Insights to building a foundation of successful brands online ⎜ Foundry ⎜ EP 165
Ryan Cramer: What's up everyone. Welcome to My Corner Of The Internet. I'm your host, Ryan Cramer. And this is Crossover Commerce presented by PingPong Payments, the leading global payments provider helping sellers keep more of their hard earned money. Hey everyone, happy Friday. Welcome to another episode of Crossover Commerce. I'm your host, Ryan Cramer, and this is my corner of the internet. Like the intro said, where I bring you the best and brightest in the Amazon and e- commerce space. That being said, if you're new to the show or if you've been here for all 165 episodes, welcome back, and welcome for the first time for those new Watchers and listeners, whether it be on LinkedIn, Facebook, YouTube, or Twitter. Or if you're listening to us on your favorite podcast destination, whether it be Apple podcast, Spotify, Google, or Foundry... I should say Stitcher not Foundry. Foundry is a company we're talking about today, but Stitcher, whatever your favorite podcast destination. You can find everything actually, all past 164 episodes. You can go to usa. PingPongX. com/ podcast. Very simple. Everything's gonna be there in terms of the transcripts, episode by episode breakdowns, key takeaways, as well as just learning more about our guests. So, that being said, welcome if you're new, again, to the podcast. You can ask your questions live in the comment section. It's gonna be really easy to find, it's gonna be below the video portion, whether you're scrolling through, you're doing some work this morning, you're grabbing some cup of coffee, and you wanna just listen to high level and great content about this topic that we're gonna be touching on today. Go, ahead and ask your questions, whether it's for myself or our guest. It's an open forum and it's very relaxed episode. So again, welcome. On this Friday, we're gonna keep it really fun and exciting for you, the listener and the watcher as well. That being said, Crossover Commerce, before we get too excited and into our episode today, Crossover Commerce is presented by PingPong payments. What's a PingPong payment? You might ask. Well, that's a great question. PingPong is actually a cross- border payment solution. If you are an Amazon seller or you're a business in general, that is trying to pay your manufacturer, distributor in a localized currency, PingPong is the company for you, whether it's paying your VA, your suppliers and manufacturers, like I said, trying to save some money and get your products to you quicker. Instead of going to a bank, waiting for that international transfer to hit their bank accounts, and then for them to exchange your fees or exchange the currencies, save more on fees, get your money to them quicker by using PingPong payments. Also, if you are selling internationally, you wanna make sure that you can receive in multiple different currencies instead of having Amazon convert it for you. That's expensive. You don't want them to do that. Of course, we're trying to save on fees here. So, use a solution like PingPong payments to help you save money and put it to your bottom line. That being said, check out PingPong payments, or you can go to the links in the comment section below, and let them know you heard about crossover PingPong from Crossover Commerce. Thank you PingPong, and thank you for sponsoring Crossover Commerce. That being said, again on Friday if you're, again, a fan of the show, a friend of the show, I like to have a lot of fun, and I like to talk about some of my favorite topics in the space right now. And I think that there's continuing buzz around this space in terms of aggregation, brand building growth, hyper growth companies that are trying to take brands from, whether it's success already in the space to the next level. And I think that is one of the most fascinating and obviously very young spaces in our industry to date. That being said, there's lots of different companies continuous to pop up. We've had lots of them on the show and provided great content, but there's also people that have their expertise and backgrounds of why they get in into it, which is the most fascinating aspect. Whether it be, they worked as a third party seller and have built a brand, they have this finance background and this is an investment opportunity, or they actually just come from Amazon themselves, and have said, my next opportunity is actually going to take what I've seen and help build out myself, and I'm gonna do that for other people and kind of make a different run at it in that regards. And that's kind of what we're gonna be talking about today, is the insights and what I've called this episode, The Insights to Building a Foundation of Successful Brands Online. That being said, branding is kind of my forte. I think I love it when people want to come out of business in terms of building a brand instead of a simple product transaction. I think that this industry is moving towards how to operate as a brand, and everyone has a different definition of that. I think a brand is something that's recognizable by either the icon or the graphic that it might be representing, or by the product itself. And for a fact that, Hey, that is what this brand is, and I can recognize the thought, the feeling, I'm supposed to get by looking at that product or looking at that website or looking at that company and saying, this is what I'm supposed to feel and know what they're about. That is a brand and a simple definition. But that being said, we're gonna start and talk about obviously the building a foundation of the successful brands online and what it takes. Truly, it's a really difficult thing to do, trying to fight your way through the crowd. But how do you stand out and how do you make that brand sing and make it profitable and help it grow? So, I brought on, now gonna be friend of the show, founder or one of the co- founders in basically the acquisition strategy, a lead for the company, Foundry, who just as of March, they actually, we were talking pre- show, but as of March, announced that their$ 100 million raised in terms of finances, and now they're building brands and acquiring brands to help them grow. And they're all a fully remote team. So, doing this fully remote during the pandemic and operating at scale. Brought him on board to talk through his background and experience in this space. So, without further ado, want to go ahead and bring onto Crossover Commerce, Kyle Walker. Kyle, welcome from the West Coast. You're all the way in Seattle. So, welcome bright and early today.
Kyle Walker: Thanks for having me, Ryan.
Ryan Cramer: Yeah, of course. So, I kind of give you, that was a really terrible introduction of yourself. We were talking pre- show about all of the great things that you've done in your past. And you and I found this commonality between, we have this breadth of knowledge instead of this depth of one specific area. But for people who haven't known your background specifically, kind of, can you give us a quick, either 60 seconds kind of brief rundown of your background and why you are where you are today?
