Joel Gaslin, Rick Wood Announcer: [00:00] Welcome to the Cognified Marketing and Selling Podcast, where we share interviews, stories, strategies, and even a few rants with doctors, marketers, and sales reps that are in the trenches, people just like you. We'll explore ideas, discuss technologies, and learn how to market and sell smarter. [00:15] Now, from Minneapolis, Minnesota, here's your host, Joel Gaslin. Joel Gaslin: [00:19] Welcome back to the Cognified Marketing and Selling Podcast. My guest today is Rick Wood. Rick is the founder and CEO of Cascade Mountain Tech. Rick and I worked together early in our careers back at Storage Instrument Company as product managers. Rick, I'm grateful to have you on the show today. I'd be appreciative if you'd give the listeners a little bit about your background. Rick Wood: [00:41] Sure. Glad to be here, Joel. Thanks for having me, man. Great to catch up with you. My background, well, I went from Indiana grew up in a little town called Kokomo, went to Indiana University. Graduated with a Forensic Studies degree. I don't know if you remember that. Joel: [00:56] I do, yeah. Rick: [00:57] Started to work in the medical sales industry, I actually worked for a little company called Summit Medical, my first job out of school, selling casting and splinting material. Worked there. I don't know how much detail you want of these jobs or anything, but I can just give you a quick overview if that's what you want. Joel: [01:14] Sure, yeah. Rick: [01:14] Worked at Summit Medical for about a year, and then after a year was promoted, and moved into Regional Manager position with them. Moved over to St. Louis, Missouri. Like I said, I was there for a year at Lexington, Kentucky, working my first job there around the Lexington Eastern Kentucky area. Then went to St. Louis, and I was in that regional management position for about a year. [01:37] Then lo and behold, I had actually met a girl in Lexington, Kentucky when I was there and was dating her. She was from Seattle area. After a year of flying out to Seattle to see her, she was just in Lexington for about a summer. That's where I met her. She was a veterinarian for race horses. She was trying to be a veterinarian for race horses, I should say. Joel: [02:04] That's a great area for that, I would think. Rick: [02:05] Yeah, yeah, exactly. There was a ton of opportunity for her. She was just there for the summer. We dated. When I got moved out to St. Louis, she flew back to Seattle. We stayed in touch and ended up finally getting a job with Trice Medical, which was a distributor of Richards. John Trice owned a distributorship for Richards, now Smith and Nephew Richards. [02:27] I went to work for them for about a year. Also, to get up there. I sold the same thing, casting and splinting material. Joel: [02:33] I never knew that. I know John Treace. That's amazing. Wow. Rick: [02:37] Wow. I didn't know you knew John Treace. Joel: [02:40] Yeah, because when I left Stores, I went to Xomed Surgical down in Florida to set up their ENT and ophthalmology instrument line. [02:49] They were owned by Warburg Pincus. Then when I was a product manager, they moved out the upper management, the senior management group and brought in Jim Treace and John Treace and a bunch of guys to run the company. Then they ultimately sold it to Medtronic. Rick: [03:05] That's right! I hadn't followed John. I knew he'd moved to Florida and was doing something else, but that's interesting. Worked for John for a year and was ultimately wanting to get into surgical implants selling. [03:21] There never came an opportunity, so I went and interviewed again. I wasn't a good interviewer then. I must have had 15 different companies I [laughs] interviewed with trying to get with [laughs] a solid company. Finally after 15 attempts, I got an offer from Jack Morris from Storz Instrument Company. [03:42] That's how I got the Storz ophthalmic, and that's how I met you. I started in Seattle, Washington, and I worked there for about two years and a couple of months. Then I was promoted into the product manage job where you and I had met each other. You want me to go on what happened after that or you...? [04:00] [crosstalk] Joel: [04:00] Yeah, because now we went our separate ways and I followed you from a distance. You've had astronomical success since then. That's what I want to hear about. Rick: [04:10] Real quick, right after I worked at Storz Instruments for a couple of years and as you know, got promoted with them after about a year. Then I actually went back out in corporate accounts with Storz back to Seattle, got married to my current wife, Christy. [04:23] She's from the Seattle area, so I moved back into corporate accounts. I was there about another year and a half probably after we moved back. Then, I left and actually went to work for my father in law, who was Peter LaHaye. He invented the first posterior chamber intraocular lens for cataract surgeons back in the 1970s and founder of Eyelab. [04:45] He had sold that company years before I had met his daughter, Christy. Before we got together, he had sold that company back in, like I said, I think he sold it in like, I want to say '79, '80, something like that. Joel: [05:01] That sounds right. Rick: [04:57] He only had it for like five years. Joel: [05:00] That sounds right. He sold it to J&J, right? Rick: [04:59] Yeah, he sold it to Johnson & Johnson. Anyway, he invented a stick on reading lens for sunglasses. He needed a vice president of sales. I'm like, "Hey, I'm your guy." I went to work with him for about eight months. [laughs] Then, we did well with it. [05:21] We sold it through. I got into about 30,000 drug stores across America. Unfortunately, it didn't sell through. The stick on reading lens idea just was a great idea. It came in, I think, it was six different powers, from a plus one through a three. We actually got it into Walgreens. Sell through, the concept, I think, was too difficult. It just didn't sell well. [05:45] I saw the handwriting on the wall, and wanted to go to another direction, anyway. I went back and started interviewing again, and I got a job with Roche Diagnostics. I was there for seven years as a corporate account director, worked out of the Seattle area, and called on Kaiser Permanente. [06:00] They had four business units at Roche, and I represented one face to the customer for all four business units, and was responsible for all of the products, corporate account contracting that we did with Kaiser Permanente. That was my only account, for the most part. [06:16] Then I've always wanted my own business, Joel. From the very beginning, from the time I was a little kid, I always talked about having my own business. Everybody who knows me it's funny, because I didn't even remember this, but many people later said, "You always talked about getting your own business," after I told them I'd started one. [06:32] Like, they're, "I'm so glad for you, because it finally happened." Guys that I knew from my grade school. [laughs] I had an opportunity, finally got my opportunity. I was 40 years old, living in Seattle, working for Roche. My uncle calls from Dalton, Georgia, and he says, "What do you think about starting a hand warmer company?" [06:49] [laughter] Rick: [06:50] I said, "Um, I don't know." [laughs] I checked it out, and there were two players in that industry. There was more, but two main players controlled 90 percent of the industry here in the US of hand warmers. [07:06] One of them was HotHands, and the other one was Grabber. The reason my uncle knew about hand warmers was because he knew the local rep there that sold into a lot of the corporate accounts across the country. [07:19] They were based right there out of Dalton, Georgia, if you could believe that, the hand warmer company. Joel: [07:23] Hand warmers, you mean things that you would put in your mittens, or something in your pocket to keep your hands warm while you're doing whatever you like to do, right? Not electric hand warmers, right? Rick: [07:34] They're air activated hand warmers, correct. You open them up, get air to them, and they stay warm for about eight hours. They have body warmers. We had four products, hand warmer, body warmer, adhesive body warmer, and a toe warmer. That was it. For four years, that's all I sold. [07:48] Anyway, we started the company in 2004, and actually didn't really incorporate and really have a product to sell. We started selling the product in 2005. That's when I quit my job from Roche, was January of 2005. [08:03] I don't know how much time we have, but it's an interesting story. I had two kids at home. They were two and three years old, approximately. Joel: [08:14] You're going along, you're still working, you had two little kids at your home, and you're trying to figure out how to start this business, right? Rick: [08:24] You got it. Joel: [08:25] What was that like? Rick: [08:27] It was kind of stressful, obviously. You've got these three mouths to feed. My wife wasn't working. She was staying home, taking care of the kids. It had been my dream, and she didn't know that. [08:37] I had been looking for years. I finally looked at her and said, "I guess it's just not going to happen for me. I'm going to be a corporate guy." Then literally, literally, like three weeks after I said, that, I get that phone call from my uncle. Joel: [08:48] All along, you've been telling people that this is what you want to do. I'm a believer in [inaudible] into purpose. Your subconscious mind was working on it all the time, but that's just my own. Rick: [08:59] No, I believe that. I'll tell you, Joel, you don't know how much work I had done to try and make that happen. I had written Subway shops, who by the way, offered me the rights to downtown Seattle for Subway, but I didn't have any money to execute on it. I couldn't do it. [09:15] That was back in 1991, when I was working for Source as a rep. I had written Burger King, McDonald's, several different franchise opportunities, trying to get something. Anyway, that's when I, like I said, I'd give that hope up. [09:30] In 2005, when I got this call from him, and I did so, I was pretty excited about it. I said, "Hey, let's check it out." Anyway, Joel, I did some research and found that there was only two main players, and both of them were making that product in the US at the time. [09:44] I thought, "Well, if we can find a company in China that can make hand warmers, I think we can compete." We literally google "Chinese hand warmer" manufacturer, and that's how we found a supplier in Tianjin, China. [10:00] This is back in 2004. We both flew out and met with this Chinese factory. It was very militant. They all wore uniforms. They all ate together, ate the exact same thing. It was very wolf gear, to be honest with you, [laughs] back then. Before we flew out there, we had sent them our packaging that we had made from a graphic designer. [10:27] While we were there, they actually started making some of our hand warmers. That was one of the coolest things I ever saw. It was a packaging that me and my uncle had designed with a graphic designer, and watching it actually come to fruition in this long term dream that I had of getting my own company. The start was happening right in front of me. It was very exciting. Joel: [10:49] That's great. Yeah, that sounds great. Rick: [10:50] Then, unfortunately, God puts tests in front of you. Joel: [10:57] Amen to that. Rick: [10:59] I was tested several times, four times in four years, that I had that company that we were really going. Like I said, we started selling in January 2005 and I sold it in January of 2009. During that time, it was crazy. When we started it in January '05, unfortunately in August of that same year, my uncle had a heat stroke out behind his house and died, 53 years old. [11:28] Anyway, I'm trying to decide what to do and how do I move forward. It just turned out I had to end up buying my aunt out, his wife. He had 51 percent, and I had 49 percent, and I had to buy him out. So I had to cash in the 401k that I had saved up through [inaudible] and all my work, to pay that off. [11:58] It got kind of ugly, unfortunately, within the family. Me and that aunt don't talk to this day. Joel: [12:04] That's too bad. Rick: [12:04] It was unfortunate. Money can get in the way sometimes. I do want to tell you a quick story. You asked how we started it. After I got back from the Chinese trip, I had some samples that we brought back with us. I was still working for Roche at the time. Hadn't quit yet. [12:22] I went in and literally sold seven out of eight customers that I called on. I went, whoa. I've never had any products, I don't know about you, where I sold seven out of eight. I knew we had a better price. I was right. When we went to China, I did some research. I actually went into local GI Joe stores that were there. They've since gone out of business. [12:45] There were 30, I think 31 GI Joe stores up in Greater Seattle, actually Great Northwest. They were selling 300,000 hand warmers a year. So before I quit my job, I go, let me go into this GI Joe's medium sized account and see if I compete. [13:03] So I went to the local GI Joe's there, and I asked the lady, "Hey can you help me? Could you tell me what you're paying for these hand warmers?" And she actually told me their exact cost. I said I was local and I wanted to try to win the business, and I had just started this hand warmer company. She felt sorry for me and told me the price. Joel: [13:21] [laughs] Well, that's great. Rick: [13:23] So, that's how I knew. I want to say the price at the time was like 57 cents for a pair, something those lines. Maybe it was 67. [13:33] So, I went in. I called the guy up. It was the buyer. She told me the buyer's name. I called him up and said, "My name is Rick Wood. I just started this hand warmer company." I said, "I really want to talk to you about hand warmers. I got a hand warmer, a body warmer, toe warmer, and this heat body warmer." [13:48] I said, "We've got great packaging." He said, "Yeah, tell you what. Send me a sample and the pricing, and I'll call you if I'm interested." Me and you, we're in sales. That ain't going to happen. So I go, "I can't do that." He goes, "Why not?" I go, "Because I'm only two hours from you." He was in Portland, two and half hours. [14:07] I said, "I'm a local company. Give me just 15 minutes. I promise you I'll be out of your office. Just give me 15 minutes of your time, and I'll show you this, and I'll be out of your hair." [14:19] He goes, "OK, send me the box first, then call me." So I FedExed him the box, call him the next day. [14:25] He goes, "Hey, you're right. I've the box. You've got great graphics. I love your graphics. You did a good job on the marketing." He said, "But what's your pricing?" I go, "I'm not going to tell you." [14:37] This guy's name was BG [inaudible] . We're still friends to this day. I said, "Let me have 15 minutes. Just 15." He goes, "All right, fine. What day? What time?" [14:46] Long story short, I ended up going down there a few days later, and I got in front of him. We talked for about an hour and a half. At the end, I closed him. I said, "All right BG. Let's just start with a couple cases of each. You can try it out and see how it goes." [15:01] He looked at me, and I'll never forget it. He goes, "Don't start thinking small with me now, Rich." I go, "OK. All right, BG, what do you have in mind?" He goes, "I'm going to put it in every one of our stores, all their products, all four of them. You won our business for next year." [15:20] I was so happy. I mean, that was my opportunity, Joel, where I knew if I won that account I'd have at least enough money coming in to get by and pay the