing you could probably do the exact same things, right? You started that process. I have. I have. So I've been networking. I go to a business networking group every Wednesday and I make contacts and I reach out. But it it's hard. You know, I built two businesses over the past ten years. I feel like I'm starting over And sales are strong. They're not thirty, forty, fifty thousand dollars a month strong, but they're strong. The problem is I'm one man now. So I sort of have to scale back.

31:26 Um put the brakes on it, no advertising. Oh please, yes. Raise your prices. A lot. Okay. Because you you do custom work. You're the artist that makes it happen.

31:40 You're doing the actual woodwork, I'm assuming still, and maybe not the lamination, but most almost all the the creation, right? I do everything one hundred percent. Everything, a hundred percent. You're not selling razors. You're selling Dan. You're selling your creativity. You got to change the name from Imperium Shaving. You can keep that up for your website. It's Dan Jansen Shaving. Dan Jansen Custom Razors. I love it. I love it. You are the the maker of beautiful things. Maybe even get a French accent, you know, or German accent.

32:10 We you know, but you get my point, right? You know, because you are an artist and that's what you're selling with any piece of artwork. The more expensive it is. The better the perception of it is, right? And that's what you have to sell. What is your typical high end highest end razor? What's your most expensive? The most expensive that we have is called the Tower. And it's something that I invented. It's basically a block of wood.

32:37 And then a matching a razor made out of the same block of wood. And it stands upright, sort of floats. And what do you sell it for? Five hundred. Okay, so you

32:46 So that's cool, right? So you're not super cheap, right, on your highest, but what's your typical one, your average sale? It's about ninety dollars. And what does it cost you to make? It depends. So we make them out of metal, wood, and stone. The stone ones, they cost me anywhere up to fifty dollars. The wooden ones I can make for about twenty five. Okay. You've got to do at least three hundred percent margins on everything.

33:09 Right. There way back when when I first got into the computer business, there was an advertisement and it was by this company called um called Epson. And this guy comes on and says Your printers are way too expensive. I can't believe you're trying to sell this printer for two thousand dollars when the Epsom printer is only forty nine dollars and the other guy comes on and says, All I gotta do is sell one. And that that's where you are. Yeah. Right. As long as your margins are high enough and you know your customer base. So hey, ask me about The Dan Jensen

33:46 Custom razor. Three thousand dollars. It starts at three thousand dollars. And we'll customize it specifically for whoever you want. It'll be the most beautiful razor they have ever seen. Guaranteed or your money back. If you would like a custom one for your husband, your daughter, your wife, your son, your grandfather, I will customize it in any way, shape, or form. As for a custom quote, do you guys do that now?

34:14 So it's funny. I was gonna put something up last week. I just haven't had the time with custom materials, customization and And use really exotic materials like fossil and meteorite things like that. It's not even about the materials. Mm-hmm. It's about your creativity. Yeah. That is the value here.

34:31 It's not the rocks, it's not anything else. It's what's in your head that you've learned over those 10 years, and that creativity you've always had as a woodworker. That's what you're selling. I love it. Okay. I I totally agree. Your story is your most valuable asset. And and I think you can really lean into that on your website. You show the lathe, I'd show more of that. You know you want to show the process, the wood, the tools. your hands, you know, um your story

34:58 Is is the product, right? You are you are making a one of a kind product. One other thought I had, we had um a couple of years ago we featured the brand Jack Black, which uh actually started in in Dallas, uh Mark, and Jeff and and Kern Danderan, they basically made a premium men's you know, shaving lotion pr products, but they the way they started it was at at golf clubs. They went to golf clubs to the locker rooms. And I you know, I wonder whether you may want to try doing something like that. Maybe a custom branded razor that they could sell at the gift shop at the golf club. For sure. That's where you're gonna find the kind of Men, right,'cause most of the people buying this are men.

35:36 Who uh have money who want to have this beautiful product in their bathroom. Um you you know. Uh hotel resorts as well, I would think would be an interesting place to be a little bit more. to to try and get these into their gift shops. With the

35:50 the logo or the the the name of the hotel on the on the handle, something like that. Because that those the people who are gonna Who are gonna buy this product. That's a great idea. Yeah. Yeah, and I'll add two things, Dan. One, there are There are companies and people who specialize in corporate gifts. Unique corporate gifts. So I I would focus on those. And then, you know, the morning TV shows, the good morning, Raleigh, and all that kind of stuff that are on the networks.