Kyle Walker: Yeah. So again, thanks for having me. I really started out of grad school as an instructor at the university of South Florida. And from there, went into working in sales at Nike Golf, spent some time then as a merchant or buyer, exporting goods for a lot of golf categories, spent some time in eCommerce operations at GMC, and then the opportunity to get a little bit closer to home. I grew up in Oregon. We had just had our first son. The opportunity to get a little closer to the grandparents presented itself and the opportunity in Amazon, and arrived at Amazon in 2013. My team originally managed about the top 20% of sellers on marketplace. So, I was an account manager and leading that area. And from there really, in late 2014 saw, as, as you said, in your lead up, that brand revolution of people launching businesses direct to consumer, whether that happened in crowdfunding, whether that happened through advertisements in social media, whether that happened just primarily on Amazon, I think our marketplace needed to evolve to support brand owners in a different way than we supported resellers. And so, we started a program called Amazon exclusives, which is now part of Amazon launchpad. So, was involved in both the creation of both of those programs. And I always say that our team, many of the things that you see in seller central, whether it's the brand analytics portal, whether it's a new brand registry program, whether it's new advertising tools or access to deals, a lot of those things were driven primarily or partially at least by our team being able to kind of surface that those things have value to brand owners in how they use them because our team was engaged with so many brand owners. We probably worked with around 10,000 brands over my seven years, give or take. And so, you start to recognize a pattern of what makes a brand, what makes it last, what the foundational pieces are that are gonna predict some growth. And from there, spent the last couple years of my time at Amazon really in the M and A space, options for brands in exchange for kind of service related contract, where we would give somebody better service account management, advertising, handle some of their marketing for them in exchange for kind of a greater level of partnership with the company.
Ryan Cramer: That's amazing. So, what made you... I've always found it fascinating, working for a company like Amazon is fantastically huge. There's so many different.... The people I talk with, that are still even there, they're saying we are almost pretty much siloed. And it's really difficult to understand that concept because it's such a massive machine. There's so many cards on the wheel. But the impact is so great on the scale for us in this industry. I always find it fascinating though. Why would somebody want to leave something as large and as growing as Amazon, and kind of do their own thing? For you, was it a nature of like personal preference or was it just like career growth or what was that reason for you to kind of step away from of massive company? Again, you see it across the board of big companies of like Facebook, Google, they go do their own thing and they grow a huge business. Was it that nature that you wanted to build something from the ground up then and that was with Foundry? What was that conversation like for yourself and your family?
Kyle Walker: Yeah, I think I've always had somewhat of a entrepreneurial bug. I just the picture wasn't clear of what it was gonna be and what I was gonna do. And I think in combination with the fact that my seven years at Amazon were great, the experience was great being at marketplace during that time. The immense amount of growth and importance of marketplace from 2013 to 2020 is pretty crazy. If you look back at some of the statistics and all the things that come out in Amazon's press releases, if you go back to 2013 marketplace was a great business and probably accounted for give or take around 30% of total consumer sales. And you see where they're at now saying it's over 50%. That's a lot of growth. And there's a lot of different contributing factors and projects and things that happened behind the scenes to contribute to that growth. And it was really all about serving the sellers on the marketplace better so that they could better serve customers. That was a fun time to be around. But I think always having the entrepreneurial bug and wanting to get back to... I really enjoyed the, I guess call it the service to the brand owners. The fact that our team for five of those seven years, or six of those seven years even, was really kind of your liaison to understand more about Amazon. We couldn't obviously share everything from inside, but when people didn't understand a policy decision, when something was going to change, that was potentially gonna have an impact on their business. And to be able to help them through that moment, not because we wanted credit for it, but just because it was the right thing to do to help them, it became clear I think to me last Summer, but that was a real passionary, it was a real calling for me. And having the ability to help people on the outside was a need too. And so, I started a consult company last Summer called the Lab and did that for a few months as we were figuring out what we were gonna do with Foundry. And I think Foundry was probably one of the more exciting ideas that came across. As we started talking, obviously you mentioned at the intro, there's a lot of people in the aggregation space. And so, I think as we thought about it, myself and one of our other co- founders, we have almost a combined 24 years of Amazon experience together, all of which or most of which is in marketplace. And so, we built a career around kind of the service to these sellers and watching them grow and thrive. And we thought to ourselves, if you're gonna go do this, how are you gonna be different? And I think we started sketching out ideas that are still true today, which is, we think we can be different and unique, and bring something unique to the table. And one, the service to the founders, it's not an accident that our name is Foundry. We want to leverage the relationships that we have with the founders, whether that means continuing to participate in that brand and leverage some of our resources to do so, to go faster, we see those as win- win scenarios. Two, I think to your point, we're really looking for brands and we go through the same exact discussion that you described. We were not interested in finding just a product company, we're looking for something that has the foundations to be a decade durable brand. And then we want to ultimately be stewards of that brand to help unlock future value going forward. And then three, I think our capital being equity, as opposed to debt, gives us the ability to think long term, invest in the right things for the business, which is software and tech, the team, to be able to live up to our commitments to these brand owners, and ultimately invest in the right things in the future so that we are sustainable and we can't have that type of impact. And so I think we look for decade durable brands. We really come from an all operations background, which is a little bit unique in this space. And so, I think we felt like there was enough uniqueness that we'd have an opportunity here to have a positive impact on this industry.
Ryan Cramer: Right. I want to kind of go back because there's a lot you threw out there, that I think there are a lot of major bullet points that a lot of people, especially in this space, try to make that distinction between companies and why one can" raise$ 2 billion". And that that's put out there, or a company can raise$ 25 million. So, what's the difference. And you said something that is fascinating that, I've always heard that you guys, or that Foundry has been successful at is that, I wanna say majority, if not all of the money that you've raised, is all gone towards equity. Is that correct? Or is that fictitious?
