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The Empire Builders Podcast
Stephen Semple and David Young
Each week Stephen reverse engineers the keys to success that took little companies and built empires. We believe in building empires and learning from those that have already done it.
The Empire Builders Podcast
10 hours ago
#20: Burt’s Bees – The accountant was only?!?
Dave Young Welcome to The Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from Mom-and-Pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I'm Stephen's sidekick and business partner, Dave Young. Dave Young: Before we get into today's episode, a word from our sponsor which is, well it's us. But, we're highlight ads we've written and produced for our clients, so here's one of those. [Aurora Pro Services Ad] Dave Young: Stephen, I'm driving across West Texas a couple weeks ago, as one does. You're driving, the air is dry, my lips are getting chapped. So the next time I pull over to get gas, I'm wandering around looking at all the different ... There's Carmex, and there's Blistex. I don't know, I'm just bored of all of that stuff, it tastes like medicine. So I grabbed one called Burt's Bees. It worked, I liked it. I think it's the only thing I've ever bought that was Burt's Bees. Stephen Semple: Yeah, they have a lot of products today and that's who we're going to talk about. But, I want to give you an idea of how popular Burt's Bees lip balm is. Stephen Semple: There's a Burt's Bees lip balm sold every second. I'm not kidding. So by the time we're done this podcast, 500 Burt's Bees lip balms would have been sold. Crazy, eh? Dave Young: That's crazy. Yeah. My office that I'm recording this in would fill up with lip balm, by the time we were done. Stephen Semple: By the time we were done, right. Even though they're all little, it would still fill up. Dave Young: Wow, that's amazing. Stephen Semple: It is and it has a crazy history behind it. It was started by Burt Shavitz, Burt's, and Roxanne Quimby in Bangor, Maine in the mid-80s. But, she's been the main driving force behind the business, a real counter-culture, arts student, hippy homesteader. Stephen Semple: I'll give you an idea of how much they were hippies, because they were basically the poster children for being hippies. Dave Young: Yeah. Stephen Semple: They started this business in the mid-80s, they incorporated in 1991. In 2004, 80% of the business was sold for $173 million. And then in late 2007, Clorox bought the company for $925 million, so just shy of $1 billion. She still had 20% of the business, so that was another 200 million in her pocket. Dave Young: She's doing okay. Stephen Semple: She's doing okay. But again, this is a crazy story about two hippies, who frankly had no interest in business, or money or things. Stephen Semple: So in the 1970s, Roxanne moves from New England to the West coast to attend art school, and she discovers the counter-culture. She meets a boyfriend, George Sinclair, at that time. They buy a van, and they fix it up and they head back East. They've got $3000 and they're going to buy some land. They go to Vermont, and they meet with a real estate out of Vermont who says, "This is Vermont, $3000 will get you nothing. Try Maine." Stephen Semple: So they go to Maine, for $3000 in Maine, they buy 30 acres of land in the fricking middle of nowhere and they build this simple house. No running water, no electricity, heated by a wood stove in fricking Maine. Dave Young: They're living the dream. Stephen Semple: Living the dream. They wanted to be part of this back to the land movement. They wanted to leave civilization. They wanted to have this idea where they needed very little money to live, they just needed money on food. At that point, they were living on $4000 a year. Dave Young: Okay. Stephen Semple: She waitressed a day or two a week and George worked at the radio station. They lived there for seven years. They had kids there, they had babies there. Hippies. Hippy babies. Stephen Semple: She separated from George in 1983, and she moved out of this cabin and into another cabin in the middle of the woods that...