36:14 I would go to them and say, Hey, I wanna come on air. I wanna make one. I'll bring my lathe and we'll make one for one of you or each one of you, right? As long as you just let me promote this. Um As a Christmas present. That's a great idea. You should do that now. You I mean how many people are making this in Raleigh, North Carolina? I mean I think a lot of these local TV uh news proofs want to feature people, local people who are making stuff in their town. Oh yeah, that's I and we actually did that in Baltimore. I had the news come out two or three times to my factory. Yes. And uh you're right, I should do that now. Yeah, podcast too. Yeah. They're always looking for original guests that do something differently that helps them stand out. DM them and say, hey, check out my website. I'd love to come on and let's make a custom

37:02 Dan Jansen, remember your name, Dan Jansen Razor, right? It's not an Imperium shaving, it's Dan Jansen world famous Dan Jansen with now with the new French accent. But you get my point, right? Yes, and it all great advice, great ideas. I really appreciate it. And it's really inspiring to hear this. This kind of stuff. So thank you. Imperium shaving soon to be known as Dan Jansen Razors. Uh Dan for calling in, man. Good luck. Thank you. Well done. These are really Beautiful. Wow, they're so nice.

37:33 I don't know, you strike me as a ki as the kind of guy that uh Might have a fancy shaving kit, I don't know. No, no, no I don't use plastic, the little plastic ones, but I did one time got a laminated fancy razor and boy this a few years ago, so it required its own blades. It was the razor and razor blade stuff. And I was so annoyed by that, but I'm gonna check out the Dan Jansen razors now. Okay, next up after the break, another caller with another business challenge. I'm Guy Roz, and we're answering your business questions right here on the advice line on how I built this lab. Um

38:21 Hey, welcome back to the advice line on how I built this lab. I'm Guy Raz, and today I'm here with serial entrepreneur, the one and only Mark Cuban. So let's bring in our final caller. Hello, welcome to the advice line. Uh please tell us your name, where you're calling from, and just a little bit about your business. Hi Guy, hi Mark. I am so excited to be here. Thanks for having me. My name is Kristen Roode and I'm based in Grand Rapids, Michigan. And I'm the founder and CEO of Northern Classics. We sell winter outerwear for kids.

38:52 So we sell winter coats, snow pants, hats, mittens, and all the accessories to get kids outside in the winter. We have blended the Technic of your typical high end ski wear. with a little bit more timeless and elevated aesthetic. Awesome. Welcome to the show, Kristen. So tell me about the origin story of the of the brand.

39:12 How did it how did it start? Yeah, so I ended up having I had four kids in three and a half years. It was right before and at the start of Covid. And I learned firsthand how important it was to get outside for both my own sanity and for my kids' sanity. And

39:29 So as winter came around, I went to get snow gear for them and I really saw um a white space. I saw there's two categories of what was on the market. It was either super technical. Kept them warm and dry, but it was either just a black snow suit or very rugged aesthetic. Or on the other bucket you had these beautiful pieces, but they didn't actually work and wouldn't actually keep kids warm. So that's kind of when the idea sparked and um I brought the two together.

39:57 I love it'cause'cause winter in Grand Rapids is like summer in Las Vegas. Right. Winter I always say uh if you're not a winter person, don't visit Michigan in December or January. Um and now where are you selling most of your products? Through your website, is it uh in sh in stores? So we do about 70% direct on our website, and then we also sell through Masonette, Bloomingdales, Nordstrom. Um, Janie and Jack, and then we're in a handful of kind of ski shops and outdoor stores across the state. Are you in their retail stores or just online for them? Those are all their marketplaces. The retail stores are much smaller, more mom and pop shops. Type story then.

40:34 Ski shops. And what do you expect to do in sales this year, twenty twenty five? We are on track to do just under a million. Nice. And before we dive in further, what's your question for us? So my question, um, as I've kind of mentioned, we're very, very seasonal. We do about 90% of our sales.

40:50 in four and a half months, really between September and January. And then once you know, we get to late winter, parents really aren't in the market to buy new gear for their kids. So sales just kind of drop off. And um

41:04 You know, we've started to build a a it's small but a a good following and highly engaged customers. So we're at this cruise of when is the right time to add additional spring and summer pieces? And do we kind of expand so we get year round revenue and also stay top of mind for our customers. Or do we just double down and stay solely focused on winter and really become the best kids ski wear brand on the market? All right, this is a seasonal business, winter business. The question is, do they add more products? Do they add summer products? Do they double down and focus on winter gear go into adult? Mark, what do you think?

41:40 Are you profitable, Kristen? We are not yet profitable. Um, during our core winter months, we are. And then, you know, I have um two full time employees. I do not pull a salary myself, but I do have two Salaries that are year round and um

41:55 Well, you kinda answered your own question there, right? Yeah. Because if you're not profitable You either have got to bar borrow money Or go out there and raise money or put more of your own money in. And that's all risk capital, right? Because even though you feel confident on your brand, you build a good following and you know, they all tell you if you do stuff in the spring, I love your designs, I'll buy more, I love what you do, and all that kind of stuff. You still don't make enough money to cover the off months. And that's where you've got to focus. And right now, because of all the uncertainty with tariffs and other charges that are happening.