bills. I was going to make like $50,000 off that one order. [15:32] I was like, holy smokes. Back when we were selling intraocular lenses, I never had any account where I could walk out and say, "I made 50 grand on it for a year worth of..." [laughs] It showed me right then and there that being an entrepreneur could pay off if you did it right, and you got the right accounts, did your homework, and do all the things that go with starting a business. Joel: [15:58] Yeah, that's great. That's a wonderful story. That's part of what I try to talk about a lot on the show, is just that doing thing smarter, adding some intelligence to what you do. Like you were smart enough not just to say, "I'll go pick on anybody, the closest one." You went and you found a target. You looked at it, and you went after it, and look where you are. That's a great story. Rick: [16:20] Thank you. It took guts also to quit your job at Roche. I was making pretty good money, and I had been there for eight years. I was well liked. I had a future there. It was just like, I'm only going to live once. My wife looked at me and said, "Go for it, man. I'm here. I'm behind you." I've told her many times, if she doesn't say that, that doesn't happen. [16:44] To have somebody behind you like that, who is supporting you 100 percent. I wouldn't have done it. I wouldn't have taken those risks, just wouldn't have done it, if she wasn't 100 percent behind me. Anyway, I sold that company. The company went extremely successful. If you want me to go on, I can. Or I can wait for your questions, whatever you want to do. Joel: [17:04] You finished that one, then you moved. How do you decide what's next? What do you start going after next? At that time, you're what? 45 years old or so? Rick: [17:11] Yeah, about 45. What happened, Joel, is during the time that I had Little Hotties, I was able to get it into Costco. Costco, I found out who the buyer was at Costco, and they were buying about 125,000 box of hand warmers a year when I was trying to get the business. [17:26] I ended up pitching the buyer, and he told me at the time, "Listen, you just started. We can't be first with you." He said, "Go out and get some other accounts besides us, and come back next year. Because I love your box, I love your packaging. I love your product, and I love your name." He goes, "But you have to get some other accounts." [17:41] I went back, did everything he asked, got all the accounts around me, and won Costco that second year. By the time I was finished, Joel, after four years of selling to them, we were selling them 325,000 boxes of 40 count hand warmers, and 200,000 boxes of 30 count toe warmers. [17:59] It was just a massive, massive order. It put us on the face of the map. That last year I owned the company, we sold a grand total of 18 million warmers in total that year. Joel: [18:12] Holy shit. [laughs] Rick: [18:13] I was really proud of that, in only four years. I tell you that, Joel, because that's how I got launched into my next venture. I told you that I had several challenges. This is a big part of starting a business. [18:29] Your listeners should hear this, because I was challenged so many times. I only told you one of them. The first one was when my uncle passed. The second one was when I won that Costco business, I didn't know where I was going to put all these warmers. [18:42] I had literally had to bring all warmers into a warehouse in the Seattle area, build the pallet displays for Costco, and then send them out. I won't say his name, but a gentleman came as a recommendation that had a warehouse that I could call, and would give me warehouse space, and a little office to work in. [19:00] I'll just say his name is Mike. Mike, I got in there, and after a year of doing...He helped me bring in the product, too, from China. After a year of him helping me, Mike was running a company himself, was very successful, and had been going to China himself for quite some time, buying other products. [19:18] Not hand warmers, but other products. His COO came in. After me being there about a year with them, his COO marches into my office, because we had befriended each other. [19:28] He goes, "I don't know how to tell you this, but confidentially, I just got out of a meeting. Mike has decided that he is going to start his own hand warmer company. He is going to go into every single one of your accounts and undercut you by 30 percent." Joel: [19:42] I don't like Mike. Rick: [19:43] I was like, "Oh, my god." I don't like Mike, either. [laughs] I just immediately contacted all my accounts and basically told them who this guy was, what he was going to do. He ended up getting not one of my accounts, not one, but it caused a lot of grief, a lot of grief. [20:01] Then in 2008, when the financial industry melted down this is the third or fourth challenge that I ran into in 2008, at the end of 2008, August, I think it was, when the financial industry melted down, my bank called and basically just said, "That's it. You're not getting your loan next year," to buy these hand warmers for Costco. [20:23] The fourth challenge was, at that same time, my best friend from high school died, my sister died, and my father died, all within six months. Joel: [20:33] Oh, man. Rick: [20:35] All unexpectedly. One of them was expected. My sister had cancer. My father ended up getting cancer, too, and died three months after he got it. Then my best friend from high school ended up getting leukemia. He was dead after about a year. [20:51] They all ended up dying at the same time, within about a four or five month period. Then I got the call from the bank. God was testing me. I ended up having to make a choice, hard decision. What am I going to do? How am I going to save this? [21:06] I put all this work in, I built up a beautiful company, and if I don't find money to get the bank loan, or if I don't get it sold, I'm done. I was at a trade show about August, the Outdoor Retailer Show in Salt Lake City. [21:22] I had had a company called Implus, who owns a conglomerate of sporting goods companies, had come by my booth, and said they were interested in buying me. I just kept talking to them, had been talking to them, and we ended up getting a deal done. It ended up closing January of 2009. Joel: [21:41] It worked out, then. Rick: [21:44] [laughs] Yeah, it worked out, but all of those things together, that was the most difficult time of my life, without question. There's no period that was even more difficult. I was very close to my father, and very close to my sister that died also. [21:57] [inaudible] to be tied after that deal got gone. I had a one year earn out, and so I worked with them for a year. After the one year earn out was finished, I came back, sat down with my wife, and had to regroup after everything that happened. [22:14] Decided I didn't know what I was going to do. I got some pretty good money for it, but not enough to not do anything. I had to do something. I'm sitting there in my office one day. I'd taken about three months off, and it was time to go back to work. [22:26] I'm sitting in my office, and the buyer from Costco. He said, "I'm looking for a carbon fiber trekking pole that I can sell for under $30, a pair." I go, "A pair, or one?" He said, "A pair." [22:41] [laughter] Rick: [22:41] Anyway, I'm like, "OK. I can do it." He goes, "OK, great." I hung up the phone, and of course did I say is, "How am I going to do this?" I flew to China, found a supplier, started a company, Cascade Mountain Tech, threw a logo on it, brought it back. [22:55] I got an order for about 200,000 pairs and trekking poles. Lo and behold, I was in the trekking pole business. That's how we started Cascade Mountain Tech. That's how it began. Then six months after that, he came to me with a stadium seat. [23:13] He said, "This stadium seat that we've been buying for 10 years from this company went out of business. Can you make it?" I said, "Yep, no problem." Took it to China, came back, got an order for 70,000 stadium seats. [23:30] I'm doing $4 million in sales a year, and making about as much money as I ever did with Little Hotties. I had no employees. Costco was picking up everything in China. I had no warehouse, no employees. I'm working out of my office, and I'm literally working 20 hours a week, and I'm making seven figures. [laughs] [23:52] I'm going, "OK, this is pretty cool." Being the sales guy I am, and being the hard charge that I am, "OK, I got..." When I started the company, too, I was like, "What am I going to do here? Do I want to do another Little Hotties, get a warehouse, get employees, and go start calling all these sporting good chains again, or do I want a lifestyle business?" [24:13] I just decided at the time, at the moment, I wanted to be a lifestyle business, like, "I'll just keep doing what I'm doing. No employees? This is great." I was doing it for a couple years, and then I just kept getting more opportunities thrown my way. More accounts were calling me. [24:27] I had Home Depot call. I had Aldi call. I had Academy Sports called. Academy, for your listeners, is a big sporting chain out of the South with maybe about 500 stores. I had all these customers calling and going, "I can't turn this down." [24:43] Lo and behold, I decided to hire some people. Now today, I have 10 employees. I have a 20,000 square foot warehouse there is Preston, Washington, which is just 10 minutes from Costco's corporate headquarters. I've got an office right there inside the warehouse where all my employees are. We got about six items in Costco. We're doing well. Joel: [25:06] How do you decide what product is next for you? Rick: [25:09] How do I decide what product is next? It's funny, because there's a lot of ways we do that. One of the ways is that we talk with our Costco buyer that we have good relationships with. Incidentally, I've had three buyer changes in the seven or eight years now, seven and a half years now that I've been doing this with Cascade. [25:26] I've had three buyer changes, but we continue to maintain the relationship. I'll just give you an example. One of the ways we do this is, I was at a meeting with Costco. They were setting things up for a big managers' meeting. [25:38] While I was there, my buyer was talking to me. I said, "Hey, I know you were at the outdoor retailer show last week. I just wanted to see, did you see anything you liked? Were you interested in anything?" He goes, "Hey, yeah." [25:49] He was in a hurry. He just really quickly showed me a picture of one of those compact folding camp chairs. They fold up really small, that you can put them in your backpack. Literally, I took a picture of his picture. [26:02] I went and did some investigating, found that there were a couple patents on it, got a design firm to design around it, and we did a test this year. This last year, this last summer, or the summer right now, actually, we did a test on it, and it sold really well. We won it for next year. We're going to be in all Costcos with it. There's one example of how we came up with one of our items. Joel: [26:22] Listening to your customers, it's an amazing concept, huh? Rick: [26:23] [laughs] Yeah, exactly, right. A lot of companies don't do that. You can get a lot of new business if you just come and say, "What can I help you with? What are you having problems with? What product are you interested in, but you feel like it's overpriced, or it's not made exactly the right way? "[26:40] Let me make it for the way that you want it, put it in the packaging that you want, and try to get the pricing that you want, so you can show value out in the market." Costco wants to show a 15, 20 percent value to, in any other retailer. They literally will not sell an item if they can't have the absolute lowest in the market. Joel: [27:00] I didn't know that they were based in Seattle. That's interesting. Rick: [27:02] They're actually based in a little town called Issaquah, Washington, which is just on the other side of Lake Washington, 30 minutes east. Where I live is about 15 more minutes east of that, a little town called Snoqualmie, Washington. Joel: [27:17] Then I noticed that you also sell your products direct on your website, and then you sell them on Amazon, presumably, too? That all works out fine, everybody's good with that? Rick: [27:28] Yeah, I got a funny story on that real quick, if you want to hear it, on Amazon. With Costco, you have to take all end of season product that's left over at the end of the season. You have to be willing to take it all back, or they won't do business with you. It's just the way they work. [27:42] They'll say, "All right, I'm going to buy, whatever, 200,000 sets of trekking poles, but at the end of the season, if I have 5,000 sets left, you have to take them back." Chances are, if you win the business, you can resell them to them the following year. [27:56] The first year, I told you we got the trekking poles. Sure enough, we had about 3,000 sets of poles left. We changed the design of them for the following year. We won the business, but we couldn't sell the old ones to Costco, because we changed the design. [28:08] We were like, "What are we going to do with these?" This is in 2012. My wife looks at me, and she goes, "Well, I sell things on eBay and on Amazon." She goes, "You want me to put it on my site?" She had little site called, I forget what the name of it was. [28:24] Anyway, she put them on there, and no kidding, Joel, within about two months, we became the number one selling carbon fiber trekking pole on Amazon. [28:33] [laughter] Joel: [28:34] That's a good story. Rick: [28:36] This went on for a couple of years. She's selling these trekking poles and these leftover stadium seats. She's making some pretty good money. My accountant goes, "What are you doing with all these returns?" "My wife's selling them on eBay." He goes, "Well, we got to account for them." [28:56] [laughter] Joel: [28:56] You want me to edit out the IRS part here? Hopefully, you're covered. [29:00] [laughter] Rick: [29:00] My wife's looking at me, and she goes, "You can't take my slush fund, no." She was literally pissed. Joel: [29:08] Slush fund. [laughs] Rick: [29:09] She was like, "I can't afford it." We brought it in house. Today, we sell maybe $6 million on Amazon. We got about 36 different items on Amazon right now. Amazon brings in 80 percent of what they sell straight from China, and we never touch it. [29:32] You talk about, Joel, about being smart, one of the smart things that we did was is, for the first seven years that we did this business, we said, "We don't want any customers that can't bring in full container loads straight from China." [29:45] I don't want to have a huge warehouse, and I don't want to have a bunch of expenses of shipping mom and pop stores. The cost to serve those smaller customers is so great, we were just like, "I just want container loads. Let's go to the largest accounts in the country." [29:58] We targeted the largest accounts that we could, and we were successful. We did that for about three or four years, where we went after other non Costco accounts. We picked up some other big accounts, but the problem was, is that we kept getting those calls from places like Academy, Home Depot, and Aldi. [30:15] We're like, "They're big, but they can't bring in full containers of all these items." We had a decision to make. We were just like, "Do we want to grow and grab these products?" As you know, Joel, when you go, and you're like, "OK," you always have the end in mind. "[30:30] What's your goal here, Rick, with Cascade?" Well, it's to sell it. In order to sell it, I can't have all my eggs in the Costco basket. I made the hard decision this year, really, to hire a non Costco