Why Entrepreneurs Need to Focus on Flexibility

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 moments that change everything. And now here’s your host, Rich Goldstein

Rich (00:33):
Rich Golstein here, host of the innovations and breakthroughs podcast, where I featured top leaders in the path they took to create change. Best guests include is Ari James Thompson. Steve Simon said, this episode is brought to you by my company, Goldstein patent law, where we’ve helped you 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, a product or a 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 today.

Rich (01:19):
Stefan Haney, Stefan is a business and technology leader who specializes in driving product innovation at scale. He spent more than eight years working at Amazon there. He led the team driving design and development for product shopping pages, also known as detailed pages, uh, as a member of the Amazon consumer shopping leadership team, he contributed to the strategy and innovation driving, not just Amazon’s homepage, but also navigation checkout and product pages worldwide. Uh, and of course all devices, PC phone and tablet. Um, in fact, Stefan was a key leader in building seller central and the Amazon marketplace from 9 billion to over 160 billion in sales today, Stefan is a founding partner of found Foundry brands where he’s involved in acquiring and growing existing e-commerce brands. Uh, so I’m really pleased to welcome here today. Stephen Haney. Welcome Stephen. Thank you,

Stefan (02:13):
Rich. Well, I’ll start to add up over time. Of course, I worked with a lot of great people and hired autographed people over. Try it. And you’re like, wait, is that 15 years of life?

Rich (02:26):
Yeah, exactly. He’s like, wait, is that me? Like, did I do that? Oh yeah. Yeah, that’s true. I guess, I guess I did

Stefan (02:31):
Small, a big wave.

Rich (02:33):
Yeah. It’s kind of funny. Like when, when someone else goes through your accomplishments, uh, and they’re impressed, um, to yourself, it just feels like, well, this is just life. This is just me, right. I was in the right place and had some great mentors, but it’s a funny phenomenon how it’s just, uh, uh, sometimes it’s hard to even, uh, even get the extent of our own accomplishments and then until it gets reflected, but, um, very impressive and really glad to have you here, because this is a lot to add to the conversation. Like not just the, the quote unquote, uh, theme of the podcast in terms of people that are innovating. Um, but also a lot of my audience, a lot of my friends are Amazon sellers and you’ve got a great deal of experience over there. So there’s just a whole lot for us to talk about. Um, and, uh, I guess let’s just roll it back to the beginning kind of how you got into all of it kinda. Um, uh, so now you’re in Moscow, Idaho. Yes. Okay, great. And so, um, just a little bit about how you, how you ended up over there and kind of, uh, like the pathway towards, towards getting to where you are today. Sure.

Stefan (03:46):
Yeah. COVID is a great thing in, in, in one hand, like it’s just a constraint, uh, and you learn Amazon real quickly. Everybody reads the goal and their constraints. Uh, what can I do with the constraints and dealt with? And, um, so, uh, we ended up in Moscow. I have nine nieces and nephews here. I have, uh, uh, seven, my wife and I have seven children of our own. So what we looked at is as, as remote work became more, uh, more common, more accepted and adaptation. We said, Hey, we can live closer to family. We can consolidate family. And this is a really short flight, you know, it was, uh, you know, Washington state universities here, university of Idaho, new St. Andrew’s college. Uh, so there’s always people coming in and out. And, uh, uh, if I need to be in I’m serving global clients, so they don’t necessarily need to know where I am. And then, uh, you know, it’s just a quick flight back to Seattle or salt lake city, and I can get anywhere in the country. So I get all the benefits of a consolidated family, small town life, and, and colleges, universities, uh, and, uh, no business impact. So we love it. We’re, we’re thrilled to be here.

Rich (04:44):
Right. And the benefits don’t just flow in the direction towards you. They also flow away from you in the sense that because you’re there, you actually created an initiative to, to build or to create 500 jobs for the local community. Yeah.

