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Last fall, Eric Morse sat down with three impressive entrepreneurs to discuss their journey, and lessons learned on resourcing for high growth, shaping culture, and learning from past mistakes.
On the latest edition of the Ivey Entrepreneur Podcast, Eric Brass, HBA ’05, Founder of Tequila Tromba, Debbie Fung, Co-Founder of Yoga Tree Studios, and Anton Rabie, HBA ’94, Co-Founder and Co-CEO of Spin Master, discuss high-growth and its unique challenges.
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The Ivey Entrepreneur Podcast is sponsored by Connie Clerici, QS ’08, and Closing the Gap Healthcare Group, Inc.
Transcript
You're listening to the Ivey entrepreneurship podcast from the Pierre L. Morrissette Institute for entrepreneurship at the Ivey Business School. My name is Eric Morse, and I will be your host for this episode.
Eric Morse
All right, so with that, I really want to get directly into our panel. So these are all three just fantastically successful entrepreneurs, and frankly, pretty nice people and that's why they're here today, really. I've been fortunate to have relationship with each of them over the years and I wanted them to be here to be able to tell their story about growth and each of them has gone through periods of high growth, through periods of stagnation, through periods of perhaps even setback and so what I hope that we'll have a chance to hear a little bit today is their story, some of the successes, some of the mistakes that they've made along the way, and then give you guys a chance to ask some questions. So with that, I'm going to I'm going to start with Anton and just let you tell your story about Spin Master.
Anton Rabie
Well, morning, nice to see everyone. You know, Spin Master were very few people know is started from just unbelievably humble beginnings. Everything you look at the company from the early days, you know, when we started the company, there was no seed capital, private equity, VC, nothing. We just started the company with a little bit of money that we'd made from a university business called Campus Faces and we started with our own, you know, seven, $8,000, our credit cards, you know, and we started with just a huge amount of passion and tenacity and a whatever it takes attitude. But you know, the company I mean, the phone used to ring in my desk. But so when we started the company, the first concept that came to us with Earth Buddy, it was a grasset like the chia pet. So what happened was my partner rinette, and the co founder, his grandmother came from Israel, and she kind of smuggled, she was like, in her late 80s and she opened up this person, she's like, and she pulls out the sawdust and grass seed and then she had this article from the television newspaper, it was like the whole spread of the insight and how the grass head, the Earth Buddy had become a pet rock in Israel. So what we did is we took it and we went into my partner's kitchen, his mother's kitchen, and we literally took like a beaker, we took all this cooking stuff and we started to reverse engineer it, like how much grass seeds, sawdust, nylon and then when we drove in our car to Kmart at baby village, at that time, there was a Kmart right on the side there and my grandmother used to live across the road and we went and we bought all of the hosiery at the Kmar,t everything, and we were sitting there at the counter and the ladies like what are you doing? So it's just important to understand that every part about Spin Master in the early days was incredibly humble. And we really, you know that there's a late professor from Western, I think David Burgoyne and he said, growth hides a multitude of sins, all right and we were a great example of that, you know, when you're growing a lot that covers up mistakes in the company and I think that's one of the most important things to remember today. We're actually having a bit of that right now, because we go through different cycles as an organization but like, one of the questions was, what mistakes we made, we made every mistake, there's no mistake we haven't made, it's just some of them are larger than others. But, you know, for us, our story is about this unique, three individuals, kind of like a rock band, we would never be here, if it wasn't for each other. I wouldn't be sitting here if it wasn't for my partners, they wouldn't be sitting there if it wasn't, you know, so it's that story where the three of us are as opposite as you can imagine and that's the magic of the company, is how we come to the table with such different mastery or skill sets or unique ability, whatever you want to call it, and Spin Master at the end of the day is about it started. I mean now it's different, we're in a totally different stage and what drives what drives success today is really different, so we have 2000 employees in 29 countries and, you know, very little of our sales are in Canada, mostly, it's a global company. I mean, we are public, but I try to not think about that. I was interviewing a board candidate yesterday, this lady in the States, and she's like, so tell me how the company's changed since you've gone public and I'm like, well, actually, I tried, I do my best to not let anyone think we're public, because I want to make sure that the Spirit, the values of the organization, and I want to make sure that decisions are made with a long term focus, because the problem with public companies is that they have a short term lens. So I'm always like the bad person trying to really make sure that the company, the entrepreneur, spirits, and all the values are kept at the forefront, and that we operate the same way as if we were. I mean, obviously, the finance department is different.
Eric Morse
That's a nice transition point, I want to come back and talk about values in just a minute out of time. So why don't we go to Debbie. Debbie, tell us a little bit about your story.
Debbie Fung
Yeah, I mean, that's a great story. I'm not sure you guys can hear me, but our family is a fan of Spin Master. So I'm Debbie, I'm the co founder of Yoga Tree Studios here in Toronto. My story, it's also very humble story, I'm not a public traded company. I'm a very local story. I founded a studio 13 years ago with my husband, at the age of 24, we both graduated from University of Waterloo, we both security full time position, I myself was also a buyer at Canadian Tire. For the longest time, I think, you know, graduating ready for full career, there was a part in us that thought that, you know, if we were to carry this through our life is that the right direction. So what we did, we did a Eat, Pray, Love, we actually took a leave of absence, left the company and went to India. So my husband, Jason, who is also the co founder of Yoga Tree, he went to Mysuru, India, if you guys don't know yoga, he did his training, Ashtanga, Classical Hatha and I went to northern India, Gypsum Board to study ayurvedic medicine. So, that was a six month journey and at that time, we weren't really thinking about finances, we weren't thinking about how to get the capital to build a yoga studio, we just really want to immerse ourself in yoga, and that was our goal. Coming back to Toronto, we then thought, hey, you know what, we already made it this far. Jason got teacher training certification, I'm training ayurvedic medicine, we need to do something about this and that was the day that we decided to find a first leaf in our industry, especially retail industry, there's two things that really would make a break of retail. Number one is the retail rent. Number two is payroll and we learned it very hard in the early days, with very minimal experience, that if we don't refine these two items, which we can talk about the mistakes afterwards, you're screwed, especially marches and retail now, especially storefronts getting more challenging. So in 2007, we opened a first study of Lauryn Hill at the corner of Center Street in Dufferin. It was hard, I think, we didn't know the demographic that well. We offered free yoga the whole day. It was a holiday and no one came. It was Hanukkah, and no one came, and we were wondering, hey, we offer yoga, there's only 11 people counting myself and Jason, we sent two classes, it doesn't look empty, what are we going to do? We have to pay rent, we have to pay our payroll. So that we thought you know what, if we don't make it in the month, we're not gonna be here. That's all for the whole month free, so the whole month of January 2007. Anyone comes in, no flyer needed, no tags or strings attached, you get free yoga. A month in, I don't know how that happened but sales started coming in. We make sure that our prices were reasonable, we make sure that the offerings contained to say the quality was, and that carries through in our second month, third month, fourth month, and memberships were starting to trickle in. In 2008, we sign up for a second lease in Richmond Hill. What we noticed was that the class offering were able to diversify. Unlike other studios at that time, 2007 the yoga industry in Toronto they were very segregated in three different styles either you're in Bikram, either Moksha, either you're in Downward Dog and you're in focus in Ashtangam, but that's about it. The value of the tree that the difference between Yoga Tree was that we very much value the the different classes meaning we offer heated classes, non heated classes restorative, we can go on and on. But fast forward, you know, 2011, 2013, 2015, we were aggressive in growing our market into the downtown core. One thing we notice is that if we continue to stay at the capacity, we're in Uptown, we would never be able to operate in the efficiency and the synergy that we want it to be. So 2015 was the year that we opened our very first flagship at the heart of Bay And Dundas. It's a 10,000 square feet studio. At that time, we became one of the largest studio in Toronto, but at the same time, we also make sure that we stay relevant to our community. It was also a time in our growth period that we decided to take a break in our growth. Between 2007, 2015, we continue to sign leases, continue to find new locations, continue to be at the very core center of the highest traffic counts in Toronto. But 2015 took a break because we realized that we needed to make sure we refine our system, so how many studios do we currently have, five, and this year since 2015, we are ready to open our sixth studio in 2020 it should have been in 2019, 2020 will be a very exciting year for us. We have studio opening at the corner of Warren Avenue. It's at 121 floor and we're excited about the opportunity.