Kyle Walker: Yeah. That's completely correct.
Ryan Cramer: So, for the listener out there, I just wanna make clear, and correct me if I'm wrong, money towards debt versus money towards equity is actually very important to understand, and this is just in business 101, is money towards equity into a company is investing into the company itself, whether it be it's not like a pot that you can pull from in terms of like buying or it's in theory available for that company to tap into. Equity, in itself, is we wanna share the company, we are locked in. We think that you and the team or the company itself is going to grow. So, we are putting our own money where our mouth is, and we're investing in you the people and not you, like, " Hey, we have available capital for you to spend if you need to tap into", is that more or less the difference?
Kyle Walker: Yeah, I think I would say there's not a right or wrong. It doesn't make one better or worse. I think what matters is that it matches your overall strategy as a company. And I think for us, we said we want capital that we have available to be able to buy the right brands. We want capital to be available to invest in the right infrastructure, and be able to do that head of potentially acquiring all of these brands. Because again, if you're building the airplane as you flying it, it can be a little bit turbulent at times. I think we thought we wanna invest for the long term. And I think having equity allows you to do that. I think the difference, and again, there's no right or wrong, but I think the difference with debt is you're constantly servicing that debt and that debt usually comes with some kind of covenants. You can only buy things that look like this. And you're constantly servicing that debt. And so, you're gonna pull a lot of levers, I think, in the short term to be able to service that debt. Whereas I think we can think a little bit more long term about what the true best thing for the business is over a five or 10 year window. Now, obviously we're not trying to not focus on the short term as well, but I think we can make slightly different bets. And I think it aligns more to what we thought about it at Amazon, or you read in Jeff's press releases around earnings time or used to. Now Andy's in charge. But one of the comments was we're always investing for the future. We're always thinking long term. And I think the equity, we felt like had to match our business model, because we wanted to be able to invest in long term as well. It's less of a focus of, " Hey, how do we pull this lever for three months and then figure out what we're doing". It was more like, " Hey, we've got a strategic vision of what the next five this 10 years look like. And that capital is an important part of being able to get there".
Ryan Cramer: So, I guess in that regards, my curiosity always gets it better me. Why not build it yourself as a team, come together and say, we're going to do all the product research, we're gonna develop all in- house instead of do the Acqui- hire or almost, not the Aqua hire, but almost the take on what other people built on and then grow up from there? What was that distinction between your and new team are like, " Hey, we know the ins and outs, we have good logistics, we have all these different opportunities, we know the spaces we can attack and target". Why not put that route and build it from a ground up, instead of taking on and then grow from there?
Kyle Walker: Yeah. To make sure I understand the question right, in terms of developing our own house brands as opposed to buying other brands?
Ryan Cramer: Correct.
Kyle Walker: Yeah. It's a good question. And it certainly gets into a little bit of a gray area, because even if you're buying a brand, that brand's gonna look noticeably different in five years than it looks today. And it's probably gonna look a lot more like a brand that you've had some touch or feel on over that five years, and it's probably gonna depend on things like new product and other things. And so, it's a good question. I think originally the thought is that there's a lot of great brands out there that just haven't had the ability to scale for whatever reason. They've made a great connection with customers already, they've got a great product. But a lot of the brand owners that I knew, they struggled because they were only one person. So, they might have been resource constrained. You're certainly gonna make different decisions if it's your money, or you're trying to build this business sustainably over time. and each decision that you make causes some amount of risk to your ongoing financial future. You have all this money tied up in this business and you're gonna make different decisions than if you had, say unlimited capital or unlimited resources, you might see three to five opportunities that are three months, six months down the road that you could pursue and you feel really convicted about those things. You're just probably not gonna pull the lever on all of those things, because you're gonna do that and kind of incrementally over time so that you don't create too much risk for your livelihood. But I think that the foundations of the connection to the customer, the creation of great products, those are things that... I think we have resources, we have a team, we have the capital to be able to invest in those businesses. And so, getting back to the earlier point of really wanting to understand how we can best serve the founders and support them, part of that is, look, if there's these obvious things that you could have done if you weren't constrained by maybe these two factors, if we have those two factors, then let's figure out how we can put our heads together and win together. And I think that's kind of a central thesis of what we're doing here.
Ryan Cramer: Gotcha. So today, do you publicly disclosed how many brands you're operating or is that still an in- house? You're still growing in that factor and you guys don't disclose how many brands you guys operate.
Kyle Walker: Yeah. We'll probably keep that closed for now, but we've bought several. We've got several others that'll be closing here shortly, or we expect to close here shortly. And really, the focus for us was, if you're looking for decade durable brains, you're gonna have a little bit more of a filter. We're looking for these really specific things. We have 32 different data points that we look at on each opportunity that comes front of us. And we knew that we're probably gonna buy a fairly low percentage of all the deals that we view, because we view making the right decision more important than making a lot of decisions. Quality over quantity. And so, we continue to seek out great brands. There's a lot of them out there. And I think it's just about staying disciplined to our approach, because we know. And now being six, seven months down the road, we've also seen many deals that we ran through our scorecard, we happened to like them, we happened to really like the founder, and we see what the performance looks like, and each one of those data points continues to make us smarter over time as well.