Stefan (05:00):
You know what, uh, I’m not alone in moving to Idaho. It’s been a lot of people moving as we’ve come out and saying, Hey, what can I do? How do I want to rebuild a restructure? Um, so I’m one of dozens, uh, you know, our small to our small town, right? It’s 4,000 person town, uh, dozens of families have moved here, but a lot of them have been experienced professionals. You know, one of, one of my new friends here, uh, is a 19 year Amazon veteran. He moved over here from Seattle, uh, you know, senior leader at get hub. Uh, and another person has been a sales, uh, sales professional in the med tech startup industry. So we have this new set of connections because our, our networks, again, our customers don’t know where we live necessarily, or colleagues even known as know where we live.

Stefan (05:44):
Uh, and so it really makes a small town much richer so we can see what are investment opportunities, what are work opportunities, uh, that we can bring here, uh, and help other people who were already here or coming to college here, uh, create services that they can export so they can export services and import customers. And this is a great town, you know, I’ve been starting to learn about economic development, you know, 15% of the people in Moscow have an advanced degree beyond a bachelor’s right. One of the seven people you’re walking down the street, I have a master’s or doctorate because of the colleges. There’s a large amount of, there’s my pitch. Uh, there’s a large amount of students who are learning all kinds of different trades. So we’re not bound by the region. This is a great agricultural and timber products region with a pretty good transportation network, but there’s a large data as a service company here, economic modeling specialists Emsi, uh, is based out of here in Moscow.

Stefan (06:35):
There’s a ton of graphic designers and marketing people, New York times bestselling author lives here. So, uh, there’s a lot of opportunity that we’ve started to put together, uh, to create opportunities. And a lot of businesses are moving to Idaho, not just Boise and cor d’Alene, but a number of the other towns too. So, uh, then in a small town, what’s fun is I get to bump into those people, right. Uh, my local burger joint, like, oh, Hey, you know, we just had a, a pretty fun meeting with, uh, don’t create a branding agency after they got finished working for Yamaha motors, uh, or doing some other spots.

Rich (07:07):
So, uh, oh, it sounds like you were learning a great place to move your family to, and, uh, what you ended up doing, you couldn’t help yourself, you, you couldn’t help, but notice opportunities to, to, to grow something, to create something. And so you ended up, uh, um, creating something for the community. Yeah.

Stefan (07:26):
Uh, you can’t help, uh, notice, you know, there is a trend we see in the United States, right? So, uh, recently, uh, the United States went under a replacement rate. Uh, last year was, uh, you know, 20, 20 19 was the last year of a lot of students every year from henceforth for the immediate future. There are less high school students graduating to go to college. Um, so there’s a smaller pool for colleges to recruit from that plays itself out in the workforce. Right? So while COVID maybe helped accelerate remote workforces, you know, looking for people to hire and then the talent rate you can pay for them. So, uh, I’ve also advised startups to think more creatively, uh, if, how much should you pay for a given skill set, right. If you’re looking for an it coordinator for your startup, someone’s gonna, you know, set up your SharePoint, set up teams, run office 365, maybe manage your security.

Stefan (08:21):
That skillset is a very different price by zip code across the United States. So, and then if you look at the 30 to 40 positions, you’re going to hire this year, if you can expand your, your potential skill population. Uh, so this is an innovation trick. If you can expand your scope population to look across the United States, uh, it’s very different between Kalamazoo, Michigan despoke can to Seattle, uh, or to Moscow, Idaho for that set of skills. Um, so you can, you can drive some cost savings, right? So if you just think of the distribution for a minute, if that position is a hundred, $9,000 in Seattle, but $72,000 in, uh, we’ll just say, Moscow, Idaho, um, right. You just saved $40,000 on one position. And if you can save an average of 20 to $50,000 across the 40 positions, you’re going to hire this year, right. Do the math that’s, that’s well into a million dollar savings on payroll to get some great talent. And some of those zip codes are excited about that salary because it’s above what they would normally see in their area.

Rich (09:26):
Yeah, absolutely. I mean, I’ve related. I relate to that. Well, because, uh, I’ve always lived in an area that was very, um, well, let’s say a high standard of living high cost of living, uh, New York, New Jersey. Uh, and so naturally the salaries are higher. And as, as an employer, uh, you know, entrepreneur, it’s like, you’re, you’re paying many people, um, such higher salaries and, and I’ve often thought that the best candidates can be all different locations. And if you could find a good way to harness that you could, you could, you can do very well by hiring people where there’s a lower cost of living.

