Simple Modern is one of the great success stories of Amazon-first brands.
Starting in 2016 and now generating nine figures in revenue per year, it has been some growth trajectory for the Oklahoma-based startup.
In this week’s episode of the Brand Builder Show, we got the honor of sitting down with co-founder and CEO Mike Beckham.
It was a fascinating conversation where we talked about:
- How the Simple Modern brand strategy evolved
- What getting your products into retail involves
- The necessity of good leadership in growing a strong business
- Why business owners need to offer more than just money to motivate a team
- What Mike would do if he had to start all over again
- And a bunch more!
- Check out Simple Modern
- Connect with Mike on Twitter
- Episode 31 with Mike’s co-founder Bryan
00:00 Introduction to Guest: Mike Beckham
00:57 Background of Mike Beckham and Simple Modern
04:38 Origin of Simple Modern
15:50 Financials in the first two years
24:42 Simple Modern’s journey to Retail
31:14 Transition to Amazon Pre-Covid and Mike’s challenging times as a leader
36:44 How to come up with a vision for your business and track your progress
44:01 Incentivizing people and winning with the company
48:12 Leadership advice for new entrepreneurs
Hi, folks, welcome back to another episode of The Brand Builder show. Today’s episode is going to be a very special one because we have a very special guest. We’ve got Mike from Simple Modern Mike, welcome to the show today. Thanks for coming on.
Mike Beckham 00:12
Yeah, thanks for having me, Ben, great to be with you.
Ben Donovan 00:14
It’s, it’s an honor, you are a well loved character in, the Twittersphere. Definitely, at least, you know, well beyond that, as well, for sure. But we have all been learning so much from your journey, as you’ve joined, you know, a really active on Twitter in recent times. And we’ve had Brian on the show as well, one of your co founders. And that was one of our most popular episodes. So I’m excited to dig into the simple model, simple modern journey from your angle, bring some fresh perspective to it there. And but before we do that, I’d love for you to just introduce yourself and kind of catch us up for anybody that doesn’t know your backstory and how you came to found Simple Modern, give us the elevator pitch of your life.
Mike Beckham 00:57
Sure, okay. I live in Oklahoma, the E-commerce capital of the world as a joke. lifter, basically, my entire life didn’t necessarily intend to, but I have kind of really developed community here. went to University of Oklahoma. That was a finance major thought I was going to do that, to my great surprise had a real like set of life changes in college. And that led me to actually my first job out of college was I worked in the nonprofit world. And if you look at my career, I’ve been graduated for about 20 years from college, you can basically cut it into 210 year chunks. 10 years in the nonprofit world, and a little over 10 years working in the business ecommerce world. So worked in the nonprofit world till I was about 30. I had thought maybe I’ll teach someday. And maybe I’ll do something in business. By the time I got to 30. It was like, Well, probably not, you know, nobody’s looking to hire me or anything like that. But I loved working in the nonprofit world. I love leading teams, I love investing in people. And right around then my younger brother approached me with a business idea that he wanted to start and just asked if I would help, we launched an E commerce concept that went from founding to having million dollar revenue days in 13 months, which was just an insane experience. As you can imagine, I was the oldest person with the company, I was 30. And then it kicked off a period of a couple of years where I was basically working two full time jobs. Then we got pregnant with our first kid, my wife, and I did. And I really felt like I had to make a choice. Felt called into the business world. And so really, I’ve been since 2012 ish, I’ve been full time in the business world, have done a lot of E commerce. But then in more recent years, I’ve done a lot of more omni channel type stuff, worked with my brother for several years. And then in 2015, a couple of guys that I had worked that have worked under me approached me and said, Hey, we would love to build something with you. We love the culture of you know, working in our department, we really enjoy spending time with you and each other, would you be open to it? And I said yes. And that was basically the seed that turned into Simple Modern. And so since 2015, I’ve been a co founder and CEO of Simple Modern,
Ben Donovan 03:17
nice, awesome, thank you for bringing us up to speed on that. That’s a great, great, great journey you’ve been on and lots unpack, obviously, we had Brian on the show. And so we talked about some of the starting periods of simple modeling that so if anybody listening wants to check that out, we’ll leave that in the description as well. And we want to obviously try and cover new ground rather than just sort of ask you the same questions. So I put it out to the community on Twitter, if anybody got questions for you, and a bunch of people replied with some questions, which we’ll try and weave into this journey weave into the conversation. And hopefully, they’ll get some great feedback from the questions. I really appreciate everybody submitting those questions. When it comes to the launch of Simple Modern. I’d love to start there, obviously 2015. You know, it’s a while ago now in E commerce is, you know, a long time. And so things have maybe changed a lot. But when you did start, you know, one of the questions we’ve gotten was about brand strategy. How much brand strategy did you do before starting Simple Modern, because obviously you were starting at a time when the era of the Amazon Seller wasn’t really that brand away, it was slap a label on something from China, and it will sell bucketloads if you find the right keywords. Obviously that’s evolved now but simple modern, is a very strong brand. Did that start in 2015? Or is that something that’s evolved?
