Nathan Resnick 4:20
Yeah, I mean, I think that’s kind of the beauty of being a startup right? You know, when we were at that stage, we could kind of pull off these different marketing stunts and take take test and take shots on goal to see what was going to drive the most traffic and growth for us. You know, obviously for us we help ecommerce companies produce products, primarily in China, but all through Asia. And so you know, as a way for us to prove out our ability of being the best, you know, manufacturing partner to bring a product to life. So I said, Hey, let’s treat this as our own product or treat this as a customer. And obviously, the hope of bringing it to life
Joshua Chin 4:52
in fast like really fast one. Yeah. Yeah
Nathan Resnick 4:57
super fast. And then like we sent one of our team numbers to like a suit manufacturing or like we need to sample done right now, you know, like, we really were pushing the ball forward much faster than, you know, I think most most companies would have moved.
Joshua Chin 5:11
What’s the what’s the typical timeline like for for new customer? Let’s say I am looking to produce? I have I have an idea for a product I came to you. How long would that typically take to from from idea to? Having those products? In my
Nathan Resnick 5:31
question, I think it depends on the product itself depends on where you’re producing it. I mean, obviously, the past two years free, freight forwarding has been insane and a lot of delays. But I think typically we can go from an idea to a sample and anywhere from like, for the eight weeks or so depending on the product, sometimes a bit faster, if it’s like a fashion item. And then production, you know, production is pretty variable to I’d say, a month and a half, two months, three months, depending on how big the production run is, depending on the product, and then trade, you know, freight, you still only take like two, two and a half weeks now, you know, you’re hearing freight take four weeks, eight weeks, like it’s insane. Some of the freight rates, freight rates, and also the freight delays that, you know, we’re seeing. So it’s it’s really crazy dynamic in the supply chain right now, where costs have gone up like crazy. And, you know, that’s kind of, I think, trickled down to a lot of these consumer brands. And, you know, a lot of them are having to increase their pricing on their website. But, you know, at the end of the day, I think this is still the kind of early innings of ecommerce, it’s, you know, one of the fastest growing industries in the world. But, you know, there’s just different wrenches that have been thrown at us right over the past few years.
Joshua Chin 6:45
Yeah. And I suppose that the entire supply chain thing, and let’s unpack that a little bit. It’s not just ecommerce that’s that suffering the brunt of the issues, retail face and same thing, any business that relies on products, to scale and to grow and to operate, is facing some bigger problems. What you see, being the trajectory of of ecommerce, with cost rising with shipping times and delays and all the things that you see right now, do you think that’s going to sustain over the next couple of years, or,
Nathan Resnick 7:29
you know, I think freight costs should hopefully, you know, level out a little bit back, I don’t know, back Pedlow is where they were where you could ship a container from, you know, China to America for like three or 4000 bucks, I’m not gonna go back to that anytime soon. But mean, they should start to taper off. And I think really what this is pushed brands to do is become more data driven, and forecast their supply chain more efficiently. You know, instead of having to just plan, you know, six months out, now, you might be planning your whole year, the prior, right, like you already know, where you’re gonna produce, you know, this year, last year, and next year, you’re you’re planning, you know, this year right now. So, I think that dynamic shifted a lot where ecommerce companies a lot of times used to be more nimble and lean, and they still are very nimble and lean. But I think when it comes to your supply chain, you have to really, you know, forecast out a lot farther, just because you don’t want to get to a point where you run out of inventory. And then, you know, you’re stuck. I mean, we don’t, you know, there’s so many companies in q4 that, you know, we’ve heard of that, you know, ran out of inventory, either because, honestly, yeah, because they didn’t make it or, you know, because they miss judge their forecast. So, that’s really kind of the dynamic that we’re seeing right now. And I think 2020 You know, COVID, obviously, it was a horrible, you know, horrible pandemic, but, you know, for ecommerce, it was a blessing in disguise. You know, ecommerce really grew tremendously through COVID. And, you know, I think last year, we saw a lot of kind of wins from that, I mean, both in the supply chain challenges, and also in some growth, but, you know, obviously, it wasn’t as crazy a year as 2020.