Ryan Cramer: I love that. I think you brought up a couple good points, Kyle. I'm curious to hear your thoughts. When you're looking at quality over quantity, and I think when you're looking on Amazon, you kind of look at quality in a couple different ways. You look at the BSR as in the top five, hopefully, you're looking at something who has been around a long time, has lots of great reviews, verified products. Again, something that's not trendy, but it's more of an evergreen product. If that makes sense. Something that people are gonna constantly need. I heard the other day, obviously like pillows or gadgets in the kitchen that are consistent, like a slotted spoons, things like that. They're pretty consistent that you can and have lots of quantity. There's not too much things to change. It's just for a fact it's gonna be pretty consistent and that's the quality. It's gonna be in the top five consistently. Is it that what you're searching for, or is it something that has potential? And you alluded to it earlier, maybe they're on page three or four, and they just don't have the ability to break through the clutter, but they have such a great product and idea. And it's like, " Man, if we had the right capital, if we had the right ability to get it to page one, it would be a lasting product for five or 10 years", just needs that extra push, which is more of the quality aspect that you're searching for, or is it both?
Kyle Walker: I think it's a combination of both. We're certainly not expecting perfection, otherwise why would you be interested in selling? And furthermore, what impacts could we have post acquisition? And if it's already in perfect shape, what positive impact could we possibly have? So, I think you're looking for both. You're looking for these building blocks that you think have untapped with future potential if certain conditions are met. And some of those conditions can be, Hey wouldn't it be helpful if you had somebody that maybe understood a little bit more about how the system worked and maybe could make a few tweaks here or there and unlocked some few at your potential. And if we can do that, I think your question really comes down to timing for us. You're trying to find an opportunity that, if certain conditions are met, there's future value to be created. And in most cases, we have to feel like there's something that we can do to positively impact the business, or it's not gonna be of interest to us. I think we're really focused on trying to find what are those, here's the snapshot in time, what are the levers that we're gonna pull, and what's the, what's the impact that that's gonna have? Because that gives us a better idea of what the future value of that business is. And being able to see that, and then have a positive impact in a way that we want to be good stewards of the brand too. We're not trying to take over a brand and completely change what made it successful to that point either. We view our obligation to the founders as building on what they have, not tearing it down and building it new all the time. We'd like to be able to find those levers that just haven't been pulled because of maybe capacity, resources, capital, et cetera. And then having a lot of experience on our team that comes from digital commerce, that comes from Amazon, understanding a little bit more about how that world works, allows you to see a few more opportunities that maybe others don't.
Ryan Cramer: Amazing. And for everyone's tuning in again and listening to us again, we have Kyle Walker from Foundry Brands, a former VM of Amazon, former of lots of different major companies that has had the opportunity to touch tens of thousands of brands and see how they're able to help them grow. I'm fascinated by the concept between brand on Amazon and brand off of Amazon, Kyle. I have this distinction I've seen over the past, 18 months or so, that since this beginning of what the term aggregator has meant in space, that something has been perceived as so many different things across this, like growth managers or however you want to deem the ecosystem in itself. I've seen this transformation from, we want all of our brand success in sales for that company, if we're gonna acquire them to come mostly on Amazon, but I've seen a shift for some companies that have now would like to kind of be a little bit more omnichannel, it would be more, Hey, maybe it's 70% Amazon, and more direct to consumer, or through other kinds of marketplace growth opportunities. Is that something that you and your team have talked about of, Hey, a brand in itself can't just solely be functioning on Amazon. It has to exist outside out of that, albeit very large eyeballs and transactions happening there. What's kind of that mentality behind where you see, as a brand. Is it just existing and mainly selling on Amazon or is it gonna be that omnichannel approach as well?
Kyle Walker: I think ultimately, any brand wants to sell wherever their customer is transacting. So, if you found that customer on Amazon and they want to transact on Amazon, then you'd like that opportunity. If they want to transact somewhere else, you'd like that opportunity over time. I think we discuss it a lot, and a lot of our conversations come down to there are different mechanics. And one of the things that we always talk about is, within this aggregation or digital roll up space, there's gonna be multiple winners. I think if there's one piece of advice to everybody that's thinking about selling their business, it's that, go find out all the different things that everybody's offering, because there's not just one option to sell your company. There's a lot of companies out there. And you gather more information, and I think you eventually start to realize whether it's a fit or not. If you talk to a lot of people that have exited a business, the first thing that they'll tell you is that, the money, the terms, they're certainly important because you poured a lot into your business and you want that validation of getting that back out, but more often than not, the conversation will always start with, for somebody that's exited, if they have any types of regret it's that, I should have talked to a few more people because I'm not sure or I sold it to the right party that has the same vision that I have. And you realize that a lot of people in this space get enamored with the dollars and they think, oh, well I've only got one place to sell it and I need to chase this. And what you realize over time is that, most people that have done that, end up coming back and saying find the right fit. The fit is the most important thing. Obviously the terms are gonna be fairly similar, because the market is what the market is. But find the right fit. Somebody that you see a lot of similarities with their company, the people in the company that are gonna be having an impact on your brand, et cetera. And then back to your... So, a little bit of an aside there, but just a little piece of advice. But back to your original question, I think there's value in both, and that's something that we constantly talk about and we've been open to as well. I think it depends on your business model again. There's a lot of things that Amazon marketplace gives you to streamline your operations and allow you to scale up to a point that you might not be able to if you had to build all that infrastructure on your own. Conversely, I think having a direct relationship with your customers is extremely valuable too, and without having necessarily always to have that go between. And so, looking at brands that have a presence in both, we just have to have a different lens for how we view their connection with customers through both. Doesn't mean one's right or wrong. But I will say you have to, as a team, have different capabilities built to support those businesses. You have to be able to support a business in a direct to consumer way different than you would support a business on Amazon. And so, I think it's really about making sure that you have the team, and the function, and the playbook to be able to operationalize that over time as well.