42:30 You know, you've got to work on your supply chain first. Because I'm guessing the increase in tariffs is is pretty much what you lose right now, right? Um It's been an interesting year. For sure. Yeah, because those tariffs losing that money You didn't plan it and you didn't know and it's all uncertainty and you know Now's the time to try to see if you can use those summer months.

42:53 to evolve your supply chain and create alternatives. Because We don't know what direction those tariffs are going. Right. Focus on that supply chain. Focus on trying to optimize wherever you can. Are you buying primarily through China or where?

43:07 Yes, we are all in China right now. All in China, right? So they're getting killed and it gets worse all the time. And you're paying How much are you paying in tariffs? What percentage? We pay it's We almost double our product costs and tariffs.

43:21 We have our cost and then we double it. Wow. So if it cost fifty you sold for a hundred. Now if it cost fifty it it um you cost you a hundred because of the tariffs and you couldn't just double to two hundred in your price, right? So you had to go to one fifty or whatever, just to make sure that you didn't piss off all your customers. And so what I would tell you is start looking for supply chain alternatives. So first step is Look, I need better prices. See, even though you've g built that trust because you've been working with your manufacturer, and I know you've already said that, but you gotta be a jerk sometimes and say, I need better prices again, then just see what they say. Cause even if you pick up an extra five percent.

44:00 Five percent of a million dollars, that pays for one of those salaries almost. Right. Yeah. And so then looking at the alternatives, and it's hard to determine whether or not you're going to use a broker, you know, a third party importer. We use a third party broker to import everything. Um to help with that process. Um, I was fortunate I found a local designer who kind of helped me understand the whole manufacturing and apparel manufacturing business specifically, and she connected us with our factory.

44:29 Which was Okay, great. Which was a possible. So but now though, you really don't so What happens in all clothing manufacturing businesses that are that are sourcing overseas. You find one that you're confident in. But it's not necessarily the best price or even the best manufacturer. Yeah. And so this is where you get to educate yourself on all the little details. Use this time in the summer to teach yourself as much as you possibly can. And I would recommend you start playing with different AI models. Like Chat GPT and Gemini and

45:02 The hardest part about using them is Not feeling weird asking it questions. So going to like Gemini and saying, Okay, here's how I manufacture our products, here's our products, here's our margins, here's the factory that I'm using, here's what they charge us. Give me some options and some alternatives. And then you go, if you went to Gemini, then you go to Chat GPT and do the same thing. Then you go to Perplexity and do the same thing, and then you compare the output. Because once you can get a better feel for

45:30 different manufacturers and how they work and all the nuanced elements of it, you can start exploring different alternatives. Does that make sense? That does make sense. I um You know, I feel like I look at our gross profit and it's a Decently healthy. Gross profit.

45:45 But There's always sharpening to happen and I I appreciate the fact that in those off months we kind of have the gift of time. Kristen, what are you I'm looking at your products and they're I mean, they're really timeless designs, especially when you're talking about little kids, you that's an advantage. What what are your best sellers right now? So pinks always sell very well for girls. So we have m multiple different pinks on on our site that's jackets, sweaters, pants, what what are jackets. The jackets. The winter coats are the best sellers. Yep.

46:15 Mark, my question for for you, uh obviously for Kristen is If operational efficiency is should be our focus right now, is there an argument to be made That you kind of double down and you buy more of what's working and you maybe scale Down what's not.

46:30 Selling as well. Kristen, is your materials your all your biggest cost or is it the manufacturing and shipping? Um So we actually we're small enough right now. We the way we're set up, we really have our factory source most of the materials. We have a trim supplier and you know, we want to own the branded pieces. But right now they're a little bit lumped together.

46:52 You know, how much cash do you have in the bank? We have um Almost two hundred thousand right now. But Good for you. But I mean keep in mind it's December and it's been a good couple of months for the time. So this is all the money coming in before. Ask me in June, it will be a different story. Right, of course. But that's good. Don't yeah, save that money so you can pay all those stuff. Um but To guy's point, this is where you put your pencil to paper, get the spreadsheets out.

47:16 And start looking at If your manufacturer is buying for you Ask them. You know, what if we bought our own materials? Because I guarantee you there's markup at they're they're adding markups to every step of the Yeah, that's a great idea.