Eric Morse
Eric. You're the youngest company up here, tell us about your story.
Eric Brass
Well, it's a nice match. We have we have toys, yoga, and tequila.
Eric Morse
What more does the world need?
Eric Brass
So I think it was in the first entrepreneurship class. So my entrepreneurship story, I went down to Mexico on exchange with Ivey back in 2005. Most of my smart friends went to Hong Kong, or France, or Switzerland, I went to Guadalajara Mexico and I did so because I wanted a new experience, I wanted to meet new people, I wanted a little bit of a kick in the ass, and you know, to be quite honest, also wanted some nice weather and a good time as well and found something unexpected actually. When I was down there I ended up falling in love with tequila. So I had that typical Western experience of tequila being that terrible shot at that horrible bar that city hour the night, ended up trying tequila for the first time. I said wow, this is incredible, it's like drinking a scotch cognac, fine wine. Came back to Canada worked a day job and finance for about six years spent a year in the UK, but had that bugging me about tequila and I noticed that there was a gap in the marketplace, which still exists today. Tequila is very top and bottom heavy. It's either close your eyes, plug your nose, hope for the best shot, which is based on price, or the pan your chest, look how much money I'm spending type product, which is more about, you know, showing off versus substance in the bottle and there had to be a middle ground there had to be something that was ultra premium, accessible, but at the same time, spoke to a demographic that cared about not just what the brand is and how much it cost, but where's it come from, who makes it, and what's the pedigree behind? So the problem is I'm not a great Mexican pedigree, as you can tell. Better to be lucky than smart, which is sometimes a theme. A good friend of mine on exchange happens to be a guy named Rodrigo Saldana. Rodrigo father is Marcos Saldana. Marcos Saldana was the original master distiller of a little tequila brand you may have heard of called Don Julio Tequila. So we said, why don't we pitch market of your master distiller to create this new brand? We have no idea what we're doing. It's like asking Wayne Gretzky to play your men's team, he's going to tell us to bugger off but we'll ask him anyway and so we did, and he said to our utter surprise, he said, listen, guys, I'll do it on two conditions and believe me, I'm oversimplifying this conversation. Number one, I got to have a piece of this company. This has got to be distiller owned like it's, you know, Canadian owned, and I had an Australian partner as well, because I worked for Don Julio for 17 years, and all I got was a watch for my service, a nice watch, but a watch, was later robbed at gunpoint in Mexico, but that's another story. Second thing is no grain goes in the kitchen. So he said my entire life. I've had people over, you know, look over my shoulder and tell me how to produce tequila. They don't know what they're doing, that's what happened here and we're like, okay, we're certainly not going to give you input on how to make how to make tequila. And so much to my mother's dismay, quit a very good job in asset management partnered with the Sudanoh family, and we started making Tromba and very humble beginnings for all three of us, because effectively tou know, no one would give us give us a dime back then NFL into institutions office now for some money for premium tequila in 2012, I would have been laughed at the door. So after our first production or after our first fundraise, which I was friends and family, I call it pity money. We ended up having about 10 to 15 grand left in marketing. And so effectively, the only way to do it was to grab a backpack, take our models and go bar by bar, bottle by bottle, and sell Tromba and go tell the story over and over and over again. And from that, we built Tromba to the number two premium tequila in Canada, number one in Toronto, number two in Australia, number one in Melbourne and now we are one of the fastest growing in the US and this year, we were named in the top 10 trending tequilas globally by the IWCR, which is the kind of spirits bible based on the London UK. So if anybody tells you organic, grassroots doesn't work, I'm here to tell you, it does, with a lot of pain when it does.
Eric Morse
Three grassroot companies, which is really cool. You know, one thing that doesn't get talked about, very often, I think, when we talk about high growth companies is values and having had the really wonderful opportunity to work with so many high growth companies that I find that it's actually central to a lot of them. And I know Anton and I have had this conversation, I'm not sure that we've had this conversation but you know, they shaped the way you make decisions and about the opportunities you go after and the partners that you take on but so many other things that happened with an organization. And so I've asked each of them to talk just a little bit about the values that they use, or that they've taken into the organization as they've grown.