Ryan Cramer: Makes sense. I guess my other thoughts would be, for you guys, as you're building out this brand, why be brand agnostic instead of be more focused in terms of, Hey, we're gonna crush it with the home and garden, or the kitchen, or the supplements, or some sort of specific category where you can create SOPs. You can really be that go- to, and just really take over that kind of category in terms of acquisitions and know that background. Why be agnostic versus category specific?
Kyle Walker: I think there's value either way. I will say our company tends to focus on a few categories. I think they're a little bit broader potentially than if you think about the taxon of Amazon, you have categories, and you have subcategories, and you have keywords and all of that stuff. We certainly have done our research down to the keyword level as well. But I think we think generally more in terms of categories, because I think you find a lot of founder led companies that have a presence across several different subcategories. So you're not just buying one product in one subcategory, which is a little bit cleaner line, and you're buying this company that has potentially a presence in several different subcategories under a category. And so, we had identified originally as part of our investment thesis, really four pillars that we kind of wanted to focus on. Because to your point, you can streamline operations, you can understand more about market, et cetera. But I think we always left ourselves open to saying those pillars might only make 70, 80% of our portfolio. A great brand is a great brand, and we should always be open- minded to what opportunities come. And there's been several times that that's proved out true, where originally we saw a brand or a company and it was slightly outside of maybe the category that we had defined, or the four categories that we defined really, and we looked and we said, if you look behind the numbers, if you didn't know what the category was, it exhibits the same principles of how we identified the first four categories to begin with. And so, this might be interesting to see a few more cards here and understand more about the business, and it became more interesting over time.
Ryan Cramer: I like that answer for sure. Would you ever go about buying either a brand that's not a three P seller or brand... What I mean by that is, would you buy somebody who operates wholesale or does retail arbitrage? Is that something that's even in the cards or the deck for you, or is that just something that you, as a company, you don't feel scalable or the business model is just a little too nuanced for you as a company, how you're set up right now?
Kyle Walker: We're open- minded, but I think we're primarily focused on those marketplace brands, mostly because our background is in marketplace, and our background is on brand building and the tools that brands use to build themselves. And so, that's gonna be our primary focus. That is our focus today. I think over time, who knows? I think each potential opportunity has to be... There's always this delicate balance of trying to find things that are right down the fairway that you know exactly how to kind of measure and provide impact for, and then there's other opportunities that present themselves that are great opportunities that involve a little bit more open mindedness and diligence to try and figure out what the business model is, how you could have a positive impact. I think most of our team in operations really from the onset have been built out to support brands that transact in either a B to C way, or B to C through Amazon in marketplace. But it doesn't mean that we're closed minded to learning more about other ways. And we're obviously gonna evolve as a business over time as well, but I think our focus right now is certainly on marketplace brands.
Ryan Cramer: Sure. And the reason I ask, it was actually something that came up in an AMA I hosted yesterday for a pretty big Facebook group. The notion of, do people acquire brands outside of just third party brands? Obviously one P would be another major corporation, that's completely different segment. But in terms of wholesale or even in the terms of retail arbitrage. For example, Pharma Packs who just announced that they're going public, and I know this is kind of, they were one of the top U. S sellers as a brand, but all of their inventory is built around arbitrage and buying other kinds of goods and then selling. Didn't even mention that they were gonna be profitable until I think two years from now, which is kind of the... Believe it or not, crazy to believe. So, I know the models are completely different in terms of buying and selling an inventory or all over the place. But it is something like that where they're going through a public acquisition to be publicly offered. Super fascinating to see that is a business model that can" yield profitability", but then also is a brand in itself, because even though it's a different model than traditional third party brands that aggregators or role of companies are acquiring, that there are these other opportunities. Like you said, it might be too big for why would you want someone to acquire you if they're already doing so well? So, I guess in that regards, is there brands that are just too big that you would have, not in your shot, but they are just too big and they're like, we're good, we got this down to a tee, and we have a great team in place. Is there a space where you have to work within terms of maybe the seller wants to acquire and they'll find you in that regards, or they are just like coming along and they're growing at an amazing speed and you don't entertain that idea or you're not even gonna ask them? Does that make sense?
Kyle Walker: It does. There's a lot to unpack there, because I think you hit on quite a few important kind of topics there. The first I would say is, look, everybody's gonna define a brand slightly differently. I've been in rooms as we were trying to figure out what truly made a brand, and the frustrating, and also I guess, beautiful part of it is that you can get to about seven or eight definitions of what makes brand, including what you said about Pharma Packs, who's primarily reselling others' consumer goods, but doing it in a way that clearly demonstrates that they've had some connection or positive impact on kind of the value chain as a brand. You have more traditional brands where a founder or created a brand, et cetera, and then literally you can get to seven or eight different definitions that you can all dependably say these are brands. And so, it does get complex. I think for us, then you also kind of led into of the size discussion. I think for us, it's really defining a business that is large enough to that we can go through the process and it actually makes an impact to our business. You spend a lot of time and effort and resources trying to be able to actually reach an agreement and purchase somebody's brand and it's gotta be substantial enough that that time and effort was actually worth it. So, we certainly have a floor. I would say given our capital structure, our ceiling is a little bit bigger, in that we have access to this capital. We've got a great group of know equity sponsors that are very supportive. So, we've looked at a lot of larger brands too. I think you're obviously making a bigger bet. And so, your criteria may change a little bit, and you may have a different set of standards or things that you look at with a larger brand. But as of now there hasn't been something that we've just walked away from and said, we don't even wanna learn more because it's too big. Then the third part of what you said, I think is, maybe the most important part, which is, look, if you've got a large operation and everything is going great on your business, you have access to capital, you have all the team that you're gonna need and you continue to grow, you're probably not interested in selling to begin with. So, I think there are scenarios where that's not true. There's always exceptions to every rule, but I think generally the folks that we talk to, there's some value that they see in a collaboration or partnership, which is really how we view our strategy is, there's something that they see of value, whether it's the knowledge from the team, whether it's the infrastructure of the team, whether it's the access to resources or a bunch of other things, but they see some value in having that conversation. And then ultimately what you're just looking for is a bargaining zone that you know that there's some way, that there's some ability to both sides benefit. There's a win- win scenario out there and there's enough room that we feel like we'll get to a positive outcome for both parties.