Stefan (10:05):
Yeah. We’re excited at Foundry brands. Uh, so this is a brand portfolio startup that I am founding with several others. Uh, you know, right now we had started with a, Hey let’s, you know, the four of the founders in four cities. And we had started with the, well, I think we can pull this off, uh, let’s hire people to work from where they can be effective and available. Um, and it turns out about 12, 15 employees in, we have a couple of clusters that have developed, uh, so 80% of our employees do live in three region, kind of within an hour of each other, three or four regions, uh, with a few outliers. Um, and that’s been, that’s been great, you know, for people, the workforce being able to do in the company, we’re able to put together is a big deal. Um, and it’s not just COVID.

Stefan (10:49):
So part of what gave us a reason to believe we could do this is when you work at a multi-business unit company, uh, like a Amazon or a, uh, Google or Microsoft, you know, my teams that I manage there was on detail page. They were in three to five locations around the world. So the practices of how do you share information? How do you make sure everybody on the team is updated? Uh, how do you run meetings with people in multiple locations? That’s not a new thing. It’s just new to a lot of people. Uh, and there’s already some good practices. So we were able to import those good practices. Um, you’re not going to bump into people at the coffee machine, for example. So how do you set up some ad hoc, informal connection times, right. People start talking about this in zoom, let’s just do a zoom happy hour just to connect, right? So, you know, we’re, we’re taking that into our startup Foundry, using the workforce all over. And then there are pockets of the United States where there are simply more young people, more people have moved. Um, so it’s now a choice. Do you want to stay in New York city? Maybe you want to go to Vermont. A lot of people moved to Vermont. Uh, you, what, what do you want to build, uh, for the area you’re in then do you want to stay, or do you wanna take this out pretty much?

Rich (11:59):
Absolutely. And, and so it, it, uh, and I imagine that it’s not just kind of how you operate Foundry. It’s also part of the reason, the reason to be that you have brands that can grow, but they don’t necessarily have the expertise to grow to the next level. And also the, it might be that they’re in an area where they are, um, they’re accustomed to hiring people at that higher cost of living at those higher salaries. And so you can take those same principles to help grow their brands, too. Um, yeah,

Stefan (12:30):
COVID COVID is a big deal for e-commerce. Right? So, uh, it, it, you know, I don’t know how many years that accelerated e-commerce, uh, but, uh, so if you’re a brand born online and you got started at Amazon and you said, Hey, you know, I’m just going to replace my job. It’s gotta be my full-time thing. It’s going to make some cash flow. Uh, depending what category you’re in, COVID accelerated. It did two things. It moved a lot of offline to online commerce, faster in categories that were much more brick and mortar, and still pretty surprising, you know, online is maybe 20 to 40%, depending on the category. There’s still a lot of brick and mortar to move. Uh, but it grew businesses anywhere from 30 to 75%. There’s some categories that really move fast to go online. Well, if you’re running, you know, you’re solopreneur, maybe you have a couple assistants, you’re running a three to $5 million brand, and you get a 30 to 40% growth across all your systems that could be overwhelming for one.

Stefan (13:30):
Um, you’re going to find out where your processes will break, uh, for, to, uh, and, and you’re going, and now my business just got a lot more valuable and, and, and where I was been thinking about. So there’s a couple of things that happened. Am I still doing what I want to do? Like we’ve talked to some, some brands who I got into this to have more time and spend more time with my grandkids, but the business has taken over my life. Um, or, you know, I made a great product. I really love my product, but I’m spending a ton of time operating my business, uh, versus making the next set of products that I want to make. Uh, those are windows for exit. Uh, it’s like, Hey, you know, now’s the time not just to replace your cashflow, but, you know, you can experience an exit for your businesses, could be a life-changing about financially.