Mike Beckham 04:38
Yeah, so I get asked about the origin story of simple modern quite a bit. And you know, I think people people love the kind of, you know, apple falling out of the tree and hitting you in the head and you have this clear vision of things we did not have that was simple modern. What we did have was a really clear picture of the type of organization we wanted to build And then the business stuff came after that. So I think going in, here’s what we knew. We had really deep ecommerce experience like myself and the co founders, we’ve been a part of probably a billion dollars in E commerce sales, which was really rare. Anybody non Amazon, that was just an enormous number. And you know, so we had deep expertise, we had built algorithms we had, we had actually built the guts of E commerce. Because if you actually go back to when I started, like 2009 2010 2011, like things like AWS, were just not a thing, right? Like, there were so many pieces now, so many apps and stuff that we take for granted that we had to kind of invent the wheel. So we had a lot of ecommerce experience, we were pretty excited about the idea of selling on the marketplace with Amazon. We wanted to sell a really high quality product. I think part of being involved in so much ecommerce sales, there were certain things that we were just like, ma’am, we don’t want to have to deal with things like chargebacks, we don’t want to have to deal with things like people having a negative product experience. And then we had a really clear picture of culture, the type of culture and environment we wanted to create. I think the one of the pillars, we knew we wanted there to be a real generosity focus, like my around that time, I was trying to figure out if I wanted to stay in the business world, or I wanted to go back in the nonprofit world. And my thinking was, okay, if I’m gonna stay in the business world, I really want there to be, I want to be able to draw a fairly straight line from what I’m doing day to day to making a tangible impact in the lives of other people. So that’s what we knew. And but there’s a whole lot of things that we hadn’t figured out at that point.
Mike Beckham 06:40
We did our first product wasn’t even drinkware. For example, we tried a stainless steel tea infuser. And and we had just enough success that it was like, Hey, I think we’re on the right path. But we haven’t totally found Product Market Fit yet. Because I don’t think we’re differentiated enough. I don’t know this is defensible. We had product market fit almost immediately. With dehydration, we sold our first hydration product, we’re probably right at the seven year anniversary of selling our very first water bottle on Amazon. And I think what we did a really good job of early on, was having a clear channel strategy and understanding the larger competitive environment and where we could really win on Amazon with a clear strategy as we grew as we achieve product market fit. And as we grew, I think that evolved into us having a clear, Omni channel brand strategy of like how do we actually create not just something that Amazon’s algorithms smile upon and and where we make a lot of sales. But we’re really creating brand equity, and we’re creating something defensible, for the long run. And I think that we were probably ahead of the game in really thinking deeply about those things in 2016, compared to I mean, even simple things like we we hired up, once we started to get some momentum we really hired up and I didn’t just hire, you know, hands, I hired people that I felt like could be executives at a much larger company. And so if you look at our early team, it is the most talented and capable people I know. And so we made a bet fairly early on that like this is going to be successful, this is going to be an enterprise in the 10s of millions of dollars, if not more, and we’re going to hire really the very best people we possibly can. So that was probably the first way that we invested in brand is by having a really high view of what was accomplishable with the type of people we recruited and the type of team we build. And then sure enough, like you said, we’ve been able to, it’s interesting, if you look at Amazon, and if you’re really familiar with the space, how few companies have been able to actually turn success in the marketplace into, you know, name brand, name brand companies that household name recognition. And we’re one of a fairly short list. I do think the fact that we invested heavily in team and that we were deliberate with our channel strategy fairly early on, helped us to move that direction.
Ben Donovan 09:14
Yeah, you’re right, there’s not many, from my view of it. There are a lot of brands that do it the other way they get well known DTC, and then pick up the branded search on Amazon. But to start on Amazon and take it off of Amazon is quite rare. You’re the only one I can think of that springs to mind is St. Paul’s they obviously have done that massively, you know, grew massively in the pet space on Amazon and then had a big big exit. But But yeah, it doesn’t happen very often. And if we get time, I’d definitely love to dig into the DC side a bit as I know, you guys are really, really pushing that, you know, at the moment, which is great to see. When it comes to the you talked about defensible product launch, and we’re drinkware obviously as a really competitive space. And one of the questions that came in well what you know, what was the main reason that you felt when you launched a competitive product? There’s lots of other people doing it. What was it about what you’re offering that you felt like people would buy this when you launched it?
Mike Beckham 10:10
Sure. So in addition to running the company, I also teach entrepreneurship and are you. And one of the more interesting things that I’ve seen is that people can be really discouraged by competitive and large markets. And I have kind of the opposite view that a really competitive really large market actually means there’s just a lot more possibility, there’s just a lot more nominal sales, a lot more nominal customers a lot more space, to be able to carve out something for yourself. Whereas I think the average kind of aspiring entrepreneur or new entrepreneur, what they see is they just see competition. And so the first thing that attracted us to drinkware was it’s a huge market, right? Like we’re talking billions of pieces get sold annually in the world, I don’t know maybe it’s 10s of billions. It’s a lot, right. So it’s a huge market. And as we looked at Amazon, in particular, what we noticed was a lot of the really strong brands. And there were great brands or great brands in our space, the yetis and Hydroflask of the world, for example. But they were not focusing on Amazon as their primary channel, they had built their inventory and product strategy really around specialty retail, and then they would offer that stuff on Amazon sometimes. And sometimes they wouldn’t even do that very well. So what we realized is, okay, if we really built around digital and the unique advantages that digital has, what were you can you have kind of the infinite shelf, and you can have in one listing, you could have 60 70 100 variations between size and color, that we can use that to our advantage. I think the fundamental insight we had about drinkware was that one of the facets of differentiation was going to be how it looked that people were going to treat this a lot more like like, the analogy I use is that these water bottles are kind of like shoes or a watch or a purse, they’re functional, but they also have this style element. And we realized that fairly early on, or maybe it’s just me bet on that fairly early on that that’s the way that the category was going to go. And it wasn’t obvious at the time, yet he was still making just stainless steel drinkware at that point in time. But we bet on that idea. And that fit really nicely with E commerce. And that was something that in our, in our experience that our major competitors were not focusing on. So I wrote I wrote a long Twitter thread about this, I think it’s actually the one I have pinned on my profile right now that if you’re listening to this episode, I’d encourage you to read, which is find a really big industry find it regardless of the level of competitiveness, there’s in really big industries, there’s always whitespace. And one of the things that can be intimidating is you look at the really strong competitors. And you say, Wow, man, yeah, he’s really good at this, they just kill it with men, you know, whatever 35 to 50, there’s no way we could ever compete with them, you know that we’re not going to be able to compete with them in a place like Dick’s Sporting Goods, or whatever. But the inverse of that is also true that all the areas that Yeti is really strong, there’s other areas that they’re not going to focus on, or that they’re intentionally going to not do that are opportunities for other brands, because they are so strong in certain areas. And so the other side of the coin is, even when you get into a competitive industry with a lot of great competitors, they’re still going to be things that they don’t focus on in areas of opportunity. So we saw that with E commerce, generally, but Amazon specifically. And we went hard after that, I think we had that realization, probably a year or two before our competitors. There’s another piece which had to do with pricing strategy. We built our pricing strategy around ecommerce, we wanted to be really great quality, but we wanted to be affordable.
