Like a Glove Podcast, Episode 11: It’s Not Supposed to Work, with Josh Owens (Part 1) Like a Glove Podcast, Episode 11: It’s Not Supposed to Work, with Josh Owens (Part 1) Like a Glove Podcast, Episode 11: It’s Not Supposed to Work, with Josh Owens (Part 1) Like a Glove Podcast, Episode 11: It’s Not Supposed to Work, with Josh Owens (Part 1) Like a Glove Podcast, Episode 11: It’s Not Supposed to Work, with Josh Owens (Part 1) Like a Glove Podcast, Episode 11: It’s Not Supposed to Work, with Josh Owens (Part 1) Like a Glove Podcast, Episode 11: It’s Not Supposed to Work, with Josh Owens (Part 1) Like a Glove Podcast, Episode 11: It’s Not Supposed to Work, with Josh Owens (Part 1)

Like a Glove Podcast, Episode 11: It’s Not Supposed to Work, with Josh Owens (Part 1)

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Like a Glove, Episode 11: It’s Not Supposed to Work, with Josh Owens (Part 1)

Pat:
Welcome to this episode of Like a Glove, the startup podcast about product-market fit. I’m your host, Pat East, and we are recording here in the podcast studio from The Mill in Bloomington, Indiana. Today’s guest is Josh Owens.

Josh:
Hey, thanks for having me.

Pat:
Yeah, thanks for coming down. We appreciate it. So let’s start with a little bit of background on you. Your two most recent roles were as CEO of a tech company and as a gubernatorial candidate for the state of Indiana. So just tell us a little bit more about both of those.

Josh:
Yeah. So I’ve been involved in the tech scene in Indianapolis for about a decade at Angie’s List, then One Click Ventures. And then I took a kind of brief side to teach at Butler University and down here in Bloomington at IU Economics and Statistics. And while I was teaching, I got connected with a company called SupplyKick, and it was about a year into its operations as a company. I came in, was doing some consulting, but then quickly we found kind of a new pivot point for the company on the Amazon platform. That’s when I took over that company. Ran that for about four or five years.

And in this last year just saw some, I think, big systematic issues that weren’t being addressed in Indiana. And I think from my perspective, both teaching and running businesses, thought that there was a kind of an avenue for a new voice to be out there in our political landscape. It’s been in Indiana kind of similar voices for a long period of time. And so took a plunge into that opportunity. And I did both of those kind of for the same time as I was exiting SupplyKick. Kind of knew that that was going to happen, whether the campaign came to an end or whether it moved forward.

Pat:
Gotcha. So that’s really interesting stuff so I want to kind of dive into both of those and talk about running for governor as almost like a startup, because that’s essentially what it is, right? Not your stereotypical startup. But I want to start talking about SupplyKick first. So before we get into that, what’s your definition of product-market fit? I start there with all of our guests to make sure we’re on the same page.

Josh:
Oh, I like that. I guess from my perspective, product-market fit, there’s probably four components of it. I think you’ve got good features to your product. I think you’ve got an audience that cares about what you’re trying to sell. I think a big key is that you’ve got to have a business model that makes sense for what you’re trying to sell. And I guess like the last piece is just like the market has to be big enough that it matters. And I think when you really have product-market fit, you’ve got all four of those working in harmony. You can probably make it work with only three of those, but you really need all of them to actually make it click and make it really expand quickly.

Pat:
Got you. And so the market piece is probably the biggest piece for you, it sounds like.

Josh:
I think so. I mean, from my perspective, you’ve really got to have, I think, a market that’s exciting, something that’s growing and something that’s really big enough to spend time in. Otherwise, you’ve got something that’s great, but you can’t really make it. You can’t take hold.

Pat:
Right. So in a growing market, the market essentially helps you grow versus if you are trying to grow in a stagnant market, it’s going to be hard to kind of get the wind at your back in that instance.

Josh:
Yeah.

Pat:
And then what were the other three things you mentioned, one was features, one was market, and then what were the other two?

Josh:
Yeah, I think first having the right features for what you’re trying to address. I think the second is having an audience that really cares, that matters.

Pat:
Gotcha. A passionate audience that your product matters for them.

Josh:
Yeah. And I guess in some ways that’s early adopters, but really I think you’re right in the word of “passion” there, you’ve got to have an audience that really cares about what you’re trying to sell in that case. And then I think the thing that actually brings it all together is a business model that makes sense for what you’re trying to sell. And you know as well as anyone, there’s multiple different ways that you can go to market. And it doesn’t mean that there’s, and oftentimes I think there’s actually multiple right options, there’s multiple options for you to go with. But you got to have something that actually clicks and takes that from just a great set of features that people are passionate about to something that actually goes fully into that market and can really get penetration.