Anton Rabie
Well, I think we should just step back on the pull values topics, and put a little bit of context is, you know, firstly, for me, every topic, depending on the phase of Spin Master, it's different, right? Because we've gone through so many phases as a company, so when you think about the values for Spin Master, in the first 10 years, really, it was just about living the values and because you're touching everyone, and everyone is watching, you know, you don't have to hang up any values on the walls, you don't have to talk about the values, you just live them. When you're in a startup phase. Now Spin Master, you know, having 29 countries, you know, and the scale of the organization is different, the values is very different at a company our size and it's really an ongoing challenge. To keep values front and center and to keep people living the values, it really takes a lot of work. And I got to put a lot of time into it and in the early days, I never put any time into it. Again, I was just living the values. So firstly, I'll just list some of our values, but then I'll kind of share with you some of the things that I'm learning today on how to keep the values front and center. So our values are integrity, innovation, entrepreneurial spirit, open mindset, partnerships, driving results in collaboration. So when you think about values in a company, like Spin Master, a couple things come to mind. One is, as a leader of an organization, no day goes by where I don't meet with people on the front line and I asked them this question. Are there any impediments or barriers to you living your values when you're working during the day? Because what my role is, is to understand where are people having trouble living the values, like, say, for example, someone says to me in supply chain, well, I'm having trouble being entrepreneurial, because there's too much bureaucracy or someone says to me, in Mexico, I'm having trouble with integrity, because, you know, things are done differently here. So my role is to really, to constantly pulse check the organization, right. And one of the things that I learned from one of our board members, Ed Clark, who's is one of the wisest men I've ever met in my life, is, you know, when an organization gets to the size that we are, is it, you've got to continuously pulse check the organization, and you can do it with easy surveys. Right? And so I think even for you, you guys should think about how do you anonymous, how do you get feedback, this feedback loop on where are you on your values? Because like, for example, collaboration 10 years ago, it's been mastered with hire, it's dipped in the last year. So now, I can kind of probe and ask questions, where are the tension points on the collaboration of the organization? But when it comes to values at a company our size, it comes down to, you know, hiring people to match your values, rewarding people to match your values, having clear rewards and recognition. I mean, it's the whole textbook thing of values, it's real, and it's live, it's Spin Master. But at the end of the day value start at the top and people need to see, you know, you're living the values. I mean, one of the values, which has really been a game changer for Spin Masters are partnerships. So if you look at any of our hits, or big franchises, for example, Bakugan, which we did over a billion in sales, just wholesale, that's not even including like the T-shirts, or the underwear, or the backpacks or, you know, the toothpaste or anything like that but when, nine years ago, when we launched Bakugan, the story of Bakugan was an inventor came to my partners, and brings us like little this piece of paper with, they had this metal ball, and it didn't even function properly and it was just this raw idea from this inventor in the States, Shelley, and the guys looked at it, and they're like, what happens if we go to Japan, and find someone who can help us with the mechanism? Because Bakugan what you do is, you know, what Bakugan is, it's a TV show, the TV shows made in Japan, Japanese anime, which boys in that age group would love Japanese anime, kind of like Pokemon, and transformers and all that. So the whole story of Bakugan is basically an inventor comes, shows us a concept, we take the concept which is very early and raw, we then take it to Japan, we have Sega help us with the engineering on the mechanism and we have a company called TPM, they did the animation can't remember the end and then we had Chorus, Nirvanana, they helped us with the broadcasting. So what we did is we created a partnership, where we said, every single toy that sold or any merchandise is sold, there's a 12% revenue that comes into a pool and that pool of 12%, the inventor gets a certain percentage, Sega gets a certain percentage, Chorus Nirvanana gets a certain percentage, the Japanese anime company gets a certain percentage, and Spend Mastery gets a percentage. So we created this like global partnership, where each person was playing to their strengths and Spin Master would never be where we were today, if it wasn't for partnerships, and our company is littered with history of partnerships. Paw Patrol is a partnership with an inventor in the UK, and Nickelodeons a partner with us. But we were constantly sourcing the world for people who that are the best at what they do in certain areas in certain verticals and partnering with them.
Eric Morse
I should point out at a time that that that sounded really easy, but it really turned the business model in the industry on its head. And I think you guys deserve a lot of credit for doing that. And then it's amazing how you've been able to partner with so many different players in that industry.
Anton Rabie
I'll just conclude on the topic of values is it gets really challenging when you're dealing with so many cultures, and so many offices, 2000 employees, there's only 650 of them in Toronto and you have all these subcultures, right? So there's no data. If you would have asked me 15 years ago, if you would have said to me, oh, you're going to spend time, you know, X percent of your day on values, I'd be like what? It's just so critical right now. And we got to constantly have a feedback loop measuring how we're doing and things change and people. I'll give you an interesting thing we did. It's humbling how you know, you got to always keep asking your employees. We found out about a year ago that people were confused about the value partnerships. They're like, how do I work in Bratislava, Slovakia, how does partnerships tie into my role when I'm working in supply chain? And I'm like, well, actually partnerships is an external value, not an internal value. And we hadn't even made that delineation clear a year ago. So now we've gone out to the company worldwide and we said, hey, of all of our values there's only one which is very externally facing, which is partnerships and if you work in the legal department, make sure that if you're working on a contract for Bakugan, right, that how it affects you is, we want you to make sure that they feel like once the contract signed, they feel happy and we're not just grinding them on small points that we're not being unreasonable and we want people to feel good afterwards. So partnerships has an application to certain departments in our company, but it's more an external facing value.
Debbie Fung
So for us we have three values and these three values really ingrained in what we do and what we're about at Yoga Tree. So our values, our community, we have five studios in Toronto, and each of them operate in very different communities. We have Richmond Hill, and Vaughan, which is more of a kind of suburban community, but we also have our downtown core, which Richmond Spadina, Bay and Dundas, and also Younge and Eglinton. When we talk about community, we echo that in the things that we do, and also how our staff translate that in their own way. For example, community means that to us, it means that, for example, what we value in, what we have in the members in the community, for long story short, I think community to us, especially in our downtown market, for example, we allow our staff and empower them to basically operate in what they want to do. So for us, I think we talked about valleys, novel community, we talked about empowerment, we talked about diversity, in the early days, a lot of times as entrepreneur, we do a lot of things ourself. The hardest part for me was to let go and let our stuff determine what it means to them and what they want to do. So I think the biggest challenge for entrepreneur like myself, who, in the early days, started the company between myself and my husband, then we also grew a family, same time in 2015, and 2016, was how can we stay relevant to our community, but also allow us to like go and delegate some of the work. Overtime we had to also reflect on the values just make sure that yes, is relevant to us, but is it relevant to the staff who comes in every day and lives and breathes to victory. And that was a time where we allowed our staff to really, that a whole power session, we actually got a third party to come in CMS Canadian Management System to really reflect yes, in the early days, we came up with the values ourselves but it was also a time for us to really reflect to see if these values are still relevant and I think going back to Tom, what he was saying, yes, in the early days, or startup these values, and you go through cycles, and we definitely went through cycles, we definitely went through our growing pains where the starter of the company's values were no longer relevant to what it was. So now, we still have a core values, but these values are translated in the meaning that our staff it also interprets, and they also have to live in breed what they believe these values are. So committees want to us community in the sense that again, we operate in these different markets but we also allow them to pick and choose what they want in class offering. For example, Younge and Englinton, and Richmond Spadina, we have more of a millennial demographic, we offer classes like fill in the six. We offer classes like yoga, of tidiness of urban market, we allow our management to select classes that are more geared towards a suburban market that includes prenatal classes, family yoga, and kids yoga. Last but not least, we also very value diversity not just in the people we employ, the people we work with, but diversity in the sense that the class offering needs to be diverse. Class offering diversity means that it should be accessible to majority of people, it should be assessable, in the sense that I have arthritis, I have hip replacement, I have scoliosis, the range of product, the range of classes needs to be accessible, and they should be diverse. So those are three values.