Joshua Chin 9:11
What, what’s the best way to get started with forecasting more accurately over the course of a year, especially for brands that are constantly iterating new products and coming up with new ideas? From my point of view, and I’m not a product owner, it seems like it’s really difficult to predict what’s going to happen six months on road, let alone 12 months down the road. Yeah.
Nathan Resnick 9:37
Yeah, it depends of the scale of the brand. And I think, you know, number one, you want to look at what your production has done in the past. So you know, obviously looking at lead times from your factory looking at, you know, what is taking you to, you know, finalize your golden sample, you know, get a sample that you want to actually go into production with. And then I think it’s a matter of, kind of continuously having a pipeline that you’re iterating on in terms of A new product launches. So always be sampling with your factory in terms of new product ideas that you might have the one click, now you’re ready to roll it out and ready to have it in your corner to sell. With freight, honestly, it’s so hard to predict right now, just because there’s been congestion at so many different ports. And, you know, just so many different challenges like there was another outbreak in Shenzhen last week, where, you know, a lot of the warehouses there had to shut down because of COVID. I mean, China has a zero tolerance policy. So if there’s like, you know, 10 cases, they’re going to shut down a large part of a city or a warehouse. So it’s really, really challenging to prove for eight. But I think when it comes to predicting, you know, product lifecycle and predicting, you know, your actual production process, you can do that pretty efficiently through data. Time that has taken for your factory to produce your product in the past,
Joshua Chin 10:58
With the tension that’s going on between the US and in China, and rising with what’s happening as we speak right now, if Russia and Ukraine, people saying potentially that gives China a bit of a green light to take over Taiwan, and that is extreme. What’s, what’s your take on that? And what what how does that impact what we see in manufacturing, and sourcing in the next couple of years?
Nathan Resnick 11:28
Yeah, you know, China is so, so dynamic, and, you know, really changed over the past 15 years that I’ve been in the business, I lived in China in 2010. And during that time, I think, in general, there was a very, you know, open and kind of growth mindset with the West, and in particular, America, you know, a lot of collaboration for growth, you know, the imports from China were fantastic. And, you know, in 2000, I guess, starting in 2017, and 1819, there was a lot of trade wars, a lot of trade tensions with China, and that caused a lot of pressure on China, but that pressure actually came down to American businesses, because they were the ones really paying for that tariff increase. And then, you know, with COVID, I think we realized how much we’re actually relying on China, when it comes to producing products, you know, when it came to producing PPE, you know, masks and gowns, and all of that stuff, and drugs, you know, people didn’t realise, like, all that’s coming out of China. And now you look around your house, look on your desk right now, or, you know, even you know, the air pods, you’re listening to this podcast on, you know, they’re made in China for the most part. And so, it’s really a pretty, I guess, crazy and eye opening dynamic, where most of our products are still made in China. And I’m not saying that’s a bad thing, but I’m just saying that something that I think we need to be aware of as citizens of the world. And then when it comes to this, you know, current war between Russia and Ukraine, you know, it looks even more political attention on the relationship between China and America. And so, you know, I think there’s definitely a lot of businesses that are trying to de risk their supply chain by moving production outside of China. But even then, I mean, we talked to factories in Vietnam, Cambodia, you know, all over Southeast Asia, a lot of those factories. Number one, they’re also getting the raw materials from China. And number two, a lot of them are Chinese owned. And so, you know, it’s just such a interesting dynamic to see the reliance of the world supply chain on China. And like I said, I’m not saying it’s bad, I think it’s something to be aware of. And I think, you know, it is important to have the ability once you reach scale of, you know, five $10 million a year in revenue, to start looking at diversifying outside of China. But, you know, I think when you’re just getting to that point of, you know, breaking a million dollars in revenue, or doing a few million dollars, more important to focus on, you know, growth and optimizing your existing supply chain, then trying to de risk it outside of China.
Joshua Chin 14:06
That makes that makes sense. It don’t fight what’s what’s the, you know, don’t notify the flow of flow of the river. What do you think is gonna happen when, like, 10 years down the road? And I say when because this is kind of like a common narrative that I’m hearing a lot about, that when China’s growth in its economy out, outpaces the US, as the leading economy in the world. Do you think that’s gonna happen? Firstly, and then secondly, one thing that’s gonna happen, then, using things shift?