Ryan Cramer: Absolutely. Has there been a shift in where you've seen brands that are trying to exit their business, because you're the one who handles for the team, you are doing your due diligence, you're looking at the ins and outs of these brands on a day to day basis? Has there been a shift in where people are" coming short" in terms of why they might be wanting to exit their brand? Like at first a year ago or so, or back in March when you were first talking to these sellers, it might have been, or even before then, it might have been, you know what, we just can't get into different kinds of Amazon marketplaces. There's 20 of them now we want, we can only do it in dot com. I know if we tried to do internationally, we don't have that skillset, we don't have enough people to do it, but now it's maybe shifted towards something else. Is there anything particular that's standing out to you, whether it be like supply chain or just capital issues, or has there been a shift in that?
Kyle Walker: I don't know that there's been a shift. I think that realization that you hit on is the most important factor, it's that something has occurred to somebody as being a limiter on the future growth of their business, whether it's, like you said, the knowledge to take something global, the time to take something global. In a lot of cases people have bootstrapped their business and they've figured out how to do it once, they could figure out how to do it again, they just probably don't have enough time. And then I think there's a lot of capabilities that come with size and scale too, where having a centralized supply chain team, not many Amazon sellers of most sizes have centralized services that they're accessing. It's the entrepreneur themselves that's doing a little bit of everything. And what we find a lot of times too is, somebody started a business because they were really passionate about one or two particular areas about the business. Like they love developing new products, they love marketing those new products, and as their has grown they've inherited eight other things that take up their time, that allow them to not have the time to do the two things that they love. And so, one of the most common things that we hear in a lot of our conversations is, I'd love to stay engaged, I'd love to continue to do new product development, or I'd love to continue to do marketing, it's just these other eight things, and when you have a larger team, and you have those centralized services, you can offer something that's of value to them, which is to take those things off their plate, potentially allow them to participate in the business in the ways that they want to, and contribute a lot of growth and find win- win scenarios to do just that. I think it's naive for anyone that is in the aggregation space to think that, and this is true of us as well, there's no way on day one, we're gonna know as much about a business as somebody that's poured seven years of their heart and soul into a business. And so, to the extent that they want to continue to participate and believe in the business, we see a lot of value in that, and we see a lot of value in trying to make that easy for them to contribute in a new way and really partner with them so that we can drive value. Because, look, if we drive value together, we all still win together. We don't have to win separately. It's not a fixed pie. There's a lot of opportunities to do this stuff together. And so, I think, yeah, you're right. Generally you come to a realization that there's some limiter on your business that you would be better off having some type of help or support. And that's really what we're here for.
Ryan Cramer: Absolutely. And I know, again for everyone, again, we have Kyle Walker from Foundry brands, formerly of Amazon and a bunch of other great fantastic companies that he worked for in the past. But you and your company have been around for, or have been announced, I guess, as a public or that you are a company, I wanna say. I know before that announcement, there's been lots of things behind the scenes, but since March and that's less than a year, is there kind of a focus on how to end the year strong as Q4 is right here? Obviously we're in it right now. Is there a focus specifically on a certain area that you and the team wanna make sure that you can get through in terms of, Hey, let's get through our first Q4 as a team together, have certain expectations? What does that look like for you going through your first Q4 as a team right now?
Kyle Walker: Yeah, it's a good question. I think there's a lot of, within any startup, there's a lot of first times. There's a lot of first times every single day, whether it's getting through our first Q4, whether it's operating our first several brands through Q4, whether it's the different, each of those brains probably has a slightly different impact that we're expecting during Q4 and success looks different for each of them. And you're trying to do these things at scale, but you're also trying to be individually support of each of the businesses. And it seems there's a million things that we learn every single day. But I think that's part of the process too. I mean, just looking back over really the first six months of our business, a little over six months, looking back at some of the things that have changed, if you think about, we wrapped up our funding at the end of March. So, most of the brands that we were viewing initially, how do you make sense of what happened during COVID, which was arguably one of the craziest times in e- commerce history? You had all these people shopping online, brought a ton of new customers to e- commerce shopping that maybe weren't there, or maybe didn't purchase with the same frequency, and you're trying to evaluate year over year what that business really looks like at steady state. And so, figuring out, is 2019 a better indicator, is 2020 during those three months, or the other nine months of the year a better indicator? And I think all of those things just involve a lot of time and effort and really diving in with the brand owner to truly understand the business. And we've learned a ton about that. The impacts were different on different subcategories or keywords. But almost everybody had some impact, whether that was, Hey, we sold a bunch, but our supply chain got broken for a period of time and we missed some sales, or we were little bit slower, but we navigated it well because we source from X or Y. There's a million factors and it takes more time truthfully to be able to understand that impact, especially during that time. But I would say our focus during Q4 is just, look, we're six plus months into a business, and we've learned a lot of lessons and we want to be better tomorrow than we were today, and that's really the focus that I think you need to have as a startup is, there's a million things that we learned every day. How do you translate those into making sure that we're smarter, we're more operationally focused the next day. And I think the team's done a really good job of doing that. Just trying to anticipate. Look, the reality is you're gonna learn some things along the way, just don't learn hard lessons twice and can continue to have a positive impact on the business. And so far we've been able to do that.