Mike Beckham 13:53
And so with the way that Amazon’s fees and stuff worked out, that put us in the kind of the 20 to $25 price point, which was about half the price that a lot of people were selling for in physical retail. And there was one big trade off. And the big trade off was we couldn’t pay for marketing to do to do things like grody to see it just wasn’t, it wasn’t in our options that there wasn’t enough gross profit available on every unit we sold. And so we had to build the company around how do we build brand recognition? And how do we get a lot of customers where we’re first sale profitable. And we’re and really the only answer to that was we have to leverage these huge mass retail sales channels, the Amazons and targets and Walmarts of the world where not only can we acquire millions customers, but we can do it while we’re profitable for sale. So some of that some of it was just, you know, necessary. Like we would like to say, oh, a strategy or whatever, but someone was like, Hey, we’ve got a lot of premium competitors. We can’t really price at those prices, and still take advantage of the opportunity when In the price here, and because of that, that that actually helps make some of the decisions about what we’re going to do channel strategy wise, because it’s the path that’s available. And so so that was kind of how we evaluated the competitive landscape and how we decided on the strategy that we took.
Ben Donovan 15:17
You talk a lot about the finances when you started, and you’re taking big bets. You know, I think you’ve said a few times already. What did that initial stage of finances look like? Because it sounds like it might not be the typical Amazon seller that spends a few $1,000 on Alibaba, can you talk us through the first year or two in terms of financials? As much, obviously, as you’re happy to talk about in terms of initial investment at a time until you were profitable, and started paying yourselves what what did that look like?
Mike Beckham 15:50
Yeah, so this is another example of where we had long term vision. And I was helped by the fact that in the previous venture, I had made enough that I wouldn’t say like, I just had a ton of liquidity, but I didn’t have any debt. And I had some money in the bank. And so I put $200,000 into the company to start the company. We’ve never taken outside funding, we’ve always been bootstrapped. But we, you know, we pretty quickly shot up to several million dollars in sales, I think our I think in 2016, we probably did five or $6 million in sales on Amazon. And a lot of the companies around that time would have been like, Hey, this is great, you know, there’s whatever a million or $2 million in profit here that we can distribute to the shareholders or whatever, we did not take that view. Instead, I think my I think I took $100,000 salary, even once we got to some really good success. Even today, I do not take the salary that people would expect. And I’ve taken way less, I mean, I’ve taken almost nothing out of the company even now, because we really wanted to focus on growth. So I would say that’s one thing, just one trade off that if you’re a entrepreneur, if you’re a business owner, the more you take out of the business, the slower your growth. And for us saying, Hey, we’re gonna really focus on growth, we’re going to try and keep what we take out of the business at a minimum, and we’re going to really focus on brand, the upside potential obviously just got quite a bit bigger. So I think the visceral experience of going through a bootstrap company growing as fast as we were, was something like, every time I placed a PO, I would look at the sales rates. And I would say, wow, you know, we didn’t buy enough last time. And we need to go bigger. This time. We bought 10,000 bottles last time, it was a $50,000 PO, man, we gotta go bigger. Let’s, let’s buy 20,000 bottles this time, you know, let’s do 100,000 RPO? And then, you know, look at it. And at the last second, I’d say no, let’s just do this do 3000 or, you know, or 30,000 miles, let’s go to 150,000. And then I hit send on the PO. And then that night, I’d wake up, you know, like in a cold sweat, like, what have I done, you know, I just spent like a house, the equivalent of like a, you know, a house on this water bottle that, who knows if we’re going to be able to sell it. And you know, I feel nervous for the next two months. And then it arrives, and I realized, we haven’t bought enough and rinse and repeat. And it was like that process over and over and over again, of like, forcing yourself to continue to go bigger, you know, and to go a little bit further than, then you feel like you’re being stretched. That’s what growth feels like, you know, I’ve heard this analogy before. And I love it, that when you have product market fit, it’s like the market is pulling product out of your company, that in the early days of a startup, when you’re trying to find you know, product market fit, it feels like all you’re doing is pushing, you’re just trying to get attention and trying to get people to care trying to get people to buy what you have. And then there’s this point, when you really do hit product market fit where it feels like you’re instead of pushing the stone up the hill, you’re chasing it down the other side. That’s the way it felt for us that we were we were kind of chasing it for years, and having to continually buy bigger and bigger. And, you know, you know, in the back of your head to have ventually one of these buys, we’re going to buy too big and what are we going to do with all that stuff? You know? So anyway, that was the experience. Yeah.
