How To Create the Right Business Partnership

Intro (00:09):
Welcome to innovations and breakthroughs with your host, Rich Goldstein, talking about the evolutionary, the revolutionary, the inspiration and the perspiration and those aha that change everything. And now here’s your host, Rich Goldstein.

Rich (00:33):
Rich Goldstein, host of the innovations and breakthroughs podcast, where I featured top leaders in the path they took to create change. Past guests include joke, Polish roll in Fraser and Kevin nations. This episode is brought to you by my company, Goldstein patent law, where we help you to protect your ideas and products. We’ve advised and obtained patents for thousands of companies over the past 27 years. So if you’re a company that has software product or design, you want protected go to Goldstein patent law.com, where there are amazing free resources for learning about the patent process. And you could email my team@welcomeatgoldsteinpc.com to explore if it’s a match to work together. You could also check out the book I wrote for the American bar association that explains in plain English, how patents work it’s called the ABA consumer guide to obtaining a patent. I have with me here today.

Rich (01:18):
Kris dinner, Kris is the CEO of Doug out mugs. Uh, he helped to grow a simple concept of a beer mug formed from a baseball bat into a worldwide phenomena. The Muggs have been featured in major publications, such as Forbes in the wall street journal and more, and on more than 27 TV news segments. They they’ve also made custom mugs for brands like Budweiser, Molson, cores, Coke, draft Kings, lo Depot, Sony, the national baseball home of fame museum, and many, many more their products are sold in all 30 major league baseball stadiums in 50 states. And in seven countries, they’ve also raised more than $50,000 through their charity cheers to charity. So it’s my pleasure to welcome here today. My friend, Kris Dehnert. Welcome Kris.

Kris (02:03):
Thanks going on. Thanks for having me.

Rich (02:05):
Yeah, absolutely. And so this, this is really interesting because, um, you didn’t come up with the concept for dugout mugs, but you were, um, well positioned to help them grow because you’ve been a guy who’s worked with idea people for a long time. So tell me a bit about that and that history that you have.

Kris (02:23):
Yeah. So I’m a, I’m, I’m a huge fan of just knowing what your core competency is like, knowing what you’re good at. And then even more importantly, knowing what you’re not good at and spending, uh, more time doing the former, right. And for me, it’s, it’s marketing it’s strategy, it’s sales, uh, connect connection, right? A networking is a, a certainly a strength of mine. What I like to do is help people do what they’re doing better than they’re doing it. And when I met Randall, he had a really cool idea. He was a really cool person, which is a, a huge plus, um, for me, and this was five years ago now. Uh, but he was a great guy with a great idea. He’s ready to go all in gritty. Like I am. And I was like, okay, well, this guy’s, you know, tough like me.

Kris (03:09):
Maybe we’ll give this a run. And I told him, I said, you go all in with me, we’ll go all in together and we’ll take this thing to the top and, uh, yeah, fast forward. And we’re certainly well on our, um, but yeah, it was really more about me seeing, seeing some opportunity, seeing the vision a little more clearly than even he could. And, and then we partnered up, we created a, a unique structure to that deal and, uh, that way neither one of us were really at risk and, uh, you know, Hey, the rest is history in the making.

Rich (03:42):
Right. Cool. And so just for context, so like what type of sales was he doing five years ago when you got involved?

Kris (03:48):
Before I got involved, I think there were $70,000 in sales, total for the company. Um,

Rich (03:55):
And, and, uh, and at this point,

Kris (03:57):
Yeah, we’re over 30 million or right. 30 million, I think. But, uh, the first year it was just him. Right. And, and then we linked up in 2017 and the very first year we worked together, we went to 1.2 in the very first year. So we came out of the gates on fire. We, you know, broke every system that he had in place. Cuz as a solopreneur, I mean, you don’t know what you don’t know and that’s most things, honestly, cuz most people only have a one or two real strengths, but when you’re trying to do everything that incorporates all your weaknesses as well. So as soon as I got involved, I realized what his strengths and weaknesses were. Um, I already knew what mine were certainly. And, and then we started filling in the gaps. It’s like, Hey, I’m not good. This and neither are you. So let’s find a person that fits this whole. Right. And then we just started strategically building and the product, we just kept that at the forefront and quality at the forefront. And uh, yeah, it’s been, it’s been cool.