vice president of sales to go out and all on all those stores. We literally, he's closed every account he's called on, with the exception of one. We've gotten something in these accounts. Joel: [30:53] Good for you. Rick: [30:55] We're in the middle of growing that business, trying to expand beyond Costco, and get that Costco number below at a ratio that's accessible to the market, where we can sell this company, hopefully for someone between a six and eight or six and nine X down the road, we're more than ready. Joel: [31:13] Do you still consider it a lifestyle brand, even though it's not just run out of your office and your house, and it's a real entity? Rick: [31:21] No, not really. Now that I've got 10 employees, it is, and it isn't. It is in one way, in that I hire a CFO/COO, a really sharp individual. He is basically running the day to day operations. I'm literally talking to you from Sun Valley, Idaho right now, where I bought a second house. [31:43] I am living here half the time. I go back and forth, and go into meetings when I need to go into, and go into big sales calls, and all those. I feel like that's my forte, sales and marketing. I always go into those. He's doing the day to day operations now, and I'm working probably three to six hours day, where I'm on phone calls or answering email when I'm here. [32:07] Then when I go back, of course, I work all day. I'm in meetings a whatnot. It is a lifestyle company, but we're now going after all of the accounts. We are still targeting only the largest accounts in the country. We're not going to go to the outdoor retailer show, and sell to every mom and pop outdoor shop. [32:26] Again, the cost to serve those customers is just so great a lot of times, that they're only going to order one case. We're charging right now with these largest accounts, we're still trying to get those accounts to bring these products in in their own containers. [32:39] A lot of them will, but a lot of them are saying, "Well, we'll bring in the initial container, but you need to bring in the remaining, say, 30 percent. We'll bring in 70 percent upfront, but all the replacement orders, you'll need to be ready to do that." [32:50] We have a 20,000 square foot warehouse there to serve those. We do a lot of Amazon. We have to fulfill 20 percent of Amazon out of there as well. We have no choice. That's how we structured it. Joel: [33:03] You and I are connected on Facebook. That's why, although we haven't seen each other for a long time, it's amazing to me, that platform, how you can still feel connected to someone. I see you've done a really good job of doing some branding on Facebook of yourself, and just Cascade Mountain itself. [33:20] I thought the video you put up thereof, apparently you're working on a new cooler that you had that grizzly bear tearing the thing up, [laughs] or whatever. What was test all about? Rick: [33:32] It's interesting, because Costco came to us about two years ago and said, "We want to do a roto molded cooler like the Yeti. The Yetis are selling it, and we want you guys to make it." [33:43] They would say to us, "You know what you're doing when it comes to making new items, and we're interested in potentially making that a Kirkland signature item, potentially, or we'll just buy the [inaudible] ." All these coolers that are out, these roto molded coolers, most all of them now have to be grizzly bear tested. [34:02] There's only one place in the country where you can do that, and it's in a little town outside of Bozeman, Montana. It's this place called the Grizzly Bear Gray Wolf Discovery Center. That's the only place in the country you can get it done. Literally, Yeti and every other major supplier Igloo that's coming out with these coolers has to get their stuff tested. Joel: [34:25] How does the process work? You put a bunch of meat in there or something. They put it out there, and then you just wait to see what happens, or what? Rick: [34:31] Pretty much, yeah, exactly. Basically, they put fish in it. They stick it out there for, and the bear has to be on the cooler for one hour. Literally, there was a video camera videotaping this whole process and a stopwatch. [34:45] Every time a bear touches, and they've got about eight bears there. They bring these bears out in pairs. Some bears don't get along with others. [34:53] [laughter] Rick: [34:53] They can only bring the bears out at certain times, because some bears just don't like each other. Anyway, all day long, they'll bring out two bears. They'll be out there for an hour. Then those will go in. They'll put them back inside, and then they'll bring out three more. [35:11] During that time, they put this cooler out there. They hide food for them to keep them active, to keep their minds active, and give them something to work on. They hide food behind all these rocks, underneath rocks, logs, and all different places in this little viewing area. [35:27] Then they throw your cooler out there, they put fish in it, and they lock it up with the lock that it comes with. Then like I said, they just sit and watch it. The grizzlies come out, and they smell the fish inside the cooler. I don't know if you know this, but a grizzly bear's scent is 40 times better than a Bluetick Hound. Joel: [35:46] Oh, I didn't know that. Rick: [35:48] It's unbelievable. Oh, yeah, crazy, crazy, good. They can smell that in there. It gets them excited. They start tearing through it, trying to tear through it, to see if they can get it. It can take some time, but usually within a couple of days, they get you an answer. [36:03] What happens is, the bears get bored pretty easily, I guess. It's hard for them, so they might move onto other easier food. After about two or three days, you get the full hour of these bears being on it. If they don't get through, you pass. Joel: [36:17] You passed, right? Rick: [36:18] We passed, man. We didn't on our first one. That first one we sent in, our walls weren't thick enough, and he got in, put all of his weight on it. I guess it's like, picture this 1,200 pound grizzly bear, just all four paws standing on top, the side of this thing. [36:33] He got in, and he was eating the fish. The second time, we made it thicker, brought it back, and we got it approved. Our first one was an 80 quart cooler, which we had in Costco this year. It did real well. Now, we're working to secure the 45 quart cooler business this year. [36:49] We've been told we've won that, but it's not approved yet. They're still working on getting that approved. Joel: [36:56] Wow. Do you think those bears learn tricks of the trade of how to get into these coolers? They're not complete...They're bears, I guess, but you keep getting the same eight bears, that keep seeing the same, you think they'd start to figure out tricks. Maybe not, I don't know. [37:06] [laughter] Rick: [37:07] I don't think there's any trick, other than trying to get through the wall, man. There's no getting those locks off there. In fact, sometimes, they don't even use locks. They put bolts on them. It's all about getting through that wall with their claws. Can they do it? Joel: [37:21] I got it, OK. It's not just testing the lock mechanism or whatever. Rick: [37:25] Exactly. They have to take those. You know those Yetis have those rubber latches on them, you know? Joel: [37:27] Yeah. Rick: [37:29] They pull those rubber latches off and just lock them, because they don't want the bear to ingest the rubber. It could be real harmful to the bear. They cut those off, and then they just lock it with a lock, so he can't. Now, it's just all about him. Is it bear proof? Can he get through the container itself? Joel: [37:44] That's cool. Rick: [37:45] They test a lot of other things there, too. It's cool. They test trash cans, all kinds of stuff. Joel: [37:50] That's good. Congratulations on all of your success, Rick. It has been fun to see you going through it. It's sad, but it's interesting to hear about overcoming obstacles, because we all have them. It's nice to hear the success story on the backside of it, and that everything's worked out as well as it could. [38:08] That's all good. What books are you reading these days? Rick: [38:10] What books am I reading? Wow, let me see what's the last book I read. Off the top of my head, the Steve Jobs book that came out about this biography, I read that recently. I read "The 5 Hour Workweek," I think, by Tim Ferriss lately. [38:27] What else have I read? I read a lot of articles, Joel. I don't read a tremendous amount of books, but I read a ton of articles. I don't know if you've got these Digital River things that are on. I've got a lot of those on my phone. [38:44] I really just zone in on business, finance, and try and read everything I can on, try and stay ahead of things. One part of my business that I have to stay aware of is currencies, exchange rates, and interest rates. [38:59] All that plays a role, so I'm constantly, as an entrepreneur, we were working marketing. Man, when you start running your own business, you got to learn all of it. That goes with not just learning the accounting piece and the finance piece, but also how to run a warehouse, a forklift, and [laughs] all that stuff. Joel: [39:15] How to manage capital and all that stuff, yeah. Rick: [39:19] You got it. I try to read everything I can on business and stay up on it. It's a full time job. It has been. Like I said, I'm starting to cut back. I'm here in Sun Valley, and I'm starting to cut back. I'm still staying up on my reading, those Digital River magazines that I look at and ready every day for hours. Joel: [39:38] Does Christy go where you go, or does she have her own schedule? What's that like? Rick: [39:43] Christi, like I said, we've been coming here for 23 years to this town. Now, we're here. She's wanting to meet people. She actually went and got a job. She's a designer by trade, had her own business there in Snoqualmie. Decided to get a job at basically, like a furniture store here in the town, and just works two days a week, 10 hours a day. Joel: [40:03] Nice, meet people, and get in the community. Rick: [40:05] It's a real small community. It's only about 8,000 people, but it's really cool. Joel: [40:12] That's cool. What haven't I asked you about that you'd like to talk about? Rick: [40:16] Man, I think for people that starting businesses out there, I can't tell you the pride that I've gotten out of finally going for it, and finally getting my first company with Little Hotties, and then coming into what I have with Cascade Mountain Tech. [40:33] I am so supportive of anybody. I get asked a lot, pretty much every week, by somebody who knows me, either through the town I used in in Snoqualmie, or wherever they find about me. They want to interview me, or ask me how I do things. [40:47] How did I make this thing happen? I'm so happy to do it, because I really feel like, in life, you're not really completely fulfilled unless you're helping others up, giving a hand down, helping these people up to be their... [41:02] I had help. I didn't do this by myself. I've got 10 great employees back there. I just feel like it's our duty and responsibility to help the next set of people coming up in any way possible. I know you know that, too, Joel, because you've got this podcast. You're trying to do the same thing, help share and give information to help people. That's where the real growth is. Joel: [41:22] It's fun. When I talk to a lot of people, even just people who are sales reps, because if you think about it, as a young sales rep, which we both were at one point, you're kind of running your own business. They give you a car, a briefcase, and little bit of training. Then they say, "Go have at it." When you get started, even when it's your own business, how do you decide where you go first? Rick: [41:41] When you start your own business, that's a good question. I had no idea. Like I said, the operations piece, I had zero experience. The first thing is, for me, was obviously, how am I going to pay the bills? What's the strategy to gain customers? What am I going to rely on to win business? What do I have? What's my strategic advantage over my competition? [42:03] Number one for me in starting a business is, "OK, what item am I going to sell, and why do I think the customer is going to buy my product over the existing competition?" You're either going to have a better widget, or you're going to have a cheaper priced widget, one of the two. That's number one. Then number two, where do you go? I think at the time, I just winged it. I talked with people. [42:26] I had this other guy, Mike, that I was telling you about. He helped me for a little bit. I got to learn a lot from him, until he tried to get all my business. The fortunate piece was, is I did have him as a mentor on how to work with China, bring things over in containers, how that worked, and what were the companies involved. [42:44] The most important piece, as I think about this, is probably getting a mentor. Somebody in your community that you can talk to, ask them questions, and get advice. Like I said, everybody comes from some discipline. Very few people go out of sales and marketing, and go into operations. It just doesn't happen. You can't know it all. [43:03] Most people have no clue about some aspect of business. You don't know it all. I certainly didn't. Having a mentor to go and ask questions is, to me, absolutely incredibly important, in some way. Why reinvent the wheel, man? Why make all those mistakes? Find somebody who's already got the results you want. Go find out what they did, and follow them. Joel: [43:27] That's good advice. It's good catching up, and I want to stay in touch. If I ever get out to your neck of the woods, we'll go and have lunch, dinner, or something, and get together in person. I'd look forward to that. Rick: [43:39] Absolutely, Joel. If anybody wants to reach out and ask me any questions, any of your listeners, you can reach me at [email protected] Tech is spelled T E C H. I'll be glad to help anybody out if they've got any questions or thoughts on starting a business. [43:55] I'm here, and man, if you do come out to Seattle, or out to the Northwest, anywhere out here, call me. I'd love to have you out. Joel: [44:01] I will. If anybody wants to get your products, you can get them on cascademountaintech.com, you can get them on Amazon, or you can get them on Costco, right? Rick: [44:08] You got it, yep. Those are the biggies, absolutely. Thanks for having me, Joel. I really appreciate it. Joel: [44:14] I appreciate it. Thanks. Have a good night. Rick: [44:13] All right, man, you, too. Joel: [44:15] Bye bye. Rick: [44:16] Bye bye.