Oct 20, 2021
#019: Dollar General – What 75% of Americans won’t believe
Dave Young: Welcome to the Empire Builders Podcast, teaching business owners the not so secret techniques that took famous businesses from mom and pop to major brands. Steven Semple is a marketing consultant, story collector, and storyteller. I'm Stephen's sidekick and business partner, Dave Young. Before we get into today's episode, a word from our sponsor, which is, well, it's us, but we're highlighting ads we've written and produced for our clients. So here's one of those. [Aurora Pro Services Ad] Dave Young: Hey, Stephen, you got a dollar I could borrow? Stephen Semple: Well, you going shopping? Dave Young: Heck yeah. I'm going to Dollar General. You see them everywhere. They're all over, everywhere. Big yellow sign. Stephen Semple: Here's a scary stat when it comes to how big Dollar General is. 75% of the population in the United States lives within five miles of a Dollar General store. They do just under $30 billion in sales, a buck at a time. Dave Young: Out of a tiny little store that's smaller than any supermarket you've ever been. Stephen Semple: Yeah, most of their stores are only a couple thousand square feet. And today they have 17,000 stores, 143,000 employees, and are doing 30 billion in sales. Dave Young: Mind boggling. Stephen Semple: Mind boggling. Dave Young: How'd they do it? Stephen Semple: Well, all this started back in 1939, right in the midst of the Great Depression. And they started out of Scottsville, Kentucky by J.L. Turner and his son Cal. And they both invested $5,000 to start their first store. And they really invented the idea of the dollar store. So J.L. Turner was a traveling salesperson. He was functionally illiterate. He had a grade three education. When he was 11, they lived on a mortgaged farm and his dad died and he had to quit school to take care of the family. And he worked in retail up until the point of the Depression. Local businesses were dying all around him. So what he did is he bought the merchandise from these businesses that were going out of business and turned around and sold them to department stores. Stephen Semple: And this gave birth to their first idea, which was J.L. Turner and Sons. By the early 1950s, they were doing 2 million in sales. So 10 years after starting, they grew this business to 2 million in sales in the 1950s. By the mid 1950s, they had 35 stores in Kentucky and Tennessee. Pretty good, right? But the real success came next. What J.L. noticed was in retail stores at the time, one of the things that was really popular was to run these dollar days. The store would set aside a section of the store and for a day, say everything in that section is on sale for a dollar. He loved the simplicity of that idea. So in 1955, they renamed the store Dollar General and decided that what they were going to do was focus on this whole idea of everything for a dollar. Dave Young: Okay. Stephen Semple: So they had these really small stores, non-perishable items and consumables, focusing on selling everything in the store for a buck all the time. So in one way, they did something that is different. Almost all of the empire builders that we've talked about today have looked outside their industry and found an idea from outside their industry they brought to their industry, but what they found was something that was done in their industry, but limited, done every once in a while and only a portion of the store. What they said, "Why can't you make a whole store that way? And every day?" Dave Young: What's really cool is what they noticed was the excitement of their customers about things for a dollar. Stephen Semple: Right. Dave Young: It's not, "Oh, we could sell a lot." It's they actually noticed the excitement of their customers that gave them the realization that that was a direction they could go. Stephen Semple: And they also loved the simplicity of what that di...
Oct 13, 2021
#018: Netflix – known for one thing; twice.
