Painful Decisions Greet First-time CEO

Bryant Jaquez picked a heck of a time to become a CEO. A longtime CMO for direct-to-consumer brands, Jaquez accepted the CEO job early this year for BuddyLove, a Dallas-based women’s apparel company coming off a pandemic-fueled boom and a dismal 2023.

“The overhead and debt service caught up with them,” he told me. “Thus far my job has been a lot of restructuring, evaluating expenses, and making deep cuts — some were painful, such as layoffs.”

He and I recently discussed his journey — from chief marketer to chief executive — including decision-making, stress, compensation, equity stakes, and more.

Our entire audio conversation is embedded below. The transcript is edited for length and clarity.

Eric Bandholz: Give our listeners a recap of who you are.

Bryant Jaquez: I’m a serial CMO turned CEO of BuddyLove, a women’s apparel company based in Dallas, Texas. My background is in direct-to-consumer ecommerce. I’ve worked in the industry for 10 years. Until about seven weeks ago, I led marketing teams. I joined BuddyLove, my first CEO role, in early January.

A CEO at a DTC company must also be an entrepreneur. And I’ve always been entrepreneurial. You have to be obsessed with your work and love it. You must also be ready to take on all the stress and responsibility of running an entire company.

BuddyLove was started in 2010 by a husband-wife team, Buddy and Grayson DeFonso. Grayson designs all of our clothes. Buddy was running the operations but grew tired of it. He approached me and asked if I would be interested in joining the team.

I was ready for a change. There are limitations on how much a CMO can grow professionally. You’re either working towards an exit or trying to increase revenue. I realized that I needed to launch a business myself or run one. So it was good timing.

Bandholz: Is the job what you expected two months in?

Jaquez: BuddyLove hit $14 million in revenue last year — quite a bit smaller than the brands I came from but big enough to have money for fast growth.

BuddyLove is in a similar position to many DTC brands post-pandemic, post-low-interest rates. The company took on a lot of debt. They made some big bets with inventory and cash flow. It worked so long as sales doubled year over year.

Then they had a much slower year in 2023. The overhead and debt service caught up with them. So now we’re cleaning the balance sheet. Our focus is profits and scaling back to a lean company. Thus far my job has involved a lot of restructuring, evaluating expenses, and making deep cuts — some were painful, such as layoffs.

I thought I was good at handling pressure. I jumped on board and started digging into the numbers. I realized we needed to restructure. It took me a couple of weeks to catch my breath.

I’m happy to report that it’s working. We’re rebuilding the brand from the inside out. We’re keeping the soul intact — Grayson’s designs aren’t changing — but we are reimagining how things are run.

Bandholz: How do you earn the team’s trust as the new boss who lays off staff?

Jaquez: The day we did layoffs was one of the hardest of my career. I believe in honesty. I’m a high-care, high-honest communicator. After spending a few days digging into the books, I called the entire team together. I told everybody about the situation. I said, “This is where we’re at. This is the path ahead of us. It’s going to be painful. We have to make cuts. We have to get profitable. We have to spend less than we bring in.”

I tried to lay people off in the manner I would want if the roles were reversed. That included trying to help them find opportunities as quickly as possible. So on that day I posted on X, “These are the positions we let go. Does anybody need these roles?” Within 24 hours, I had opportunities for everyone who wanted them. A few didn’t respond to my attempts to connect them.

We were around 40 employees. Now we’re at about 24.

Bandholz: Many founders want to hire a CEO to grow the company. What does a CEO candidate look for?

Jaquez: For me it’s equity, skin in the game. I took inspiration from Elon Musk’s story of creating out-of-the-money outcomes and structuring an equity agreement to hit them. That’s what we did at BuddyLove. Every time we hit a milestone, it unlocks more equity for me. Right off the bat, I was in a better position than the one I left. So, the simple answer for an entrepreneur is to find out the compensation of the person you’re trying to recruit and make your offer much better.

That’s enough to pique their interest. Then you have to ensure you’re aligned on an exit plan and long-term goals. What kind of a company do you want? What do you sell? Hiring a CEO is one of the riskiest things you can do.