Joel Gaslin: Welcome back to the "Cognified Marketing and Selling Podcast." I'm your host, Joel Gaslin. This is Episode 10, and my guest today is Stan Herrin. Stan is the founder and publisher of "Outpatient Surgery Magazine." Recently, Stan entered into a transaction to sell "Outpatient Surgery Magazine" to AORN Group. Today, we're going to talk about a lot of different things. Stan is an ad man, and also a publisher, and has lots of good things to talk about. With that, Stan, I'd be grateful if you'd give us a little bit about your background, and then we can get going from there. Stan Herrin: Sure. Thank you Joel for including me in this project. I think it's going to be really fun. There's not much remarkable about my background. I went to journalism school way back in the dark ages. I worked as an editor exclusively in eye-care magazines for about 20 years. That's how I got to know surgery a little bit. One day, I was in the OR watching some kind of an eye case done at Wills Eye Hospital in Philadelphia. A circulator came in. A circulator is a person who can go from OR to OR. She motioned me over. She said, "Come on. I want you to see something." We went up to the fifth floor where they were doing neurosurgical cases. I walked in, and before me was a carotid endarterectomy. That's when you're taking a plaque out of the carotid artery that is interrupting blood flow to the brain. The neck of this patient was just wide open. You could see all of the anatomy, because there was the epinephrine in the tissue. It was just the most amazing thing I had ever seen to that date, and I was hooked. Eye cases are interesting, but they're not as interesting as a lot of the other surgery you can see. I just became hooked on being in the OR and seeing as many different kinds of cases as I could. That really inspired me to broaden my focus. I ultimately started this magazine about outpatient surgery as a result. Joel: What made you think about, Stan, focusing on outpatient surgery? Stan: Couple of things. That's what I was familiar with in eyes. Almost all eye surgery is outpatient surgery, as you know. Also, at that time, and still today, outpatient surgery was really exploding. The incisions are getting smaller, surgery is getting better, pain control is getting much, much better, control of things like post-operative nausea and vomiting are getting better. That's allowing more surgery to be done on an outpatient basis. Meaning the patient goes home before 24 hours is over. That and financial incentives for physicians created this entire industry of ambulatory surgery, both inside the hospital and outside the hospital... [crosstalk] Joel: That was [inaudible 3:29] my next question. Stan: Now, today, at least 80 percent of all surgery is outpatient. Joel: I read recently that ophthalmology is 70 percent is done in the hospital and roughly...I'm sorry, the other way around. 70 percent in the ASC and 30 percent are still done in the hospital for varying reasons of either the patient needs it, or for one reason or another. Is that jive with the information you hear or what do you hear about that? Stan: That's pretty close to what we see. We use the number 75 percent, but they know... Joel: Maybe better. Stan: It's definitely the case. I think that what ends up happening is that a lot of the surgeons who don't have a high volume in that operating in hospitals, because they are not owners of an ambulatory surgery center. They may not be invited to operate there. Joel: That's true and a fair amount of that too, Stan, are critical access hospitals around the country that are in remote areas. The physicians go there to keep care closes to home, which certainly from a Sightpath standpoint, that's still the bread and butter of our business. Some of those remote facilities that doctors go to once a month. Stan: That's a great point. Joel: You've been at this game a long time and in your niche in industry, you'd have a contact for a lot of different companies. What are you seeing changing from them from a selling and marketing stand point? Stan: That's a great question. Something that we've gone through over the past ten years or so...In 2008, we had the recession. Of course, it seems that whenever there's a downturn in sale, one of the first things to get caught ironically is advertising and promotion. That happened in 2008. At that same time, we saw a lot of, I'm going to say, confusion about all of the new advertising options that were becoming available. We had all kinds of different banner advertising opportunities, interstitial ads, all those kinds of ad. You had to search. You have behavioral advertising. All these things were starting to develop at that same time. We called it, "The Perfect Storm." It was a challenge for our business. Joel: Sure. Stan: In addition to that, one of the things that's happened is people are always...Advertising is very confusing. There are good reasons why people don't understand advertising well. In addition to that, there are these people out here who are trying to understand, objectify advertising, measure the return on investment of advertising. Joel: Right. Stan: The book that you've recommended, Joel, which I love -- "Storynomics," I was entertained by the subhead on the cover. It talks about the post-advertising world. Joel: Right. Yeah. [laughs] Stan: Of all these people giving seminars and writing books about how advertising is over, or you need to measure your ROI...All these things have served to cause people to be confused and paralyzed about what they should do with advertising. Joel: Interesting. How does it fit in in what you see people doing well today? What do you think is different than used to be? You still believe in it. You're talking print advertising, right? Is that what you're referring to? It's interesting when we go talk to physician practices, a lot of times and you talk marketing, and immediately think advertising. It's not an advertisement. When I talk about my view of advertising, it's just one channel of marketing. There is selling. There's product. There's placement. All these different things. What are you seeing that's changing? What do you think is making it the way it is? Stan: The way we see it is a "Back to the Future" kind of scenario, I'll say. We've seen all of these different digital ideas for advertising. Most of them are, I'm going to use the word interruptive. I don't know if that's the right word. Joel: Sure. Yeah, I think so. Stan: They will come between you and your content. I don't know whether the effect of digital advertising, when it's annoying to you, has ever been studied. I've been very curious about whether or not advertising within a negative, annoying environment -- how that works, and whether it works. But we know that digital advertising is very annoying to web surfers. Adobe does a lot of research on this, and it couldn't be clearer that people find digital advertising annoying. When I said Back to the Future, what I see is that advertising that's more static not annoying. Advertising needs to not be annoying. I guess, that's my point. If it's digital, then I think that it's going to be most effective if it's simply a banner ad and it just sits there, it's not trying to grab your attention, it's just in front of you quietly sitting there. With our print magazine, we have that same effect. You open a magazine, you're not going to find the advertising annoying. It's not bothering you. It's just sitting there across from the content, and it's quiet. It's not demanding that you look at it. I think that that's the way that advertising is probably going to work best -- at least, traditional advertising. Joel: What's your feeling, or what's been your understanding and thinking around the brain chemistry that happens at that point, where they're having...You're sort of geek telling that in a few conversations at breakfast in varying cities. Let's talk about that. Stan: Yes. Thank you for that question. As you know, we have a whole presentation on advertising in the brain. We actually developed that during this terrible period for us, in 2008 and 2009, when we weren't bothered by any customers who wanted to buy advertising during that time. Joel: [laughs] Bothered! Yeah. That's a time for content development. [laughs] Stan: [laughs] Yeah. It was a time for navel-gazing. Honestly, I did not understand advertising well, and I wouldn't tell you that I understand it well today either. But, after looking into it very seriously and trying to understand how it works on a neurological basis, I feel like I can explain it maybe on a 12-year-old level, how it works. Joel: That's great. Have at it. Stan: [laughs] OK. Again, I would say that there's just no training out here on this, and so people shouldn't feel bad if they don't have some kind of solid understanding of advertising. Some of the science too has just developed, really, and so we didn't really know how it worked before. But how it works, Joel, in my understanding goes back to... If you start with something called "the triune theory of the brain"...This is a very simplistic way of understanding the brain's functions, but we have what they call "the reptilian brain," which is down near the spinal cord. This part of the brain can't learn. It's responsible for things like fight or fly. It's not really relevant to this discussion. I just am going to leave it out. Then, over the top of that, we have what's broadly called "the limbic system," or some people call it "the mammalian brain." Then, on top of that part of the brain is the part we call "the human brain," or "the neocortex." A way to understand -- and I know you know this -- a way to understand the difference between the limbic, or mammalian, brain and the human brain, or the neocortex, is, or I think it's a simple way, is, if I asked you, Joel, "What is two times two?" you're going to immediately know the answer. But, if I ask you, "What is 17 times 23?" you might immediately know the answer, but most of us would take a long while to cogitate and try to figure it out. Joel: [laughs] I need a calculator. Stan: [laughs] Joel: Or at least a piece of paper. Stan: [laughs] Joel: And a pencil. Stan: That illustrates how the two brains function. The way that the limbic system is set up...Again, this is very, very simple, but we have neurons, billions and billions of neurons, in our limbic system. Those neurons are connected by something called "the dendrites." You do have more than one dendrite coming out of each neuron. Those dendrites are connecting one neuron to another neuron. Your "two times two" neuron is connected to your "four" neuron. That's because you've trained, your neocortex has trained, that lower level of the brain to form these dendrite connections, and they're refreshed frequently. You frequently have to do the calculation "two times two is four," and so that connection does not go away. Joel: Are there axons in there, somewhere, too? Stan: There might be, but I don't know what axons [inaudible 14:56] no. [crosstalk] Joel: Yeah. I think there are axons and dendrites connect to form the connection. Yeah. I think that's right. Yeah. Stan: Thank you for that. I was not aware of them. The neocortex, by contrast, is actually something of a computer. It can actually make calculations that are not due to connections from neurons. It can put together more complex problems. However, the limbic system is incredibly fast and powerful. I have the numbers here, somewhere, but it's amazingly fast, and the bandwidth is amazingly wide. The neocortical system is very, very slow, very labor-intensive. As a result, we don't like to use our neocortex. The estimate from the Nobel-Prize-winning psychologist Daniel Kahneman is that about 90 percent of the time we're on autopilot. Our limbic system is running us. We're not really using that human brain. Even though we think that we are, the neocortex is running everything. I like to think about this. When we're driving, all the information that we're taking in...I don't know if you've ever had this experience, Joel, but I have driven places where I was very familiar with the road, and I woke up at the end of the trip and thought, "How did I get here? I don't remember anything about the trip." Joel: I do remember this. In fact, in the early part of my career, Stan, I covered Minnesota, the Dakotas, and Wisconsin, so, that drive from Minneapolis to Rapid City, South Dakota, I had to do everything I could to try and forget a lot of that. There was a lot of daydreaming that happened there. [laughter] Stan: But it's an amazing amount of information that your subconscious brain is taking in. That's how you can see, maybe, a child over in the corner, about to cross the street in front of you. That's not your thinking brain. That's your limbic system that knows, "OK. Stop the car. Sometimes is about to happen." Joel: I have the benefit of having this up here, your presentation open, that you were kind enough to give me, that you created back then about how your brain works with advertising. You say in here, "Don't underestimate the subconscious. The subconscious processes 20 million bits per second. Your conscious brain processes 40 bits per second." Stan: Amazing difference. Joel: That's an amazing difference. Is this a proprietary deck, or would you want me to make this available to people as a download from the website? Stan: Yeah. This could be downloaded. The first slide doesn't work in PowerPoint, but I could maybe remake that... [crosstalk] Joel: I've got that. I can figure it out. I'll put up and people can grab it. It doesn't have to be perfect. It's not like they're paying for it. Stan: That'd be great. One of the neat things about the subconscious, too, that I wanted to mention is that -- this always amazes me -- we see people, and we maybe don't trust them or maybe we do trust them. Something about their mannerisms, their facial tics, or whatever that we're seeing subconsciously, we're basically connecting that to things that we've seen before. If we see someone who's got some kind of facial movement, that may remind us of someone else that hurt us in the past or something like that. That's another... [crosstalk] Joel: I think of the dendrite-axon-dendrite network, it's under this web of connections that are made. As you learn, it creates a connection that way and it gets a little stronger. As you don't use it, they die off, but yet it's still hanging there. The subconscious makes these sort of connections that are always there. Do I think about that the right way? Stan: Yes, that's how I understand it. I couldn't say for sure, but again, my understanding is very elementary. Joel: You articulate it well, so that's good. Stan: I find it fascinating. Thank you. Another interesting thing, Joel, is that the subconscious and the conscious brain have to work together. They're connected somewhere. I think it's called the orbitofrontal cortex, which is behind the eye somewhere. We know that they have to work together to make decisions because people who have this part of the brain damaged cannot make a decision. They say, "Well, I think I'm going to go to the store, but I'm not sure, you know, uh, if I should, I'm going to wait and decide later." They literally can never ever come to a conclusion, because we need that second opinion from our subconscious brain. It's very interesting to me that we have three brains, but the two... We find ourselves talking to ourselves. The concept that we just have one brain doesn't work with that reality. Joel: You say that we may not see it every day, but advertisers are in a battle to rewire customers' subconscious minds. The stakes are high enough to justify $350 billion in spending. Stan: That's well said. I didn't say that, but you said that better. Joel: Yes, you did. [laughter] Stan: I did? [laughter] Joel: No, you wrote it. Maybe you got it somewhere, but I liked it. Stan: Right, and advertisers have understood that this works for a long time. I'm not sure they understood how it worked. Companies have been doing this for a long time. I think I read in "Storynomics," I think it was Doyle Bernbach in Chicago came up with this idea you would be especially effective at rewiring the brain, delivering a message, if you could also create an emotion at the same time. Joel: Yeah. Agreed. Stan: Very interesting. Apparently, the amygdala releases chemicals that enhance this formation of dendrites. [inaudible 21:21] don't get too wonky, here. That's very interesting too, and you see a lot of advertisers trying to do this, especially with TV advertising. Joel: That's right. I think what I see a lot...Now, Stan, and I really, frankly, enjoy is...And it's an overworked term right now, but using story to do it, taking...Because, even on an ad, or even on advertorials, telling a story