Rich (04:52):
Well, that’s amazing. So it just, it really underscores the value. Um, the value add when you, when you put two of the right people together or you create a team, um, that so much more can be accomplished. Yeah.

Kris (05:03):
You gotta have the right butts in the right seats, you know, and, and there’s a, there’s always a transitional period when you’re starting something up where, um, you know, it’s like chicken and egg. Like we can’t afford an employee, uh, because we’re not making enough money, but we can’t make enough money until we outsource this crap I’m doing and we need an employee to do that. So the there’s gonna be those times that, you know, at life I say there wasn’t, but constantly focusing on building to where you’re going versus building to where you are, uh, is, is really a big thing for me, you know, constantly be putting the things in place that you can grow into. Could otherwise you’re constantly stalling out.

Rich (05:44):
Yeah. I mean, there’s a great analogy, which is kind of a bit of a bit funny here it’s um, for business in terms of like, um, creating a bigger cup or filling your cup. So a lot of times like, you know, you need to create a bigger cup, um, to then, uh, you know, have additional capacity and, and have those employees and that team in place to be able to then kind of sell your way into that capacity or that revenue. Right. Um, but it was interesting, um, in, in terms of, of, of kind of creating that partnership, um, that you did with, with Randall, um, you created, you found, first of all, you found the, the right combination of strength, strengths, and weaknesses that worked, but you also helped create a, a certain type of, um, relationship or agreement that was, that fit well with where he was and allowed you to show kind of what you can do. So tell me about like how you created that partnership, how you created that, that, um, you know, created the right partnership and then the right type of agreement.

Kris (06:53):
Well, uh, those are two different things. I think the, the right partnership in the right relationships and, and just in general in life, I mean, whether it’s business or personal, I mean relationships, right. I think the more clear you are on who you are and what drives you and who you’re not and what you stand for and what you won’t stand for becoming really in tune with yourself, allows you to, to have the right type of people gravitate towards you. Right. So for me, I have a, a certain set of rules. Do I like the person? Do I like the deal? Is it scalable? Does it take away from my time with my family? Is it experiential? Right? Like I have my own set of metrics and money’s in there, but it’s not at the top hell. It’s not, probably not even the top five.

Kris (07:41):
And because if you, if it meets all these other markers, money shows up, I believe. And so to find the right partner, I think the first step is really understanding as deeply as you can, who you are and what you need. And, um, then the, the second part of it, it is, you know, I like to say sometimes that creating a win-win situation doesn’t have to use the same currency and what I mean by that is like what he needed and what I needed were different things. So putting a deal together that allowed him to, you know, I owned 40% of the company, I got it with no money down and that’s not a deal that somebody’s typically gonna take you slide in and say, Hey, I’m pretty good at what I do. How about you gimme half of your and I’ll make it pop.

Kris (08:31):
You know, doesn’t really go too far that conversation, but he needed to feel safe and protected on allowing equity from his baby to, to go somewhere. And I needed him to trust in my abilities. I needed control of a lot of things, right. So I, we kind of looked at what each one of us needed and we put together something that was performance based with a, uh, a, um, a finite amount of time. So within six months we’re gonna, you know, 10 X the company, and for every hundred thousand dollars in sales, we achieve it equates to 8% equity earn out. So by the time we get to where we got, it’s worth 10 times more than it was in the beginning and you gave up 40%. So it’s a, you created a win-win situation that was performance based. Everybody put their money where their mouth is and yeah. And it, it, it just worked out really, really well.

Rich (09:32):
Yeah. No, that, that’s awesome. So, um, it it’s like you were able to come in there and make a difference and then kind of earn your piece out of the difference that you made.

Kris (09:43):
Yeah. I knew what I could do. I, I just, I knew what I could do and, um, I did it right. Like it’s not, it’s not my first time. Right. And I all, I knew all the right people to call in my network and I knew a lot of these things. So when I, I evaluated the deal, um, I felt confident putting, putting that kind of statement behind it because I knew what was possible. And at that point, I mean, how, on the other side, how do you say no to that and making deals in general and finding partners in general, it’s like, um, you really need to under stand where the other person is coming from. Yeah. That’s probably one of the most crucial things. And, and then you work, you kind of reverse engineer it from there.