The CEO of a rapidly growing DTC brand likely earns multiple six figures annually plus equity. But here’s what founders need to hear about equity. I had an equity option at my previous employer, apparel brand Caden Lane, that would execute only at the point of a liquidation event. However, the founder was the sole shareholder and controlled when, if ever, that event would occur.

In 2021, she turned down an offer to sell for $100 million. My equity was essentially monopoly money because it didn’t mean anything unless we sold, and I had no control over whether or not we’d sell.

So, founders and CEOs should be aligned on when and how an equity stake can be monetized.

Bandholz: Where can people follow you and buy your clothes?

Jaquez: Shop for women’s apparel at BuddyLove.com. Follow me on X, @BryantJaquez.

Grow or Die, Says Momentum Shake Founder

Mike Tecku first appeared on this podcast in 2019 as an Amazon marketplace seller. Shortly afterward, he sold that business, a maker of floormats. He retired, became bored, and in 2022 launched Momentum, a direct-to-consumer nutritional shake producer. He and I discussed that venture last year in his second appearance.

He’s back. Momentum Shake is flourishing, as is Tecku. He’s evolved from the nuts and bolts of making money to achieving a purpose, building a team, and self-improvement. “If I’m not growing, I’m dying,” he told me.

Our entire audio conversation is embedded below. The transcript is edited for length and clarity.

Eric Bandholz: Your entrepreneurial journey is impressive.

Mike Tecku: Growth gives me meaning and a sense of being alive. If I’m not growing, I’m dying. The American dream of not having to do anything runs counter to human nature. When I retired, I got good at golf. I read many books but could not shake the urge to solve problems. I’d be in a store and think, “This is an interesting product. I wonder if I could make this.”

I got depressed when I wasn’t working on anything. I could feel myself shrinking. About a year into that, I decided I needed to re-embrace being an entrepreneur. That’s just who I am. Those are my gifts. I wanted to use my gifts and strengths, and now I had the privilege of using them in a way that I wanted, not just to survive or make money.

The world is constantly changing. To make something perfect is impossible, but you can pursue it by continually adjusting. The farther you get along, the more precise the destination is, and the more attuned you are to your goal. You gain knowledge and make better decisions. When you’re really into something, you’re continually growing and perfecting your art.

Bandholz: How does a company strive for perfection?

Tecku: You must develop trust with your customers so they know you have their best interest at heart. If we change the flavoring of our shakes, customers worry we’re making it cheaper when the reality is the opposite. You must be transparent with customers and communicate that you want to add more value without increasing their costs. It’s essential to zoom out beyond supply and demand. What advantage can you bring to the market besides making more money?

I want to produce a product 10 times better than everybody for the same price. Most businesses are just media and marketing platforms. They don’t touch the product. If they’re doing anything at all, they’re selling commodities. I want to make something that is a masterpiece and stacks much value into it.

That wasn’t happening with our outsourced manufacturer. I love those people, but they can’t innovate at the speed I want. I can cut costs by 30% when I take over manufacturing. I can shrink cash flow, increase quantity, reduce costs, and improve quality. The only way to do that is through owning the manufacturing process.

Bandholz: What are the pitfalls of in-house manufacturing?

Tecku: The first step is believing it’s doable. I spent 10 years thinking manufacturing was complicated and beyond my expertise. But I had to start questioning myself. Why can’t I assemble a team of intelligent, hardworking individuals? Why can’t I solve those problems?

The goal is to make manufacturing easy. If I can build something simple and scalable, it will be more secure and reliable. I like to forecast five to seven years down the road. What are my goals? I want to scale to a hundred million dollars. What does that look like in the number of units I need to make a day and the machines capable of that?

I’m buying machines to simplify and reduce the chance of error. We can’t eliminate mistakes, but we can streamline processes, steps, and inputs. The machines I’m buying should be able to make a thousand bags an hour with one employee. That’s a scalable system.

Bandholz: You have a single SKU earning thousands of dollars monthly. You’re not touching it. There’s beauty in that.

Tecku: It is beautiful because it frees me for growth and improvement. Recall the old phrase, “Work on your business, not in it.” That can’t change. You have to be on top looking at the pieces. My job is decision-making. I want two hours of hyper-focused thinking every day.

Constantly executing is not the best use of my skills. Some people are way better at it. I consider all components of the business to be assets. The manufacturing facility I’ve been building for the last six months is an asset. I want it to run perfectly without me. That involves the machines, the space, the team — every decision.