Nathan Resnick 14:43
Well, I think it’s bound to happen and you know, it’s just a matter of time, like you’re saying, I think, really what’s going to shift is that you know, right now, the world currency is basically the US dollar, right? And so, when China becomes the world’s leading economy, that mean, the Chinese yen is our, you know, world currency? I think there’s a big debate right now going on in the crypto world of, you know, well, Bitcoin is the world’s currency or cerium. And, yeah, I don’t know how much we want to get into crypto on this podcast. But, you know, I think it’s just gonna be an interesting dynamic when China surpasses the US as the leading economy in the world. And I think even right now, you see China, lending out a lot of its, you know, money to developing countries in Africa that are, you know, using it to build airports and infrastructure and all of this. And so, you know, you even see the UN being used across the world more and more, even a lot of the US debt is from China. Right. And so, you know, Samsung kind of owns a lot of America in that, in that sense that they control a lot of our debt. So, especially interesting financial dynamic, I mean, tying it into ecommerce, I think, you know, it means that the value of the dollar might have less buying power, which means, you know, the cost of goods could continue to go up, if it’s a currency exchange, where, you know, obviously, I go, there’s not going to be worth as much. So, you know, that probably happening, like you said, 10, you know, 15 or so years down down the line? And, you know, we’ll see, we’ll see how that plays out.
Joshua Chin 16:29
We’ll see. We’ll definitely see. Nathan, you also started and own a hospitality versus Bubble Hotels. This is certainly when 2020 20
Nathan Resnick 16:43
Yeah, 2020. You know, it’s pretty crazy story. Basically, I lived in San Diego for eight years, and spent a lot of time in Joshua Tree and just, you know, realized that I wanted to create a way for people to connect with Mother Nature. So it’s kind of like a similar type of, you’re actually on a trip to Japan, and figured, wow, this would be so incredible to build this experience in Joshua Tree. And so we actually became the most funded or crowdfunded hotel ever, we raised almost a million dollars in a pre booking campaign. And that’s how we got started. I mean, I think, for me, I really wanted to kind of try to test my ability as an entrepreneur to bring new products to life. I mean, I’ve brought a tonne of physical products to life in ecommerce world, and the bill software through Sourcify, that helps brands produce products in China, and does you know all the sourcing work for them, but I wanted to kind of just try that entrepreneurial capability in a different industry. And it’s proved the, you know, have a lot of success. So we’ve got Joshua Tree, we’ve got Bryce National Park in southern Utah. And we’ve got a few other properties. We’re announcing here pretty soon, but it’s really been quite a journey. And I think for any entrepreneur out there, it kind of, is really fun to test your ability as, as a businessman or woman to, you know, bring new ideas to life.
Joshua Chin 18:10
Fantastic. What what’s what’s similar? What was transferable in your skill sets? And what did you have to relearn or learn from scratch?
Nathan Resnick 18:19
Yeah, yeah. I mean, I think what was transferable was the process of getting from, you know, a to b, and B to C. And just all the steps that go into building and growing a successful business. I think what I had to learn was development, design, architecture, engineering, all of that, I mean, required everything from you know, an L three septic engineer versus a commercial grade, septic engineer to meeting architecture plan that no, never done that before, to figuring out, you know, what best materials to use for our development. So there was definitely a lot of learning that went into it. But it was really fun. I mean, I think, you know, as an entrepreneur, sometimes when you’re, you know, exploring new things, you can get new energy. And I think that’s, you know, part of what happened with me is I got, you know, so much more energy of being a founder and entrepreneur and, and, you know, growing Sourcify even more, I mean, 2020 Like, everything, everyone, ecommerce was huge for us as Sourcify and 2021 was great as well. And this year, we’re off to a fantastic start to so I think it kind of ignites live value, because I think sometimes when you’re just focused on your business, and you’re doing it for you know, long period of time, I’ve been running sores, five over five and a half years now. It’s, you know, you need to look outside the box for areas to grow and ways to continue to be more excited.
Joshua Chin 19:48
Make sense? And Sourcify is backed by Y Combinator. So tell us a little bit about that. That experience, what does that look like? And yeah, that that has, it hasn’t given you some kind of a tighter timeline or road to follow.