Eric Brass
Yeah, some really, really interesting, interesting points on that culture thing. The what's important in Mexico sometimes isn't as important as it isn't in Canada. And it took us a while to realize without, you know, both from a profitability standpoint or a production standpoint, but also from not banging your head against the wall too many times, you have to adjust for the cultural aspects, new deal with so many more different cultures and ideas. But Mexico is you know, we have 10 people down to Mexico, and it is challenging. For us, we you know, we have a few really key values, think and act differently. Collaboration to do one for us empowerment, and love your customer. So in terms of, you know, for us, on the collaboration side, if you ever sit in one of our meetings, we really try to foster a no bullshit approach, where it's a free flow of ideas. So in the sense that, you know, you'll sit in a call with us, for example, you'll have two part time ambassador in Washington State telling our US head of sales that he's wrong, and here's wh and the US head of sales doesn't get upset about that isn't gonna offend it because it limits the free flows of ideas and as a result of setting up a structure like that and encouraging people to have such input. They feel empowered and some of the best ideas we've ever had for Tromba have not come from creative agencies. They've not come from, quote unquote, you know, see sweet executives they've come from people on the ground on our team. One of the other elements we have on the empowerment side is we really believe in a decentralized organizational structure. So the traditional structure in the in the liquor world at least, is to very top down control from headquarters. Here's what you do, heres your marching orders, and here's how to do it, that's not the way we operate at all. We have very small regional teams, with leaders that have huge empowerment to make decisions. We put a ton of trust in these guys and ladies, in really, these guys are tasked with a ton of responsibility to execute quickly and if they worked at a large company like Dr. Pernod Ricard, it would take them 10 to 15 years to reach this milestone, this level of responsibility. But with Tromba, if they show success, we empower them really quickly two, three years. And I'm a big believer, I think it's an old patent code that says, don't tell people how to do things, tell them what to do and they will surprise you with their ingenuity and I'm a true believer in that. And the old structure of, of top down, I think is, is not the way to go the structure of fast, fluid, nonlinear, where you trade an element of chaos, but you gain such mobility and such execution, that you're able to effectively outmaneuver your competitors, think and act differently, so one of the things one of the challenges we have we started a brand, where we're so story reliant, and so brand reliant versus product relaint, is, we thought, well, let's mimic what works for another company, their story and adjust it to ours. If we did that, we would have been dead a long time ago, as crazy as it sounds, the world does not need another tequila brand. So if I went and told the story kind of, you know, built a better mousetrap on an existing story, it wouldn't resonate. So for us, we had to effectively you know, really be different. If you look at, you know, if you read biographies, or look at other things that are in terms of history, a lot of the key pieces of ways people succeed is to be different and carve that path and being different also means standing for something, having a belief within your sales team. So you turn those salespeople into, into storytellers, you turn your employees into preachers, and I can tell you, every single one of our employees, that Tromba could walk across the street for a significant wage increase, but they don't and one of the reasons is because they truly believe in what the brand stands for. And the last thing is, is loving your customers, we certainly can't outspend our competitors, so we have to effectively outlove our customer and I'm a big believer of goodwill, I'll spend sometimes, you know, if a transaction is going to give me a $200 value, I'll spend $500, to keep that customer happy, because I think that goodwill is going to accrue, that relationship is going to build and it's not going to be 300 our gain, it's going to be a $3,000 gain. And it doesn't always work and it's demoralizing sometimes when you do something for a customer and they don't recognize it. But overall, it's been been a massive success. So if somebody and in the past this has happened, I've gotten calls at 8pm, on a Saturday night saying Eric, we rented a truck doesn't happen anymore, Eric rented a Tromba. Can you deliver this emergency case? Yep, I'm gonna go to my garage, what are you doing, are you crazy, like nope, got to keep this customer happy and I didn't charge the customer anything for it. I went to my garage, put in my car, drove down to the bar dropped off a case, maybe I had a drink and then came back and there was no monetary gain from that. And sometimes it didn't even add anything, but I would say that overall it was one of them that instilled that culture and I think that lead from the front is a big thing too. If I'm, if I'm going to ask my team to do something, I have to be prepared to do it myself.
Eric Morse
Absolutely. You know, value is really underpin culture and culture is such an important piece of the puzzle when it comes to growing a successful company. You know, when Don Bell, who was one of the founders at WestJet, told me a long time ago says Eric, it's so much easier to build and nurture a culture than it is to come in and try and change it. And that's something that's always kind of resonated with me when we talked about this topic, and it sounds like you guys are all doing a good job of building and nurturing that culture and how important it is even even when you're better famously successful. I'm going to skip around just a little bit. Let's talk about mistakes. We've all made mistakes. Anton, tell us in one that comes to mind or your biggest or however you want to frame it.
Anton Rabie
Well, firstly, just silly fun fact when it comes to alcohol when I was traveling, I mentioned to someone that I've never been drunk my whole life. So people when we're out for dinner in Slovakia, and I told some of the staff that they were like, seriously, they need my kids are like, yeah, no, I've never been drunk. So anyways, just in some some frivolous not important fact.
Eric Brass
If you drink tequila, and only tequila for the entire night and hydrate well, you will have no hangover the next day. Yeah, in fact, I challenge you all.
Anton Rabie
Right. So, you know, as I said before, I mean, we've made every type of mistake we really have and, you know, I think that there's a couple of really big things that I wish we did earlier in our cycle. Like, for example, having an operating president, for so many years, for 15, 17, 18 years, we had this CO, you know, CO-President and the company would have ran better if we would have brought the right type of operating president earlier, because my partner and I, we there was a lot of friction. When it came to the day to day, like even silly things like the executive S&P cycle, ordering inventory, the smallest things, even how we would run a meeting would be different. We're totally aligned, when it comes to building the companies, the values, the strategy, putting truth on the table, radical transparency, we have great conversations, they're tiring, but they're very, very strategic. And we really challenge each other in a great way, but I think that the the whole company would have been better if we would have brought in a global president earlier. You know, and I, there's a lot of reasons why, so I think that's one mistake. The other mistake is if we would have had someone who could, the whole talent side of the business, I was telling you how we've, you know, hired this lady Tara Deacon, whose was the chair of the Talent Association for the World. Tara just joined us from TD Bank. She was the head of talent for 168,000 employees and then before that she was in Citibank, in the US ran talent for like, 300,000 employees, but more importantly is the depth and the thoroughness and the quality of how she assesses talent, and how to grow talent, how to even talk about talent to frame the conversation of talent. So, you know, Spin Master would be a much stronger company, if we would have had a chief talent officer earlier at the level that we have earlier in our career, and that that's huge. I mean, I, you know, I could literally spend the whole morning talking about talent, you kind of alluded to it, and especially, you know, we're living in a world today that everything's changed. We're, it's the reality is you can go on LinkedIn, and say, Spin Master head of anything, and you go on LinkedIn, you can see the name of the person, just send them an email, say, hi, I'm Debbie, would you, you know, come for free yoga, and then let's talk about your career. So, we're in a world talent, if you're in downtown Toronto, that's the reality, right? Everything's changed. I mean, 20 years ago would be okay, if you had an attrition rate, you know, you'd be good if you're a 678 percent. Now, you're good if you're below 12%. And loyalty is different right now. Everything's changed when it comes to millennials and talent, and people's expectations of flex work hours. So I wish you know, that's one of the mistakes we've made. I think, also something I've haven't shared before, is I think that Spin Master, we would have taken a lot of grind out if early in the stage, if all three founders had full psychological assessments and there was a complete transparency in each founders blind spots, inherent bias and the way their brain processed. There are no business schools that say this, but the faster you put self awareness and truth on the table, about the leaders of the organization and say, hey, this is my blind spot, this is my inherent bias, this is how I process information, then everyone can get into their lanes quicker and you take out so much grind and that was a huge mistake that we made, probably costing me a lot of my life, right because it's such a serious topic. I think that right now, we're in a world today where I'm a huge believer in all psychological tools. You know, my kids at the age of nine had full psychological, qualitative and quantitative production. All three of my girls got tested just in a proactive way. I'm a big, big believer in all the, you know, there's so many incredible tools for psychological profiles and I think you got to profile yourself and share it with everyone else. Because why come to work and trying to do things that you think you're good at, and you're not good at, and then you stand, and then you're creating friction and tension points throughout the organization. You know, everyone should just get into their unique ability and, you know, turn your day into your art and your hobby, and create magic.