Stefan (14:15):
And so we’ve seen some of that, right. COVID is accept grown people’s business faster than their scale was ready and, and foundering and say, Hey, we cannot provide an exit ramp or an exit path for you for a set of great brands to either plan for it, or to go ahead and let’s take a jump and Foundry we’ll acquire, acquire brand and take over its operation to let you get back to the things you like doing, or that could be product development, look for your next thing, uh, or, uh, getting back to your family, whatever you’d like to do. And you’re right. The principles apply and we’re bringing

Rich (14:45):
Those to bear. Yeah, absolutely. And, and a lot of times with those, um, solo preneurs that have grown too, it just quickly outgrew their skill set, where there are skills now that are needed for their business, but they didn’t have the time to acquire them. They didn’t have the time to grow those skills. And so they’re not necessarily going to take advantage of the opportunity. Um, but if you can, then there’s actually value in the transaction to them. Like there’s more value there, um, that can be provided to them for exit. Then they could capture by trying to work their way through growing the business with the limited skillset and any other limitations. Yeah.

Stefan (15:27):
Founders are often really smart people and they can acquire skills, but what happens? Well, maybe not quickly

Rich (15:33):
Enough, the thing, all of a sudden you go from having one, is it worth their time? You’ve hired an assistant, you hire two assistants early in the year. And maybe just, even in terms of recruiting skills, like, okay, you know, a little bit about how to hire people, but now you have to hire a COO

Stefan (15:52):
The marketplace just to throw a history in the front of it. When I joined the marketplace team in 2009, right. 2009 marketplace was, first of all, I was even called marketplace inside of Amazon was called merchant technologies. Uh, but marketplace is roughly a $9 billion business in 2009, give or take, um, and roughly 25% of Amazon’s business overall from 2009 to say, let’s just say 2013, we’ll pick a number. Um, I forget the year. So the 13,015 more marketplace became 50% of Amazon sales. And just, you know, in a five to seven year period went from being a $9 billion business to $150 billion business. Right. Uh, you know, you know, over 10 X, almost 20 X, you know, size of growth, um, living through that was, uh, like you didn’t even know the, the air you breathe because like we have to hire, uh, like I was living that same 20 X growth that some of these founders live, but I was living at inside of Amazon versus being outside.

Stefan (16:52):
Uh, and you know, we had years where my team was 50 people. We need to hire another 50 people on top of that. So how do you hire them and get your work done and coordinate, uh, when you bring those people on, because you don’t need to hire, you need to get more work done. Um, and hiring is just one way to get that work done. What you’re really doing when you’re hiring is you’re building your team. Um, and so what’s the team we need to build for two, three years out. A lot of, I have a different view of hiring a lot of folks. So, you know, I’m trying to think of the team. I need two to three years out. That’s what I’m hiring for a lot more like a sports general manager, what are the skills capabilities? And maybe I changed my whole structure, my team, because when you’re going from that nine to 150 billion, uh, you know, the amount of people we need different, but also what you need to do is different.

Stefan (17:38):
So these founders in that same boat, they’re at a business organizational step change. When your organization grows from say two to four people to when you really need 10 to 20, how you organize work, how you communicate across your business, all that needs to change a little bit. Uh, and you now start to have jobs that are big enough for a specialist, and you have to decide, are you going to be that specialist, or do you want to hire that specialist or outsource that specialist? Uh, and how do you even manage it, right. If you’re a generalist and you know, it’s not like you came up that career path. So, um, I’ve kinda, it was fun memories, and I could go some specifics, but yeah,

Rich (18:17):
Yeah, that’s it, this is a whole bunch of new problems that come with scale. And, um, uh, and, and it’s, you know, entrepreneurs tend to be flexible and that’s, uh, that’s a core part of being an entrepreneur, but that doesn’t mean that you’re necessarily going to be flexible enough to enter a new paradigm every six months.

Stefan (18:39):
And you have to decide, you want to, because sometimes entrepreneurs are flexible or, you know, uh, people have worked at Amazon sometimes describes it. I can do a lot of things. I have a lot of skills, uh, and you lose the perspective of what do I want to do, or what do I like doing right. I’m doing the needful and I don’t mind doing it, and I have lots of skills, so I can do it and maybe do it fairly well. And a skill of acquiring skills is often a good entrepreneur skill as well, but then you kind of look back and go, wait a second. This wasn’t the path I planned to take. Uh, I don’t necessarily like being here. Uh, let’s, let’s go back, let’s rewind and make a different term.