that's trying to... Just the simple hero's journey of the three-act structure of "OK. Here's the first part. Let's do the setup. Here's the middle 50 percent. Let's build it out. Let's create a conflict. Let's create the problem, and then let's give the solution in the last 25 percent." What advice would you give to people who may be listening that are thinking about developing advertising campaigns and strategies to try and help sell their products or services? Do you have a formulaic way that you've seen people work? How do you think about that? Stan: I do not have a formulaic way, and I'm no expert. I have some, again, very elementary understanding of how different kinds of ads can work. I understand and believe that stories are a way that the brain...They're a message that the brain likes, because the brain understands...It's a great way for organizing information for the brain. It's just the way our brains are set up... Joel: Yeah. Agreed. Stan: ...in a chronological fashion. I've often thought that it's a reason why people have such trouble understanding a concept -- and I do too -- a concept like evolution, where you really are telling the story backward, in a way, and there's no protagonist like we're used to, I think storytelling is extremely effective. Joel: It's interesting you said, because I think the reason story works in my mind and for a lot of people is it's puts a bow on everything at the end, because our mind doesn't like things hanging, and not really understanding why is this this way. Stories -- good stories, at least -- have a conclusion, and it may set you up for the next story, but it does have an endpoint, and I think... That's why we don't have to certainly get into an evolutionary discussion, but you're right. That's backwards, and you're like, "Well, OK, what's the real answer here?" [laughs] Stan: Right, yeah. I totally agree. I love the commercials where you see these characters acting out some kind of sequential story. There's a commercial that tells the first part of the story. Then you go back to your content for a while, then another commercial comes on. You're eager to find out what's going to happen next with these characters in the commercials. I believe if you watch, always, though at the base of these commercials the advertisers are trying to connect their brand with a concept that's favorable to them that's going to help them. I like to think about Coca-Cola, which honestly I think is a dangerous product, but their advertising is extraordinarily effective. They work all the time to connect their product to things like water sports and first love. They've bought the rights to an Olympics advertiser, even connecting their product to very healthy, thin people. Karl Lagerfeld models, that is another one. It's ironic, because we know that Coca-Cola and all soft drinks cause obesity as well as diabetes as well as tooth decay as well as hyperactivity. Again, our subconscious is wired where our Coke neuron is connected to this athleticism and fun and love. By the time our human brain catches up, we've already drunk half of the can. They're very, very good at what they do. I don't like their product. I think it's not good for us. Joel: I agree with you. In fact, I think the same is true of Red Bull. They've done an amazing marketing job for a product that... Coke's just sugar water. This is just sugar water with some vitamins put in it. They hooked it up with the right people and away they went. Now they're a massive company. It clearly works. Stan: Great point. They are also admirable with their... You don't have to be a good company or a product that's good for you in order to have great advertising. That's proof. Joel: You're right. You do have to have some money. [laughs] You will, at least, be willing to spend it. Stan: That's right. Joel: In your deck, you also talk about the concept of signaling and that simply repeating an ad over and over can subconsciously convince consumers of high product quality. The ads don't have to be informative. Then, you say, "Why does that happen?" You say, "It's because it's costly," and you call this an implied warranty. What do you mean by that? Stan: Thanks for the question. It's that, when a consumer sees an ad over and over again, they understand that advertising is expensive and they think that nobody would invest that much money if they really thought that their product was damaging or not going to fulfill the promises that they were making. That's what I mean when I say, [inaudible 27:39] . I'm not sure it's the right phrase, but it's a guarantee that it's OK. We've all done this, we've all purchased like if we go to the store, we thought we talked about coke before, but any products really next to a generic products, even if the advertisers has not really done anything but signaling, we're going to tend to trust the product that we're familiar with versus the one that we're not. Even if we know intellectually that is exactly the same product. Joel: What about emotional advertising, do you have some examples of those you like to use? Stan: I guess you saw this, I know everyone has seen this commercial, but the one that I just adore is the Subaru commercial. They are so good. They have a commercial that air probably five years ago where we start off seeing the dad looking in the car window, and he's talking to his daughter clearly, and he's giving her advice about how to drive safely. We pine over to the daughter and she's just this little girl. She's maybe five or six, and she's listening to her dad, and agreeing to do what he says. He keeps going and finally we hear the voice of the daughter. She says, "OK, dad, OK." The camera pine us back over to her and she's grown up. She's 16 and of course gorgeous and then... [crosstalk] Joel: Dad's a little gray. Stan: Yeah, her dad's a gray. [laughter] Stan: She drives off and then Subaru always, always, always has the word love at the end of their commercials that will appear. You can watch for it. There are a lot of messages in that commercial, but the center of it is that if you love your kid, if you love your family, you will buy a Subaru, because Subarus are really safe and Subarus are going to protect your children, the people that you love the most. They're really working hard to connect the word Subaru to the word love. It works very, very well. They sell more cars than -- I forget -- more cars than BMW, more cars than Volkswagen, I believe. They're very, very successful with their advertising message. The other thing, Joel, that I love about that commercial is this idea of time that they built in there. You may not be ready to buy a car when you see that commercial, but they're trying to communicate that maybe you can go ahead and buy a Subaru now and then that will be the car that your child will drive whenever you might be ready for a new one. You don't have to buy this now. Think about as your child grows up, you're going to want them to be driving a Subaru. Joel: That's good. You also talk about the 40-yard dash in the NFL as it relates to advertising. Let's talk about that for a second before we shift to surgical sales as a zero-sum game. Stan: That point was just that we have a lot of customers who don't really understand advertising. They're skeptical about it, and I support that. It's expensive on the surface to advertise. You can definitely mess it up and not do it well and waste your money. If you do it well when you're selling something like surgical products or anything where it's a little bit more of a complex sale, then advertising can give you an edge that may be just enough to win the contest that you're playing. In surgical sales frequently, you mentioned a zero-sum game, meaning there's just going to be one winner in the game. If your company and your brand is familiar to the person who's considering buying the kind of product that you're selling and your competitor's brand is not, then that may give you just enough of an edge to make the sale. That's why I brought in the idea of the 40-yard dash. In [inaudible 32:36] , they talk about it when they do the NFL combines. One of the most important measurements is the time and the 40-dash. The reason for a receiver anyway is just a fraction of a second can mean a step on your defender. If you have a step on your defender and you have an NFL quarterback, you can pretty much put the ball exactly where it needs to be. That could be the difference between a touchdown or an interception. Then we feel the same way about advertising. We never tell people this is a confusing thing. I think a lot of people feel like advertising is supposed to be a substitute salesperson. It's really not that. That's not what it does. It makes sales easier by helping to break down the natural defenses that we all have. When the salesman approaches, everyone, even other sales people like you and I, will say, "OK, here he comes. He's going to try to take more money from me than he's going to give value back." To the extent that you're trusting that person and you know them, you're going to be able to actually hear their message and say, "Hey, wait a minute. This person may be able to help me." Joel: That's great. I like it. Anything more you want to talk about with advertising and outpatient surgery? If it's OK with you, I'd like to shift to your decision process you went through and your transaction you did with AORN. If you want to talk about that for a little bit, I'd be grateful. Stan: Sure. I don't know how interesting that will be but I guess maybe there's something there to talk about. Just a little bit of background. I'm going to be 60 in August. I felt like the company I had started would be a lot less attractive if I decided to put it on the market when I was 65 and out of gas. I thought it would be a lot better if there was a management team with a lot of energy and a lot of ideas and so forth. So, we decided to go ahead and get going on that now. Also, I had people who had invested in the publication. We're getting older. One guy who's a tax attorney was 85. He called me up. He said, "Maybe it's time that I got out of this." I thought, "Well, it's not really fair if I buy him out. It's not going to be the kind of value he would get. If I sold it, you know, I promised all of the investors that I would get them out in about 10 years, and it's 18 years now." They got dividends every year. They were happy, but I felt a little remiss in terms of not doing what I said I would do. Let me just think about this for one second, Joel. I'm trying to think of things that would matter to people. When we were trying to sell the publication, I learned a lot that I'll never use again. [laughs] Maybe somebody else have their [inaudible 36:14] in this similar position. One of the things I learned is the difference between a strategic buyer and a financial buyer. We talked to both kinds of buyers when we were looking to sell the publication. A financial buyer is someone who...There may not be all that many synergies with that kind of buyer but they may be able to achieve better volume discounts on the things that you need to buy for your business. You may not be able to help them grow revenues. It may just be like, "OK, we're going to take this over, and it's a going business, and we might be able to save a little bit on the bottom line, which is run your business the way you have and we're going to get the profits now." That kind of buyer is going to mean that your business is not worth as much as if you're able to find a strategic buyer where you truly have -- I hate the word -- synergies. You're able to combine forces and make each other better and hopefully make more money and make your organization stronger. We ended up finding a strategic buyer for our publication. It was an association in our field called AORN. I know you're familiar. It's an association for operating room nurses. The synergies that we had included things like... They had 42,000 members. We have 28,000 subscribers. By acquiring their membership list, which would not have been available to us before, we're able to find more people who are qualified to receive our magazine and add them to our list. They also have email addresses captured for the entire 42,000. We are going to be able to use those email addresses to market our digital products as well, although we want to be very careful of that path. What I mentioned before, we're concerned that digital advertising can be annoying. We definitely don't want to annoy people. Joel: It can be. If you're delivering value, if there is and they say they want it, then I say have at it. [laughs] Stan: One of the things we're working on is we have a program where we send out information about products to all our readers all the time every week. [inaudible 39:05] they're advertising our publication. Products and services, I should say. We're working on a system that's going to customize each individual email to each individual reader. Right now, what we have is, let's say, a reader in a single-specialty orthopedics center. That person is still going to get an email that has maybe ophthalmology products, maybe products for GI. They're of zero interest to him, so we're wasting bandwidth there. We ought to have instead where those products are in the email. There should be orthopedic products instead. We've got them. We just don't have a way of building emails on the fly. We're working on a system to do that. Once we have that, then I think we're going to unleash those on the rest of the AORN. Joel: I like your vernacular issues there. Unleash. That's good. That sounds like you're getting after a good stand. I like that. Stan: We have a program, too, where we think it's innovative. It's a reverse trade show feature that happens at our meeting. You're familiar with our information product where we tell you what everyone's doing in terms of procedures and which physicians are practicing there and so forth. We use that information to organize these meetings that we orchestrate at our reverse trade shows. Let's say that [inaudible 43:46] is going to come. We're going to make 25 meetings for them. You would tell us exactly the criteria you want. Maybe you want people doing a high volume of cataracts or a low volume cataracts, whatever. We can match you up with that group. You'll get five-minute meetings with each of these candidates for your services. Then after five minutes, the chime rings. You have a minute to move to your next appointment. That is all orchestrated and customized just for you and for the VIP. We call them the facility leader. Joel: I'm glad it's done well for you. How many other publications does AORN have in their stable? Stan: They have one other print publication. It's called the "AORN Journal." It's a peer-reviewed journal. It's very different than ours. The Academy of Ophthalmology and [inaudible 44:53] , both have similar combinations. They have a consumery-type publication and then they have this serious peer review journal. That's what AORN has. Joel: As you move forward with them, your functioning, how is your day-to-day changing from what you used to do? Stan: There are many, many changes. So many changes. Many more than I expected. Everyone warned me that when you're acquired by another company that you're going to have to adapt to the way they do things. Joel: There's this synergy. That's good. Stan: There's lots and lots. Just it's almost endless. Joel: That's a good stuff. Stan: There's lots of good stuff. Hopefully, we'll get through this other stuff that we're dealing with. It's somewhat painful. [laughs] They are very time consuming. Joel: What have I not asked you about that you'd like to talk about? Stan: How about those Missouri Tigers? Joel: How about them? [laughter] Stan: [laughs] That's right. It's been interesting. Very interesting. Joel: Stan, I look forward to our next encounter at presumably the AEO in the fall. Otherwise, I'm grateful for you being a guest on "The Cognified Marketing and Selling Podcast." If you will send me any links to anything that you want to have in the notes, it'll go in the website. I'd be grateful for that. I'll put those on there like links to your meeting, links to your publication, links to anything that's irrelevant. Otherwise, I'll try and figure it out myself and do the best I can to make it, so you get some value out of this. Stan: Fantastic, Joel. Thank you so much for the opportunity. It was really fun. You made it really easy even for a first-timer. Joel: Now, you'll have to call the folks at the Ophthalmology Innovation Summit and go on the "OIS Podcast." You could do the ophthalmology podcast circuit and really [inaudible 48:43] . Stan: I'll hit the big time. Joel: That's right. Now that you started small, you can get going with the big guys. Stan, thanks. Always a pleasure. Stan: Thank you so much, Joel. Same here. Always great talking with you. Joel: Bye-bye. Stan: Take care. Bye.