Nathan Resnick 20:07
I mean, I think so one went through YC, it was 2018. So we’ve been in business for a year, we were a bit later stage, then, you know, other companies were that that went through YC at the time. And, you know, for us, there’s just a platform to connect with entrepreneurs that think big, right, the community at YC is incredible. And it also just opened our minds to how big certain businesses get, you know, like Airbnb or stripe, or, you know, Instacart, there’s a lot of just incredibly successful businesses that have been through YC. And, you know, teaches you to think big, and, you know, really open your eyes to the potential of what your business can become. And so that’s kind of the route that we took with yc. And, you know, it’s been a great journey. I mean, we, you know, before YC, were just a sourcing company, you know, just charging people a flat fee to manufacture their product. And after YC, we really focus on building software, becoming a growth tool for other ecommerce businesses to handle their supply chain more efficiently. So we look at, you know, a company’s margin the time and, and quality and see, you know, which lever levers, we can work the, you know, really help them improve their supply chain.
Joshua Chin 21:23
Just direct our listeners to understand, we talk a little bit about the problems that we’re, we’re facing and about to face in our supply chains in ecommerce, and in this year, in the next couple of years. What part of that the Sourcify? So
Nathan Resnick 21:38
yeah, yeah, so with all of our customers, we basically act as their boots on the ground. So we have, you know, our own what’s called wholly owned, wholly owned foreign entity with V in China and Guangzhou, China, we employ, you know, about a dozen full time team members that manage production. And on behalf of our customers, we do all the sourcing, work, sampling, the production management, the quality control, and often handle the freight as well. And so that’s really the full scope of sort of services that we provide. And then we do so in a very, you know, easy to digest software, where customers can understand what’s going on in their supply chain. And then we also launched in 2020, product sourcing School, which is for people that are just getting started in ecommerce to try to, you know, understand and learn how to bring a product to life themselves. So it’s an educational program that’s helped about, I think just over 2000 students at this point, go from an idea to a product, which is really cool.
Joshua Chin 22:43
So talk to me about growth, for both Sourcify and doubles that your bills hotel. What what do you see being the lever for growth at this stage of your journey? For both?
Nathan Resnick 22:55
Yeah, it’s all referrals and inbound. I mean, for us, customers refer us to other customers. And that’s the beauty of it, it kind of goes to show like, we’ve had a lot of success or success with our customers, and they’re happy with the work that we do. So we grow through referrals primarily right now. With Bubble Hotels, it’s a whole different beast of trying to find the right land to move on and partner with existing landowner acquire that land. So that’s a whole different dynamic for sure.
Joshua Chin 23:26
With with Bubble Hotels, are you backed or have you been bootstrapping through the Kickstarter campaign till till now?
Nathan Resnick 23:35
So we, you know, Bootstrap, and then to actually develop, we raised like a massive private equity money develop.
Joshua Chin 23:44
It’s fantastic. So yeah, if you’ve had if you’ve had a stuff raising money to protect the true YC. So I suppose yc is a form of venture money.
Nathan Resnick 23:59
Yeah, yeah, exactly. So Sourcify has raised some venture capital, know, through YC raised about 2.5 million. So YC and a few other venture funds, but, you know, for us, we were able to use that capital to grow efficiently. And that’s what we’ve been doing since 2018. We haven’t taken on additional venture dollars and I think there’s an interesting dynamic to be said, especially in the ecommerce world where a lot of these ecommerce brands have taken on you know, a ton of venture dollars whether it be you know, big mattress brands like Casper, they went public and they got to Casper their latest round before they went public was at like one point something billion dollars. Yeah. And their market valuation dropped to 200 something million and I think they got taken private for their high 200 or high or low $300 million. So you know, a lot of times they think raising capital is good, but it has to be used as a tool for growth right? and you’re gonna become kind of, you become part of this flywheel of constantly having to grow at a certain pace. And, you know, it’s just the venture capital world of burning money to continue to keep up with that flywheel pace.
Joshua Chin 25:19
And it’s tough, Nathan because now you’ve exerted external pressures that you get to manage on top of the pressures that come from your customers and growing the business at the same time.
Nathan Resnick 25:31
Yeah, yeah, for sure. I mean, you know, I think whenever you’re growing a business, there’s gonna be things breaking, but me trying to grow at such a high pace, a lot more of my break, you know.