Transcript David Young: Welcome to The Empire Builders podcast, teaching business owners the not-so secret techniques that took famous businesses from mom-and-pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I'm Stephen's sidekick and business partner, Dave Young. Before we get into today's episode a word from our sponsor, which is, well it's us, but we're highlighting ads we've written and produced for our clients. So, here's one of those. [Royal Plumbing Ad] David Young: Stephen, when you told me you wanted to talk about Netflix, my first thought was are we talking about the original Netflix or the Netflix of today or are we talking about the evolution because there's a lot to talk about with Netflix. Stephen Semple: And we're actually talking about all three, because we've got to go back to the beginnings, because the beginnings is where the stories are about how they became this successful thing that they are. So, we're definitely going back to the beginning. We also do need to touch a little bit on the evolution because they went through an evolution I think a lot of people have forgotten about. Because it's easy to forget that this company was founded on August 29th, 1997 and it was founded by Mark Randolph and Reed Hastings. So, this is long before or streaming. Heck, this is back when the DVD was launched, was created, because here's what ended up happening. So, Hastings had sold a software company. He had built a successful software company and he sold the software company and he decided he had two and a half million dollars that he was willing to invest in a startup. Stephen Semple: So, Mark and Reed had been creating all these ideas when they were working somewhere else and they were creating all these ideas, what should we start? And they had actually developed the idea of Netflix back when there was, remember the big VCR tapes coming back in those days? And what they realized is they couldn't make the business model work with a VCR tape, because what their business model was, they were going to sell and rent through mail and they just could not make the VCR so, they shelve the idea. And then one day they're driving into work and they hear an advertisement for a DVD. They go that's it, this will freaking work. They literally stopped the car and they tried to find a DVD to buy. They couldn't find one to buy. This is how new it was they could not and they're in freaking Silicon Valley and they couldn't find a DVD to buy. Stephen Semple: So, they bought a CD because they were like well, this is close, put a stamp on it, mailed it. Because they wanted to see whether it would work and low and behold the next day a DVD shows up in the mail and they go, let's start this company and that was August 1997. And they started with 30 employees and 925 DVD titles. And here's the funny thing is, 925 DVD titles was the entire DVD library. The entire DVD library was 925 titles. That's where they started and by April 2021, 25 years later, they have 208 million subscribers, they're doing $25 billion a year in revenue and have got 12,000 employees. Huge success and in fact, in the decade of 2010, they were the best performing stock on the market. The stock had a 3693% return. David Young: And other than still being in the entertainment distribution business it's not even the same company that was in 1997. Stephen Semple: No, not at all. David Young: They used to send a physical thing and now it's all streaming and online and who doesn't have it? Stephen Semple: They came up with this idea long before the internet was a big thing and before streaming and all of that. The interesting thing is, they were constantly being told, this idea will never work when they took it to investors, constantly. So much so, that Mark Randolph, one of the founders wrote a book called, "That Will Never Work" and has a blog called,
Oct 6, 2021
#017: Coke – they already had an empire, but…
Coke. Hold on a minute. They are already an empire. This is a lesson on how no matter how big you are, no matter how much you spend, and even if you are the best marketers on the planet; you cannot bend the consumer to your will. If you have ever thought that you can use advertising to change consumer behaviour you need to listen to this podcast. David Young: Welcome to the Empire Builders Podcast, teaching business owners, the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple, is a marketing consultant, story collector, and storyteller. I'm Stephen's sidekick and business partner, Dave Young. Before we get into today's episode, a word from our sponsor, which is, well it's us, but we're highlighting ads, we've written and produced for our clients. So here's one of those. [No Bull RV Ad] David Young: Steven Semple, today, we're going to talk about Coca-Cola. Steven Semple: It's interesting. And we're doing yet another department, we've been doing those lately. David Young: Yeah, that's not even really empire building. It's like how somebody that had an empire tried to kill it. Steven Semple: Yeah, basically, but there's a lesson to be learned here. Because often we hear clients that come to us, they sit there and say, I'd like the consumer to behave different, it would be better if they shop at these times or they behaved in this manner or they did this and the other thing. And we're always saying you can't use advertising to change the behavior of a customer. And I came across this around Coca-Cola and I found this fascinating because look, let's face it. Coca-Cola is arguably one of the most successful advertisers on the planet. One of the most successful brands, they have a huge budget, like they've been doing it forever. Steven Semple: And the company has been around since 1886, was founded by John Pemberton. And even when he founded Coca-Cola, he started with a big advertising budget. So by 1912, they were spending a million dollars a year in advertising, which was a huge budget at the time. That's $30 million in today's dollars. Then also think about how small the population was in comparison for that $30 million. So really it's probably more like 400, $500 million budget if you adjusted for inflation and population. So they've been great, done it for a long time, hugely successful, big budgets, but they have this one little problem. And this problem was they discovered that people were not asking for the product by name. David Young: They weren't standing up and saying, "I'd like a Coca-Cola, please." Steven Semple: No, they were standing up and saying, I'd like a Coke. David Young: Oh a Coke. Steven Semple: A Coke. And for the longest time, the company wasn't happy about it. They decided, consumer behavior must change. We must change consumer behavior. Consumers must use the full name. We are Coca-Cola, we have big advertising budget. We know what we're doing. So we are turning our marketing muscle to changing consumer behavior. We will bend the customer to our will, right? Because all we're asking you to say is Coca-Cola, damn it. Just instead of Coke, Coca, just add Coca, two syllables, easy, right? So here's what they did. In 1913, they started running an ad that said this, Coca-Cola, ask for it by its full name, then you will get the genuine. That was the advertising campaign. And they tried various things for almost 40 years. They weren't- David Young: To get people that quit saying Coke. Steven Semple: To get people to quit saying Coke. In 1942, they finally waved the white flag. David Young: Stay tuned, we're going to wrap up this story and tell you how to apply this lesson to your business right after this. [EMPIRE BUILDERS AD] Brought to you by the least full of shit marketers association of America. Yes, that's a low bar, but we clear it mightily.