Pat:
And makes sense for your target audience in terms of, “Hey, do I have the budget for this? Is it easy enough for me to understand? Does it make economical sense for me?”

Josh:
Yeah, for sure.

Pat:
That makes sense? So let’s talk a little bit more about SupplyKicks. So you were not the founder, but you came in as the non-founding CEO. And I think it was right around that time where the former CEO, he had another business he was starting, right? So those kind of were taking place at the same time. And so did you have product-market fit then? When you started as CEO?

Josh:
No, I think is the quick answer to that. So kind of quick backstory, the company had started in 2013, kind of mid-2013. Really started as a retail arbitrage business, buying overstocked inventory around Indianapolis and Indiana and selling at the higher price on Amazon and eBay. And there are literally millions of individuals, not necessarily companies, individuals doing that. And they’d grown it up to a nice size, they were selling a few million dollars on the platform, but the products that were being sold were all over the place. It ebbed and flowed with only the accuracy of whatever was going out of business or was on sale around Indianapolis at the time. And as a result, profit margins were all over the place. So it was a hard business to be able to forecast for and be able to manage the inventory.

That being said, I had a lot of great experience on the Amazon platform and obviously the Amazon platform was a giant, absolutely huge market. And everything we were seeing with Amazon was that they were continuing to put more resources in the marketplace relative to their retail engine. And so that was the exciting part of it. And I think the second thing that was kind of clicking at that time when I was starting to take over the company, was we were looking at it and saying, “Hey, we’re competing. Selling against brands, selling their products.” Either because we got on liquidation or for a discount. “And we’re actually out-selling these brands on their own products.”

Pat:
Oh, really? Oh, I didn’t realize that. Wow, that’s a great business model.

Josh:
Yeah. And so we started looking around and started saying, “Well, hey, we’re actually in a situation where clearly these brands need help selling on the Amazon platform.” And that was the nugget of the idea. Now this is 2015 going into 2016, looking back on it, it’s very obvious at the time that what we were building was a retail solutions company. But at that time, it didn’t quite feel like that. It kind of felt like, “Hey, we’ve got to build some technology to maximize on the Amazon platform.” We weren’t quite sure who to talk to as far as the type of brands, and then within those brands, was it the sales manager? Was it the ecommerce manager? Was it the CEO?

But what ended up happening was we pivoted the business towards selling directly with brands. So replenishable products, getting rid of the arbitrage piece of the business and having a full retail solution. And so effectively we were running their organic advertising, all their marketing, all their paid advertising on the platform, all of their customer service, and then all of their logistics. And if you put all of those four pieces together, you effectively have a department store on the Amazon mall. And so we wound up with a very old-school model that really worked in a place where brands needed a lot of expertise and a lot of extra help. And that’s really where we would find that product-market fit.

Pat:
So you took a business that was really at the mercy of kind of the Indianapolis market in terms of, “Okay, here’s the stuff that is available for us to buy.” And maybe there was a reason it was available to buy, right? Maybe they had bought too much of it, which may not necessarily be a bad thing, but maybe nobody wanted it, which is probably not a great way to continue building a business. And so you took the good parts of that business, which it sounds like mainly it was the retail knowledge, but specifically Amazon and really understanding how that worked and had a market on Amazon and that platform. And it continues to grow just like all e-commerce, but it certainly has a large market share. And you took all those things and said, “Okay, how do we start scaling this business?” And you removed all the bad things of it. And so you really kind of built a full retail solutions business, a department store on the Amazon mall. And that’s the current version of SupplyKick now.

Josh:
Yeah. No, you’re exactly right. And I think it was only over time where we really saw that start to develop. It was pretty obvious that brands needed help on that platform. And I liken it to a mall that you might go to today. There’s anchor department stores within that mall, you might have some brands who were able to sell themselves, they’ve got their own store set up. But then if you walk into that Nordstrom or that Macy’s, you’ll likely see that same brand selling there as well. And it’s really about being able to find those customers within that mall, if you just take that physical analogy and you just blow it up to be North America’s largest digital mall, that same dynamic basically still takes place. And I think luckily, we were in the right place at the right time, but then we were smart enough to see those dynamics starting to be at play and ran after those as quickly as we could.

Pat:
And so this is a fulfilled by Amazon business, an FBA business, that’s kind of the common term online. And so were there a lot of FBA businesses when SupplyKick made this pivot, or were you kind of one of the first to start to see that you could build an actual business around this?

