How Firing My CFO Took Us From $11M to $80M

Sean Weisbrot: Ryan is the CEO of MIT45, an e-commerce brand that sold nearly $75 million worth of KRA products in 2022, and he will explain for you what that is in a little bit.

Sean Weisbrot: He's also the president and CEO of Southsea Ventures, a private equity fund, and he sits on the board of directors for several other companies. He's also helped with the acquisition or exit of more than 11 companies while seeing their collective revenue surpass more than 237 million. He has successfully tripled the revenue of more than five companies in under two and a half years, adding an extra 950 million in valuation to these companies.

Ryan Niddel: It makes me sound larger than life, and what it really comes down to is I'm just a normal guy from the Midwest, right? And it's not to downplay myself, I don't have a fancy MBA from a prestigious Ivy League university. I live in Columbus, Ohio, kind of born and raised, lived my entire life in different parts of Ohio and.

Ryan Niddel: A lot of my success has been on the backside of my own shortcomings, right? Where I went to college for mechanical engineering. Not because I wanted to be some fancy engineer, but because math and science were just very simple for me. And it was literally the path, at least resistance. I would love to say I had some huge aspiration in going to college.

Ryan Niddel: My aspiration was to get a degree in the simplest fashion possible. And when you say engineering, people are like, that's, that's ludicrous. But it's just how my brain works, right? Math and science, again, we're second nature.

Ryan Niddel: I. And so that's allowed me and afforded me a luxury in my professional career of being able to look at things and laughingly reverse engineer the success that I seek, right?

Ryan Niddel: So it's, if I wanna be a hundred million dollar a year business, what are all the things that would have to happen in a rough sequential order to help support that? And part of any business's growth is the unknown. I think we. You and I could probably agree with knowing a little bit about your background, like the path is crystal clear until you start taking some of those first steps.

Ryan Niddel: And then for me, I've realized every once in a while that crystal clear path is really a hall fold of mirrors, and I'm gonna have to navigate this clear path, kind of, searching around on the ground for where the actual path is versus what I thought I saw. Which led me into this world shot off from selling a couple businesses.

Ryan Niddel: So I sold a, a host, a web hosting company to a subsidiary of GoDaddy about nine years ago. Jumped into high risk merchant processing that I thought, I, I thought at 29 I had the Midas touch. I'm 38 right now. I found it by 30, just about 31. I didn't have the Midas touch, like everything I was touching was turning to coal versus gold.

Ryan Niddel: So, the high risk merchant processing company I started was an abysmal failure. All the money I had had made from the exit of the hosting company.

Ryan Niddel: Was all gone. Rental properties in foreclosure truck out repossessed, I'll say a negative net worth of, 40 to 60 grand. Like really, I'll say pretty low. Started a custom clothing company. Was fortunate enough to learn a lot about wool and Ashery. Bought into a manufacturing facility in England, helped grow that. And I did an owner finance deal to my head of sales after a two year time period. I Jumped into CBD before people knew what CBD was and not because I was passionate about CBD.

Ryan Niddel: Really, I saw the right place at the right time. I saw that Google search search volume was increasing for CBD. There weren't a lot of really powerful direct to consumer brands at that point. So created a direct to consumer only brand and grew that from 16 to 18 and sold that to a private equity group out of Pittsburgh, December of 2018.

Ryan Niddel: Then eventually ended up consulting for the company. I'm now CEO of a company called MIT 45, which imports, manufactures, and distributes, on indigenous leaf to Indonesia and Thailand called Kratom. And if you haven't heard of Kratom, I, it's not a big surprise to me. Almost no one has heard of KIf you look at anecdotal third parties.

Ryan Niddel: Research, less than 2% of the populace has ever tried it before. So a pretty low, low amount of people have heard of it. But what Kratom does, if you take, conversely, right, I'm not allowed to say there's any sort of structural claims. So there's all types of things that the FDA is always looking for, and FTC and everybody else.

Ryan Niddel: So I'm saying if, if you interviewed someone that has tried Kratom, they would say more than likely if you take a little bit, it gives you focus, it gives you clarity, it gives you energy. Essentially like an organic nootropic type of product. If you take a lot of it, it has the opposite effect. It's more of a sedative, a muscle relaxing type of feel.

Ryan Niddel: And the the downside of it, right, let's make sure we paint the entire picture, is it works on your opioid receptors. So you have the type one receptors or a receptors, which is what, Oxycontin, heroin, some really hard drugs work on the type A receptors and credit works on the type B receptors. So. Big Pharma doesn't like it because it helps people get off of opioid addiction.

Ryan Niddel: It's, it's got a lot of really positive, it's been said. To have the ability to help people get off opioids. A lot of anecdotal research for that. But just as easily, if you Google what Kratom is, you're gonna see tons of information saying it's the worst thing ever. So it's a very polarizing product. Half the popula says, man, it's a panacea and it will solve every problem under the sun.

Ryan Niddel: It's like Windex for, for the Greek people in my big Fat Greek wedding. You spray it on everything. It solves every problem under the sun or the opposite side, which is, if you look at it. It's gonna absolutely kill you. So we've been able to grow this business again when I came around $5 million a year in annualized revenue.

Ryan Niddel: The numbers aren't all the way tight from last year. We're certainly north of 70 million. We'll see what we have in, in some of those reserve accounts and what things look like. But between 70 and 75 million is where we hit for 2022. So a lot of growth from 2018 to 2022.

Sean Weisbrot: I wonder how much of that is due to the COVID pandemic where people are just at home and they're like, oh, I just want to feel chill or like I, I know during that time I definitely felt a lot of anxiety.