Joel Gaslin: My guest today is Jeff Peres. Jeff is the founder and CEO of Everseat. I've known Jeff for I guess about seven years now. We first met when he was helping us at Sightpath Medical when he was the CEO of Eyemaginations and was helping us with a refractive surgery coordinator program. With that, Jeff, I'm grateful to have you on the program. Tell us a little bit about your background. Jeff Peres: Hey Joel. Thank you for having me today and great to be in touch. I really appreciate it. My background is not unlike maybe other entrepreneurs. I went to graduate school, studied finance and accounting, went into a traditional Wall Street-type job after that. This was in the late '90s. A lot of people when I was graduating from business school were doing one of two things. It was a very, very clear track. You were either going into investment banking or management consulting. There were some exceptions and some big companies that would come around, like Hewlett-Packard or maybe Proctor & Gamble. But it was very rare to see someone go to a tech startup or an Internet company. That changed quickly thereafter, but in my era, we went to investment banking or consulting. I did that for a while, Joel -- maybe seven years or so. While I worked very hard and had some fun and met some great people, I found myself admiring the people on the other side of the table -- the operators, the people for whom we were providing our services. I formed some good bonds. I tried to learn from what they were doing and what they were focused on and I found that to be a tremendous source of motivation and I would say self-searching. My background, just to end that chapter of the story, right around or a couple years into the The 2000s, maybe 2003 or so, I decided to depart from the finance industry and get into small companies and entrepreneurship. That's been about 15 years. No looking back, no regrets. So much fun and stimulation along the way. Joel: How did you pick where you went? Because certainly you were exposed to many different industries and verticals. How did you decide where you went? Jeff: For me, and I can't speak for others, but I bet this is probably part of the story for others, this is always these other influencers. At the time, I was newly married and starting a family. There's some guardrails or parameters that are in my case relevant. If I had the ability to do it over and if I were in a different place, or without other commitments, I might have picked up and tried more of an entrepreneurial town or city. It could be San Francisco. It could have been Boulder, Colorado or Austin, Texas. I look at those places and I've visited them for work and in some places for fun. I could see my younger self really enjoying and getting enmeshed in the culture there. Joel: Yeah, I could see that. Yeah. Jeff: [laughs] It's great. I would encourage my younger colleagues and friends to try that, or my kids, for that matter. For me, there were a couple other factors -- just family, proximity to grandparents, cost of living, what was doable without being completely disruptive. Returned from New York City, which was a great place to live, and I really enjoyed being there for that time. I wouldn't want to go back to live there, but I certainly love visiting. Departed New York. This was a little after 9/11, too, Joel, so you have some other elements, and just really looked at proximity to grandparents, which is how I landed back in Baltimore, the town I grew up, just north of the city. That governed a lot of it, and then it just became a game of networking and learning what's out there. It's a little bit of a smaller pond, as you know. The options are different and it forces you to really be thoughtful in what you're looking into, but that's some of the processes for me. Joel: You connected and became the CEO of Eyemaginations, which was a patient education company, primarily ophthalmology. When you go in there, how do you get started there? What do you start looking at when you get there first? Jeff: It was like drinking from a fire hose. The company was started by a great family of really hard-charging, smart guys. Really, I think we looked initially just at the revenue opportunities, and they really were flowing in like a fire hose. I'd like to hope I helped in some way and I added some structure, but in the end, they had started by selling what at the time were CDs or DVDs at trade shows. This was really in the '90s. Doing a lot of trade shows. Have a huge screen and do demos and get people excited about it, and offer a show special -- some sort of attractive offer or special pricing related to that trade show. It drives a lot of orders. The other business channel was these unique one-off animations that were being made for vendors that needed them. It might be a mechanism of action for a new drug, or it might be a device or some sort of consumer product, even like a contact lens. Diving in -- yeah, it was really about trying to harness the revenue, maybe put some discipline into the contracts, maybe document some things. We built some infrastructure around the process, ultimately explored a few CRMs along the way and landed on SalesForce. The team that came after me took that to a more intense level and really optimized it in ways that I probably couldn't have. Just added some process and some documentation and tried to sell as much as we could to grow the revenue. Joel: What was the sales team like? How was that structured? How did you do that? Jeff: Initially, it was ad hoc and a lot of trade show follow-up. I think what we did was we brought in some people. We really experimented and honestly made some mistakes along the way. Joel: Yeah, sure. We all do. Jeff: We initially put some people in different territories. We had some folks in California and New York and Boston and Texas and so forth. If you think of the traditional proforma model, it's a lot different and it enables people to be in offices all the time, knocking on doors, and dropping off literature. That's a more expensive model. In hindsight, we learned it wasn't the right mix. When you're selling a platform product this sort of pre-dates SaaS, the software-as-a-service, but it morphed quickly into that, again thanks to a lot of great people that serve or were part of that team. The morphing, Joel, was one of more of an in-house model driven by inbound leads, driven by some channel partners and marketing through still, some trade shows, but not nearly as many and some smart marketing in the form of articles and blogs and webinars and some good channel partners. It was a transition from dedicated external marketing-heavy trade shows. I think there were some years that we went to three or four a month. The next retina trade show [laughs] and then the refractive trade show. It was heavy travel and expensive. I think all that's changed. Again, the team there, I think, has taken it to another level and probably refined that even more. Joel: You may not remember this, and I owe you a debt of gratitude, because when you and I were working together... If you remember, I came out and we brought along a couple of doctors and we were working on some things that we were doing to think about adding new services... You spent some time showing me your sales model and how you did your things. I liked the model because I think at Sightpath, we had a similar challenge in that we don't apply to everybody in the market, so to take people and put them out on the street and say, "Hey, go, now here's your bag and here's some stuff and go at it." It's just we had to find a different way to do it. I looked at what you were doing and then even... It's funny you mentioned Sales Force, because as we were going through a search for a better CRM and the CRM companies and SaaS companies, as you said, we were going through the sales processes with them, it wasn't until the very end that someone actually showed up at our offices. We did a lot of it over the phone. We did it a lot of webinar things. We did a lot of work to say, "OK, let's just go." The people just came when they knew it was OK. We were about to close. We use a lot of that in our business now. Frankly, it's just driven a lot of costs out of it for us. I think it's certainly as efficient and more efficient. Jeff: Yeah. Hey, if I may, so I'll spend one more second on that point because I fully agree with you. I think as a business person and an entrepreneur, we often have a fear that there's some correlation between the price of the solution we're selling and the need to be able to shake hands and be face-to-face. I know I did. I'm guilty of it. If you were selling some less expensive widgets it's easy to do over the phone. Or if you're selling something that's just easily downloadable, of course you'd do it over the phone. That makes total sense. But the more either customizable or expensive it is you think, "Oh, well. I have to go there and present. I've got to put on my suit and tie and shake hands." I think there's a place for that, for sure. I'm agreeing with what you're saying both in SaaS models in general and sales forces I've watched. Certainly in the way we go to market today in my company, Everseat, you're really able to do almost 99 percent of it remotely and via web and phone. For some of our institutional clients we'll go on site. Those are really just the exception. Joel: I agree with you, Jeff. It's funny because when we began to transition our sales model to what I call centralized model, it's not an inside sales model. Our people can travel out into the field whenever they need to. Frankly, the manufacturers they were sort of snickering at us behind our backs. I knew it because people were telling me, and that's fine. I can live with that. But we had a different problem to solve than they did, or a different opportunity to pursue. What we're doing works for us, and I think doctors in general. I think the surgical industry in general is becoming less maybe accepting of reps that just come and stand around in the OR all day. They aren't really delivering value on a routine basis. They're just there to come and say, "Hey," to check in as they say. I think people want value. We, setting with all the tools we have available from a marketing standpoint and from a data standpoint, and an adding value standpoint, are what they're looking for. Well, enough about that. I want to hear about Everseat. Tell me about Everseat and what made you start it. Just tell us about that, please. Jeff: Yeah sure, Joel. I think I was always a tinkerer and sort of a curious person, a frustrated entrepreneur. I wanted to start something to really be a creator. I still have that passion in me intensely today. Everseat was born out of a lot of brainstorming with an old friend and now a business partner, a doctor here in Maryland named Dr. Kaplan, Brian Kaplan. He's ENT, not really in the eye case space. I got to know him a lot, years ago, both professionally and personally. I think we had this vision of maybe finding a way to solve a problem. Lots of problems out there both in healthcare and otherwise. We brainstormed about probably a couple of dozen different ones. Some of them were just silly and easily dismissed. Others were maybe a little bit more tangible and real. We were thinking a lot about the problem of supply and demand and a lack of immediate flow of information. If an ophthalmologist in Kansas City has a LASIK consult open in their counter tomorrow at 9:00 AM who knows about that? How do you get that word out? Whether you have a billboard at the side of the road or a TV commercial, it doesn't mean people are going to know that the 9:00 AM was open. Other medical specialties, sometimes the problem is even more tangible. Dermatology is a great example because very often there is a long wait time to get in. It could be three weeks. It could be three months for busy doctors. If you call to get a new consult today, we're here talking in May, I know there are some providers you could call and they would say, "Great. First appoint is September 15th." That is frustrating but there are so many appointment changes or schedule irregularities. We used some of that wording in our initial marketing literature, scheduling irregularities. Think of musical chairs. Things change on a dime. We thought, "There's got to be a technology that can harness those, or help let appropriate people know what is becoming newly open without spamming or blasting it to your whole rolodex or contact log." If a practice had 10,000 patients we didn't want to blast it out to all 10,000 that Dr. Wilson has an opening tomorrow. We want to define a smarter solution for that. That was our initial premise. That was the initial problem, Joel, that we were trying to solve. It went from there. It was a lot of iteration, a lot of learning, a lot of feedback and mistakes, and learning again. A sort of a circular process around that. Joel: How does it work today? What is the final product as it stands today, or service as it stands today? Jeff: It's interesting. We got to market two different ways today. [laughs] Like anything, it may be different six months from now. The two ways we go to market today are we sell a SaaS model, a subscription service. We're principally going after medium and large size healthcare providers. For us, that's a description of how many people work in the practice in a patient-facing capacity. It's not that we eliminated or we got rid of small practices. Think of solo providers like a dentist, a chiropractor, or even certain ophthalmologists. It's that it was hard for us for economically to make it work on the small end. We've aimed for these groups that have 8 or 10 providers or more. We've got a few that go upwards into 800, more like a hospital system and alike. Today, that's the first model. It's a SaaS solution. We are... Joel: Is it reasonable that scheduling complexity increases in a multiplicative fashion on the number of providers? Is that a reasonable thing that happens? Jeff: Yeah, it is. Joel: Cool. Jeff: It is. It can stay simple if the institution wants to keep it simple. It's more likely that it gets way more complex. There are highly specialized surgeons that only want to do one type of thing. They're super trained in what they do, and excellent at it. There are generalists. There are a lot of key mid levels and non-physician professionals that provide a tremendous amount of healthcare and leverage in the system, like PAs and nurse practitioners. There's a whole continuum of professionals that this