Josh:
Yeah, there was a ton of companies and individuals using FBA, fulfilled by Amazon, those Amazon facilities all across the United States. There’s ton of companies using them, and individuals, but they were wildly inefficient at using them. Effectively, what Amazon is doing is they’ve got basically a fixed fee, about 15% for selling on the Amazon platform. And then if you’re using the fulfillment facilities that can vary anywhere between 10 to 20% of the product costs, depending on how quickly you turn the product, the amount of inventory that you have, how efficient you are at selling that product, and how efficient you are keeping that right product in stock, variation, strategies, all that kind of stuff.

It turns out we became experts in that because we were selling a lot of hardware, a lot of tools, a lot of oddly shaped items that are fairly expensive. And so we had to get very good at the shipping component of that and being able to use the Amazon facilities was kind of a big component. It wasn’t until I think probably a year and a half into that pivot that we really understood that was kind of the big “Aha!” moment that we had had. Looking back on it, we were just much better than a lot of others at being really efficient within those facilities. And so while there was a ton of different individuals and companies, competitors using them, we were really running a lot faster than them, both in how we were turning the product and how we were effectively efficiently managing the capital of that inventory.

Pat:
Your product-market fit almost was not just, “Hey, we know how to build this retail solution for you. But for these oddly shaped items, we’re better at marketing them, turning them over, we’re better at fulfilling them than other folks who were doing this.” So there were a lot of inefficiencies in the market, how did you come up with that insight? I mean, you said in hindsight, okay, you had it, but what series of events led you to that insight?

Josh:
So we were going to trade shows early on, and having conversations with brands at those trade shows, effectively asking them about their Amazon strategy. They were probably talking to 15 or 20 different firms about their Amazon strategy. So even if it was the most important thing that they were trying to figure out at that time, either because it impacted their national distribution or they were actually trying to scale on the platform to make more money, it was kind of one of those two situations. So early on we were having direct conversations with those brands, which really helped us be able to get really good information of what the brands needed and what mattered most to them. And it almost always came back to supply chain management. Who had access to their products and effectively, who was selling their products. They wanted more control, and they typically wanted the price on Amazon to match what was being sold in their stores, not 20% lower.

So we got a lot of brands that way, and that was really from us listening to those customers and being very responsive to that. The second thing was very early on, I had a high premium in wanting to grow this thing pretty quickly because we saw the size of the Amazon marketplace, and so we knew if we could work with enough brands, we could get very large very quickly. And we did, we’ve been one of Indiana’s fastest-growing businesses for three or four years in a row.

Pat:
Congratulations by the way. That’s not an easy feat.

Josh:
Yeah, no, I appreciate it. And it’s partly because we’re in just a gigantic market that was growing. And so some of that was just we had tailwinds helping us move along. But we made a really smart decision early on. If I go back to that retail analogy, everything in kind of old-school brick-and-mortar retail would tell you to specialize, be a REI or a Dick’s Sporting Goods or a Macy’s with apparel or Nordstrom with high-end stuff. But the Amazon marketplace is completely different. It’s not a certain type of shopper going into the Amazon.com platform, right? You’ve actually got basically all of the United States, all of North America, and they’re going and they’re searching for specific things. And so, because it’s search driven, effectively Amazon looks the same, no matter what you’re trying to buy. And so what we were trying to theorize and understand early on was, “Well, is that true on the backend as well? Is it really true that you don’t have to have specialized expertise within different product categories?”

Pat:
Oh, interesting. Yeah, yeah.

Josh:
And we already had a little bit of experience with that because we had the arbitrage business. And so we were selling a bunch of random stuff, right? I mean, it was kind of all over the place. As I like to say, it really doesn’t matter on Amazon if you’re selling barn doors or baby seats, the backend of Amazon is the exact same thing. And I think that was the smart thing that we found very early on and were able to lean into quickly. And because of that, we didn’t artificially constrain ourselves to a certain category or a certain type of product. I think we smartly saw that on the Amazon platform, because it’s search driven and because everything was so standardized, it was really about going after as many products as you possibly could get under management, instead of being the experts within this certain category. Because there’s no follow-along effect to having all the camping suppliers and, I don’t know, all of the kayaking suppliers or something like that. It’s completely different markets on the Amazon platform whereas in a physical space, that’s not the case.

Pat:
There’s no benefit to having all of those camping suppliers or kayak suppliers, whomever it is, because all of the different people that go to Amazon, it’s not exclusively kayak enthusiasts, right? When you go to Amazon, a lot of people refer to Amazon as a search engine because people literally go there just to search for stuff, or they’ll go to Google and type in “XYZ product Amazon” because they know that Amazon’s likely to come up anyway at the top of the results. And so really you’re right, it is almost every single type of buyer in North America and the United States who is on Amazon. And so it really doesn’t make sense in that instance to focus on a particular type of customer.