Sean Weisbrot: Especially from my own business and COVID specifically, I was really anxious about getting infected and not wanting to get infected. And, I definitely found some solace in, Klonopin, which isn't a good, it's, it's not good to like take these kinds of things, but I was very fortunate that I was able to get some and, it was helpful, but I, I think some people don't wanna go that route and so they looked at things like that. I think Ava and. And weed were also really big purchases during that time. But hey, business is business and if it's not addictive, then let's do it. Even if it is addictive. You look at some people and they, they don't have the same moral centers that some people do, and well, they're being sued right now for billions of dollars and their names can't be named because of the agreements they've made with courts.

Ryan Niddel: Of course, and to make mention of that, just so I'm painting the right picture of this product. There, there are plenty of conversations to say that Kratom could be addictive. What I look at it is if you're someone that, if you have one drink of alcohol, you find yourself having 12 drinks and you can't stop at just one.

Ryan Niddel: You might not wanna try something like Kratom because if you start to feel good, you might wanna feel better and you might keep trying it. But if you're someone that can, can have that drink or you can go to the gym once, you don't have to go 12 times each day. I think you have to be able to modulate your own level of, of obsessive compulsive nature that we all have inside of us.

Ryan Niddel: That, that, that thing that makes us wanna keep doing something over and over again. 'cause we feel good. How much self-regulation do you have? So if you find yourself saying, I don't really have a whole lot of self-control, no shame in that, right? We've all, we've all got our vices. Probably stay away from Kratom 'cause it, it. It definitely has a good feeling to it. And by the nature of that, you might want to keep trying more and more and more, which there's a product in Kratom. The alkaloid is seven hydroxy that has that habit forming nature to it. So we actually, in our manufacturing process, filter out as much seven hydroxy as we possibly can.

Ryan Niddel: We have the lowest in the industry because we look at, we want you to have all the healthy benefits without any of the negative side effects, but it's not perfect. So. Enter your own risk again, there's, we sell about 600,000 bottles of our main product every month, so people are using it. People seem to enjoy it. Enter at your own risk.

Sean Weisbrot: You've made a claim. So I do have to ask, do you have lab reports or anything available publicly for people to be able to review? Because I've been on Amazon quite frequently for different products, as I'm sure a lot of people are. And very often brands will make claims and then people in the comments below that have purchased the product would go, well, I ran a lab test on it and. Actually, no, it doesn't have this thing. So yeah, that's something I think people would think about.

Ryan Niddel: We've taken a really aggressive stance in this, Sean and I, I love what you're bringing up, that although it's not deemed a food grade product, we've really treated it like a food grade product. So the leaves themselves are tested in Indonesia where they're native to, they're tested again when they land on the state side.

Ryan Niddel: They're tested midway through our manufacturing and they're tested at the end of manufacturing. So in the grand fancy scheme of manufacturing paralysis here in the United States, that's called GMP compliance at kind of a base level, and so we're we're GMP compliant as a facility, which allows it to be that if you were to buy a bottle of one of our products and scan the QR code on the back, it shows up on a website then where you can see the entire history of that product.

Ryan Niddel: You can see all the COAs that have been tested and associated with that lot number. Through. So we would take a lot of pride in having a really transparent, transparent manufacturing process. Again, our main product, a bottle called mid 45, no big secret by the name of our company. It literally is vegetable glycerin, citric acid, high filtered water, and Creo.

Ryan Niddel: That's it. There's nothing else in there. And, and our, our tests support that all the way through. So I would love it if you're listening and you buy a bottle, get a third party test done, it'll only confirm what I'm sharing. Now

Sean Weisbrot: You mentioned GMP and COA. What do those mean?

Ryan Niddel: COA is a certificate of analysis. That's something that to me, any, anything you put in your body. I believe you should be able to find somewhere the certificate of analysis that a third party has reviewed the efficacy of, of what the product is and what's in it. Now, certainly supplements in the United States kinda work backwards, where you can create a supplement.

Ryan Niddel: You and I, Sean can create a supplement together. We don't have to have it tested. We can take it to market, we can manufacture it, we can say it solves everything under the sun and until the FDA or FTC pushes us to be able to back up our claims. We can keep conducting business. So you don't actually have to take a supplement, have the certificate of analysis done beforehand.

Ryan Niddel: You can just kind of wing it, which makes the supplement world so scary. Something like on Amazon where you could create a product, make big claims, throw it on Amazon, sell hundreds of millions of dollars worth knowing you've never done any sort of testing. Unfortunately, that's the way the supplement world works.

Ryan Niddel: Food's a little bit different, right? Food you do have to test before going to market and have the certificate of analysis. So that's, that's the COA side of things. The GMP ends up being, essentially the. I forget the exact acronym, but it's the standardization of manufacturing principles that state the fact that your facility's clean, orderly, up to date following best practices as arrived at by the FDA.

Sean Weisbrot: The GMP in your situation is saying that the Indonesian factory is following it or just yours? In the us.

Ryan Niddel: Just ours in the us. And we're in the process of working with the Indonesian government to help have them follow the same FDA guidelines, and it's our, we're operating from that same level in Indonesia, but I can't make that same claim because a GMP facility doesn't exist over there.

Ryan Niddel: What I can say is right, I'm sitting at my office desk right now as you and I are having a conversation. If I were to drop a bite of food on my desk, my production facility floor is more hygienic and cleaner right now, at this moment in the middle of the day than my desk is.

Ryan Niddel: I mean, the GMP requirements are very, very high. So there's no external contaminants. We have, hepa filtration systems everywhere. There's hair nets, there's gloves, there's shoe coverings, there's, clean hygienic, smocks and, and the accoutrements that people have to wear just to enter the production facility.

Ryan Niddel: And if they ever leave the production facility for a break or, whatever, whatever need be, they have to go through that whole process once again before they're allowed back in. So it's really, really a clean and orderly environment where we take a lot of pride that if at any moment somebody could stop by and we'd give you a tour of our facility and it's, it's really sterile. I mean, it feels almost cold, right? It's not an inviting place, but it is a very, I. Safe and well thought out environment.