Eric Morse
And self awareness is so important and the truth is, we have varying degrees of recognizing.
Anton Rabie
I just say on the topic of self awareness, wherever I talk in the world, whether its internal or external, it always comes back to self awareness. I did a talk on YouTube on I did a TED talk about eight, nine years ago, and it was 14, 15 year old students on self awareness. So it was really dumbed down, it was like a TEDX at the Ontario Science Museum. But I can't say enough about self awareness and the way you become self aware is you got to do 360s. You got to ask people that you work with and say to them, okay, I want to ask you some questions, you don't need to answer, I'm just gonna write it down, I'm not judging you, what can you count on me? What can't you count on me for? You have to ask people questions you work with, do a 360, do psychological profiling, you need to be obsessed with inviting feedback, ehen it comes to self awareness. Self awareness is a journey and whatever your self awareness is today, you can still heighten it, because self awareness is an ongoing journey until you die.
Eric Brass
Thanks, Debbie biggest mistake?
Debbie Fung
Geez, I think every entrepreneur has their own blind spots, when you're traveling at you know, 20 after 30, you tend to miss things, reflecting back, there's two things that I find and one of them is continuous learning, hiring the wrong people. I think on resumes, you might find the best Yogi's with a passion as their influencers, they present, you know, the teaching of the most wonderful classes. Having the passion in industry does not translate to doing things well and we learned the hard way, we hired them on from, you know, early on as an instructor, having the passion having to drive during the classes, right and doing the class as well, and transferring them over to management team, because they also say that they have a passion drive and the ability to do that task well. But it's totally different skill set, I find that in different, you know, in our operation and that's why I kept my self and my husband's role very separate. My husband leads and trains, all the teachers at Yoga Tree, he's responsible for the curriculum, I must say, I myself actually don't teach and we made that very clear, 13 years ago to make sure that we don't step on each other's toes being in business and in personal life together, it's very hard for us to make sure that we continue to have the respect for each other, and continue to stay married 19 years after, but also, most importantly, I think you have to carve out that piece, right? I think one of the biggest mistakes that we have is that we take our time to hire, but we don't take the time to fire fast. And it's harder to let go of someone that you really have a connection with, together we develop that Yoga tree, but how do you make sure that it was time to let go that you can do it fast and furious. And we have challenges with that and as a entrepreneur, you often don't see that in your blind spot and you often don't see that coming until it's too late, until it becomes toxic, until it becomes something that's much bigger than the role and become a bit more than what you know, the damage that they pay people to do. Second thing I find I had the biggest mistake and I still regret it today is that in 2016 Yoga Tree, as I mentioned to you open a reflection in 2015 Bay and Dundas and I told you that we stopped growing but in 2016 we made a decision actually which I haven't disclosed to you to buy a piece of land. We bought a piece of land and our goal was to really spin Yoga Tree into something else. And I think at that time, we were experiencing quite rapid growth. We were steady, but reflecting back to it, we were growing too fast and too much outside what are our our strength was. At that time was to buy a piece of land. We're going to be offering a retreat center we're going to be offering Wellness Center. And it was investment that at that time, but I'm not sure you guys are in real estate but remembering 2016 real estate was pretty much at its peak both in residential and commercial. We at that time purchased that piece of land by little did we know, that piece of land, although it was shown as commercial, it was actually a residential piece of land. So we learned the hard way, being a entrepreneur, you can operate business well, but being a land owner being now a whole new side of business that you explore, there's multiple challenges. We went through a lot of legal hurdles, we had to obviously go through, you know, a debate between us and the seller. You know, what, what happened? How can we commercial, those residential, how come this place can never be deemed as a commercial space to be zone and build it as a commercial space? Long story short, we lost half of our deposit, we came to agreement, but also a big lesson for us was that continue doing what you do, I mean, continue doing what you're good at. You can deviate, you can grow, but also stepping back to make sure that you know what you have. You're solid in your foundation, but recognizing that again, these blind spots had I, you know, done my research more had I done, you know, a zoning variance had a hire planner, had I hired a consultant, perhaps it could have avoided that regardless of what the realtor listing says.
Eric Morse
Yeah, you know, it's a, it's a really common mistake. When you're starting up your business, and you're trying to partner with everybody, and everyone says, who are you again? It's really hard to find those partners. But as you start getting success, more and more people start knocking on your door, saying, hey, wouldn't you like to do this? Wouldn't you like to do that? And keeping the focus on, you know, what's been successful becomes harder and harder and harder as as you become successful.
Anton Rabie
Eric, you hear all the cliches, but they're true, you learn more from your losses and your wins. I'm a tennis player, and I play tennis tournaments for fun and once you lose a match, I spend more time thinking about was it my fitness? Did I eat right? Did I eat the right amount before? You know, it was a strategy, it was a tactic, and then you're making notes after your loss, you win a match, and you're like, great, and you're going on to the next thing, right. But I think that when it comes to mistakes, it's so important that you keep them front and center and visible. And what we've done is, our office is just here, because I just walked over here, our brand new offices are beside Roy Thompson. Outside of my office, we hung the products that were big mistakes, and we wrote the lessons on it, and they're on the walls outside my office, right. So as you walk from my office, down to the master boardroom, in a hall, you see us hanging up our mistakes. So one of the things I recommend is to make sure that your mistakes are shared with everyone, and that they're visible, so that you so that you don't make them again, and that you know, everyone continue to learn from it. I think Ray Dalio and his book on principles, you know, you know, he talks a lot about mistakes and learning from mistakes and the power and I think those are the inflection points where it helps you. The mistakes are most sometimes and the mistakes are moments where they're testing the entrepreneur and the leader, about their inflection moments testing you about, do you really think you can get to the next level, and what got you here won't get you there and it's challenging you to get on the balcony reflect, rethink strategy, rethink people, rethink process, rethink systems, and to make some serious changes, and have that edge, to make the tough decision to get ready for the next day.
Eric Morse
It's a big read, but it's a good read. Difference between mistake and failure and that's why I'm purposely using mistake is that a mistake only becomes a failure if you don't learn from it and so take the opportunity to learn from those mistakes, and then they never really turn into failure.