47:29 Going back to them and said look We we need to get our costs down. And so You know, I might have to start buying our own materials and shipping them to you. And ask them like look.

47:40 I need to cut 25% some way, some shape, some form, somehow. Just see what they say. Yeah. But in parallel to that, you need to start controlling your own destiny. And as boring as it can be figuring all this stuff out. You've got to get to that'cause that's what's gonna take you to the next level.'Cause One of the challenges companies have as they try to grow and really scale is who are they dependent on? Where are your dependencies? And right now all your dependencies are external.

48:07 A a quick thought for you. I mean, I totally agree. You want to focus on the stuff now with the the w the so called boring stuff, but I think looking down the the road as you think about Creating Yeah. It might be worth thinking about like adjacent products like base layers or um you know or Bo snow boots or something. And and then maybe

48:27 From there. looking at like shoulder seasons, like lightweight. Jackets or rain jackets or windbreakers, you know, down the road. I know that you're not quite there yet, but you probably start to think about that. Obviously you're thinking about Where do you go next? And I would sort of think about adjacencies first, like the seasonal adjacencies or what works in winter, and then move to

48:48 early spring and then see how it goes from there. Yep. That makes sense. Awesome. Well, uh congrats on the business and congrats on on what you build Northern Classics. Kristen Roode, thanks for calling in. Thank you for having me on. Great chatting with you both. Thanks, Christian. Congrats.

49:03 It's so true, and we've had um businesses on the show, you know, major brands that have talked about The the secret to their success is operational efficiency, you know, or inventory management, you know. Um, Zoomies, which is a surf and skateware brand, you know, in in shopping malls. They've been a pretty successful brand, even in a in a challenging market because they're so obsessed with inventory control. Yeah, one of my company's um beatbox beverages that just got sold to Anheiser Busch, a shark tank company, and that was their real

49:35 great marketers, but they got their cost of goods down while improving the quality of their product. Because that's That's places where you can pick up margin dollars and cash that you have under your own control. And now with so much technology going in that direction, you know, just staying on top of Guardian bikes move their um manufacturing 85% of it now to to Indiana, the state of Indiana, because now with automation and AI, um and robotics. You can push your costs down. It took them time to build up enough cash to be able to afford to do it, but once they got there, That just lit the fuse for them to cut their cost and increase their sales.

50:17 Yeah, great brand, by the way. When my kid one of my kids was little, I had it we had a Guardian bike. Terrific, terrific. Uh Mark, before I let you go Uh question for you. If you go back to when you were like bartending, you know, and and and when you came out of uh I think you you were at Indiana University, right? You.

50:35 Goos. Yeah. And um and just starting out in Dallas. If you could Go back to that person now and give them some advice. I would tell them don't screw it up. You know? Um But

50:48 I think now I always looked at all the technological tools that were available to me at any point in time. And there's never been anything as dramatic as what we're seeing with AI right now. And so I would I would reinforce it to anybody today, you know, use every technological tool available to you. And right now and I'm kind of zigging a little bit.

51:11 Everybody has access to every Library in the world. with AI to every professor. Where I used to go and sit in bookstores because I couldn't afford the books and I would read, you know, the workbooks on how to write a business plan, you know, here's your guide to accounting, how to sell books, right? All those things you have in your phone by going to Chat GPT Gemini, et cetera. And so be curious, because I think that was my greatest skill back then. I love to learn then and now, but now curiosity can be satisfied right out of your phone. With AI.

51:45 And I think that is the big differentiator, and it's such a democratizer for entrepreneurs. For sure. For sure, no question about it. It's absolutely amazing. That's serial entrepreneur and investor Mark Cuban. Uh Mark, thanks so much for coming back on the show. Oh, this was a blast, guys. Thanks for having me on. Thanks so much for listening to the show this week. And by the way, please make sure to check out my newsletter. You can sign up for it for free at guyroz.com or on Substack.

52:10 And of course, if you are working on a business and you'd like to be on this show, send us a one-minute message that tells us a little bit about your business and the questions or issues that you're currently facing, because we would love to try and help you solve them. You can send us a voice memo at hibt at id.wondery.com, or call us at one. 1-800-433-1298. Leave a message there and make sure to tell us how to reach you, and we'll put all of this information in the podcast description as well. This episode was produced by Casey Herman with music composed by Ramtina of Louie. It was edited by John Isabella with engineering from Jimmy Keeley and Robert Rodriguez. Our production team also includes Andrea Bruce, Alex Chung, Chris Massini, Elaine Coates, Catherine Cypher, Carrie Thompson, Neva Grant, Nor Gill, Ramel Wood, and Sam Paulson. I'm Guy Raz and you've been listening to the Advice Line. on how I built this lab.

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