Sean Weisbrot: There was a time when I was in Shenzhen, China where I was working with a British guy who had a business that provided meals in mass to schools and businesses where they had to be able to serve. I think it was like 5,000 meals a day or maybe 5,000 people per meal. I can't remember, but it was like they were only targeting larger. institutions and I was helping them to get connected to a, a Chinese, well, a Taiwanese, manufacturer that had a, a large, base in Shenzhen. And I remember, arranging a tour for the board of directors for the Taiwanese manufacturer, with one of their, like I guess you would call it, a food production hub. And it was very sterile. Like, so I, I definitely understand, that it was really cool. Unfortunately, I couldn't take any video or anything, but it was a very interesting experience, to say the least.

Ryan Niddel: Well, yeah, Shawn, you think about it and it's, as a consumer, there's this inherent trust that we have in the US especially for food. you walk into a local grocer, you assume that if you're grabbing a bag of potato chips, let's say, off the shelf, you're assuming when you open it there, it's safe to eat. There's a lot of trust that we have built into the economy at large here in the US And so I look at it. I mean, think about it logically.

Ryan Niddel: If one of my employees somehow got something in their hair, right, and who knows what could come up with whatever could be in their hair. It doesn't matter what an ash from a cigarette that somebody else smoked, inflicted as they were walking by. Well, if that level of contamination somehow ended up in something you're ingesting in your body.

Ryan Niddel: I'd feel, I'd feel horrible. It has nothing to even do with the, the revenue and the, the, the onset of issues that would come from that. It's, you're entrusting us and our brand that you're gonna consume something that we've created. It becomes my responsibility to make sure that it's an enjoyable experience free of any sort of potential hardships that could exist. So it's all these little things that until I got into this particular business I never considered before. Like me, I didn't know anything about this five years ago.

Sean Weisbrot: So I guess you get to go to Indonesia to inspect the facilities quite often.

Ryan Niddel: So I, I'm fortunate in this business, one of my partners makes that journey. He loves international travel. He loves to spend time on the airplane. He's, he loves to be over at the facility where it's not that I don't enjoy that, but there's so much going on for us stateside that it's actually better use of time for him to go over as he's used to being the CEO. He's definitely graduated into more of them, you know. Board of directors is kind of the founder's role. So he gets to go over there and enjoy the fruits of his labor, but doesn't have to concern himself with the day-to-day operations.

Sean Weisbrot: Yeah, sounds like a great job. Get to travel to Indonesia. So when you first started working with a company before you decided to become the CEO, however that worked out, the company was generating about 5 million. What issues did you see? Immediately that you said this is, it's, it's not gonna destroy the business, but it's not going to let you grow.

Ryan Niddel: I dunno if we have enough time on this particular show to go through all of them, but I'll certainly give you the highlights. Right. So, and I've, I've seen this time and time again, even in my own businesses, it seems like the zero to $1 million a year range, you can do that kind of hustle, tenacity. You can really figure out, that's really the time to figure out product market fit or market message match, however you wanna look at it. You can get to that million I. And then one to five is a combination of that hustle and levels of systems and processes. And so the company had systems and processes. They were just inefficient and perfect examples of that back then. And, they were 5 million a year for a few years in a row. If you were someone that was buying a product from us, a gas station, a convenience store chain. You speak to one of my sales professionals, my sales professional will take your order.

Ryan Niddel: They would physically walk back into our warehouse, give it to a fulfillment specialist, the fulfillment specialist would package your order up and ship it out. Then once it got shipped out, accounting got to know about it. So when I came in, we had 1.6 million in uncollected accounts receivable that no one even knew existed.

Ryan Niddel: Because you think logically, really what should happen and what happens now, a salesperson takes an order. It gets sent over to accounting. We have to make sure there's no outstanding balance on their account. We have to make sure they're in good credit standing. We have to make sure they are who they say they are.

Ryan Niddel: W nines are filled out, all the stuff that goes into conducting real business, and then it goes to fulfillment to be shipped out. And so just reevaluating the processes that customers go through and that we were operating in internally was one of the most pivotal things to start with. It wasn't.

Ryan Niddel: It wasn't reinventing the wheel. I would love to say, gosh, Sean, I came in, I had this magic marketing idea, and poof, things just took off. No, just by analyzing what we were already doing at that point, it's like, okay, if we don't grow at all, we'll have an extra, essentially $2 million just by tightening up our credit process and what we do that way.

Ryan Niddel: And then you start to, you know that that worked pretty well to get us from five to 10 million. I started to notice a lot of that 10 to 11 million where. Quite a few of the people that had got us to that point in time, just quite frankly, didn't have the skillset or the drive or the ambition to get us to the next, next plot, which is about 25 million for us. The frustrating part is they were convinced they had the skill set, right? So it's that unconscious incompetence. It's like, no, no, I can absolutely do this. And so we, we bring up things like you and I spoke about this, I'll say off camera, so I'll, I'll drop it on here. We talk about accounting. We had a great CFO Someone that in her mind was a phenomenal CFO.

Ryan Niddel: So I'm sitting down and saying, help me understand our accounting principles. Help me understand what goes on. Are we fi, FO, or li o? Those acronyms being last in first out or first in? First out. That's how we start looking at inventory stocking. So what we wanna run is first in, first out, meaning as product gets made, it gets put on the shelf and more product backfills it.

Ryan Niddel: We wanna always ship the quote unquote, oldest product to customers, right? So you're, you're always pooling from what was manufactured the longest to go, but that's only a series of weeks. And her answer to me is, well, we run a combination of those right? You, you, you can't run a combination of lifo and FIFO as you really get into it with gap based accounting, right?

Ryan Niddel: Generally accepted accounting principles. you have to choose one or the other. And so that's, that started having me say, okay, well, I'm not the smartest guy in the, in the, in the business. Maybe I haven't heard of a hybrid. FIFO lifo help me, help me understand more. Help me understand, are we on a cash basis or accrual basis?