Joshua Chin 25:43
So you coach Nathan you coach brands that are just effectively startups and entrepreneurs just starting out with your first product, as well as entrepreneurs, launching your tenth 100 product as well, and you helping kind of that whole spectrum of entrepreneurs. So you’ve seen, and you’ve been on the ground as well, from from start to where you at right now? What what are some of the best ways that you have used to acquire new skills that the next level demands of?
Nathan Resnick 26:23
Yeah, I mean, I think, you know, what we see from founders that are just starting off, they need to put the pieces together actually bring their product to life, right. So that’s what we create a product sourcing school for, for our enterprise customers, most of them are doing anywhere between two and $100 million a year in revenue. And they run their supply chain through salsify because we number one are always improving their margin and improving their quality and lead time. But number two, were really their boots on the ground, you know, in Asia for them. So we’re going into their factories, we’re negotiating on their behalf, we’re making sure they’re getting the best payment terms, all of that. And I think that transition for an ecommerce brand really comes from being data driven. And also thinking big, you know, I think in today’s world, especially with rising ad costs that you know, I’m sure you guys are more familiar with me. You know, on the ad side, it’s crazy, you know, I was 14 had a huge impact on ads. And so tracking has been all messed up. And we see brands now that have gotten to scale spending, an average of 35 40% of revenue on ads, which is, you know, quite a big chunk of their revenue. Of course, it’s a huge chunk. Yeah,
Joshua Chin 27:37
it is, especially if the brands start optimizing email and SMS. That’s a big, big, big issue there. But with with manufacturing, and sourcing, are there are there benchmarks in terms of cost and percentage of revenue that you tend to look at? And
Nathan Resnick 27:57
we typically see, I mean, most companies that get to scale their margins on their product, or 80 plus percent, I mean, usually, even 85 plus percent. So they’re saying, let’s say they’re selling $100 product? Yeah, they’re spending less than $15 to produce that product manufacture that product? Well, you know, because you think about it, if you want to get to scale, and you’re spending 40% of your revenue, on ads, you’ve got, you know, let’s say that number was 25%, and you got 40% of ads, 65%, that leaves you with, you know, 35%, left, you know, probably got 10 or 15% of overhead, got, you know, like, your margin gets just depleted, you know, after a while. And so having that, from a product standpoint, like cogs standpoint, enables you to spend more than your competitors to acquire that same customer, right. So that’s about margin. Because, you know, if I’m producing my product for $10, and you’re producing it for 15, you know, I can spend five more dollars to acquire that same customer then you can,
Joshua Chin 29:05
exactly that’s, that’s how that’s how we out compete and win. Nathan, for people listening, what’s your number one advice for scaling ecommerce brands?
Nathan Resnick 29:19
You know, I think on the scaling side, especially in this market, I’d be very niche focused and start with a community. So like, if you already are a part of a community, whether it be like for example, pickleball, I’ve been playing a lot of pickleball lately. I love that community. I think it’s such a fun, fun game to play. You know, as you dive deep into the community, figure out what products are missing in that community figure out, you know, what different areas you can tap into, or how you can take ownership of that community and build a brand or a product around that community, rather than starting you know, so broad from the gecko. So, you know, that’s what I’d recommend is find a niche thing too many brands are broad and in this market, it’s Hard to target broad
Joshua Chin 30:04
Makes sense. And for for those interested in connecting with you and learn more about Sourcify. Where should they go to? And how can they connect?
Nathan Resnick 30:12
Yeah, I’m pretty active on Twitter. If you just search Nathan Resnick, I should be there and then LinkedIn are pretty active as well. I’m Nathan Resnick on LinkedIn. And if they want to hear more about Sourcify, just sourcify.com or Google Sourcify We’ll be there. Happy to answer any manufacturing questions or talk about ecommerce or I guess host you at a Bubble Hotels too.
Joshua Chin 30:34
Oh, yeah. Sourcify that’s sourcify.com. And as per usual, links will be in the show notes. And you can go to Chronos.agency/podcast to check out our latest shows and show notes. Nathan, thank you so much for being on the show.
Nathan Resnick 30:53
Thanks for listening to the eCommerce Profits Podcast. We’ll see you again next time and be sure to click Subscribe to get notified of future episodes.