Ryan Cramer: I mean, great insight there for sure. As we're wrapping up on this episode, because you were on the marketplace team, I have a question. Now that Amazon has 20 different marketplaces that are available to sellers, third party seller, is there one in particular, not in the United States, that you have your eye on, that's really kind of exciting, you have your eye on in terms of like growth potential, or really just intrigue how it's going to shake out in terms of the adoption of Amazon both there, but then also how sellers can touch in that region and sell in that region moving forward?
Kyle Walker: Yeah. I mean, look, I think Amazon in a lot of ways has made it easier for marketplace sellers to access other places you had unified accounts. And so, you've got the ability to have a presence in Canada and Mexico, and certainly through, through the UK, which shares a common language. You can get access to great amount of Europe within two days. And it's interesting because Europe's highly fragmented. And so, if you're off Amazon particular, so being able to kind of think through and understand where your customers are searching for your products, and what markets might have positive impact. I know with the two companies that I'm thinking of right now that we've done our homework on, it might be a different answer for both of them. If one's in, let's say office, we might have a different answer, and if one's in sports and outdoors, we might have a different answer just because the demographics are so different across all of those marketplace. But I think, look, the gateway that the most Amazon sellers take is going from the U.S to the UK and then figuring out the other four marketplaces, primary marketplaces in Europe that do require translation services. And Amazon's done a lot to benefit sellers that wanna do that quicker. But I think ultimately it's just finding out where are our customers located and where would we have the most impact and positive return for our efforts. That doesn't mean we take every seller on day two globally to X country. It matters to try and work backwards from where our customer's at, how do we access those customers, and then what has to be true to get there.
Ryan Cramer: Yeah. Great insight there. And then finally, what's the toughest brand to acquire in your mind? You're the person, is there a specific category or just one that if it hits your inbox and you look at it and you see what kind of category, gives you chills looking at it or it gets you excited. I guess what's the one category that invokes the most emotional response for me, whether it's like not another one of these blank categories, and you throw something across the room, or you're like, thank God that finally something I can try to acquire for our company in this category. Is there one or another that's that really invokes this emotional response from you?
Kyle Walker: No. I mean, it's probably category agnostic, but I would say so many times, I think we even internally have these discussions all the time and this continues to evolve, but if you look at, say 32 different data points, you're never gonna achieve perfection. And so, the question then becomes, what are those things that are imperfect today that we feel like we could have a positive impact on, on that journey? And there are times where out of those 32 factors, we feel like five of them are more important than others and they score well there. And so, we move forward. And I think if anything, the frustration that I feel is that, I think every business that I've ever viewed has potential, and you're trying to assess in a startup, and I really believe that that's true. They all have potential. There are all opportunities to grow every single brand that we see every year. I think the hardest decisions that you have to make are, if we have X number acquisitions per year, we have X capital to deploy, how is it deployed in a way that makes the most sense for our team to be as efficient as possible? And so, trying to, you feel this obligation and real true, genuine belief that every one of these brands has potential, but sometimes you have to make hard decisions on if you have A, and you have B, we feel like the levers on a are easier to pull and more within our kind of sphere of competence, and B has a ton of potential, but it might be a little bit harder. You're always gonna lean in the other direction. And so, I think those are the hardest, most frustrating decisions to make, because at the end of the day, they all have potential. It's just a matter of what's the most efficient use of our resource to have an impact.
Ryan Cramer: Absolutely. I like those answers. And that's the difficult nature you guys have to be put in on a daily basis saying, that's what's fascinating about brands that do get acquired versus not, what are those distinguishing factors why brands would exit, and who they thing with, and who sees more potential in it. I know it's almost like a bidding process. Right off you might be bidding with five other companies, 10 other companies, or just one other company. There's a reason for all of those kinds of things. And so, it's difficult to say like what you truly know in your expertise, but then also just maybe it's a gut feeling that you've been enable to develop over time of, we really can really do something great with it and move forward with it. So, I think that's really cool, and quite frankly, terrifying job to have and a responsibility to put on your shoulders. So, I'm sure that's something that when people get that new brand in their inbox, and then you say, this is the that we're working with and we just acquired, let's make it work and people are trusting, and that's a really cool position to be in Kyle. I don't know if you have anything else to add?