Ryan Niddel: And she said, well, we're pretty much on cash. And this is one of those moments where as, as you're spending time with Sean and I listening to us, it's one of the big changes that happens if you look at publicly traded companies, they're all running on an accrual based system for accounting. And all that means is, I'll take my web hosting business, someone would buy a web hosting package from me, but they'd sign up for five years when they paid five years of service. Well, in the cash based world, I'm collecting all that, all that money for those five years, and I'm booking as income in month one, but on a accrual basis, I should have taken that $300 and broke it out equally each month over 60 months because you still have to fulfill on the service for that period of time.

Ryan Niddel: Well, that's one of those lessons I didn't know in the hosting business when we sold it, because here we are, this company running $50 million a year in revenue, but we're not really, we'relearning about 12 million in revenue on an accrual basis, which takes this company. I thought we were gonna sell for hundreds of millions of dollars and we sold for 12 million because all of our numbers are wrong. All of our accounting was wrong, everything was backwards. And so as I'm poking inside of our business and saying, help me understand, and she just, while she understood the principles of accrual. Again, a very brilliant woman. She's like, we're never gonna be able to switch to accrual. It's just not gonna happen.

Ryan Niddel: You don't understand this business enough. And so a combination of life and FIFO being one and the same, and someone telling me we can't switch to, to accrual. It's just having to go through and start to say, like, love you to death for all that you've done to help us get from 2 million to to 11 million. But you're not gonna be on the, you're not gonna be on the trip to 11 to 25, 11 to 50. So then it's getting into that whole firing well. Which is a, a, a whole different principle of understanding that to me, when we hire someone, we typically see the best in them, right? We run them through a series of interviews, we get to know them, we check their references, and at that moment in time, they're probably the best fit for the role.

Ryan Niddel: Well, as businesses grow or we mature as operators, we start to see deficiencies in some of those decisions. The person probably hasn't changed. They probably haven't become worse at what they do. Just the requirements have changed or our internal skills have changed. And so when that happens to me, instead of saying, okay, like you're, you're fired, it's really acknowledging it and saying, look, you've done everything that we've asked you to do, but the role has changed. The responsibilities have changed. I've changed. And so it's not your fault. You've done everything right, but as we go forward, we're gonna be going in a different direction. And I wanna help you find that place to land for yourself. I wanna open up my Rolodex. I wanna open up any connection I have because your skills were amazing from two to 11, and I really think you can add value and in a way to help you do that, I'm gonna give you a really good severance package because you didn't do anything wrong.

Ryan Niddel: And it really changes that feeling of how we terminate someone that really hasn't done something wrong, right? This person didn't steal from us. They didn't try to harm the business. She cared about the business a tremendous amount. Her skills weren't there. So instead of penalizing people for that, I just wanna fire them graciously. Right. It's just a different way to look at it.

Sean Weisbrot: I always look at it as my job as the CEO of a company is to make sure I have the best people and to understand what each employee's goals are in their career, and if they're not growing in a way that makes sense for them. And I can't help them any further, then it probably doesn't make sense to continue working together because they're probably not excited anymore and I'm not getting the best out of them. So there's no point in continuing to work together. And so hopefully then I can help them to further their career goals by giving them the freedom to go and find a new opportunity that'll challenge them in that way. I love it.

Ryan Niddel: Couldn't agree

Sean Weisbrot: more. It also sounds a lot better than fire. That's true. That's, that's very true. So, that's a really good example of someone that you found who was good for the business, but not, continuing to be great for the business. and I think those are two really important levers you pulled on that enabled you to get to the next level. How, how did you handle that transition? Did you. Take over the CFO position for yourself. Did you find someone immediately, or did it take months to find someone? Like how, how did you handle that and what was the specific result of changing out the CFO?

Ryan Niddel: I certainly didn't jump in. I didn't roll up my sleeves and I wouldn't have been capable of it at that moment. I didn't have the level of training specifically for accounting, but what it did create was an acknowledgement that I didn't have that level of training. So I then went out and got that level of training. It was, look, if that ever happens again, I don't need to be the CFO, I don't have any aspirations or delusions of grandeur that would say I'm a qualified CFO, but if our back was against the wall and there was nobody else there and business had to continue, I, I need somebody, I needed to have the skillset to at least step in. So the ship wasn't taking on water. Fortunately, in the accounting department, we had a, a, a level of additional staff, right? We had a controller in place. We had accounts payable and accounts receivable. We had a generalized clerk. So when the. When the CFO stepped away, when she transitioned out, the controller stepped into the role for a moment, right? Just for a series of a week or two until her replacement came in and her replacement. she'd been through a lot, right? She had, she was a part of Purple the Mattress Company and their IPO and some things that went on that way. So I've really become very intentional with looking for people that have traversed the next season that we're stepping into as I'm hiring those key roles.

Ryan Niddel: I don't, I'm. I think that's another one of the changes, right from as I'm, as I went from 25 to to 50 million, it's starting to look for people that have already been past where we're going to. It's not allowing people to necessarily, especially in that C-Suite role, not have them learn on the job, right? I need people that have already passed that 'cause I wanna shorten down the time that it takes for us to grow and really hire very, very brilliant people for all of the C-Suite roles. And then empowering them to do the same. It's been a big shift from that 25 or 30 up to the 75 or so we're gonna hit this year, or for 2022.

Ryan Niddel: That's a really big driver. So that CFO was the first domino that fell. She was the first one that came in that had this plethora of experience, not only in the CFO chair, but really even in a COO chair. So she understood not only the finance side of things, but also how that corresponds with operations. And those two, to me, as I look at businesses, are so intertwined, right? I mean, how do you, how do you start looking at finance without looking at operations and vice versa? It's like they're, they're opposite sides of the same coin. And so having someone with that skill set. Was a catalyst in our future success.