Eric Brass
I think just on that point, it's sometimes easier for leadership to acknowledge mistakes. Having your team and your employees and your salespeople acknowledge mistakes is a bit of a more challenging thing, just because, you know, it's natural to be afraid, or I didn't do it or pass the buck. So having the culture where you know, you have that it's great, it's okay, you made a mistake, because you have to learn and build from that mistake. It's funny, seems like there's a theme when it comes to mistakes. I make a million mistakes a day, right? So there's not one big mistake that I think I've made that put my company in jeopardy and not an extra zero to one of our payments or something like that. But probably in terms of I think hiring is a big theme here. And one of the traps that we fell into, especially you know, in the liquor segment is we as you grow one of the temptations is to hire an executive somebody with close sales experience, a rolodex you can use and say he's gonna take us from here, up to here overnight. In the past, we put that first and we put culture second. And we said, you know what, it's fine and we've done it, we will hire him, hire her, we'll gain all the benefits from other connections, people say, wow, they got this person, and we'll adopt them to Tromba afterwards. I think it doesn't work. Thankfully, we've corrected that. Now we've hired a veteran who puts culture first and sail seconded. Education is a lot easier than re-education. Because you're hiring folks that have 5, 10, 15 years experience have done it a very different way than Tromba and trying to tell them, hey, you can't do it that way anymore, you got to do it this way, they're gonna say, well, hold on, I built my career doing it this way, I'm not gonna change, you guys have to adapt to me. So putting culture second, and sales first is never a good idea. Some of the best people we've had, at Tromba have been outsiders, have been people that have had no experience, or very little experience within the segment. And they've been able to mold, we've been able to mold them, they've adapted to our culture and they've been some of our absolute top employees. I think another thing that we've learned along the way is and we've touched upon it before is that cultural aspect. I try to treat our Mexican production fair so we have 10 employees down, next we have our own office down, there, I tried to do business, down in Mexico, like I did in Canada and that caused a lot of pain, both on our operational standpoint, but also from a mental health standpoint, as well. Because it's different cultures, different set of values, it's just a different way to do business. And again, they're not going to adapt to me, I have to adapt to them. Another thing as well, which is correcting your mistakes, not repeating the same mistakes is important, but also, sometimes the past is a bit of a shell. So sometimes, don't just take a formula that worked and copy and paste it. You know, there's no, sacred cows and I find in the business world. And we've tried to effectively take a formula that worked in Toronto, and New York, and Miami, and try to put into Los Angeles, and kind of ignoring some of the outside stuff that was going on and it didn't work, because we set up worked here, worked here, worked here. And therefore, it's going to work in another market and it didn't, just because we were watched to copy and paste. So I think that repeating your successes sometimes can be as dangerous as not correcting your mistakes.
Eric Brass
Cool. You mentioned the quantum ship program, Debbie was a part of it, we have a couple other folks in the room part of that program. We do a survey every year and every year the number one issue keeping entrepreneurs up at night of these high growth companies is talent. People in talent, and we refer to heard from all of our panelists and finding the right people that fit with the culture and have the capabilities to continue to move the company forward is so critical. Probably one more question for me, and then we'll open it up to the audience. If you were to give advice to the group, you know, kind of a really key learning that you'd like to pass on, what might that be?
Anton Rabie
Firstly, I'm really looking forward to the questions, I enjoy uncomfortable questions. I try to spend as many hours of my day uncomfortable as possible, right? So I kind of wake up uncomfortable, and I go to bed uncomfortable. So I wake up in the morning, and I play tennis in an uncomfortable fashion and then I go to the office and I'm uncomfortable and I come home, my girls make me uncomfortable. So I'm really looking forward to some uncomfortable questions.
Eric Brass
Do you play tennis hopping on one foot?
Anton Rabie
Well, I play people better than me and try to figure out different ways to to win. Anyways, the question. Yeah, I think it's important to understand that as the business evolves, it's that whole concept of resetting strategy. I think the days of having a PowerPoint and having a business plan. And then, you know, following the business plan is those days, you know, I don't think that's the way to run a business. I think that one needs to constantly be resetting strategy. And, you know, for us for an example of how we reset strategy over 10 years ago, we were like, content is king. These are all the benefits to owning our own content and that's when we created an entertainment division. We're an entertainment company, as much as we are a toy company. So entrepreneurs, they get they get to married to the whole, this is the strategy, let's stick to the strategy to me is, one of the themes today is entrepreneurs need to be on the front line. That's what separates if you look at the last 20 years, the founder led companies, out produced companies without the founders on average, those statistics have been published by Bain, McKinsey all of them. And there are three reasons why founder led companies, and one of them is being on the front line, right, and getting all that information from customers from the marketplace, from employees and everyone and resetting strategy based on how the marketplace is changing. So that's one really big point. I think the other thing is that the larger the company goes, it goes back to talent and when you talk about talent, it all starts with yourself. How you show up. I'm working on how can I become a little more structured in the business, because now the company requires me to show up differently. Like, when I stand when I've walked into a meeting and Spin Master today, versus 10 years ago, I have to be a different person. It's tiring, because that's not my natural reptilian response, my DNA, that's not who I am, but I need to, as a leader of the organization, I have to show up differently. So much in business comes down to mindset, the underpinning of mindset is psychology, anxiety, insecurity, ego. What people need to do is they need to put truth on the table have radical transparency, and people need to talk about where are your pressure points when it comes to anxiety, ego, insecurity, self awareness, mindset, because, if you do the five why's, and you keep going to the root, cause, you just gonna keep going down layer by layer, you're gonna eventually hit people and when you hit people, you're going to get into a mindset and how open is the person. Does the person have a fixed mindset or an open mindset? I mean, there's a basic book from Carol Dweck called Mindset. It's just the most basic book ever and it talks about the difference between a fixed mindset and an open mindset. And that applies to everything in life, it applies to parenting applies, to politics, applies to business, applies to yourself applies to playing tennis, whatever you're doing. So I think that as leaders, you need to get comfortable understanding psychology, you need to get comfortable talking about uncomfortable topics, which is people's psychological profile.
Debbie Fung
So just to rephrase, I love listening, but just want to make sure you're on track with the questions. I'm in the health and wellness industry, I think, for us, more than profit. more than growth is really happiness, and happiness in the sense that I think you can only achieve that by having work life balance, even if your business don't last your family last. For me, I have two young kids and I think, you know, how do we make that happen? For me, it's really shaming that, making sure that you'll betray all my staff, we echo the same thing. Most of them are millennials, you don't have to put in the most hours at work, that's not how we measure success but you do have to make sure you achieve great results. We use a lot of tools to make sure that work life balance is achieved the Yoga Tree by having technology. We use collaboration like Slack, but I think the most important thing is if you're happy at work, if you're able to have that flexibility, you're able to carve out, you know, meaningful life beyond just working after studio or taking classes. I think for us, that's longevity, how do you make the business seem sustainable?
Eric Morse
Sure. Happiness, it comes down to toys, yoga.