Ben Donovan 19:26
He’s obviously a bigger budget than a lot of people would start an E commerce business with in these days, what would you maybe have done differently if your budget was a lot smaller, say 20,000 rather than 200,000? Yeah, well,
Mike Beckham 19:41
first product I think we bought $5,000 worth. It wasn’t 200,000 all at once. It kind of grew to 200,000 over the first I would say 12 months. And that was as we saw more product market fit. And it was like oh, wow, this is great if we just you know, just don’t mess some more money. But yeah, I mean, I think I saw that question on Twitter. I think it’s a great question. Like, if I was going to start again on Amazon, I had 10 or 20,000 hours, what would I do? I can tell you what we did do. And I think it still applies. When we knew we wanted to start this company, but we didn’t know what we wanted to. So what we did is each of the founders spent a few hours on Amazon just looking around. And I still remember it fairly vividly, that I was just not finding a lot of stuff that was compelling. In fact, we made a list in that early like brainstorming session. And there were probably 50 possible items on it. And so many of them, I just looked back, and they’re just terrible ideas. I mean, it just would have been a disaster if we’d picked them. But as I was doing my research, ironically, the thing that stood out to me was I stumbled across a company doing personalized dog tags. So you know, like the little like, not not like the military ones. But like you think about like literally on a dog’s collar, the tag that says, Fido or whatever. They were selling those tags, but they were laser engraving them so I could go on, and I could say, hey, I want this color, and I want this name on it. And then they would you know, a few days later, it wasn’t FBA, they would, they would ship it to you. And the reason why it stood out to me is, I felt like, Hey, this is an example of kind of a sustainable competitive advantage, they obviously have some sort of an operation. And they’ve created a differentiation, where there’s 1000, people that will sell you generic, you know, little dog tags that don’t have the dog’s name on it. But they’re offering personalization. And that, and that added layer is really creating differentiation for them. And I think they’ve got a shot. And I wouldn’t be surprised if you told me, Hey, seven, eight years later, that that company is still selling personalized dog tags and doing well on Amazon. Yeah. And my takeaway was, even early on, I understood the dynamics of the way that you can get commoditized in a marketplace like Amazon, and that it really wasn’t going to be much of a win for us if we got to selling you know, some kind of a critical mass of stuff and a category where it was just a countdown until a Chinese factory came in and sold it cheaper than us and beat us on the algorithm. And so I started immediately saying, Okay, where can we offer something that is differentiated in a way that’s sustainable? Yeah, there’s the for us the short term answer was, there were some things we could do around the lids we offered and the price and the color assortment. In drinkware, it gave us the variables to kind of create that assortment, but long term, it became brand and realizing it’s interesting, if you look at the history of drinkware, there was a period with drinkware, like in this 15 16 17 range, where Walmart got really into white label, and doing Ozark Trail and stuff. And I thought the whole industry might just kind of commoditize into a white label kind of industry. And it just didn’t, right. Like the brand, people really do have brand preferences, and it was really strong. So I in general would say, I if I was starting over 20,000 hours, I’ve looked for a category where I felt like there was some dimension that I could be differentiated on, and in a sustainable way. And that it was a category where I could make brand matter over a one to two to three year period. And I would gravitate towards that. I guess one other thing I would look for today is I would look for what is a category where I think I could maybe eventually take this to physical retail. Because for us, pairing physical retail with digital distribution was a massive, you know, leg up and and so some of that could be looking at research of what’s going on in physical retail and where there there may be some opportunities, but I would I would definitely watch first on Amazon, you don’t need a bunch of money to do it, I’d find the point of differentiation and with the hope of building a brand and taking it on the channel.
Ben Donovan 24:08
Yeah, it’s a good context that you out there in terms of investing money in as you started to see that product market fit, there was validation, you kind of poured fuel on the fire there. I think that’s really good, really good context for people. But it’s a good segue into into retail. I know we had some questions on that. I’d love to talk about those questions and then finish up with talking about leadership I know is a something you’re passionate about. And there were some good questions on so I’d love to finish up on talking about that as well. In terms of retail at what stage of the journey did simple modern go into retail.
Mike Beckham 24:42
We got our first programs in I think it was early 2018. And yes, I think we sold into Target at the end of 2017 and it first started to show up in target in 2018. We we really identified fairly early on on Amazon, hey, we’re just doing very well with women 25 to 45, I had like done an internship in, in target. When I was in my in college. And just being in the stores, I realized, like, Man, that is the demographic target just as awesome with like, this is the combination, you know, our brand kind of sits at this intersection of quality and style and, and affordable price. That’s really where target is. And so we identified, hey, this is the ideal fit, if we can get into Target, I think this is where you know, more of our customers are there than anywhere else. And we were fortunate, I mean, I think two things helped. One, we had a great broker that helped us to get a meeting after months and months of a buyers wouldn’t even talk to us. But then we were really able to make a compelling case to target of every day you’re competing with Amazon. And millions of your customers are buying our product from Amazon, instead of you that that your customer is Amazon’s customer, and they are buying our stuff, we can guarantee you that they’re just buying it online and from Amazon instead of you. And you really need to be represented here. And that was a very effective, I think, value proposition at that point in time. So we were able to use the credibility that we had built from our success on Amazon. The other thing that’s great about Amazon is Amazon’s like a digital resume, you can you can just say hey, go Google simple modern, and you know, people see these listings with 50,000 reviews at a five star, you know, whatever. It’s just like, okay, I can see the volume, I can see the credibility and custom customers eyes. So we were able to sell against that. And and even as we’ve expanded into other parts of mass retail, it’s kind of the same story. There is a little bit of a herd instinct here of buyers look at what’s working for other buyers and working in other stores. And then something that’s really doing well, they say, Well, I think we need to be represented there. So for us, the biggest Domino was going from having one channel that was really doing well, Amazon, to getting a second channel doing well on Target.