Sean Weisbrot: So was that the most important change you made or

Ryan Niddel: the most important change I made at that moment? Absolutely. But Right. It's a cascading effect to me. You make that decision, then you start looking back and saying, okay, now, now I have a higher skill set person in this role. It's shining a light on all deficiencies everywhere else. So it's like, all right, now I need to go hire better. Chief Revenue Officer, I need to go hire a better chief marketing officer. I need to hire a better chief operations officer to help bolster those things up. And those were, those were pretty pivotal. Another pivotal part, Sean was switching our corporation or switching our LLC into a C Corp, really massaging some of the things that way and doing stock issuance to our entire team.

Ryan Niddel: So when you come on board with us, you're actually getting shares in, in the company itself. I mean our vision right now is certainly to be one of the first public, if not the first publicly traded Kratom company in the world. And our revenues support that. Our growth is supporting that. There'll be some uniqueness to figure out what exchange to go to.

Ryan Niddel: There's some hurdles that we still have to hop over, but there's something that changes when you show somebody they're an actual owner of the business and that the decisions they're making are affecting the bottom line, which then affects their. Their distribution, their dividend in accordance with the number of shares they have.

Ryan Niddel: So that was really, again, as I started looking at what's taking us from that, that 30-40 up to that 75, it's really getting cultural buy-in from laughingly, the janitor all the way up To me. If we were to call the janitor right now and say like, what are our core values? They should be able to share what our core values are and not share it begrudgingly with, oh gosh, let me go look at the plaque on the wall. It should be. No, no, it's, it's candor, it's honesty, it's forward facing, it's intelligence. Right? They should because they're, they're living and breathing it because they understand how that ripples through the entire organization and everybody that interacts with it.

Sean Weisbrot: What was the, the next kind of revenue mark, where you felt stuck from, from after that 10, after you replaced the CFO?

Ryan Niddel: So from 10, the next place we landed was 25. Right. And that didn't feel stuck. That felt like we couldn't get enough done in the right amount of time and. When I say that we couldn't get enough done to me as we have people from a previous season that are involved in the business, they're unconsciously incompetent in their own right.

Ryan Niddel: Right? They don't know what they don't know. So start having conversation with the sales manager about, right. What are the number of turns that an average customer is going through? How are you increasing the average order value? What's the throughput penetration on these three SKUs? And it looks as though I'm speaking a foreign language to that person.

Ryan Niddel: It's not because they're unintelligent, but they were. They were brilliant and incredible to get from five to 20 to 25, whatever the number was. But knowing that from 25 to 50, these details have to start being on the forefront. We can't keep doing more of what we've been doing, expecting to get massively different results.

Ryan Niddel: And so biasing those questions and seeing like, okay, he doesn't quite know what I'm talking about. I mean, he gets it conceptually, but we have no idea how to impact those. It's okay. On one side, I can pay for his training, which is part of our corporate culture. Every employee gets 1,250 bucks a quarter to invest as a see fit into continuing education, to better their skillset.

Ryan Niddel: But that's only so efficient. It's better for me to say to that individual, I, you're not fired. You're doing a great job. If I need to bring somebody in for you to learn from, I need to bring somebody in and be able to go to the market and find the person that was in charge of sales for DC shoes. As they went from 50 million to 500 million, they had one sales director who's now our sales director.

Ryan Niddel: So he's been through international commerce before. He's been through all these things I'm suggesting he's been through, how do you really market and, and create an environment around your brand, inside of a retail storefront because Sean outta the 70, I'll say 75 million this year in revenue, 54 million of that is B2B for us. The majority of our revenue is still selling to you. Who owns five smoke shops across the country. And so how do we help you sell incrementally more and shorten down your reorder rate so that your timing, you're never, you're never without product on the shelf and showing somebody. If you're without product for three days over the course of the year, that's probably two additional turns, which is probably costing you an extra.

Ryan Niddel: I'll make it up to $5,000 a year, which doesn't sound like much, but if we just help you manage your inventory levels. You're not doing anything more, you're not working harder to make the extra five grand. You're just working slightly smarter. So we started bringing a level of tracking, accountability technology to help impact the points that were really gonna make a difference in the business.

Sean Weisbrot: Sounds like that guy was extremely important.

Ryan Niddel: He was. He was. But Sean, as we go through all that now we've, at the same time as we cross from that 25 into the 50 range, we've now out, we can't produce as much product as the marketplace is demanding from us. So I'm like, okay, now I have to figure out a manufacturing solution. So now I have to go and buy two manufacturing facilities. I can use them as co-packers, or I can jump in and say, look, let's look at your net margin. Let me take some of them and the experiences I have. What if we just buy you? And so I bought two separate facilities, which are the GMP compliant facilities now because it was just such a shorter barrier to entry.

Ryan Niddel: They were already compliant. I could buy them and backfill them, and then now had a revenue positive way to, to manufacture my own product at scale. So it's like laughing every new level has a new devil. It's like, Hey, you solved that problem. You now have manufacturing. Now it's like, well, shoot, we have all this dormant time on our production lines.

Ryan Niddel: Now I need my sales guys to go out and sell more because we're not maximizing the floor footprint of the manufacturer. Like the equipment itself. We just have, you never want dormant equipment in a factory. And so then you get new salespeople and they start ramping up sales. Now all of a sudden, operations are in turmoil because now there's six new customers coming in and where do you put the product and how do you manage the supply chain to support those products?

Ryan Niddel: Then you solve that and then you're back to the marketing side. Well, how do we go out and get more customers? 'cause now we have another shift. So I look at business very simply. You, I, there's only four aspects that I look at. Business. I think you would say there, there might be five. It's marketing, operation, sales, and service. And I look at operations and finance as one and the same. So you call it numbers, you call it whatever you want to, but no sooner. If you look at four, each one of those is one of four legs on a table. Well, you make one leg a little taller, one leg a little shorter, the table starts wobbling. So you gotta go back around and incrementally sure, up each one of those legs.