Bandholz: I struggle with shifting from the execution role into strategy and decision-making.

Tecku: I try to check with my team to see if they need something from me. I have to remind myself this is what they’re good at and that they appreciate my trust in them. If you want to create independent people who think for themselves, you have to let them fail. My job is to determine the next step. There’s no right path. It requires a lot of walking around, reading books, talking to folks, and paying attention.

Bandholz: Where can folks follow you?

Tecku: Our site is MomentumShake.com. I’m on LinkedIn.

How Merchants Rack-up Airline Points

Allen Walton is the founder of SpyGuy, a seller of surveillance cameras from his base in Texas. He’s also a world traveler and a seasoned acquirer of airline travel points. Ecommerce merchants who pay with a rewards credit card for advertising, shipping, and other expenses can “rack-up crazy points,” he told me.

In our recent interview, his third for this podcast, he elaborated on his methods for obtaining cheap airline tickets and hotel accommodations.

The entire audio of our conversation is embedded below. The transcript is edited for clarity and length.

Eric Bandholz: You are the points guy.

Allen Walton: I’m pretty well-versed. For almost 10 years now, I have been paying attention to points and miles and figuring out how to save money, especially on international travel. Many folks come to me for tips, and I am happy to help because I know how meaningful it is to lay flat on a business seat when you’re on your way to meet suppliers in Asia.

If you desire to travel, whether for business or personal, and you’re willing to learn some rules to redeem those points, you could fly business class from the U.S. to Asia or get just under $400 in cash. There are some tricks. Ideally, you must be flexible about when you fly out or your final destination.

Say you’re trying to get to Barcelona in the summer. There might not be something available that gets you the whole way there, but if you’re happy with ending up in Madrid or Paris, there might be something there that’s just a fraction of the price of trying to get to Barcelona. Flexibility opens up the possibilities.

Bandholz: What’s the process?

Walton: Airlines have loyalty programs. American has the AAdvantage program, United has MileagePlus, and Air France has Flying Blue. You can rack-up airline miles from standard fares and redeem those miles for tickets. You can also get airline miles just by making regular credit card purchases. You don’t have to fly on those airlines to rack up their miles.

“Anytime awards” or “everyday awards” are where you pick the exact flight you want on the same date you want, and the airlines will quote you a price that will typically be expensive in terms of points. On United, it might be 200,000 points from New York to Japan or New York to Hong Kong. But there are what’s called “saver awards.” On many flights, the airlines will designate a small number of seats at a saver rate, which might be much less. So, instead of 200,000 points, it might be 80,000. If you know the game’s rules, you can look for these saver seats, which aren’t on every flight, but you can book these awards at a fraction of the average points.

Bandholz: Do you have to switch credit cards to get the maximum points?

Walton: No. Getting a big signup offer, canceling it, and switch cards to max out the number of points is what somebody with a nine-to-five job might do because they don’t spend the amount of money necessary to facilitate redeeming points for miles. You do not need to do that as an ecommerce entrepreneur. When you factor in ad spend, shipping, SaaS, and paying suppliers, your monthly spend on a credit card is so much that you don’t need to do that game. You could stick with one, two, or maybe even three cards and rack up many points from your regular business expenses.

Bandholz:  What are the best cards for entrepreneurs?

Walton: There are a few for ecommerce entrepreneurs, particularly the American Express Business Gold Card. For the last decade, it was four points for every dollar of online advertising and shipping. That was big for anyone who advertised online or shipped physical products. You could rack up crazy points. AmEx recently tweaked that card. This year, instead of 4-times on shipping, they added 4-times on software and cloud computing. Klaviyo and ClickUp will be on that, for example. The card has a $400 annual fee but pays itself when you get four points for every dollar you spend. You can start redeeming that for business-class international travel or hotel stays.

The Chase Ink Business Preferred is the next option, but getting multiples of this card is much more challenging. Generally, you need a relationship with the small business banker at Chase, such as your local regional banker. This card gives you 3-times points on online ads and 3-times on shipping. It has a $95 annual fee and a 100,000 signup bonus. You could do a round-trip ticket from the U.S. to Europe in business class just from the signup bonus. And so it’s a card worth picking up if you’ve tapped out on AmEx cards.