Sep 29, 2021
#016: Gaggia Espresso Machines had a problem
What to do with the oily film that formed on the top of their espresso. The result built an empire and even changed how fine espresso is judged. This is a lesson of overcoming resistance to new innovations. David Young: Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I'm Stephen's sidekick and business partner, Dave Young. Before we get into today's episode, a word from our sponsor which is... Well it's us. But we're highlighting ads we've written and produced for our clients. So here's one of those. [Armadura Roof Ad] David Young: Stephen, a little sleepy this afternoon as we record this. And thinking that I might need a little cup of espresso, just a little pick me up, just a little jolt. What are you thinking? Stephen Semple : I'm thinking that's what we need to do. And we're going to take a trip back to September 5th, 1938. David Young: For our espresso? Stephen Semple : For our espresso. That is when... Now I have to apologize because if we have any Italians, they're just probably going to cringe when I say this name. Because the modern espresso machine was invented by Giovanni Achille Gaggia. Now I probably butchered that name, but that's as close as I can get. Before that time, how espresso was made was it was boiled and cooked. And what made this machine different and it became the father of the modern espresso machine is it made espresso under pressure. And so it literally changed the way espresso is made, looks, and tastes because one of the results of making it that way was you actually get that little cream on the top of the espresso, which did not exist before that. David Young: Coffee suds, kind of. Stephen Semple : Yeah. And Achille literally changed the way we look at espresso, and changed the way espresso is graded and how coffee snobs look and describe espresso. Because when it first came out what people were doing was spooning that little cream off the top of it. They're like, "Oh my God, what?" They would take their cup and they would scoop all of that off. David Young: And throwing it away. Stephen Semple : And throwing it away. David Young: They were saying, "Ooh, there's a foam on top of my coffee." Stephen Semple : Yeah. They were literally saying, "What is this scummy foam on the top of the coffee? And what's wrong with it." Now, normally what a company would do in that manner is choose to educate their customer, right? We've seen this over and over again working with companies have new technology or new innovations, "Let's educate the consumer on this. Let's let's tell them how much better it is." Achille decided to do something different. He decided to speak to the heart, not to the head. So guess what he did. He gave the foam a name. He romanticized it. He called it crema caffe naturale. Or natural coffee cream, which today we call la crema. David Young: La crema. And before that they looked at it like it was the same stuff you get when you boil a chicken and this foamy stuff rises to the top of... "Ooh, get rid of that." Stephen Semple : Yeah. Well, to the point today, that if you're competing and grading coffees, one of the things that gets graded is if there is no la crema on the top of the coffee there's something wrong. David Young: Ain't that great? Stephen Semple : Yeah. In fact this is a bit of a problem for Starbucks because Starbucks uses Arabica beans rather than Robusta beans, and Arabica beans naturally don't have as much of the crema. David Young: Oh my gosh. Stephen Semple : Yeah. It went from this negative to this positive by giving it this name. David Young: And then people want it. Stephen Semple : And then people want it. David Young:
Sep 22, 2021
#015: An interview with a small business that applied the Wrigley formula from episode 4