Ryan Niddel: And so the goal is to keep growing them kind of simultaneously, which sounds easy in principle, but you get it certainly when you're out there in the field in the thick of things, man, you get that, that. Linear focus on one aspect of the business and all of a sudden the other three start to go to the wayside a little bit or just don't grow as quickly as efficiently, which is then the next big transition, Sean, is from that 50 to 75 or wherever we'll be this, this past year has been decentralizing as much as I possibly can.

Ryan Niddel: That takes a page out of. Jeff Bezos's book with type one and type two decisions. Type one decisions are decisions you really can't come back from, right? So if you send credit terms to the wrong people, pricing some things would drastically affect the business if those decisions are wrong, but it's only five or six for our company.

Ryan Niddel: Type two decisions are like that two-way door. You walk through it, you don't like what's on the other side, you just walk right back out. Well, as the business has grown, most of the decisions kept funneling up to me and I started looking around after a couple 80 hour weeks and the like. Why am I making the decision on what the marketing flyer needs to say? I have a CMO for that. And so pushing back down and decentralizing and empowering everyone that supports the mission, vision, value of the company to make decisions and just to to own the fact that an 80% success rate and making decisions puts you as a world-class decision maker, right? Everybody's that has that fear of, I gotta be right a hundred percent of the time.

Ryan Niddel: You might be right a hundred percent of the time, time, Sean, but I'm nowhere close to that personally. Like it's, it's the iteration, it's the decision making quickly to then get that input to say, okay, I thought that was the right path, but now we need to course correct a little bit. We need to go a slightly different direction. And so that's been one of the big things from that 50 to that the mid seventies has been empowering the people that support me to own more of the footprint. Right. I want to really be the chief impediment remover. The C-suite around me, they get stuck somewhere and I have the ability to come in and knock down a wall for 'em, but then they have to keep, taking that, taking that footprint. They have to keep driving forth.

Sean Weisbrot: I think my team from my past startup would probably say I was wrong at least half the time. Sounds about right. If I'm only right half the time, that's still pretty good odds. Those are great odds. I would spend quite a bit of time being told why my thought process was wrong, or why this is wrong, or why I'm, I don't have enough information to make that decision and I should leave it to them to make the decisions.

Ryan Niddel: And That's one of the things to me about being a founder, being a CFO or being a CEO, you start to become accustomed to making decisions without all the information, and that's that dichotomy back and forth to me is for type one decisions we might have. Eight weeks to, to do all the data compiling to decide what is the absolute best decision.

Ryan Niddel: But I'll tell you, when we were $10 million a year, it's like we were putting out fires every other day. There wasn't time to come up with an eight week hypothesis on what might happen if we made a decision. It's like you look at the data that's in front of you, you might ask one or two people. Then you just freaking go knowing that half the time you're gonna have to retread your steps and go a slightly different direction. But to me that's the fun of that 10 to 25 million is, is that your back's not really against the wall. 'cause if business is cash flowing positively, but at times it feels like it's, it's us against the world. Right. You're just making those decisions in iterating real time.

Sean Weisbrot: Yeah. I definitely don't miss any of this, like, but listening to you talk about it, I get excited because I'm like, yeah, I'm sure it would be. Awesome to, like, to go through this. I've, I've talked to so many people that have done things like this. although I would say the average one gets to like 25-30 in their business. 'cause they're not doing e-commerce, so it's a little bit harder to scale the service side. so like I've learned from them what they've gone through and all of that.

Sean Weisbrot: Physical products, you've got that added issue of the logistics, the supply chain, the manufacturing, the compliance, the, the inventory management, all of that. which makes it, I think, far more challenging than a service business. But for which I, I mean, I, I think service businesses are more interesting for me because they're a lot more simple, but they also are a lot harder to scale at some point, I think. Yeah, so you were saying that you would like to take this company public. Is there anything that would change your mind and make you consider selling it?

Ryan Niddel: This becomes interesting because I have two partners in this venture, and we're all at very different stages in life. One of my partners is turning 60 this year. He's got six grandkids. He's Mormon. He's brought up Mormon. He's no longer, and not that that matters, but it's just, it's a reproduction hub. So he's got five kids and they're starting to have grandkids. So he's at a, he's at a whole different place where he's incredibly risk averse. So he actually wants to hold onto the business as almost an annuity 'cause he looks at it like, gosh, where it sits now, it's very predictable.

Ryan Niddel: man is incredibly intelligent. He's, he's really, really brilliant. But as we get into some microeconomic theory. It gets a little fuzzy for him, where Right. We're still in the early adoption curve, so we haven't seen the compression in margins yet where we keep trying, traipsing along. But the odds of us keeping 40% or more net income is pretty low. Right? As we keep growing and more competitors come in the space that's gonna get whittled down. And so I have him. I have a second partner who is 45, never had kids, doesn't want kids, never been married, who's a free spirit, who's like, man, I'll cash out tomorrow, whatever.

Ryan Niddel: I'm gonna go surf and hang out and travel the world and hang out on a beach. And he's, he's more creative. He's more the free freestyle type of guy. Then there's me, right? I'm 38. I, I look at this as the first step in a three act play for me, where whatever I do with this company. Whatever we do with this company ends up being the on-ramp to the next big thing.

Ryan Niddel: For me, I don't know what the next big thing's gonna be. It's not, I'm not looking to get out of what I'm in now. It's just the acknowledgement that, okay, there's a lot of lessons from 5 million to, I dunno, maybe 150 million if, if I were to show you our forecast for next year. It's a, it's 125 million without acquisitions, two acquisitions kind of hovering in the background.