Mike Beckham 27:12
But even getting into Target probably, I think that was a huge jump. I think there was another huge kind of milestone, when we really started to figure out what was the right offering the right prices, the right sizes, the right colors, and target. And that probably took us almost two years, we were fortunate that they gave us some rope to kind of swing with and figure out, hey, what really was it that their customers will it was it was fine, the sales were fine the first year, year and a half. But they were nothing special. Then by about the third year, we started to kind of leave the category. And at this point, we really, I would say probably leave the category for them. And so I would attribute that to two things. One is because we were wanting so much product online, we had a lot of data that we could look at, to help us figure out what was likely to do well, on shelves. And once we saw what was doing well, we could kind of say, well, what’s like that in our portfolio that’s also doing well, online. And then we were just willing to experiment and iterate. And again, it’s this having a long term mentality. Experimenting in mass retail is expensive. The way you really make money in mass retail place like Target is you put something on the shelf and you don’t mess with it for four years. So if you say hey, buy this bottle, and then a year from then you’re like actually changed that out for a different color. It’s hard to make much money doing mass retail that way. But we were willing to disrupt ourselves until we really found in fact, even this past year, we we really, as a category leader, we really disrupted ourselves, like the stuff that you’ll see and target in, I guess about two months is fantastic. It’s the best we’ve ever done at Target. In the entire time. We’ve been there by a pretty wide margin. But it was painful. We had a lot of inventory with the supply chain mess that happened in 2021. And there was a lot of incentive to just roll it forward and run it back. But we knew we could do better. And so even though it was financially painful, we disrupted ourselves. And I think again, that’s what companies that win tend to they tend to be long term thinkers and they tend to be willing to disrupt themselves even if it’s painful in the short term.
Ben Donovan 29:29
What percentage of your excuse do you put into retail then?
Mike Beckham 29:33
it’s a really small percentage, and we sell several 1000 skews, probably digitally. And we might have, I don’t know 100 150 that are in that are in physical retail. So it’s certainly a much smaller number. I mean, this was one of the things we had to kind of wrap our mind around on Amazon. A really good SKU because we have so many different colors and so many different sizes, you know might sell whatever 10,000 or 20,000, and a year in mass retail really good skew can sell a couple 100,000. And so it’s almost like an order of magnitude. So there’s some great things about that. But then there’s some, there’s some scary things about that, right? Like, if I’ve got a SKU that I think is gonna sell 5000 a year, but next year, it only sells 3000. Well, I’ve got 2000 Extra that, like, there’s ways to get out of that, that are not too scary. If I think askew is going to do 200,000 and target and it does 75,000 Now I’ve got 125,000 of that. And you can’t just snap your fingers, right? Like that’s like a city. That’s a major cities worth of people, you know, like, it’s an entire football stadium of people. And so that’s the one thing that’s challenging about scale is when you get to scale the missus even if they’re, you know, you can miss by 20 30% and it’d be millions of units. So anyway, that’s that’s maybe the the downside when you get to that scale, but you get operating efficiencies and some of the complexity goes down. There’s there’s trade offs.
Ben Donovan 31:02
Yeah, the size you’re out. Now do you have sleepless nights have you had moments where you’ve wondering if the walls are closing in your sounds like you’ve got a really slick operation going on. So I feel like you’d never have those moments. But
Mike Beckham 31:14
well, I’ve got a fantastic team. And that helps. Like, I think my stress level, I’m connected to a lot of the other really successful digital businesses out there. I generally sense that my stress level is lower than most of them. A lot of that is because I’ve I’ve got a very deep bench of leaders that are as capable as I am, that I really empower to run things. I think the the one of the last times that I really felt like, okay, the walls are closing in, was during the first month or two of COVID. So it’s actually kind of funny, you know, we obviously have a very big Amazon business. And at that point, it provided, I don’t know 70 80% of the contribution profit in the business. And we decided to make the transition from three P the marketplace to selling directly to Amazon as a vendor. And we knew that transition was going to be really messy. It had there hadn’t been a lot of them. But we knew that once it did happen, it’s messy. You know, you’re you’re transitioning your catalog from being managed in one system to another, a lot of stuff breaks. There’s all kinds of inventory complexities, it was going to be a mess, but we felt pretty convinced it’ll be worth it. We started that transition. The day before that famous Oklahoma City Thunder, Utah Jazz game that got cancelled right before tip because of COVID. When everything just kind of hit the fan, we literally started the transition like on top of that. So right at max chaos, we made this transition to one P all of our listings were broken. And then Amazon put a bunch of our stuff on one month, two month delivery timelines, they, they basically went through their catalog and 3P and 1P and they just kind of played kingmaker. And they picked what they considered were the top skews and in different categories and said they’re gonna get quick delivery and everything else is gonna get deprioritize. And so some of our stuff was still getting today, delivery and some others getting two month delivery. And the listings were broken, and we couldn’t really get good responsiveness from Amazon, because they were running around like their hair was on fire. Then target came and told us, Hey, we can’t even order from you right now. I mean, not only are not a lot of people in stores, but also like all of our buying budgets going towards, you know, essential like items and masks and hand sanitizer. And so it was really is funny because our team was ready for COVID We had been told by China that like, Hey, this is disruptive, it could disrupt the factory. And it didn’t take too much foresight to say, well, if it’s a virus, it’s probably going to get over here and it’s probably going to be disruptive. So I was telling our team before it happened even like hey, expect this to be disruptive. Maybe we have a week of lock downs or something. But I wasn’t expecting what happened. And when it when it happened, you know, the first week or two until my our team and like refine, this is fine. It’s good opportunity for us to learn and grow and push yourself whatever. And then there was a point I remember really vividly about three weeks in where it was like our Amazon sales had gone from we were hitting all time highs, right before you know the COVID The Stay At Home stuff hit two we were at like 20% of the volume we expected. And being like are we going to be fine. And there was a it was a challenging moment as a leader to manage myself. This is one of the things you know I’m kind of bleeding into leadership here.