Josh:
Yeah. And that was not obvious in 2016, 2017, that was we were partly lucky, we were partly taking a calculated risk. And it turns out that our theory of the case was right, and we were able to run after that pretty quickly. And because of that, that certainly helped us expand much quicker than we would have otherwise.

Pat:
That’s awesome. That’s a really cool story. And one final question about SupplyKick before we move on to running for governor. So as a non-founding CEO, I think many would not have felt they had the moral leadership to make some of these changes. The company, as this founding CEO builds it, kind of the company is how it is, and they just feel like they can make changes on the edges. And so what was different about your situation where you said, “Hey, we can make these sometimes big or sometimes small pivots, but meaningful pivots, along the way.” What was different about your situation where you felt you could do that?

Josh:
Well, it’s probably partly my personality. If I’m doing something, we’re going to run after it as quickly as we can. And I also have just a general theory of business, which is it’s not supposed to work. There’s so much competition out there, it’s so difficult, that really you’re kind of playing with a losing hand already. So when you find something that actually takes hold, when you’re able to find that product-market fit or that set of customers that are really passionate or you’re actually solving a problem that is really needed within a marketplace, you almost have a responsibility to just run after it as fast as you can. And I think I kind of take that attitude to just about everything.

So certainly a healthy amount of conversation with the board, the founder, those kinds of conversations that was useful along the way. But no, I think we set a really big audacious goal because the market was big enough to justify it, and we went after that. And I think from my perspective, I do think that there’s obviously value that a founder brings to a company as far as vision and the ultimate idea, but kind of by definition, building a company, scaling a company, it has to be bigger than you as an individual.

And so I actually think that it’s really valuable for companies to bring in, at an early stage, excellent operators, whether that’s in a CEO role or a COO or whatever that right combination is. But you really want to get people who can understand the outline of what that vision is, but then take it to 10x that vision, and be able to run after it. And that takes good management, that takes being able to build a team, that takes being able to pivot really quickly when the world changes. And sometimes when you have an outside operator, you’re actually able to pivot a little bit quicker because I haven’t fallen in love with that initial idea.

Pat:
100%.

Josh:
What I’ve fallen in love with is trying to grow the thing as big as we possibly can. And I think sometimes that’s where companies can get a little sideways when there’s too much of an adherence to kind of the founder vision. Again, a lot of that’s really healthy, but when it becomes a little too much idolization of that founder, as you kind of see in Silicon Valley a lot, that kind of stuff, I think that’s sometimes where the business goes a little awry and you’re not focused on what actually is the end goal, which is to grow as big as you possibly can.

Pat:
To grow the business, help your customers, create opportunities for your employees, create opportunities for everybody.

Josh:
For the community. Yeah, exactly.

Pat:
So in your case, it was a little bit of, hey, this is just your personality, so you really want to run at things. And it was a little bit of, “Hey, I’m going to have some conversations with the founder to make sure that “Okay, yeah, you are the founder.” So there’s a healthy respect for that, but also, “Let’s make sure we’re on the same page, and this is the direction I want to take it as the CEO.” As is your right as a CEO, right? That’s part of your job description. But then part of it was just kind of your belief that every business kind of has a losing hand to start off with, and you’ve got to make enough adjustments along the way in order to win the day for your customers.

Josh:
Yeah, no, I think that’s exactly it. And I think when you have that perspective, not just on business, but on life, I think it gives you that fire to really go after it. And from my perspective, I don’t look at that as a negative. I look at it as like a challenge, as a positive, it’s like if that’s the way I’m looking at it, then it’s a real great situation to be able to say, “Who else can I bring along to try to change that dynamic? And how can we be more creative to either outsmart our competition or create a little bit bigger slice of the market than existed the last day?” And I think at least from my perspective, that’s always paid off for me. So I’ve at least stuck with it thus far.

Pat:
Awesome. Very cool. Josh, thanks for coming on the podcast today. Really appreciate it. If folks want to get in touch with you, what’s the best way they can do that?

Josh:
Yeah. You can find me on, I guess, social media for I think just about everything, would be @joshuadowens. Feel free to reach out either Twitter, Instagram, anything in between.

Pat:
Awesome. Thanks very much. I appreciate it.

Josh:
Cool. Thank you.

Like a Glove is a production of The Mill, a coworking and business incubator space in Bloomington, Indiana. Our mission is to launch and accelerate high-potential companies, and our vision is to become the center of coworking and entrepreneurship in Indiana. You can learn more about The Mill at dimensionmill.org. Thanks for listening, and be sure to check back every other Monday for new episodes.

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