Ryan Niddel: So I think we'll hit one 50 in, in total, total revenue as a business. Right. That one 50 mark, it's, it's tough to, to say, I mean, the, the logical side of me would say, Sean, we should sell to a private equity group with a good track record. We'll sell 70% of the business to them. We'll maintain 30%. They're gonna, private equity groups have like a 92%, 98% success rate over the past 10 years of picking winners.

Ryan Niddel: Like they're not gonna invest in something like us to let it flounder. So they're gonna grow exponentially over the next three or four years. And then they'll probably take it public, where if they grow it enough in those three to four years, that 30% we hold onto, if they were to take it public, is worth as much as the 70% we sold this year.

Ryan Niddel: So that would be my preference, is to approach it that way. 'cause there's a lot I, I would like to learn from some really sophisticated private equity groups. I don't know that I wanna be the CEO of a publicly traded company. I don't know that. Having an answer to a true board of directors and all the nuances that go into that.

Ryan Niddel: I don't know if that's a good fit for my personality at this point in time, but I don't know 'cause I haven't been through it before either. It's one of those things that's important to me is to return shareholder value to everybody that supports us. I wanna make sure that, again, that janitor where we are, our stock issuance was based on an enterprise value of $150 million and our enterprise value significantly higher than that at this moment.

Ryan Niddel: So some of these people that have two years of annual salary in, in stock that they're holding onto, right? They're gonna walk away with life-changing money from the decisions that we make. And that's really, really exciting to me, is like Sean, I think you and I probably a little, a lot of the same boat money is certainly a motivator.

Ryan Niddel: It gets me up in the morning. I'm excited by it and I haven't had a nine figure payday before, so I have to also raise my hand to that, right? I haven't had a hundred million dollar check in my hand personally before ever in my life. It's almost bigger than that now. Like the company is bigger.

Ryan Niddel: When I look at the 88 or so full-time employees we have, like, I'll have a whole bunch more at bats from 39 till I'm done working where the line worker, right, that this might just be his trajectory for the rest of his life. He might just kind of, line worker to, to team lead to maybe, assistant manager is his entire career trajectory.

Ryan Niddel: So he puts four or five, six years of annual salary in his pocket, and if it's invested the right way, he's now completely changed the course of his life forever. Now, there are a lot of ifs there. It's also assuming that someone gets that. Five, six, $700,000 paycheck in their hand. They don't go out and buy new Rolls Royce and take their family on a couple private jet flights and it's all gone. But I can't be responsible for all that.

Sean Weisbrot: Do you guys offer like a 401k or an HSA or an IRA plan that you match?

Ryan Niddel: We do. So I've been very employee centric. View into our business. Whereas I started looking at our net margin and saying, okay, as an LLC, we're 47% of our income, which is literally going to the federal government. And I believe we should all pay our fair share. Right? So that's no big deal. But if I'm gonna, if that money's already gone anyways, how else could I deploy it? So it benefits more people than just who the government decides. And so it started with getting just the absolute best health insurance we could find.

Ryan Niddel: I mean, we called brokers and said, just max out the best coverage on a national basis you can possibly find. And then we're gonna pay for a hundred percent of it as an employer. So our employees have no medical expenses. They have their deductible, but their deductibles are very, very low, $250. And that covers them.

Ryan Niddel: And then we pay 20% of their families. So if they wanna extend it, like we literally do everything we can to pay all the health insurance for our employees. Then we get a dollar matching, right? And we do have a 401k. It's good, but any 401k is only so good. So our dollars match up to 4%. But we also have a financial advisor that works inside of, kind of inside of our organization to help people truly understand that we, we pay for this individual.

Ryan Niddel: Tell people understand what they actually wanna achieve, and is a 401k the most effective vehicle for them to do that? Or should they consider an IRA should they consider, any other litany of, of products out there in the, in the marketplace? Then we've gone as far as, and I think health and wellness is a vital part of how we show up as employers, right?

Ryan Niddel: Am I, am I saying I want my employees and my team to be healthy and be happy, or do I actually live that? So we do, we pay up to a hundred dollars per month for gym memberships for all of our employees. We provide two meals a day from healthy meal prep companies that they can come and eat, two meals a day that are shipped in. We have DEXA scans done for them. They get to work with nutritionists and dieticians too, to give them. Between that and that $1,250 a quarter in continuing education, we really want to create this environment where you're excited to come to work. You have fringe benefits that are way outside, what makes quote unquote sense to most people, and that you get the impression that we actually care about you.

Ryan Niddel: Because to me, if you feel like I care about you, because I generally do, but if you feel it, then you can actually feel it versus just hearing it and you're supported in growing as a person. I see that people just produce more. And so our, what we're doing now is shortening down the workday, kind of counterintuitive to what everybody else does.

Ryan Niddel: By quarter four of 2023, no one will be able to work more than six and a half hours a day, but it's deemed full-time work. So we're shaving things back more and more because there's been enough research now conducted that between five and a half and six and a half hour work days are kind of max productivity.

Ryan Niddel: Where, right. It's what Parkinson's principle things fill the time that you allot for them. And so as I'm monitoring people's, I'll call it efficiency, they're not efficient, right? They're involved in meetings they don't need to be involved in. They're wasting time at the water cooler. I'm like, hold on. Why won't you be, why would you spend more time with your family? I think you can get everything done by coming in at 10 and leaving at four. How great would that be if you didn't have to fight rush hour on either side? You gotta spend more time with your family. And it's, it's, to me, it's counterintuitive until you zoom back and you're like, it's not really counterintuitive. It's how it should be. Like, we've got into this hustle grind mentality, at least in the US that 12, 14, 16 hour days have to happen in order for you to be successful. And there might've been a season for that for us, but I think we're way past that season. Right. We're just a more and more mature company right now.

Sean Weisbrot: That sounds like all the things that I was hoping my startup would do, but we never got to a point where we could afford to do that. Which was a shame because I had written it into everyone's contracts that they would be getting these things. Once we got that next raise, once we, we raised that 5 million, that 10 million, whatever it was, and, we never got there, but, it was, it was there and I, and I sold people on that.