Rich (10:26):
Yeah, absolutely. And then just in terms of that from the other side, say from Randall side, so he, um, so what was important for him was to create an opportunity for you. Like he had to have his, his opportunity presented and aligned and clear in a way that you can see, well, this is worth my time to get involved. Um, and have it be on the basis of what I could do and how, how, um, how well I perform. So it’s like the two sides of it is like at, as an innovator, as a person with ideas, it’s so important for you to create that value so that the strategic partner can see like, yeah, this is a good opportunity for me. And just going to the, the other thing you said in terms of knowing what’s important to you and knowing yourself and your values.

Rich (11:14):
So, um, it’s extremely I, and for them too, to be clear about their values. So be clear about the person that they’re getting to partner with that is aligned with them in, in what their focus is. If they’re strictly about making money, then they might not be as well aligned with someone who wants to, um, does like money, but wants to make a difference and, and likes to contribute to the world too, and likes to have perhaps a charitable aspect to what they do. Uh, so it’s like, you have to kind be clear, well, it comes

Kris (11:48):
Down to asking better

Rich (11:49):
Questions,

Kris (11:49):
Partner. It comes down to asking better questions. Yeah. At the beginning, ask better questions and then shut up and listen, that’s that latter part, people tend to forget ask the right questions and then really give it the attention that answer deserves. And you’ll find out a lot about that person. Right. And, and I think as you get older realize, and, and more mature in business in particular, you’ll realize, you know, that your nos are more important than your yeses, you know, and if you ask the right questions, you can quickly identify what deal and opportunity and potential partners a no.

Rich (12:29):
Yeah, absolutely. I mean, without, without the nos, then there’s no real. Yes.

Kris (12:34):
Yeah. And there’s sometimes there’s no room for the, yes. The real one, because you’re constantly chasing rabbit holes, you know, just, you’re so busy being busy that you are not paying attention when the right kind of opportunity comes by.

Rich (12:50):
Yep. Absolutely. Let’s talk about IP. So what role has, has IP played in your us strategy for growing dugout mugs?

Kris (12:58):
Uh, honestly it’s more of a deterrent than anything, um, because, uh, patent law, if you know how to manipulate it, uh, which some do some don’t most don’t, but if you know how to manipulate it, most patents and, you know, are, are able to be circumvented. Uh, so for us, it’s really been more, just a deterrent. Um, our, our real, you know, a little bit of a marketing play on it, you know, leveraging, uh, you know, the original dugout mug and yada yada. But yeah,

Rich (13:31):
So the branding too, like you’ve been building all. Yeah. It’s

Kris (13:33):
It, it contributes to branding for sure. One of our new products, we actually have a utility patent on the lid. Um, and we, we own a few trademarks, um, because I mean, dugout mug is synonymous with bat mug. I mean, we are literally the best in the entire world at what we do. So now when people see the brand, it is, which is trademarked, right. They see the brand and they’re that’s quality product right there. I saw that on the governor’s desk, I’ve seen that, you know what I mean? And yep. Yep. It’s just, it’s a synonymous with quality, which is what we’ve aimed to do. Um, but, but the, the, the patents design patents, you know, how, you know, fragile, those things can be. So really for us, it was, uh, a deterrent which gave us enough of a head start and, and enough of a shield to just blow past everybody. And we’ve, you know, we’ve sued a handful of people and easily won. Um, I think that what’s interesting now is trade dress, you know, the amount of products that we have in the market, the amount, amount of customers, the amount of distribution, we’re really getting to a point now where, where we can enforce trade dress too. And that’s, that’s powerful.

Rich (14:48):
Yep. Absolutely. And, and so, and that’s, you know, trade dress is closely related to trademarks. And I think that’s the, the, that’s the point though, is that your focus or your strategy has been like, yeah, we’ll put a little bit of attention on patents, but really it’s about building our brand building kind of the way that we’re recognized, uh, and the type of things that would confuse consumers and the thinking they’re dealing with us. And that’s all what, um, so your, your strategy has really been focused more towards trademarks, essentially.