could work for. Certainly, the larger ones are the more complex. Joel: Got it. Jeff: The medium ones have proven to be probably the sweet spot for us. I'd say that's somewhere between, like I said, 8 or 10 up to maybe 50. We do a lot of... [crosstalk] Joel: Why do you think that is? Jeff: I know why it is. It's a couple of reasons. One, [clears throat] it's a big enough group that they're a professional organization. They have some staff. Usually, they have an administrator, a COO, or a marketing department. Joel: Got it. Jeff: That's number one. They're not so big that they are a hospital or a health system, which is mired often in committees or a more rigorous decision making and budgeting. That middle tier is big enough to be profitable and attractive. They need our service. Whether they get it from a different vendor or not is obviously a scenario. They need something in the category of what Everseat does. They generally can move more rapidly, make quick decisions. [crosstalk] Joel: More nimble. Jeff: Yeah, exactly, definitely more nimble. Good call. Joel: Great. Anything else you want to say about Everseat? Jeff: Yeah, we go to market two ways. The second way we've gone to market is something we really discovered, I'd say, within the last 12 months, which is in a white label manner. This is really something that's quite fun, and looks like it's going to be a big part of our business. We are able to be the scheduling engine for other platforms that might be in the clinic today. They might have their own reps selling their own solution. They don't have scheduling. A great example of that, Joel, would be some of the telehealth companies. Think of, you know maybe Skype types or things like Doctors on Demand, or TeleDoc. These are examples. They're not clients of Everseat, but just examples of remote consults. It's a big, big business and I think really continuing to grow rapidly. Some of them need a scheduling widget built in. If I'm talking to Dr. Joel and you're my doctor, and you decide that you need me to come in or you need a follow-up, or you need me to go to the lab to give some blood, you could say, "Hey, tap on the screen below. I've had a five-minute telehealth consult with you, but you need to come in and have that looked at. Tap on the screen below and you can schedule a visit." That scheduling widget is Everseat in many cases. Joel: That's cool. Jeff: It's really cool. It's a great business. It's private-labeled. It's more deployed in an API format. They're using our technology, but in their wrapper or their UI. Again, I think that looks like a very big growth avenue for us. Joel: I think we talked about this when we had a chance to visit in DC a couple weeks ago, or a month ago, rather. Have you looked at putting something like that into the SalesForce ecosystem? Jeff: Yeah, we have. We have. I think we will. We have a couple of clients that are using SalesForce now in the healthcare environment. They're using it as their CRM/EHR that's on the fringe of being an EHR, but more of a CRM. I think that's a definite. We're not there yet. We haven't done it. We've been more focused on the core healthcare group, the Athenas and Epics of the world. However, I think there's a big, big opportunity. In fact we just spoke to an accountant about that earlier this week. We think we should be in there. A lot of other groups are launching these ecosystems or marketplaces. It's something we're excited about. I think it's a great way to gain exposure, so we're very enthusiastic about it. Joel: I'm happy for you, because I think you're at the front end of what's going to be a significant trend certainly in ophthalmology, and I think in other specialties, too, is that the physicians have been so focused for the past 10 years, roughly, on looking backwards onto my EHR system, my practice management system -- things that are happening, in the restaurant vernacular, back of the house. Whereas I think they're going to need to start looking at front of the house and how are we handling and building demand? Not in the sense that they don't have enough to do. Ophthalmology, let's face it-- we all know the "10,000 people a day turn 65," yadda, yadda, yadda. We hear that. But what's also true is with that onslaught coming in, they have to begin to codify that data of what's coming in and how they interact with people and make the patient experience better. I think they're going to need a company like SalesForce coupled with an Everseat, and SalesForce's recent purchase of Mulesoft, which becomes that hub for all the different software platforms to talk to one another. I think you're just really in an exciting place for some things that are happening in our industry. Jeff: Thanks, Joel. We agree too. I think in healthcare, like certain other categories, people will naturally be a little risk-averse, or a little bit of a later adopter, or just let these changes settle a little bit before they jump in and adopt. We've seen that. We've seen longer sales cycles. It's hard when you're in it. It's not fun. Joel: How do you compress it? What steps do you take to try and compress the sales cycle? Jeff: Well, if I had that answer... [laughs] Joel: [laughs] Dang, I was hoping you could tell me. Jeff: If I had that answer, I think I'd feel [laughs] really good about it. Here's what I would tell you. It's a combination of a few things. First of all, I don't think it's a price thing. I don't think saying, "Hey, great. We're going to take off 10 percent," or "We're going to drop it by 50 percent" -- I categorically do not think it's a pricing thing. I think it is around showing value, showing other use cases or case studies of people that sat just where they did a year earlier and were on the fence or were uncomfortable. I think it's about listening really, really well and understanding pain points, so rather than just selling features, trying to really understand pain points. That probably is the best way that we think we can compress it. If we realize there's a problem, and the organization is saying, "We struggle with this," if our solution can genuinely be helpful or add value, you have an interested customer. It's hard. The other thing that's important is persistence, having grit and not giving up when they tell you for 20 times in a row, "We're not ready yet." The 21st time, the very likely they are ready. It's sounds very, very mundane and basic. Having some persistence and putting a system in place, like Salesforce and other tools, to manage your pipeline is critical. It's really proven to work for us. I have some delightful examples of people that we've talked to for two years. Finally, they call us, and they're like, "OK, we're ready. Send a contract." It's a really nice feeling when that happens. Joel: Yeah, you're right. We have that a lot, too. I can relate to that it is. It's satisfying when the rep comes and says, "Hey, it's one we've been talking about in my pipeline for two years. They just signed." That's fun. You're right. Jeff: That's a good thing. You may also have this, too, because of the industry you're in. I have a couple of people that have called us and said, "You know what? We went with a different solution last year for whatever reason. One of our VPs knew them really well." Or, "They gave us some other incentives. We tried it. We deployed it. We rolled it out. We're so sorry to say that we made the wrong decision. Can we still talk to you now?" That's pretty cool, too. Joel: It is. What we have that happens there, Jeff, is we use, what I would call, transparent and customized pricing. Every single one of our proposals is truly unique. We get all the supplies that the physicians use. I'm talking about a cataract business, right now, to the blade they use, the different kind of drapes they want. It's everything customized. Then when we submit a proposal based on that, some of our competitors, they'll submit a bare-bones proposal, and then the people will go with that because it's lower price. It's not really an apples-to-apples comparison. We try really hard to convey that message. Then, after the one year is up, they come back and say, "Well, we're going to go with you guys because the pricing that they showed us really wasn't what it was. They couldn't deliver on the same services as you." You're right. That's fun. We like when that happens, too. Jeff: Yeah, that's true. That's very true. Joel: You said there were two primary go-to-market strategies you have. One is the white label. What's the standard run-of-the-mill Everseat, "Hey, we're going to market," straight up? What's that one? Jeff: That's selling a SaaS solution. The straight-up is what we do all day, every day. It's selling a subscription license. It's generally a one-year license. We have a couple of accounts that are two years and three years, but it's generally one year. You're basically plugging into their practice management system and helping them with scheduling, managing a digital waitlist, dealing with some appointment reminders, and a comprehensive suite. It's truly a plug-in. It's done in the cloud. It's not on-premises. You don't have to go on site. It's a subscription. We are EHR agnostic. We'll plug into all of them. Some are easier than others. We'll plug into any EHR and practice management solution, and sell your practice a subscription, Joel, to the Everseat platform. That's the core, plain vanilla, go-to-market approach that we have. Joel: Tell me about the onboarding process. What's that like? Jeff: Great. Onboarding process generally involves two things. One is staff training, and the other is integration with your practice management solution. It's all done remotely. We're not coming on site. Again there's some footnotes to that, if you're a larger institution. Even there, it's really able to done remotely. The integration is done today through APIs. These are bidirectional integration. We're looking to do read and write back. We can read the calendar for tomorrow. Then, if Ms. Wilson books an appointment, we could drop it back into the calendar. We could check her insurance. We can verify whether she's a new or existing patient, and so forth. That is all done through a series of API integrations that we've spent four years working on. That's probably the most heavy lifting on the IT side that we've done. We can integrate with pretty much any system that's out there. There are some rare exceptions, but I would say easily 85, 90 percent of them. The onboarding for the staff is really done, Joel, in a series of webinars and calls, usually three or four. One is to set up templates. Another is some training. We do a lot of testing or fictitious patients, pretend appointments that are not real, to make sure that everyone is trained and ready. Joel: Sure. Jeff: Those calls are not exceptionally long. Maybe each one is 30 minutes. We try not to be disruptive of the staff. Usually we succeed when we find an internal champion or point person within a practice. Doesn't matter whether it's ophthalmology or derm or women's health or cardiology. If you lock in a point person who's your advocate and who's the chaperone, it goes really nicely and we get the screening done, the kickoff, and we've seen some great results and have a lot of great advocates and champions. Joel: First year, typically, Jeff, what are people seeing that gives you a lot of satisfaction to say "Yeah, I'm so happy we did this"? What kind of results are people seeing? Jeff: We look at a bunch of different types of data. We look at appointments that are available. That's going to depend on your overall capacity utilization. How busy are you? How many open slots do you have? How new are you at your profession? If you're a second-year doctor versus being in your 25th year, you have different levels of depth and availability. We look at how many of those appointments have you made available through an Everseat channel, be it on a website, a mobile app, a text message, an email? There's all sorts of ways to get appointments out there. Then of those that you make available, how many do you fill? It's math, it's a percentage. Joel: Sure. Jeff: Then how many of those happen per month relative to what you're paying us? We'll work with you to assign a dollar value to an appointment. This is just a clinic visit, so this is not surgery. This is not Lasik or cataracts. It's a clinic visit, usually. You and I talked about this two years ago. It's impossible to book a cataract surgery on my online platform, because there's too many measurements and analyses that have to occur. But it's great to book an initial consult or a follow-up visit or a Botox injection, or things that can occur. The way we measure it, Joel, is both in terms of how many are being booked, and then how many are you booking relative to what you're spending with us? Most people understand the concept of ROI really, really well. If they're spending $1,000 and they're making $1,001, that's not the best ROI -- technically a positive endeavor. But if they're spending 1,000 and they're making 15,000, then people... Joel: That's pretty good. Jeff: Yeah, then they'll think that's great. We measure it for 'em, we share it with them, we talk about it. If we're not seeing good results we'll work with them to tweak and modify things. But when you see it installed properly, it really hums. I'll give you some examples just that we were looking at recently, without even naming the practices. There's a multi-specialty group. This means all sorts of different types of providers up in Albany, New York. They put the system in really recently. They put it in in March, and we are now in sort of the second week of May. They saw 145 appointments come through last month, and of that, 35 within the last week. That's a nice number for us, just given that they just put it in. That's... Joel: That's 180 slots that wouldn't have been filled? Jeff: Well, we're not saying they wouldn't have been filled, because some could have been filled by calling in. We want to be realistic to know that they could have been filled other ways. What we do take credit for is driving online booking, availability, and ultimately cutting back a little bit on the demands of the call center or the front desk. Even if not all of them wouldn't have been filled another way, a percentage of them didn't have to call. That's a huge savings or upside. Joel: It's a nice experience for the patient too. Jeff: It's a nice experience for the patient, and also after hours. If you're trying to book something after your kids are asleep and it's now 9:00 at night, or it's Sunday and you don't feel well -- you return from church and you have a discomfort that you're not used to, it'd be great to be able to get some peace of mind to know that you have an appointment the next day. That alone is very valuable. Here's a cardiology practice that posted 31 appointments on their website this week. Of the 31, they booked 28 of them. Joel: Wow. Jeff: I can't ask for better data. That's amazing and good. Joel: That's wonderful. Jeff: Let's look at an eye doctor, because I know that's an area where you spent a lot of your career. Joel: [laughs] All of it. Jeff: This is a great guy. I know you know him well. He's in Ohio. He's posted eight appointments this week and booked eight. Joel: Wow. Jeff: So he's batting 1000. In the last month, he's posted 69 appointments and booked 65. Again, that's amazing data. We're delighted to see that. We look at both. We look at that over what their monthly spend is with us, and these are really astonishing returns for them. What they're spending on this service, this is part of their budget, have to take that seriously. If it's not making them money or at least helping them drive efficiencies, they're