Meet Rick Showers. He does not sell gum. He sells used RVs and he applied the lessons from Wrigley’s and is growing like crazy. New sales record after new sales record. Learn what he is doing to grow and the lessons he has learned along the way. Clockwise from upper left: Rick Showers, David Young, Stephen Semple David Young: Welcome to the Empire Builders podcast, teaching business owners, the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I'm Stephen's sidekick and business partner, Dave Young. before we get into today's episode, a word from our sponsor, which is, well it's us, but we're highlighting ads we've written and produced for our clients. So here's one of those. [No Bull RV Ad] David Young: Stephen, today we're heading off in a different direction almost. This is our first interview podcast episode. Stephen Semple: Yeah. And I am so excited today. We have a real empire builder on our show with us today as we have Rick Showers, he's an owner of a small business that applied one of the lessons from the Empire Builders podcast to his business. He's just exploded from that. He's having record months, months after months. And the reason why I'm excited about this is so often people listening to our podcasts will say, "Well, that worked for Wrigley's and I'm not Wrigley's." Or "Wrigley's sell candy, and I sell RVs, or that was in 1920s, how about today? Or that was New York, and I'm in a small town outside of Edmonton," All these reasons why it wouldn't work well. Here's Rick to share a story. A small RV dealer that's outside of Edmonton that applied the lessons of Wrigley to his business in the spring of 2020. David Young: Wait, in the spring of 2020. What happened in the spring of 2020? Stephen Semple: There was this little, let me think, what is it? It had a number of next to it, oh right, COVID. The pandemic happened. David Young: So right at the start of it. Stephen Semple: Right at the start of the pandemic, we're taking our story back to that moment. And here's the thing, from that moment, he's doubled his business. So for full disclosure, Rick is a client of ours. And the ad that you heard at the beginning of this podcast was written by one of our partners, Mic Torbay. And it has run on several radio stations in Rick's market. If you've not heard the Wrigley podcast, I suggest you go back to it and listen to it now, before listening to this interview. Stephen Semple: So I just want to set the stage. It's the beginning of the pandemic, frankly, the world is going to shit, everything is closed, people are panicking, and Rick sells a luxury item. In the vast majority of the times when a recession or panic happens, the first thing that goes in the shitter is luxury items. They're the first thing that get nailed, right? So at the time, no one knew RV sales would benefit. Like that was a surprise. We've got to remember that was a surprise. So here's all this pandemics stuff going on, Rick's shop is closed, everything's closed. There's worry about sales and we come along and suggest to Rick, Hey, here's what we think you should do. You should increase your marketing budget, which he did. And I'm going to tell ya, I mean, that took guts. Most people would've kicked me out of their office and we know advertising was getting cut right left and center because we saw it with our media partners. David Young: Well, thanks Stephen. Rick, thank you for being on our podcast. Rick Showers: More than welcome. Glad to be here. David Young: And I know this is an audio podcast, but as we're recording this on a Zoom meeting, you're in the woods, you look like you're in a way better place than either Stephen or I, enjoying yourself, enjoying some nice weather up in Canada. How long have you been in this business? Rick Showers: Oh,
Sep 15, 2021
#014: The birth of Play-doh. A cleaning agent becomes a toy.