Mike Beckham 34:50
But there’s four different types of leadership you do. And one of the four and perhaps the most difficult one is actually managing self and being be able to control my own emotions. And my own perspective. That was actually the first and most important thing that had to happen during that period there wasn’t, I could not impart what I didn’t possess. I couldn’t give my team a sense of peace and a sense, a sense of stability and vision and direction, if I didn’t have that, personally, and just like everybody else, there was a period there where I really struggled with what what does that look like? So we’ve been fortunate that the last couple of years have been mostly just things going well, I mean, that just like everybody else, we we our financials were not as good as we wanted last year, because we paid so much in logistics, and we had more inventory we wanted, but generally, the brand has been really healthy and just grown at a really great rate. But that stands out, in my mind is a really challenging period. As a leader.
Ben Donovan 35:52
Yeah. Obviously, speaking of leadership, it’s something that I know you’re passionate about, you talk about a lot, and really resonates with a portion, at least of the E commerce audience, they want to build your valuable companies, they want to build companies that make an impact with the products, not just sell trinkets on Amazon. And I think that yeah, really resonates with a group of people. You’ve spoken about being able to cast the vision for others, one of the questions that came up on Twitter was, yeah, how do you come up with that vision, you know, without meaning to be? Not not disrespectful, but you know, you sell drinks bottles, it’s not like, you know, you are curing diseases or anything like that. And obviously, there’s a no, there’s a load of charitable work you do and not mean to downplay it. But it could someone could have that argument? Well, you know, it’s an ecommerce company, how do you, how do you cast a vision for that, right?
Mike Beckham 36:44
Absolutely. Well, if you look at the book, Both Last, for example, which has been out for a long time, what they really come to is that the great companies, the enduring companies, they’re not actually first and foremost about selling a product or about making money, they’re about something else. And what that something else is actually can vary quite a bit. It’s not like, Oh, you have to be about this. It’s more that they have something more compelling and greater that they are about as at an organizational level, the way that I would describe simple modern is that we’re really what I’m really passionate about is organization building, and culture building. And we’ve specifically built an organization in a culture around certain values, and around a certain vision. That’s not probably for everybody, but who it’s for, they are incredibly passionate about people get incredibly passionate about being a part of this. And we just so happen to sell water bottles and tumblers, and backpacks and things like that. But I view it as that funds, the existence of the organization, which is really kind of the point. So we wanted to create an organization where hey, everybody who comes into contact is with us, you know, the shareholders, the employees, the customers or partners, the community, everybody’s life is better as a result. That’s what we want to create. But you can do that in a number of different types of business selling a number of different types of products. And so, So practically, how do you do something with this? I think what everybody is asking for what everybody wants, at least, if they want a picture of the future in their head that’s compelling, that gets them out of bed in the morning, and that they feel like they’re working towards and building towards, right. If you think about when we feel hopeless, or we feel discouraged, it’s usually when we’re just lacking vision for like, how is what I’m doing today building towards something great, right. And as a leader, like step aside from business, just say, as a leader, what really great leaders do is they’re able to paint that picture for people of the future that they want to be a part of, and say, Hey, come with me, this is where we’re headed.
Mike Beckham 38:52
So one of the ways you can evaluate whether or not an organization is doing a good job when it comes to vision, if you took five random people from the organization, you pulled them in a room and just said, Hey, let’s say you’ve won for the next three or four years, you know, everything that the organization wants to do is happen, you’ve been successful, what’s the world look like? And that those people could all give you a fairly similar answer that they’ve got a fairly similar picture in your head. So that’s the way that I think about vision casting, is first you’ve got to have a compelling vision of the future that people want to be a part of not everybody, right? But that at least for some people, this is going to be something that is like, yes, Sign me up. I want to live in that future. And then you have to paint that picture for people so that everybody has the same picture in their head. And we’re all working towards that. That picture.
Mike Beckham 39:47
So for us, like you said, it’s like well, in some ways, it’s like maybe we’re just selling water bottles. We’re just doing e commerce and we’re just selling water bottles. But for our team, every time I sell a water bottle like we just talked this morning about the good thing that we’re doing for this year and how we’re allocating it. And there’s a direct link that when I do a better job on planning this shipment, when I do a better job with the Amazon ad here, when I when we sell the right item into Target, right, then you know, another whatever $50 $1,000 Go to goes to addiction recovery with this nonprofit that we’re working with. That’s somebody’s life, that’s changed, I might not meet them. But that’s, that’s significant. But it also, it also leads to my life at the company and my ability to be saving for retirement to be changed. And it also leads to, you know, I see all the reviews on Amazon, even if I don’t meet the customer that gets the product, I know that it leads to them having a really positive experience, whatever. This is what we try to do here. And we try to give the ability for people to connect how they’re spending their time, to something greater than themselves. If you look at what people what drives fulfillment and satisfaction in jobs, it’s actually a list of four or five things. And the researchers have spent a lot of time on this. And as a business, every business can offer this to people regardless of what you do. But people want to feel appreciated for their contribution, they want to feel enabled, you know, they don’t want to feel micromanage, they want to feel entrusted with the ability to make decisions, they want to be able to exercise creativity, they want to be able to feel relationally connected to others around them. And they want to feel like what they’re doing that there is a tide of what from what they’re doing to making a positive impact in the world. Right. Regardless of the type of organization you run, regardless of what you sell, when you help people do that they are so much their their quality of life is improved dramatically.