Kris (15:18):
Yeah. And, and branding and branding as a whole. I mean, we spent the first five years of this business. I mean, we have 30,005 star reviews online. That’s nuts. I mean, some of the biggest companies out there don’t have that. We focused hard on building the brand, building the community, building the culture, building, you know, our name in the, in the baseball space and beyond. And, and now that we’ve done that, we’re starting to hand it off to other major players in their vertical fanatics, Dick sporting goods, um, pro image, sports, things like that. And we’re letting other people run with our run with our baby. Now, at first it was, it could be fragile. Someone could try to slide in and cause issues. Well, now we spent the first five years building a brand that really is people can dentist us, but they can’t break us. Now you, I mean, so we’re gonna focus on mass scale. Our whole, our whole premise, the entire time is focus on winning versus focus on not losing. Got it. You know, and we’re just gonna keep winning and focusing on, there’s plenty to focus on. If we want to go chase down the little guy who’s trying to rip us off, they’re not gonna make it anyway. Right.

Rich (16:29):
Yeah, absolutely. Cause the branding that you created P people want to deal with the real thing they want to deal with.

Kris (16:36):
We’re the real deal.

Rich (16:36):
Yeah, exactly.

Kris (16:37):
They always find their way home.

Rich (16:39):
Yeah. And so, um, and so now you, your focus is on taking what you’ve built there in terms of the brand, in terms of the reputation and, um, seeking new channels of distribu, where again, it’s strategic partnerships, it’s people that can, can, um, can, um, grow the brand, handle the marketing and sales of it. And you focus on continuing to manufacture the quality product.

Kris (17:07):
Right. We’ve figured out that, I mean, our, my core competency has always been sales and, and, and grow oath and strategy and things like that. But I’m shifting my mind a little bit more into the valuation side of the business, um, potential exit. So Randall and I, we’re always building, we’ve built this to sell it right. Is really what it comes down to. And we’ll make the decision if we want to, or not, you know, supposing the right partner or acquisition partner comes along. But I’m shifting my mind over into that side. I’m, I’m focusing on some bigger deals, um, big collaborative stuff. I’m working with a lot of the MLB players and things. I’m not as much into the e-com side and that, and that whole side of the business e-commerce has seen some significant blows as of late with, you know, all the changes on Facebook and, and stuff like that, where everybody’s spending their pay to play dollars.

Kris (17:59):
Um, so we are, we’re gonna let the, the fanatics and the and the bed bath and beyonds and the, you know, touch of moderns and zoo lilies and QVCs, and people like that that have established networks and even, uh, strategic partners that have large lists in the sports space. Uh, we found a lot of success in the wedding industry. The gifting industry, fifth anniversary is wood. Uh, everyone’s looking for a cool groomsman gift. So there’s a lot of these pockets of people that have, you know, not huge lists, but maybe 50,000, a hundred thousand of buyers and, and things have dried up for them, whether it be, uh, supply chain or, or paid traffic or whatever that looks like. So it’s kind of dying on the vine. So we’re actually being able to throw those folks a lifeline right now, because we have hundred of thousands of mugs in stock in Florida. Right. Cuz we’re a print on demand. It’s not shipped in from, you know, who the hell knows where we got it, ready to go. So if these people wanna do some quick, um, promotional stuff, the collaborations have really been cool. We we’ve been able to work with a handful of different companies to put this product into the market, into new markets.

Rich (19:11):
Oh, that’s, that’s great. And so, and so you, you, um, you are open to, and you’re looking for affiliate deals too.

Kris (19:18):
Yeah. I’d entertain that if, if it’s the right, if it’s the right demographic, um, you know, there’s, there’s some room in our products where everybody could usually walk away pretty happy. Yeah.

Rich (19:29):
Yeah. It’s a fantastic product. And the, and I, I mean,

Kris (19:33):
It really

Rich (19:33):
Is way happy, 30,005 star reviews. I mean, it’s, that’s unheard of.

Kris (19:39):
Right.

Rich (19:39):
So it just shows how satisfied people are with it. It’s a, it’s a great concept. It’s a great product. Um, and you’ve done a fantastic job growing this company.

Kris (19:48):
Thank you. Yeah. We’re giving it out. We’re doing our best.

Rich (19:51):
Yeah, absolutely. Um, any advice for people with ideas? Cause I know you’ve, you’ve done a good amount of consulting for, um, for people that are looking to take an idea and grow it into something bigger. Uh, so any particular advice you would have for people in that situation?