Play-doh, seriously, it was not a toy. This is serious stuff. Learn how observing how your customer is using your products can lead to new product ideas and maybe even save your company. You will also learn the mystery of how they created the name. The first idea was doozy. David Young: Welcome to the Empire Builders podcast, teaching business owners, the not-so-secret techniques that took famous businesses from mom and pop to major brands. Steven Simple is a marketing consultant, story collector, and storyteller. I'm Steven's sidekick and business partner, Dave Young, before we get into today's episode, a word from our sponsor, which is, well it's us, but we're highlighting ads we've written and produced for our clients. So here's one of those. [Peak PTT Ad] David Young: Steven, another big old flash from the past right today. You've taken me back to my childhood. Is that what I understand? Steven Semple: We're going to play with some Play-Doh. David Young: Oh God, I'm hungry anyway. Steven Semple: Don't eat the hot dogs that you make, you're not supposed to eat that. Steven Semple: Here's the thing, it's amazing, we sometimes forget about things like Play-Doh. So Play-Doh's now owned by Hasbro, has been for a number of years. They still sell 95 million cans of Play-Doh a year. David Young: 95 million cans of it. Steven Semple: 95 million cans a year. And when there was a bunch of marketing companies got together a while ago and created this list of the most memorable brands in the world and number 24 was Play-Doh. Mark it in your calendar, September 18th is national Play-Doh Day. David Young: Oh, sweet. That's nice. They have their own day. Steven Semple: So when you have your own day, you're kind of a bit of a deal. David Young: Yeah. I mean, it's a foundational toy for most of us, right? We all remember playing with Play-Doh. Steven Semple: And here's the interesting thing, it didn't start as a toy. Didn't start as a toy. So, if we go back to 1920, there's a company called Kutol and it was founded by Cleo McGyver, McGyver, not MacGyver, McGyver, and it was a soap and cleaning product. And basically houses at that time were heated by coal, so there was lots of soot. And what was really popular in that time was wallpaper. Wallpaper was much more popular than painting. So, you basically had a house, it was heated by coal wallpaper on it, lots of soot, and basically, Kutol sold all these products basically to different grocery stores. And what happened is Kroger basically said to them, "Hey, do you have a cleaning product that would clean soot off of wallpaper? Did you have something like that?" And he said, "Sure, I do." And they signed a contract and then he went, "You know, this is really good news because we've been a struggling business about to go bankrupt. We now got this great contract from Kroger." David Young: We just got to figure out... Steven Semple: We don't have a product. So he went to his younger brother, Noah, and he said, "Can you make a product? I got an order. Can you make a product?" So, they created this putty pliable, like substance that you would basically roll on wallpaper and would collect the soot off the wallpaper and had cleaning product in it and whatnot. And it would clean the wallpaper. And the product did gangbusters in the company made tons of money until suddenly the 1950s come along. And you know what happened in the 1950s? Oil and gas, no longer coal. Way cleaner. Soot went way down, also a trend away from wallpaper to painting. But the big thing is, you didn't need this cleaning product. So demand went, boom, like this. So for the second time in the company's history, first time is struggling and they get those order from Kroger and they make this product. They're now a struggling company again, about to go bankrupt. And so basically they hired their nephew, Joseph to join the business.
Sep 8, 2021
#013: Get rid of all the bells and whistles. The Birth of the Sony Walkman
The staff, the critics, and retailers all said it would fail. It lacked all the things people wanted but gave them one thing they had not thought about. And a star is born. David Young: Welcome to the Empire Builders podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I'm Stephen's sidekick and business partner, Dave Young. Before we get into today's episode, a word from our sponsor, which is... Well it's us, but we're highlighting ads we've written and produced for our clients. So here's one of those. [Tapper Jewelry Ad] David Young: Stephen, we're doing a flashback today, right? We're going back to when, the seventies? Stephen Semple : Yeah. And we're also doing a little bit of a departure because we're actually going to talk about a company at the stage that it was very... Still, it was already large. It was already successful, but I still think there is a lesson to be learned. And what we're going to talk about is the birth of Sony Walkman. David Young: The birth of a Sony Walkman. It was a thing before Guardians of the Galaxy for you kids that are listening. Stephen Semple : It actually played this little thing called a cassette. David Young: We can go into all kinds of minutia and trivia about cassettes and their interaction with pencils or big pens. Stephen Semple : I'll be wearing my shirt that has all the records and cassettes on it. I dress inappropriately, I apologize to everyone. David Young: And maybe we should offer a mixed tape prize. Stephen Semple : There we go. So anyway, going back to the birth of the Sony Walkman, it all started with the Sony chairman. And I'm going to butcher the name, so I apologize. Masaru Ibuka. And when he traveled he loved listening to music. Now Sony had this product... It was actually called the Pressman. It was for