Kyle Walker: Yeah. I was just gonna add that, I think you're right. Nobody likes to be in that position, but I think that's why, and visioning where this company was gonna go, and specifically what my role was gonna look like. Literally, one of the very first questions I probably had before we ever even started the conversation about fundraising last Fall and wrapping it up in March and all of that stuff was, I can't sit in this seat unless I feel like I'm having a positive impact on everybody that we engage with. And so, one of the things that we talk about a lot is, we're probably gonna partner with say dozens of companies every year, but we're gonna serve thousands of companies every year. And getting back to my earlier point of, reach out and engage with more people, because the M and A process or a business exit, if it's your first time going through, or even if you've been through it several times, or even if you've worked in M and A for 15 years, you're always gonna learn something through the process from somebody else. And as you start accumulating all of these different little tidbits from everybody, you're gonna make a more informed decision that benefits you more long term. And so, again, I would encourage people to gather as much information, talk to as many of the aggregators as they feel necessary, and talk to us. Because if it's not a fit, we're very transparent with saying that it's not gonna be a fit for the great majority of people that we talk to, but we still want to have a positive impact on your journey. And maybe we can give you a couple of things to think about that help influence, again, where you do ultimately find a home. And if you reach out to us and it is a great fit, then I'm confident that we're gonna have the right discussion to find the right outcome for you, because is we're actually gonna listen, and we're gonna take it into account. We're gonna be creative to find something that makes sense. Because ultimately, the thing that I want is that whether we did business or we didn't do business in five years, if you said, did you have a good experience with Foundry, the answer is always gonna be yes. And for of those that we didn't have an experience with, is because we gave you a couple of things to think about that better informed your journey into kind of this ambiguous space. If we did do business together, it's because we spent the time to get to know you crafted the right creative deal so that you're still happy with it in five years. And I think that's incredibly important, because to your point, it is terrifying to sit there and think, Hey, we're just gonna have to tell somebody no, and they're gonna go on their way, and they're gonna not have the greatest experience. And so, one of the first questions we asked was, how do we add value to everybody that we impact? And that's one of the ways and it's something that's a core of what we started the company around.
Ryan Cramer: Absolutely. And I think that's a partnership mentality that I always try to attribute, and I see great assets or a great responsibility on that from you guys and just anyone in the space. The people coming to you have put their heart and soul into something, it's their greatest asset, they can potentially have their own. And when people walk away, they say, Hey, there's nothing here, there's no value, that could be devastating to an individual or entrepreneur. But if it's a coaching mentality or say, Hey, listen, you're great in these areas, work on these, we just can't, not this time, know for a fact that it's gonna be at the level we need to be successful at. But it doesn't mean it's not successful. So, always giving that that feedback, if you will, whether it be positive or negative, is always gonna be helpful for people in the long term. So, as long as that's kind of the mentality you guys are approaching with, I think that's a win experience for everyone involved.
Kyle Walker: Absolutely. A hundred percent.
Ryan Cramer: Awesome. Well, and I know Kyle, I know we've ran over the hour mark and I told you we would do this. But for people who are curious or want to learn more information, just wanna engage with you or the team at Foundry, what's a way that they can do that? Is through the website or are they connecting with you personally?
Kyle Walker: Either you can always find me on LinkedIn, you can find Foundry brands on LinkedIn. You can visit Foundrybrands. com. We have various mechanisms on the site to be able to connect directly with us. If you're interested in learning more about what an exit might possibly mean for you. There's an avenue there to email our team directly. There's also places to look at open job applications that we have open. And so, I would just encourage everybody to learn a little bit more. We certainly pride ourselves on being a team of operators and we've got a great team in place, and I think giving yourself the chance to engage with our team will be a positive experience and encourage you all to learn more about Foundry brands. Because we do believe that were different and unique. And again may not be a fit for everybody, but no harm in learning some more. We'll try and leave you better off than when you started.
Ryan Cramer: Awesome. Well, great stuff there. And thank you so much for spending and lending your time and insights and expertise with our listeners and audience today. Thank you so much, now friend of the show Kyle Walker of Foundry brands. Thank you so much for joining us bright and early there on the West Coast. I'm gonna drink another cup of coffee for you because it's early over there still, but the there's no risk for the weary. E- Commerce never sleeps if you will.
Kyle Walker: That's right. Well, I'm gonna go on and hold on coffee, but it was a pleasure.
Ryan Cramer: Absolutely
Kyle Walker: Thanks for having me.
Ryan Cramer: No problem. Thank you again now friend of the show, Kyle Walker. Again, Kyle, thank you so much for hopping on Crossover Commerce, and everyone who tuned in today on episode 165. This is looking at the insights and the foundation of building a brand online and on Amazon. Again, Kyle knows the insights because working with Amazon and now working with Foundry, just what they're looking for in terms of good brands. I like the phrase he used today that there's positive aspects in everything that you see online, because there's always a glimmer of success, no matter what that scale might be. Again, it could be why large top 100 seller, or it can be something that just is fitting a micro niche. And that would be something that is valuable in certain aspects of lots of people's lives. It can be life changing for some people, but brands have that scale. Depending on who you are as a company and what kind of risk they are looking for, what portfolio fit, really for different companies. But I like the aspect of positivity but also insights to walk away from the experience, is always gonna be important too. So, that being said, this has been Crossover Commerce, again, episode 165. If you thought this was the end of our episodes, think again. We have three more episodes next week that are gonna be coming live, Tuesday through, I wanna say Friday, we have lots of great insights from different people in the Amazon eCommerce space. Again, as an intro mentioned earlier, this is my corner of the internet where I bring the best and brightest in the Amazon e- commerce space, whether it be in marketing, logistics, acquisitions, to building brands like we talked about today, it's gonna be talked about on this podcast. So, definitely go ahead and subscribe to our channels on social media, but then also you can catch all of our audio components that we release daily, if not every other day episodes on your favorite podcast station, or you can just catch everything, video and audio at usa. PingPongx. com/ podcast. That being said, this is Crossover Commerce. I'm Brian Kramer, I'm your host. This is my coordinator of the internet and we have been a pleasure talking with you guys on this Friday bright and early, good luck this weekend, whether you're an Amazon seller or e- commerce entrepreneur, or just wanna take a break. Again, it's beautiful, hopefully where you're at. Go ahead and enjoy the weekend and great success. It's Q4, so hopefully things are starting to look up for you in that regards. But until then, next episode, we'll catch you guys next time. Take care.
Ryan Cramer of Crossover Commerce talks with Kyle Walker of Foundry one-on-one reviewing his thoughts and insights into building a foundation of successful brands online.
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