Rich (19:15):
Yeah. And I guess, um, it’s, it’s not always easy to do that type of a rewind though. Um, and, uh, that’s it, but you see a lot of people like

Stefan (19:26):
Me doing it right now. Like I like the thrill of, uh, of the built early days. Amazon has a lot of transformation when I joined David’s on 2003 in, in supply chain, uh, e-commerce distribution was not the dominant distribution, even for books. Uh, we were. And so, uh, you know, you’d go to borders, go to Barnes and noble. Um, and, and because it was a different business model, we had to do a lot of education with our suppliers on, uh, what the differences were and how to share cost reductions. Right. And so, uh, it’s a transforming moment. Like we’re transforming eCommerce, being a dominant, delivering. We had to transform the contracts. Uh, we’re not going to have as many returns, nowhere near the amount of returns that our borders or Barnes and noble let’s share those costs reductions. Right? How do we make that clear?

Stefan (20:15):
You get to examine each piece. That’s part of why like Foundry right now is, is we can audit the first assumptions and go, what does it look like to have a brand portfolio company completely oriented around brands, born online? You know, uh, you get a company like, uh, motivational boarders. They’re one of the companies that we look we like, you know, and, and, uh, that Foundry it’s poster company or education materials company, uh, and they’ve only existed online. There’s no brick and mortar store. So how we find efficiencies in our supply chain process, uh, we can use talent from around the world to make designs. We can insource or outsource, but we get to change. How’s that gonna fit in our portfolio? Um, we get to transform existing models and processes, and that’s, that’s fun. So bill and you see other ex Amazon people, a lot of them leaving and going to, yeah, Amazon’s great.

Stefan (21:08):
And stock prices good today again, but, um, there’s, uh, when your company gets big, you have to operate a lot of that. And so, you know, whether it’s, you know, Ian Clarkson over at nerdy, whether it’s, you know, uh, people go into compass or, um, Glossier or SoFi, uh, belong to these kinds of scale ups. I see a lot of really senior 16, 17, 20 year Amazon talent folks. Um, just, they want to go back to the thrill of the belt, right. They want to take that rewind and go. I want to spend more of my time innovating and inventing than perhaps a big company is going to allow me to do, because there’s a lot of operations that have to happen in a big company.

Rich (21:50):
Yeah, absolutely. Um, and I guess let’s bookmark the innovation part and we’ll assume that, uh, but, um, one of the things you mentioned a few minutes back about, um, about how you’ve taken some of the, the, uh, methodologies from Amazon and, and you’re applying them now and Foundry, but between those two, um, you also have a consulting company, um, Vanguard that you, you actually, um, build around, um, taking those types of methodologies and, and consulting with businesses to help them grow. Uh, and as part of that, like, you know, in terms of the thrill of the build, you’re helping to build a marketplace, um, in Romania, um, an e-commerce marketplace, like using some of that, uh, methodology and some of those, um, kind of best practices. So tell me a bit about that. Yeah,

Stefan (22:39):
But when I left Amazon, uh, I started getting contacts from various people, and I was thinking about how to structure this. And so I formed a small company called vantage, uh, and vantage and God, my bad, I’m not quite into the assets under management. Didn’t want to compete branding with the mutual fund guys. Um, but vantage, you know, and, and there’s there’s mean to the name. Uh, one, my wife had said is we, you know, my wife, Megan says, we drove across vantage, this beautiful city overlooking Columbia river. And I 90, if we’re a competition, they have advantage. But, uh, part of it, a lot of what you learned at Amazon, as you look at first principles, and what’s my point of view, or what’s the mental model, how am I thinking about the problem, the structure of how to do this? And a lot of times, if you haven’t examined your mental models within a company, or haven’t revalidated them, or haven’t been curious, like, why does this have to be this way? That’s one of the most powerful areas to change now it’s also evangelism. So it’s also one of the hardest things to change, right? Uh, you know, I believe what, what’s my belief system. So at Amazon for they believe that, you know, customer X customers will there that flywheel that, um, you know, the faster I can deliver things and the more convenient I can remember things, the more customers will return to shop.

Outro (24:03):
Thanks for listening to innovations and breakthroughs with your host, rich Goldstein, be sure to click, subscribe, check us out on the web@innovationsandbreakthroughs.com. And we’ll see you next time.