recorders. So it had a recorder and a microphone, but it also had the ability to play things back. So Sony had this product. And when he traveled, he took it with him and he would listen to music on planes and things along that line. Stephen Semple : And he found it was just too heavy. He said, "This thing is just way too heavy." And so he went back to his designers and he said, "Look, let's modify the Pressman. Let's get the weight down. Let's remove the recording feature. Let's remove the speakers. Don't put a radio in it, but basically let's strip this thing down that basically all it does is play a cassette through headphones. That's what this will do, nothing more. No speakers, no record, no radio, no bells, no whistles, no nothing." David Young: It doesn't even have to be much bigger than a cassette itself. Stephen Semple : Right. Yeah. And if you go back to the early Walkmans, they were not... It was funny, when CDs came out and went to the Discman, the Discman was actually bigger than the Walkman- David Young: But it had to fit a CD in it. Stephen Semple : Yeah. It was about that thick, but not much bigger than the size of a cassette and very reasonably priced and highly durable and all those other things. But here's where it gets interesting. His designer said, "No one's going to be interested in this. This is a stupid idea. No radio, who's going to want it? No speaker, no record. No. People carry around... They carry the boombox on their shoulder. And that's what they want because there's a group of people wanting to listen to the music, and we want to be able to record stuff and all that." Stephen Semple : And so he faced this tremendous pushback, but he said, "Look, we're doing it." And then he took it out to retailers and retailers are like, "No one would be interested in this. No one's going to want this. This is a dumb idea because it's got no speaker, no record, no radio. That's not how people consume this.
Sep 1, 2021
#012: How to marry brick and mortar with online retailing. The Canada Goose way.
Canada Goose is the second fastest growing luxury brand in the world. They have created an amazing store experience that at the same time makes it easier to manage the store and reduces inventory costs. And it is easy to do. David Young: Welcome to the Empire Builders podcast, teaching business owners the not so secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I'm Stephen's sidekick and business partner, Dave Young. Before we get into today's episode, a word from our sponsor, which is, well, it's us. But we're highlighting ads we've written and produced for our clients, so here's one of those. [Tapper Jewelry Ad] David Young: Stephen Semple, you're in Canada. Stephen Semple: I am, proudly. David Young: And I know you wanted to brag a little bit about a Canadian company in this episode. Stephen Semple: Absolutely. It's about time we brought a little bit of Canadian to this whole thing. I actually feel bad it's taken this long. David Young: Well, tell me your Canadian story. Stephen Semple: I want to talk about a company called Canada Goose. And it's not necessarily super well-known. So the first thing I want to add is that they are, right now, the second fastest growing luxury brand on the planet. David Young: Wow. Stephen Semple: So, when somebody's the second-fastest luxury brand on the planet, I think it's worth paying attention to what they're doing. And what I specifically want to talk about is they have a very interesting business model in terms of how they've managed to marry brick and mortar in their online presence that only works for consumers, but actually makes their business a lot easier to manage. And these guys have done just an amazing job building this empire. But let me tell you a little bit about the story of Canada Goose. They make these big puffy like Michelin Man style puffy winter coats, right? David Young: A parka. Stephen Semple: Yeah. David Young: As one wears in Canada. Stephen Semple: Right, that is stuffed with goose down. David Young: Uh-huh (affirmative). Stephen Semple: Surprise, surprise, right? And they were founded in 1957 by a Polish immigrant, Sam Tick. And they originally started as a company called Metro Sportswear, and they were making clothing for police and municipal workers and private labels. So basically, high volume, low margin stuff. And by 1985, they grew to 50 employees and they started their own brand at that point because what they wanted is they wanted to have more control over their destiny. And they called it Snow Goose. David Young: Okay. Stephen Semple: And in the early nineties, they ran into some issues with the name Snow Goose because of other companies and whatnot, and they changed their name to Canada Goose. And then here's when it gets kind of interesting because in 1997, under Canada Goose, they sold $3 million worth of product. David Young: 87. 3 million. Stephen Semple: Yep. Some 3 million. Not a lot, but by 2008, 17 and a half million dollars. Five years later, 70% of the company was sold to Bain Capital, Mitt Romney's company, for $250 million. So Bain Capital came along and bought 70% of the company for that price. But there was an interesting thing, stipulation. Sam Tick stipulated that that was great, they were going to sell the company, but manufacturing had to be maintained in Canada. David Young: Okay. Stephen Semple: And these coats are still made in Canada, they're not made in China or anything along that lines. That's part of the deal. 2014, sales hit $200 million. 2016, they went public. And by 2018, they were doing $591 million worth of sales. And today, second fastest growing luxury brand. David Young: So, what's the key? Stephen Semple: Here's the key. Here's what they're doing.