going to have second thoughts about it. Those are just some real numbers, from May of 2018, which are really really positive. Joel: That's good. It'll be fun when you go back and listen to this three years from now, after you've done all sorts of fun things. You say, "Wow, look, that's where we were then." It's kind of fun that we have a little record here for you. Jeff: For sure. Joel: What books are you reading these days? What skills are you working to learn and acquire? Jeff: I love questions like that. Let's see. Well, I'll answer them in reverse. Skills I'm looking to acquire, I'm looking to always continue to be a better dad. Joel: [laughs] Jeff: I think you're never finished there. My boys are in high school and middle school, respectively, so super important to me and something I think about every day of the week. I'm trying to figure out whether I'm a morning or afternoon exerciser. Joel: [laughs] Jeff: I haven't done well at that. [laughs] I can tell you I'm not an evening exerciser. I work with a great guy who's able to have dinner with his family that I imagine digests his food and do whatever. He can work out like nine o'clock at night. Joel: I couldn't do that. Jeff: It's amazing. I couldn't do that. So trying to refine that. I'm trying to read more. I think I've really gotten good at that. I sort of, like you, Joel, I set some goals. I really tried to hold myself accountable and that's been good, almost to a point of obsession. Joel: Yeah, what did you say, you're doing one book a week or something like that? Jeff: I try to do one book a week all year long. I've been able to do it. I think I'm going to mess up May and not hit it. Joel: [laughs] Jeff: [laughs] But I'm going to give myself some slack. Yeah, trying to do one book a week. Honestly, I sort of go a slightly wide range. I love business books and I always keep them as part of the mix, but I'll read a lot of history and fiction, because I really just want to just stretch my learnings. I read a book earlier this year. It's more of a mainstream one, "American Kingpin". Super interesting, about online drug trade and massive FBI search to track down the participants and bring them to justice. Just a more exciting story, sort of intense story. I read Phil Knight's "Shoe Dog". It sounded amazingly touching and motivating. Lots of elements in there I could connect with. I listened to Angela Duckworth's book "Grit". I thought it was great. Sort of persistence and stick-to-it-ness. Another book that I read that I liked a lot was Amy Wilkinson's "Creator's Code". She talks a lot about the OODA loop, I'm not sure I'm pronouncing it correctly, but I probably am. It's something that has some reference to war planes and battle and other things. Joel: That's that general. Jeff: That's right. Joel: He never really wrote a really definitive guide to that theory, right? He just used it and wrote a very simple framework and a paper on it. That's all that it's really been, right? Jeff: A hundred percent right. It's sort of gotten this cult following. It's one of those Air Force generals. Joel: It's like observe, orient, decide, and act, or something like that, right? Jeff: That's it. That's right. That's exactly it. I think that it really works particularly in startups. It takes great discipline to stick to it. I don't think we do it perfectly here for sure. If you do those steps, it will help you make some decisions and maybe cut what's not working. I know we have. We've introduced a lot of things here that we since had to reorient and act. It's helpful. It's satisfying. Those are some of the things I'm reading. Joel: That's cool. Jeff: I dig into a lot of history stuff, too, that's just sort of goofy about unknown presidents that I never would have bothered to read about, like James Polk or some other thing. I have no idea why that captures my imagination, but occasionally I'll just read one of those. In case I ever end up on "Jeopardy!" I'll be able to answer those questions. Joel: [laughs] That's good. I like to do the same thing. I'm a jogger. I won't say a runner, because that would be overstating the speed at which I do the whole deal. I'm a jogger, maybe even borderline plodder. Jeff: [laughs] Joel: I like to listen to books while I'm doing that, and I hit the weights for a little bit afterwards. Lately I've been sort of obsessed with books about learning how to write better because I like to write, and I want to get better at that craft, so I've been learning and studying that. Then also I like to pick up and download from Audible that's the classic novels that maybe you read in high school English class or college class but really don't remember much. Right now, I'm listening to Hemmingway's "For Who the Bell Tolls." It's interesting to go back and listen to those and hear the stories. I think you and I are in the same boat there. Jeff: That's way cool. I love that last anecdote. I agree with you completely, and I am also a big believer in mixing that diet up just like you've done with some of your Audible choices. I completely agree with you. I don't know why, and I don't even care why, I think it makes one a more well-rounded person. I'm fully in agreement with what you just said, Joel. Joel: Good, good. If you could be reincarnated...Let me try that again. If you, Jeff, could be reincarnated as one business person, whom would it be and what's one thing you'd do differently than they did? Jeff: You know what, I am not positive I'll come with a good answer to this one. [laughter] Joel: There's no bad answer. Jeff: It's an awesome question. I'm not going to do the best job of answering this, but I'll give you two or three and i'll tell you why quickly, then you can edit out whatever you think is excessive or useless.I don't look at Warren Buffett as a businessperson, although of course he is. I think he's just sort of a wise person, a great decision-maker and investor. I just value that in him -- his ability to make smart investment decisions and stick to it, and so not jump on the Internet train when everyone else did, or not jump on the bitcoin thing when everyone else did. I definitively value that and I think having the willingness and the ability to not follow the herd is an amazing trait. What would I do differently if I were him? I'd stay away from insurance, because I think it's horrendously boring. Joel: And wildly profitable. [laughs] Jeff: Right, but he's Warren Buffett, so I would have been wrong. I would have been wrong. I will say one or two other quick ones. I've read a few books of -- Joel as I know you have. I love the stories about investors. Howard Schultz from Starbucks, and there's probably 500 others, like Elon Musk, or like Peter Thiel and others. People who have had a vision and had something, a concept and a product and got turned down the first 150 times that they spoke to investors -- I so value the stick-to-it-ness and the willingness to stick to your vision and not get disheartened or give up. Maybe they did get disheartened and frustrated, but not give up, because I find that to be exceptionally motivating and inspirational. If you have a vision and you have something you're passionate about and you just know it's right, and maybe your timing's wrong or the market's wrong, but so if I came back as them, probably I would not have had that kind of patience and I would have missed the opportunities. There's hundreds of others. I'm just reaching for two or three names that were... Joel: No. Those are good. Jeff: Those are some examples. Honestly, if I had done things differently, again, I probably would have fared way less well than those people did. Joel: You never know. Just in your mind, what does it mean to you, Jeff, to sell or market smarter? How do you think about that? Jeff: On that, I think a lot about, "less is more." I think a lot about really doing a lot of thinking and research in advance, so that you form a point of view, you understand the market, you try as best you can to understand your clients' needs before you meet with them. For me, selling and marketing smarter is about having greater precision in how you communicate and what you say, and also what you don't say. Earlier on and even probably now a little bit, but certainly earlier on, we would go in and just do these massive feature demos. 45 minutes of this button and this widget and this setup and this tool and that tool. It was sort of a disaster. We would still sell something. This is both at my current company and other companies. It was just featuring them to death before you knew maybe what their pain points were. For me, selling and marketing smarter includes listening more. I think it includes being a thoughtful contributor to conversations without being an aggressive seller. I see that with just more inbound marketing, stuff you and I have talked about. I know you have some real expertise there. Whether you're contributing an article or a survey or a podcast or a LinkedIn posting, I'd rather be a part of the conversation where you're establishing yourselves as a participant, as someone with a respected point of view, and you're not always "Me, me, me and my product." I think if one can do that, they're likely to garner some respect and therefore trust. Then the conversation around the need and that sort of product fit is met with less resistance. People put their guard down and they see you as perhaps a trusted industry colleague and less as a sales exec. That for me is selling and marketing smarter. Joel: I like it. That's how we're thinking. We think very similarly. That's why I like to talk to people about and promulgate the idea of having your own platform. This term platform is bandied about ophthalmology a lot these days, with platform practices and platform this. But I think we as a sales and marketing person, you should have your own platform. Part of that platform is, what are the planks within my platform that make up what I think about, and how I think about things that someone could say, "Yeah, I want to align with that guy because I like how he thinks"? Whereas if you don't put any of that information out there, and put it in some meaningful fashion where people can see it, how will they ever do it or how will they ever see it? All they'll see is what someone else says about you or what your company says about you. You have to be loyal to your company and all that good stuff. I'm not suggesting that. I think we as commercial professionals, we need to have our own platforms out there so people can look at them and say, "What does Jeff Peres think and what does Joel Gaslin think? How does he make decisions?" I think we're thinking along the same lines there. Jeff: Yeah, I think we are, Joel. You know what I'll add, and I mentioned this to you once before, I think. I think that it's exceptionally hard and takes a great amount of commitment and discipline to stay consistent, to stay true to that mission. I think those that do will undoubtedly benefit more, will gather that greater community respect, and have that platform, have that brand. I think it's exciting. I think what you're doing is extremely exciting. I just footnote that it doesn't happen on auto-pilot and it doesn't happen by accident. It is a true discipline, just like going for that run or anything else that you make a habit. That's another book I read, that Charles Duhigg book on habit. I'm just flagging that I have tremendous for that because it's not easy to be consistent. Joel: You're right, and this is kind of an old one. One of the first management or motivational books I read was the old Ken Blanchard "One-Minute Manager." I think it was in that one. It was Ken Blanchard who made the quote and I think it was in that book. But he talked about the difference between an interested runner and a committed runner is the interested runner gets up in the morning. He looks out the window and it's raining, and he says, "Aw, it's raining, so I'm not going to run today, because it's raining." The committed runner gets up in the morning, looks out the window, and says, "Oh, it's raining. Yet it's time for my run, so I better put my rain gear on and go for my run." [laughs] I think about that often -- that it's easy to get waylaid and make excuses for not doing it. I don't come at this from a position of judgment that "Hey, it's easy," because I fall down on it all the time. Just look at the history of my regular cadence of putting these episodes and links together. I have room for improvement too, so that's where I am on that. Jeff: It's motivating. It's always fun to aspire and to have goals. We all have room for improvement. But what you're doing is a) I think working and b) just again noting that it's not easy. It takes tremendous discipline. When those rainy days are out there, yeah, I can tell you -- I don't feel like going for a run. I am certain of it, so I get it completely. Joel: What haven't I asked you about that I should have and perhaps you'd like to talk about before we close up? Jeff: Let's see. This has really been fun and comprehensive. I'll say one or two other things and if there is a place for them in your end product that's great and if not that's OK too. I think one thing that I've realized in doing this initiative with Everseed and branching out and trying to bring a solution to market from scratch -- I would tell people, ask for more help. Ask for help from even the sources that you don't think are as relevant. People generally want to help you and people generally will root for you. I've seen that, and again, these aren't even doctors or nurses or orthodontists or optometrists. These are random people that work in call centers that'll give me feedback about how the call center works. Or they're patients that have had to deal with chronic conditions, and so they're in and out of the doctor's offices hundreds of times a year. It's been remarkable just to ask people for feedback and help, not so much as a paid project but just to give some guidance or give some point of view. Sometimes maybe you're either reticent or afraid or uncomfortable to ask for help. But asking for help has proven to be really wonderful and has helped me make some great friends. Joel: That's a great tip. Jeff: Yeah, and the inverse is also true, which is pay it forward. I have had plenty of people that I've tried to do favors for with no expectation in return. Some of it's just networking. Some people needed to use a piece of my product for a big presentation. We didn't bother charging them. They needed a favor, they were in a jam, and we could help them and make them look good. I believe in karma. Pay it forward is the other thing that I would add to the conversation. Joel: That's great. Anything else? Jeff: I don't think so. I'm hoping that the springtime has arrived in Minnesota. Joel: It has, finally. [laughs] Jeff: This was super-fun. Joel: It was fun. I'm grateful that you took the time. I know we had a little scheduling headaches on my end, so I'm grateful for your flexibility and the time you spent talking. It's been a lot of fun. Jeff: Oh, gosh. No, it's nice to catch up. I'm really, like I said, impressed with what you're doing. I'd like to be helpful in any way that I can. I want to stay in touch and keep you up to date on some of the other projects that I'm working on, and hopefully see you soon. Depending on where your travels take you and what other opportunities we have, I really enjoy catching up. Joel: Yeah, it's always fun, Jeff. Thanks for the time. Jeff: Yeah, thanks for today. I'm sure I'll talk to you over the next few days or weeks, and debrief, Joel, but I really enjoyed it. Thanks for the great conversation. Joel: Thanks Jeff. Have a good night. Jeff: Take care. Joel: Bye-bye. Jeff: Bye.