Kris (20:10):
Yeah. So my, my bad background from the consulting side of things with my company, dinner media, it’s, it’s been more about strategy, um, which path to take, uh, marketing outside the box marketing, especially gamification, you know, all the sales ends of it typically. And, and a lot of time it is very unique products that, that do that because they’re they’re disruptors. And what I would say is that there’s no saying don’t fall in love with potential. Right. Which sounds counterintuitive what I was just saying, but, but sometimes people will just smother an idea and let it just consume them versus get it. You don’t have to get it right. Get into the market, get some feedback, make adjustments, go back. What do you guys think? Ask questions, poll, get, get data groups. And you know, you gotta make sure that what you’re offering is think people actually need and want.

Kris (21:08):
It might have solved a single problem for you in a quirky situation. But that doesn’t mean it’s applicable to the entire world, you know? And, and what is, and what is scale and success. And I think, again, let’s go all the way back to knowing yourself more. What is, what does success look like? Is it I’m gonna bring in $70,000 a year and work from home and spend all my time with my kids and I can do this at night and on the weekends a little bit. And it, and it provides that if that’s success, well, then that’s a different path then making an international brand for exit or, or going public. Right? Like there, there’s very different paths to things. And I think, um, the, the easiest way I’ve ever explained it to somebody is that don’t judge your success by somebody else’s ruler, meaning know what it looks like, feels like, sounds like, tastes like to you and then build that.

Kris (22:07):
And, and sometimes it is gaining partners, gaining, you gotta get capital, you gotta raise some things and that’s okay. Right. But sometimes it’s somebody who’s just tired of the rat race. They wanna make a hundred grand a year and they wanna do it from home. So they don’t miss Billy growing up. I mean, that could be success to somebody. And, and I think your product cuz some products aren’t, but they’re really cool in niche markets. And maybe you can go to a trade show or two every month and sell enough to achieve that. Do you know what I mean? Like that’s a completely different market and market strategy and you don’t have to go national international, um, to, to achieve that. So, uh, I think understanding what you want the outcome to be will certainly determine the path in which to get there. Uh, that’s number one.

Kris (23:01):
Um, now the idea, I, I, the idea in and of itself ask back to the same, ask the right questions, get, understand your target demographic. Most people would look at my product and like, oh, that’s cool for a bunch of guys who drink beer. Well, our average customer’s like a lady in her mid forties. Right. We know that because we looked at data. So understanding. So now our products, when we market ’em we use middle aged women in a lot of our advertising, right. If it’s a shot glass made out of a baseball bat handle, we do younger guys at a tailgate in our marketing. Right. So it’s, it’s also really understanding your demographic and, and is it possible to serve that demographic? Um, and are they gonna be interested in what you want, what you actually have? So, I mean, there’s a few, few thoughts there. Of course.

Rich (23:54):
Yeah. So it’s, um, I mean, it sounds like it, it’s a, a mix of validating your idea, validating your hus of what you think people might want by actually going out there and, and getting some real data about what they want and who is the customer that wants it. And also it’s just further emphasis on understanding yourself and what you are looking for, um, personally, and then visualizing a path, um, where this idea or pursuing this venture might fit into what you actually want. And

Kris (24:27):
That’s what I’m, we’re, we’re all in a different path and here’s the reality. None of us are getting outta here live, and you really need to know what you’re doing, why you’re doing it, and then the business or a product or even money. It’s all just a means to an end. You know, it’s it, the fulfillment is really big in there. You know, not a lot of people put fulfillment on that checklist, but I think the, the more in tune you get with yourself, you realize that this is just a means to an end. It’s a sickness, sometimes entrepreneurship, where people just gotta get more and gotta do more and gotta do more. Well, you, you know what I mean? You gotta know where you’re going. Uh, and I think it’ll help you really put a, a clear attainable path together. Um, hell, you might want to go to like level 10, but your products only get you to level three.