Mike Beckham 41:45
And so for all of us, regardless of the type of business that you run, regardless of how many people work for your team, when you develop in this area, it improves everybody’s quality of life, and the enjoyment that everybody gets out of what they’re doing. I mean, one way or another one final way of saying this, we all work work takes up a huge percentage of our life, you know, from 20 to 60. And the question isn’t whether we’re going to work, the question is going to be, what do we get out of that? And when the answer is I got some money, then we got the lowest form of compensation possible, you know that that’s all we got out of it. and quality of life is so much more robust than that. And so that’s what we tried to build the company. We tried to build the company around those kinds of core ideas. And as a result, like we don’t have the turnover, and we have incredibly high engagement. And going all the way back to a question you asked earlier, I sleep really well at night. I don’t have to micromanage people, I don’t have to worry about hate is that customer support, you know, representative, do they care, they care as much as I care, you know, it’s a different role, but they really care. They represent the company in an outstanding way. And it’s possible to build these types of cultures.
Ben Donovan 43:04
It’s interesting, because I think as you know, as a business owner, I am incentivized to grow the business because I’ll earn more money, you know, if you bring it back just to money, but then I struggle sometimes, you know, when I think about it with my team, how do I incentivize them beyond just they’ll continue to get a job, because I feel like for a lot of people, that’s not a huge incentive. And so I’m like, at the moment trying to devise a profit share scheme, because I want them to take ownership in the growth of the company. And then they earn because of that, and I suppose maybe I’m too limited in my thinking, thinking just in monetary terms, with this generation that you’re working with, and that’s coming through. Some people will label them lazy, or they don’t know the meaning of hard work, they don’t want to work hard. How do you grapple with all of that and incentivize them? Is the altruistic nature of your company doing that? Is it doing all of that? Or is there a financial component that you do mix into that as well?
Mike Beckham 44:01
Well, yeah, I mean, it’s, it’s holistic, but you know, like, then are you married? Do you have a significant okay, you’re married? How much would you money would you pay? If you knew our let me, let me put a different way. How much money would I have to offer you? If the consequence was you and your wife would just be at each other’s throats and the relationship would be in a bad place? What would how much money would you be willing to trade for that? Well, there’s not an answer, right? I mean, it’s like it’s a rhetorical sorry, I answered it for you. But it’s like money, right? Because what I just talked about is a thing that drives quality of life for you. That is not monetary in nature. And this is kind of my fundamental point to people is that when you take a step back, most of the things that actually drive quality of life have nothing to do with money. In fact, money never drink springs quality of life. Money can be a thing that can be used as A way to accelerate things that do bring quality of life like so you could say, well makes me happy to spend time with my wife. And if I have more money, then I can go on vacation. And that increases my quality of life. But even then it’s a means to an end. And it’s not worth anything if the other non monetary things don’t exist. Alright, so if you’re sticking with me on that idea, everybody works this way. Right? So what we can do as employers is we can offer environments where we compensate our people in a lot of ways that are non monetary. Let me give a simple example. In our culture, we have a real environment of being encouraging with our words towards each other. Right? What is that worth? I don’t know. But it’s a lot. The quality of life impact a feeling like my co workers, my teammates appreciate me, and they tell me they appreciate me is worth a ton. And I don’t say this so that Oh, and because we do that we don’t have to pay people, right. That’s a bad perspective. But it’s more, no matter how much I pay someone. It can’t override the fact that everyone wants to feel valued and encouraged. There is no amount of salary I can offer someone where they no longer will have that need, and where encouragement and affirmation will improve their quality of life and in probably improve their quality of work, how long they stick around as an employer, whatever. And my argument, even if you’re like, okay, my, I’m super cynical, is way too fluffy. For me, I would just say, if you’re a shareholder, if you’re an owner, if you’re a CEO, what drives good performance, it’s retention. It’s people that are happy and that care. And it’s not dealing with turnover, it’s being able to recruit the best talent. You know, it’s things like this, when you get good at understanding that compensations real holistic, and it’s all these things other than money. And your organization gets good at compensating people in all these ways that aren’t just monetary, then it turns out, you also really went on the monetary side. And that these two things, it’s not an either or, but these two things coming together. So that’s the way that I think about it internally is, hey, I want to pay people really well. I want people to be able to win financially as the company wins. But that is just a small fraction of their actual like emotional state and well being and how they’re going to feel about their job, all this other stuff. I feel connected to my co workers, my co workers know me, I feel appreciated, I’m not micromanaged. I feel like my job makes a difference in the lives of other people, all this stuff. That’s, I can’t fix that with money. That’s stuff that you have to offer culturally, and you have to be deliberate about.