Debbie Fung
and tequila, those are three perfect combo.
Anton Rabie
we should take this on the road.
Eric Morse
Eric, how about you?
Eric Brass
It's a great question. I think kind of how we started the company was effectively ingrained a culture of us great culture with us to be successful. If we didn't start this way, we probably wouldn't have been and by when we started the brand with effectively, you know, $10,000 in a story, we're no institutions would give us a nickel. Today it's very, very different environments but back in those days, they would literally lock us out the room and so what that did to us, I remember our first business plan that we gave out to an industry expert, it came back with more red ink on it than black ink. And the words impossible can't be done unless you have a million dollars per market or something like that and so we had to look at it and take a effectively, the only way for us to succeed would take an unconventional approach to building this brand because if we went toe to toe with one of the big boys, even if we had $2 million, $3 million, we would have died a pretty quick death. One of the things that we did, which was we didn't do really super consciously, but we look at the strengths and weaknesses of our competitors, because the only way to do this is to effectively take market share from them, that tequila market was growing, but it certainly wasn't growing enough for us to effectively build a really strong brand on something like this. So we looked at, okay, where are they strong, and where are they weak, and how do we effectively attack their weaknesses with our strengths? If you look at the bigger players, they have a ton of money. They have huge distribution for a huge distribution force, and they have a lot of relationships embedded within the industry seems like a fun competitor to go against. But where are they weak? They're big, their infrastructure is rigid, they're slow, they're very short, term oriented, and very payback focus. So they're not brand builders. They're transactional based. So as an example, doing this was beyond belief helpful for us, because when they go to a bar and restaurant, they would be lying for the general manager, or the purchasing director, or the owner, someone who's going to make the decision where they say, I will give you this much money marketing support, you give me this many cases, job's done, I go to my boss and say, look what I've done, they haven't done anything to build their brand, they made a transaction, we would do the opposite, we would be lying to the bartender, and we would tell the bartender our story and they would say, you guys are ridiculous. The bartenders most of the times has no decision making power, you could be wasting your time, they could quit tomorrow, but what we did was we ingrained, that story, bartender by bartender, bar by bar. Instead of working for payback, we built the foundation of a brand and we attacked kind of the Achilles heel again, and again, of our competitors doing this and we achieved, you know, effectively, by doing this, you can take down Goliath with a slingshot, almost the trickier thing as well as it, you know, it embedded that ROI base culture on us, which is a bit easier when you have no money, when you start to have a lot more money, nothing on the scale of the big boy levels, but to maintain that culture and maintain that payback. When you hire more people, you get far further and further removed and when they come from different organizations used to spending to maintain the ROI based culture and analyze kind of the major transactions you're making. Does this add value? Is this building the brand? Is this helping us achieve our objectives? Is something that I think has been really successful with Tromba.
Eric Morse
Cool, you guys. Thanks so much. Let's turn it to the audience. We have time for a couple of questions. I think we have microphones floating around. So Roger,
Roger
Thanks very much for those great questions. We're just following up on what you just said. How do you scale? If your staff are like they're always trying to approach bartenders and serving staff? And if you go into the market that you work with partners, how do you exactly approach?
Eric Brass
It's a really good question. You scale a lot more slowly than a lot of big boys would want to scale. So effectively is, hand to hand combat, bar by bar, bottle by bottle. And our strategy, the conventional wisdom is you need to go into a distribution drive and be in 500 accounts, and 500 accounts, maybe you'll sell a case, two cases, our strategy is very different. Our strategy is we need to be 50 accounts and from those 50 accounts, we're going to sell 10 cases for those accounts, we're going to serve as our them, they're going to all know our story and it builds, and it builds, and it builds and that word of mouth spreads between one bar to another bar, hospitality to other hospitality and there's a tipping point where it actually becomes infectious. Then you walk into a bar that you've never heard of, and person beside you is ordering Tromba. So I'm a big believer of scaling, in that sense, slow, but building that very strong brand foundation, because when the big boys do take notice of you, and they will, they'll try to disrupt it to throw cash at the bar or incentivize them to pour their product and the bartender, you've already commoditized your brand. So they're pouring it not because it's the cheapest. I mean, you know, we're on some house course for example, in New York and Miami where a bar could pay one third the cost of a tequila that they paid for us and so that's into their high volume bars, it's 10s upon 10s of 1000s of dollars a year, but they do it because they love the brand, they love the value proposition, they have that relationship. So it embeds that rock solid foundation
Audience
Thank you all so much. My question is so I'm wondering as you go from growing yoga studios in different locations. What are some of the steps that you've experienced?
Debbie Fung
That's a good question. So again, going back to what you're saying we do have five very different geographical locations. What we do weekly, we actually meet with our management team and we actually give them the support that they need. It is kind of like a breakout session, where we review using, we have a tool on the back end called High Fredrik. Social media is huge for us, but also feedbacks huge for us. So what we have is we have a step in between where we drive feedback internally before it gets out to the public and that step is actually very critical for us because anyone who's unsatisfied, anyone who has a concern, or something that really triggers that culture unfit, we probably would notice it in that zone before it hits out to the public or hits out to something and becomes long, full scale. Every week, we meet with the managers, but we also meet with a frontline yoga visors, and also instructors, where we kind of brainstorm to see you know, if there's something that's not right, something that you guys need support on, what can we do to support each other? We might not find the answer, for example, at Richmands, Spidina, but we pick on the team at Bay and Dundas to see if they can offer hand of support, it becomes harder, I find, especially when our brand, at one time experienced a lot of rapid growth back in early 2012 to 2013, when opening one store pretty much a year and a half. That was hard for us in a sense that we didn't have that connection, and we lost it at that time. We really took the time in 2015, to really make sure that we hone in on that to make sure that even if we don't have the resources and human resources, what technology can we leverage to make sure that we have the support? So yes, we cannot call everybody over the phone to ask them, hey, how was your class or, you know, would you come back to Yoga Tree, but we can use other tools to help us with that to the to identify some of the weakness that we have and kind of sown us back in and reflect that in weekly meetings.
Eric Morse
Fun fact, we have a 2016, when Debbie was with this, she mentioned social media, we kind of shipped it's 40 high growth entrepreneurs that are well past startup and we have a session that's Hear Me Out, Help Me Out and everybody asked her, Debbie please tell us what this whole social media thing is all about.
Debbie Fung
We're learning as well, we recently hired a PR agency. What we did well in the past and social media has probably changed and I think we need to stay relevant. We actually have the same PR myself and Eric Blue Door, there's no payment here. But but I find that you know, we do stories, we spread ourselves across three platforms, facebook, instagram and twitter. We recently tapped on a new platform called WeChat. WeChat is to make sure that we stay relevant in our, as I mentioned to one of our core values diversity. WeChat is one of the fastest growing platform on social media in the Asian segment. So reflecting in the demographic and people who come to Yoga Tree, we're now on four platforms. But social media is ever evolving. I mean, what we learned in the past in 2016 was Hootsuite right who uses Hootsuite now, they use other technology. So that's a channel that we're ever learning and ever exploring.