You might want to consider looking at a hotel card for loyalty reasons. I have platinum status with Marriott Bonvoy because there are a lot of Marriotts. They give you a 4:00 p.m. checkout, an upgrade to suites, and a free breakfast. Sometimes you have to ask. They won’t do it automatically. It makes it a lot easier to get status for when you’re traveling and want a better hotel experience, specifically the late checkout.

Consider getting another card for any spending that doesn’t have a multiplier.

Bandholz: Where do you search plane tickets by point costs?

Walton: There’s a tool now that I love called Seats.aero. It scans the most popular routes every hour or so. It will tell you when the flight takes off, how many seats are available, and booking options. There’s a free version, but the paid version costs $10 a month and is worth it. They have a bot that crawls all the airlines’ websites. It will find what’s available at that saver level, what date it is on, how much the fees are, and how you book. It’ll explain all that right there, but it’s imperfect and doesn’t include every airline. It misses a lot of stuff.

Bandholz: How can folks connect with you?

Walton: My website is SpyGuy.com. My Twitter handle is @allenthird.

Marketer Finds Joy in ‘Bigging’ Others

Aaron Orendorff is a chaplain turned writer turned digital marketer. He was the first editor-in-chief at Shopify Plus and then vice president of marketing at Common Thread Collective, an ecommerce agency.

He’s now head of marketing for Recart, an SMS platform. His passion is empowering colleagues and clients. He told me, “I find joy in bigging others up.”

The entire audio of our recent conversation is embedded below. The transcript is edited for length and clarity.

Eric Bandholz: Tell us who you are.

Aaron Orendorff: I’m the head of marketing for Recart. We’re an SMS app for Shopify businesses. My claim to fame is coming up with Shopify Plus. I cut my teeth with Shopify early in ecommerce. I remember writing how-to guides and articles about why you should trust the cloud for ecommerce.

I then moved to the agency side at Common Thread Collective. Now I’m sending text messages.

I didn’t have any background in this industry, nor any clients, pedigree, or connections. My life radically changed a decade ago. I’ll celebrate 11 years of sobriety at the beginning of February.

At the time I was unemployed and unemployable in Klamath Falls, Oregon. I created a website and wrote 10 blog posts to make it look like something was happening. I bought a traffic course from Neil Patel. It said to purchase your first 5,000 followers on Twitter. So I did. I think it screwed me for quite a while, but it helped to look like I was a legit business.

Bandholz: You have a big Twitter following.

Orendorff: Yes. My production rate is so much lower than what I see happening in the world. I’m relentlessly enthusiastic. I find joy in bigging others up.

At my core, I’m a writer. I warn folks when I’m starting to work with them and say, “Listen, I’m going to light you up in this Google Doc more than you’ve ever been in your entire life. The fact that I do that is an act of love. I would not invest in this if I didn’t believe in you.”

Criticism is a gift. Criticism is love because it takes energy, and it takes emotional risk. It’s much easier to fix and ship a thing than tell somebody where they went wrong. You run the risk of them misunderstanding or thinking ill of you. And I care a lot about that.

Bandholz: There is a line between criticism and hate.

Orendorff: That’s a powerful point. I’m fascinated by how to get somebody; how do you get on their side and disagree with them? How do you rapidly build trust? What are the cues? What are the shortcuts to it? What are the heuristics? The rule of thumb?

Bandholz: It’s just authenticity, right? You have to be authentic. From there, you build trust. Where can people follow you?

Orendorff: @AaronOrendorff on Twitter or find me on LinkedIn. If you need help with text marketing, visit Recart.com.

Beardbrand Survives Its Hardest Year

Hosting “Ecommerce Conversations” is a welcome respite from my day job of running Beardbrand, the direct-to-consumer company I co-founded in 2012. I periodically post podcast updates on Beardbrand’s performance, hoping the transparency helps other entrepreneurs.

Here’s my recap of 2023.

It was a terrible year for me and Beardbrand. It was the first year we were in the red. We’ve always had around 15% margins, but not in 2023

I described the year in this week’s episode, embedded below. The transcript is condensed and edited for clarity.