Ben Donovan 47:42
Yeah, that’s really good. Final question on on team, and leadership for newer entrepreneurs that are just sort of scaling up and starting to look at building out a team. Do you have any advice for those early stages of you know, getting the right people on board at first, but be also do you have anything as you’ve grown simple modern, any principles, like your thresholds of revenue to amount of staff, ratios, anything like that, that you have worked on? Or is it just been a little bit more intuitive than that?
Mike Beckham 48:12
So I would say, I would focus even even in the early stages, I would try and focus on a vision of like, what you want to be building towards, because that will really help you to grow into the leader that can create that kind of a culture. And it’ll help you to hire the right type of people to build that type of culture. And I think I had, I had one advantage with simple modern, that is almost priceless. The it was my second time to be a part of a really quickly growing company, I had done with my brother. And I had gone through kind of like almost the entire cycle, I’d seen the good the bad things that we did, that worked great, the thing the mistakes that we’ve made that I wish we could take back. And then I got another opportunity to go through a quick growth company. But with that knowledge, which made me way more deliberate about decisions I made with who I hired with the type of culture I tried to create with how I structured things very early on. And I think like most things in life, it compounds that when the earlier you start with some of these things, the easier it is to perpetuate them and the stronger they get over time. And the inverse is true that and I’m really sympathetic here because in the early days of a business, a lot of times it’s just like my hair’s on fire. I’m just trying to keep you know, the trains running, right. And so I can’t be bothered and thinking about culture or thinking about some of this other stuff. The vision I would give people if you are in that stage right now is the worst scenario. And I see owners get stuck in this is I’ve got something I’ve got product market fit, it’s growing. I’m not taking care of myself. I’m not being deliberate about how I handle relationships are maybe in terms of hiring for culture and just trying to grow the thing. And then they wake up one day, and they’re like, I don’t like the organization I’m a part of, I don’t want to run this company, right? So you know, you’re gonna have to why and whatever bed you make. And the quicker you realize that the earlier you realize that new organization, and you’re deliberate about it, then when you do if you do kind of get scaled up, like your ability to enjoy, what you’ve built is, is so much better.
Mike Beckham 50:26
So that’s, that’s probably the biggest thing that helped me in this is that I had a picture of what I wanted to build. I was deliberate about it. I think one other piece of advice I’d give to leaders that are in the early stages is you need feedback, like oxygen, you need feedback from the market, you need feedback from your your peers, and your your co workers. And you need to be receptive to feedback, like the one of the best things that I ate. So that’s definitely true in the market, you need to be running experiments need to not be saying like, I know what the customer wants better than what they want, like, you need to be really hearing from people and you need to be willing to change business strategies and pivot and adjust to what what you’re hearing. But on an interpersonal level, especially as you start to have some success, what can happen is you can be less open to feedback, especially critical feedback. And I made a decision when I was about 21, that I was just going to assume that if somebody had critical feedback for me that it was that there was there was truth to it, and that I should listen to it. And I went from having a default setting of like, when somebody has something critical that they say to me, they’re probably wrong, they’re wrong until proven right. And I flipped it. And I said, I’m going to assume they’re right until they’re proven wrong. And that made me a person who was willing to hear feedback. And because I was willing to hear feedback, it made people around me willing to give feedback. And because I was getting feedback, and I was willing to hear it, it helped me to grow at a much bigger rate than I ever would have, I could never be the person I am today, if I hadn’t gotten the gift of feedback from people over the last 20 years, and been willing to take it and apply it. And so especially like if you’re a if you’re the leader of a really fast growing organization, the organization cannot grow faster than you’re growing personally for very long without disaster. So if your organization is growing 100% year over year, I don’t know what growing personally 100% year over year looks like. But you’re going to have to be growing in your capabilities as a leader, as a manager, as a strategist, like you’re gonna have to be growing at a really high rate, and that is going to be messy. Otherwise, there’s going to start to be this disconnect between you and the organization, you’re not gonna be able to lead it.
Ben Donovan 52:43
Yeah, really good. And I think, you know, is a massive all of this a massive testimony of the way you’ve built the business and how to build something big, you got to build deep foundations. And I think you’ve done that. And it’s clear to see. And it’s it’s mind blowing ly impressive. So, Mike, honestly, I feel like we could talk about this stuff for hours. But I really do appreciate you taking the time to talk about all of this. You know, there’s so much more we could talk about DTC and US manufacturing, you guys are pushing boundaries on so many levels. So I really would encourage our listeners to go and follow you on Twitter. Is there anywhere else you’d like to send people anything else you want to add? Just before we close?
Mike Beckham 53:21
Yeah, I think Twitter and LinkedIn are really where I’m the most active right now. I want to say thank you to everybody listening to this stuff, you can always send me a direct message. I mean, I’m for entrepreneurs. And it is hard. And one of the things I want everybody to hear from me is that I really respect anybody that’s putting themselves in the arena and is trying and I the reason why I do things like this podcast, the reason why I did a social media is hopefully to be an encouragement, a voice of encouragement to those people. Because I’ve been through the ups and downs, the successes and failures. And I just want to be a resource for other people. So I appreciate you on the show.
Ben Donovan 53:58
No, and you certainly are, you’re a massive inspiration and resource for a lot of people. So thank you for investing your time and doing that. We really appreciate it.
Mike Beckham 54:07
Yeah. Thanks, Ben.
Ben Donovan 54:09
Good. Okay. Well, thanks, everyone for listening to the show. I hope you got as much out of that as I did really great show. If you want to check out the episode with Brian, Mike’s partner, he talks more about Amazon one p three B, all of that kind of stuff. Check out that episode in the show notes below. And make sure you follow Mike on Twitter. He gives so much value on there. And we’ll see you in the next episode. Same time next week. Take care