Aug 25, 2021
#011: Retailers Beware!
This is a departure. In this episode Stephen Semple shares trends that he is seeing that is being embraced by retailers. Trends that are dangerously wrong. David Young: Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from Mom and Pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I'm Stephen's sidekick and business partner, Dave Young. Before we get into today's episode, a word from our sponsor, which is, well it's us. But we're highlighting ads we've written and produced for our clients. So here's one of those. [Armadura Roof Ad] David Young: Stephen, we're going to do a bit of a departure today. Tell me more. Stephen Semple: Instead of talking about some history of empires, we're going to talk a little bit more about strategy and some mistakes that are easy to make, because I think we're going to look back at this time, we're going to look back at retailers and we're going to see that this was a turning point and a lot of retailers really made a wrong call. David Young: So we may be witnessing the decline and fall of the retail empire. Stephen Semple: I think we are. I think we are in a lot of cases. Because here's what I've been seeing. I've been talking to a lot of retailers and I've also been witnessing this, ad you'll see this when you go to a retailing store today. There's four things that they're doing. One is they're cutting their hours. Look at the hours that malls have. They've cut evenings. They're not open as much as in the weekends. You go to your local store, they've cut hours. They've also cut staff. We know that, look, we can look that up in employment stats. Retailing is down unemployment. They've cut staff. If you go to a store today, they've cut inventory. They're not carrying as much inventory. And while we also know from talking to our media buyers, because they're in contact constantly with the media companies, is they've cut advertising. So they've cut hours, cut staff, cut inventory, cut advertising. Stephen Semple: And I've been talking to them about how this is a bad idea. They're going, "No, Steve, you don't understand. It's hardly impacted my sales. It's fine." But here's my thing, let's stop and think about this. What they've done is cut hours, cut staff, cut inventory. So what they've done is they've made themselves less convenient, less helpful, less selection, and by cutting advertising, less known. Oh yeah, there's a recipe for success. Meanwhile, let's look online. Completely convenient, unlimited selection. What we're seeing is online retailers are continually working on their website presence to make the shopping experience better. And in terms of well-known 80%, 80, 8,0 percent of US households have an Amazon Prime account that they pay for every month. David Young: Right. That doesn't get you have one product. Stephen Semple: It doesn't get you one product. Gets you the right to buy one without shipping costs. This is like standing in front of a firing squad and saying, "Can you please hand me a cigarette?" What they're saying is they're going, "Yeah, but Steve, you don't understand. It hasn't impacted my sales because the people who come in have bought." Here's my question. Are they coming back? David Young: Well, it it's almost like they're saying, "It's not affecting my sales because I'm already dead. I just haven't realized it yet." Stephen Semple: Right. But since when is a strategy of, "I'm going to be less helpful, less convenient, less known." Since when, of all the companies that we looked at, has there been a single one where that is a strategy that has worked? All of them have done something to make themselves more convenient, better time, better all of it. So you know what, retailers? Wake up, smell the coffee. Don't get in front of that firing squad. Do something different.