Audience
The 150,000. But we're at the precipice of scaling. And the first thing I wanted to do was acknowledge the three of you and say thank you the three of you are tremendous inspiration, both in the common result that you started from scratch, and succeeded. That's incredibly inspiring for led to start but nonetheless, achieve whatever it is that you have in front of you. The question is, before you were eligible for investment funding, or for a bank funding or any other kind of institutional contribution, America's bar contract is the issue, how did you survive? What did you do to get from the traffic.
Anton Rabie
We were spoiled because our first product Earth Buddy, cost us 91 cents to a wholesaler for $3.15, you know, and our margins were really were the labor. And so we were, very profitable out of the gate. One of the things that we did do is we used to relationship, Sam Koster, sample sales who paid a COD. So in order to ship Walmart, we sent the product to Sample Sales, they paid a COD, and then they shipped it to Walmart, in the early, in the beginning days. So I don't think I'm the best person to answer that question because we were so profitable early on.
Debbie Fung
I'm in retail, it's a slow growth, but it's sustainable. If you do things right, again, making sure that we negotiate hard actually, and all leases because there's two things that I mentioned to you that when to do well. Number one, we need to make sure we control payroll. Number two, we need to control rent, if we get do those two things, right, you'll be a sustainable and profitable business. We've been approached early stage on by local companies to do mergers and acquisition. Later on, as we get more on a list like growth 500 when the fastest growing companies, we got traction and people coming from the States for us, right now we have a trait 12 years in, we're still privately owned by myself and Jason, there's no minority partner, franchise or anyone else. There's still a long way for us to grow. I find that, you know, we're not at the scale at doing to be quite frank with you to do a merger or to do acquisition, I think there's a lot of work we need to do and this is a five year process, this could be a 10 year process, I don't know. I think we have to recognize that there are times where you might get excited, you may get these calls, it might keep you motivated and they'll continue to keep me motivated, but you also have to recognize where you are, and is it the right time for you to exit, is it the right time for you to do M&A? We recognize at the stage, this is not the right time, there's a lot of work we need to do.
Eric Brass
Certainly the market in the craft spirits slash tequila space has changed quite a bit. Some of the calls I get now were guys that wouldn't return my emails back in 2012. But we tend to question we swam very close to shore. We didn't exceed our means because it's such a capital intensive industry and you can waste so much money so quickly, by doing things that don't necessarily generate anything for the business, but guess stimulate, stimulate your ego and say, kind of look where I am actually my ex boss and finance, she asked me what the biggest destroyer of value is and when I was a senior analyst, I would say What was the number one reason why companies failed? And I would say cash flows, and no, profits? No, ego. So I remember turning down a distribution offer. We started first in Canada and Australia. We wanted to succeed in our backyards before we moved to the US and we turned down a distribution offer I think it was in 2015 or 16, for New York State for really good distributor, because we weren't ready. I mean, and he said to me, I've never had anybody turn down distribution offer from us before because it was it was insane but we weren't ready to go. So for us it was about again, growing slow, but growing smart, staying close to shore and not overextending. I also took no salary for two years personally.
Anton Rabie
I took zero so for more many years.
Eric Brass
But if you're not prepared to sacrifice both on a personal level, then, you know, it's gonna be a lot more difficult to generate that culture within the organization.
And this is for Anton because you're looking a little too comfortable. You talked about self awareness for years. It's so important. What's the toughest feedback, you got that you were able to turn around and do something with it?
Anton Rabie
Well, my toughest feedback came right when I started, when I did a 360 and my listening skills were 5.8 out of 10. I was around 20 to 23 years old and I'm still working on my listening skills are about a seven 7.7 now depending on the day. I mean, listen, I get so much feedback every day, it's exhausting, but does that answer your question? Yeah, I mean, I would say my listening skills. So a lot of entrepreneurs have some form of ADHD but they don't talk about it. I was never diagnosed with ADHD, but it's quite common and first of all, ADHD is just such a silly label, because there's such a spectrum, right? And I've never been officially diagnosed by anything. But, you know, I'm sure I'm somewhere on the spectrum. So I think that we spike high spike, low cause and effect, as an entrepreneur, there's things that make you great, like my energy and my pacesetting. There's certain things that have been so instrumental in the company's success, but at this size, you know, I need to show up differently. So it's just constantly re-checking in with, where are you in the evolution of the company and how do you need to show up differently? Eric, did we cover everything?
Eric Morse
I think so. One more question. It was uncomfortable enough.
Audience
My question is, what's your greatest weakness? Your greatest weakness? And how can you solve it or how do you intend? The second part is, have you guys ever felt that you've plateaued and how did you solve that?
Anton Rabie
My whole view is, to spend your time not working on your weaknesses. Like who wants to die with strong weaknesses, right? That's like my whole life is figure out what your unique ability is, and surround yourself with people to cover on your weaknesses. So everyone should spend most of your day, 80%, 90% of your day in your unique ability and what makes you great and what's the one thing that you do better than other people, and then just hire people around you to cover and your weaknesses. If you're able to do that, then, you know, we'll help you grow faster. So that's just my overall view
Eric Morse
So let's go back to the the first part of that question and we'll leave it with Debbie and Eric then we'll wrap up after that. Anton thanks so much. Debbie, want to talk about that a little bit?
Debbie Fung
Doing too much. As a woman entrepreneur, as a mom, as a mentor, as a leader, but also as a janitor at work, you're doing a lot and I think, saying no, is really hard in general, but you got to recognize there's a tipping point, there's a breaking point where you take on so much, and it no longer functions at the 100% capacity that you want it to be and it took us a while, especially in the early days, because, yes, you want delegate, but cash flow is also issue, resources, having the network was also an issue. You always don't have that choice to delegate, you don't always have the choice to recognize a weakness and address it and I think that took time, it might not happen today, that might not happen because of the circumstances you're in, may not happen because of the stage of the growth you're in but we took time to address that and slowly and slowly start delegating and start letting go. Now as I mentioned to Eric, I'm very excited. What keeps me up at night is not work, is not cash flow, it's about what am I going to do for school council tomorrow, sending pizza lunch to my kids. So there's different things and recognizing that it's a slow process to fix that but it's something that you might have it on your agenda and to re revisit that every year?
Eric Morse
It's a great point. It's another answer to the questions earlier is that when when you become the choke point, you can no longer scale and you have to understand when you become that choke point in your business and start to delegate more effectively. Eric, what do you think?
Eric Brass
It's a great question. I think one of the weaknesses that, still plenty of weaknesses, but something that I've recognized that I've tried to correct is having kind of a food mindset. So taking a cue for my children where they get upset about something and then 35 seconds later they're on to the next thing. It's funny, but it's really important because you don't get bogged down in the past, you don't get bogged down with with old issues. You said okay, that happened, I'v addressed the best I can and moving forward.
Eric Morse
I want to thank the panel for coming in. Anton, Debbie and Eric thanks for coming.
Outro
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