Kris (25:19):
Well guess what friend you ain’t got the right product. Right. If it’s, again, it’s just, it’s really, really trying to, to lay that out. Um, and then, uh, the, to the first part, what you were talking about is, is go get validation. Well, there there’s something that a lot of people need to remember, especially with products. And this is this conversation I had with Randall at the very beginning. It doesn’t matter what you think. You’re not the buyer. You’re, you’re, you’re already partial to the product you’re and if you’re smart and a good salesman, you’ll sell yourself on all kinds of stupid ideas. So it really doesn’t matter what you think it matters, what you know, and the only thing you can know are facts. And only way you can get facts is by asking the right questions. Does that make sense?

Rich (26:05):
Absolutely.

Kris (26:06):
And that is at, is part of really figuring and, and don’t be afraid to take the, uh, Kevin O’Leary take the, take the dog out back and shoot it. It’s okay. Uh, but you won’t get to that realization until you start getting real facts and, and remember that it’s not what you think it’s what you know, and what, you know, comes from data.

Rich (26:25):
Yeah. And, and by the way, on that notion, I think, um, when you talk about it, it’s okay to take the dog out in the back and shoot a terrible metaphor. But I get the concept is that, um,

Kris (26:36):
I’m a dog guy. So I agree with you, but you, you get the, you get the idea.

Rich (26:40):
Yes. But, but, but the, really the, the idea or the issue that comes up there for people is they have an idea. They fall in love with their idea. And then they believe that if I lost this idea, if I had to take it out in the back and shoot it, there wouldn’t be another idea that comes along. So I need to hold onto this because there’s like a scarcity around idea as a belief that I’ll never have another good idea. Whereas sometimes yeah, if you let it go, that creates room for the new thing to come on in and oh,

Kris (27:09):
For sure. Yeah. Yeah. When you, sometimes you’re holding it so tight, your eyes are closed and you can’t see all the other things that are coming by. There might be a slight iteration of this, that, that would’ve made it the perfect idea, but people are, um, they’re convinced. Right. And they’ve fall in love. I mean, we’ve all been for the most part in a bad relationship. And after that, thing’s over, you’re like, God, thanks for that. I mean, I wish I would’ve done that a year ago. Right. Right. Kind of thing. And, and business and ideas are no different. You could have a bad relationship with the, this thing and you don’t know until it’s over. And you’re like, wow. She was, she was ugly. I got this much pretier idea. Now let’s, let’s run with this one. And Hey, it’s actually almost the same thing except a couple upgrades to it. And, and yeah, so you gotta just look at things from, uh, a few different perspectives. Sometimes you can’t, and that’s why having good counsel around you is, uh, important.

Rich (28:09):
And yes, and getting to know yourself is the key to not finding yourself in a dysfunctional relationship with an idea is, is, is, you know, what you want. And then, you know, if that fits and if not next. Yeah. Uh, Kris, this was awesome. Um, I really appreciate you taking the time and, uh, people wanna learn more about you or get in touch with you. How do they go about doing so?

Kris (28:34):
Yeah, I’m pretty easy to hold of, uh, LinkedIn. Uh, I, I spent a lot of time on LinkedIn. I got rid of Facebook seven years ago and it’s been just a blessing. Um, a lot of time got chewed up over the, there, uh, my Instagram’s private, so that’s really just a handful of friends, but, uh, LinkedIn’s a good one. And of course, dugout mugs.com. You gotta go there. Dugout’s on all the social channels. And we do all kinds of fun stuff with like giveaways. And, uh, I think I even commentate game through the world series with Pete rose, you know, a couple years ago, we doing fun stuff and cool videos and cool content and fun giveaways. So I encourage everybody to check out dugout mugs. If you wanna see how we can, you know, we’ve committed now with dugout to run a multimillion dollar company and be the same exact guys and carry the same exact culture that we did from the beginning. So if you wanna see what at that look, we call it being unapologetically authentic, and every everything you see, everything you hear, it is what it is. Um, there’s, there’s no facade here and I think that’s really well received with our tribe. Uh, so come take a look, be a, be a fly on the wall and be loud if you want to chime in. We’re always chatting with people.

Rich (29:48):
Awesome. That sounds great. And, uh, Kris, thanks again for being here.

Kris (29:52):
You’re welcome. Thanks for having me. You guys take it easy.

Outro (29:59):
Thanks for listen to innovations and breakthroughs with your host. Rich Goldstein. Be sure to click, subscribe, check us out on the web at innovationsandbreakthroughs.com and we’ll see you next time.