Losses

Beardbrand generates revenue primarily through our website but also via wholesale accounts. Sales from our site were down 53% from the peak of 2021 — our best year. They decreased slightly in 2022, but profit increased because we lowered expenses. In 2023, profit and sales continued to decline significantly. A huge tax bill last April was the downside of being so profitable in 2022. We’ve always had tax bills, which we paid on time, but it was difficult this time with the other losses.

Then we got hit with a tax lien early last year. The state of Texas audited us for sales tax compliance. We had to pay additional taxes, penalties, and fees. They gave us 30 days. Fortunately, we run a very conservative business and have emergency savings. We paid the state and the IRS simultaneously, plus some hefty bills from the holiday season. Thus all our cash went out the door at the beginning of 2023.

Another loss at that time was a mistaken 100%-off discount code. I created it about eight years ago, and somehow, it was reachable on our website. It was leaked to a Facebook group or on TikTok. We had roughly $30,000 worth of products purchased with this code. None of us here caught it.

Target was a key wholesale account for about five years. We lost that business in 2023. The staff there simply stopped replying to our emails after we proposed 2023 plans. We emailed, “If you don’t reply, we’ll assume you won’t carry our products from now on. We’ll adjust our order projections.”

We had purchased a lot of specialized inventory for Target that we could not sell elsewhere. We destroyed about $500,000 worth of unsalable products at the end of the year. Additionally, Target now claims we owe chargebacks for markdowns, which we strongly dispute. They have refused to pay about $170,000 of invoices over the disagreement.

We faced more challenges. My business partner had her third baby and decided to step back from the company. It’s been a challenge not having her in the day-to-day. We furloughed our entire team to half-time this past summer, and our organic YouTube content performed worse than ever. We tried TikTok Shops with the recommendation from Paul at BK Beauty, but it wasn’t effective for us. Lastly, we were sued for accessibility reasons despite the website’s excellent accessibility rating.

Wins

Our biggest win was having enough savings to cover our losses, tax bills, and unsalable products. Conserving cash over the years finally paid off.

We were fortunate not to have lost employees. Everyone we furloughed stuck through the hard times and returned to full-time in August.

Since June, we’ve been profitable, but not at the margins I’m comfortable with. We’ve plugged the holes in our boat. Now we’ve got to get the wind behind the sails.

Part of our sales drop was due to manufacturing glitches and launching products that did not meet customers’ expectations. We’ve resolved many product concerns by returning to our old-school formulations and finding manufacturers who align more with our production needs.

Another win was raising our prices in June. Our average order went from $48 to $60. We’re getting fewer orders, but our per-order fulfillment and shipping costs are a smaller percentage. That’s been nice. We pay less to our outsourced fulfillment vendor.

Another big win is increasing sales from product subscriptions. We went from about 1,100 product subscribers to about 3,000. I see that growth continuing into 2024.

For years we did not sell on Amazon. We launched there in 2023 and reached a $1 million annual run rate by year-end. Hopefully, Amazon will become a seven-figure channel in 2024 and beyond.

A final win was starting a new marketing strategy. After talking with the founders of Batch cannabis, we introduced an affiliate program. We’ve had good promotions and referrals from our affiliate partners, with excellent articles and other placements. We hope the program grows, not just in affiliate revenue but also in improved organic search traffic.

Looking Forward

Despite the challenges, I remain optimistic. Twelve years in, I’m as motivated as on day one to roll out new products and serve our customers. Tough times require perseverance to pull through.

We had many manufacturing problems in 2023. We’re excited to grow with a manufacturer that aligns with us. We will take it slow, one product at a time. We’ve learned the benefits of a tightly aligned partnership with one manufacturer versus diversifying with several.

We continue to focus on Meta for customer acquisition. We haven’t given up on our YouTube organic strategy. We plan on introducing a new video format. If that does not perform, we might shut down YouTube organic and focus on other avenues. We hope Amazon sales continue to grow and eventually replace what we lost on Target.

But our top priority is getting back to 15 to 20% profitability. That would help me sleep better at night.

I want to build Beardbrand. To me, the destination is the journey. Creating a business my kids can grow up around brings me joy and excitement. I’m aiming for a generational company that my kids and grandkids can run, allowing our family to live happy, healthy, functional lives. That’s why I show up every day.