Sean Weisbrot: it's one of the reasons to join us because that's what I was working towards. And, so I'm, I'm glad to see that. And yeah, it, it sounds more like a European kind of socialist, method of work, but in, but in a good way because America does a great job of making socialism look like communism, which is ridiculous because they're not even close to one another.

Ryan Niddel: It's funny you share this, Sean, 'cause I have a saying inside of our business that it's, it's our responsibility to protect democracy, just not practice it. Where at some point as an, as an owner, it is a level of dictatorship. Like it's compiling information, but it's making decisions. And sometimes those decisions get made in the opposite manner that the team that supports me hopes the decisions get made, but they have to rally around it.

Ryan Niddel: And you look at socialism, just as you said, socialism is this beautiful construct, this beautiful idea. If everyone's contributing and taking equally, to me it's when there's disproportionate amounts of contribution versus versus receiving where. Because of the ecosystem that we've built. It's pretty, it's pretty balanced, right? People, people get to give and take from the system at a pretty equal level. I can't say that the CFO is taking more or less than the line worker. They're, they're just both maximizing their own level of productivity and efficiency. Creating a, a, a hybrid socialist environment that I think is a, at scale will be a really cool thing to see.

Ryan Niddel: But all this sounds like I'm, I'm sharing with you highlights. I'm not sharing with you. The frustration, the kicking and screaming, the people not understanding, the people waiting. Like we could hop on a call right now with, we could randomly call 20 employees and they're gonna all say, yeah, I'm waiting for the rug to be pulled out from underneath me.

Ryan Niddel: I'm waiting for all this stuff to be told, it's all fake because you also have the thing that most of our employees have worked for many other people who have promised 'em the world before and then decided the bottom line was more important than the world I promised him. It's like, man, I, I don't want to, I don't wanna run our business at that point, that we have to worry that much about the bottom line without worrying that much about the people, which is great in this margin rich environment we're in now.

Ryan Niddel: But also, make no mistake, our margin kept getting compressed. The money would have to come from somewhere, right? It's like where, where do you start cutting as an employer? Fringe benefits. Too much staff. All the extra pieces and parts, which just get natural to me at a certain point, which then has the opposite, of course, of the socialistic environment, that kind of wish to, that we aspire to, to live within.

Sean Weisbrot: Is there anything else we haven't talked about that you'd like to mention as we come to a close here?

Ryan Niddel: I could sit on my soapbox for another couple hours and share things that have been lessons. I don't know. There's something extra that I wish to share about business. To me, it's, it's more about life and that's. I've noticed inside of my trajectory that how I do one thing ends up being how I do most things, if not everything. And so if I find myself, you talk about those four legs, right? The market, marketing, operation, sales, and service. I also look at us as human beings as having those, those same four legs, right?

Ryan Niddel: There's a component to our spirituality, whatever that means to you, whether it's a deity or whatever it is that you adhere to. There's the body, the physical vessel we walk around in. There's the relationships in our life, right? Friends, family, partners, whatever you wanna look at. And there's this monetary side, and as entrepreneurs, it gets pretty easy to get folks on the money side and start looking around and saying, my quality of life is, is trash, right?

Ryan Niddel: I'm not taking care of my body the right way. My personal relationships are suffering. I don't know what I believe anymore from a, from a, a deity type of perspective. And what I found is if I try to keep those a little bit in alignment as they're all growing. It makes life more enjoyable to live. And that's really, to me, so much of what I've caught myself is this, this guy that, like I'm an A type personality.

Ryan Niddel: I wanna achieve everything. I wanna explore everything I wanna, I wanna see how far I can push the envelope in every capacity. It's what happens when I slow down for a minute. What happens when it's the opposite of push? What happens when I sit there for a second and say, man, what's, what's the highest version of Ryan doing right now? And if it's not what I'm doing, then it's my responsibility to get to that version really, really quickly. Quite often that version isn't 12 hour work days and coming down on somebody for not producing. It's showing empathy and compassion and understanding and realizing that, to me, most of, most of life, to me, is just a mirror of an internal state of reality.

Ryan Niddel: And so if things are in flux around me, it means something's probably in flux inside of me that I need to look at first before trying to knock down walls with my fist over and over again.

Sean Weisbrot: I learned living in Asia, that lesson, it took a few years where I used to yell basically if, like I, I asked for something from a bank, right? For example, like, like I lost my bank card and I needed another one. Oh, well, it'll be ready in 14 days. Well, I'm sorry, but I need to spend my money right now. You know? So I would get mad if, like I, I didn't get my way basically like, what? This is ridiculous. Why would you make people wait for it? Like, and then over time I started to realize like. Yelling at this person isn't gonna change the fact that they're just the person at the front of the bank who can't make that decision. That's the policy. They have no control over it. But if I'm sweet to them, maybe they know someone above them and maybe that person can give me a better answer or.

Sean Weisbrot: Or that person came to the event, whatever it is. So it took me a few years because I was so used to beingso, I came to China when I was very young. I was so used to the American way of life, things are very efficient and it requires a tremendous amount of patience and maturity to recognize that most other countries just. Aren't as efficient as America, and if you wanna live in those other places, you gotta just shut up and deal with it or find a smart way around it.

Ryan Niddel: What I'm hearing you say is if you're, if you're listening to Sean and I and you haven't traveled the world, you probably need to a little bit or you start seeing how the rest of the world operates, like going to Italy and see like. At 2:00 PM there is nothing happening. Like everybody's taking a break. They're, they're drinking, they're eating, they're having conversations. They might head back to work at four. It might be five. They might not head back at all. Like, it is just a whole different balance. And, and seeing that even if it's not a life you wish you adhere to, just to see how many ways different cultures operate in, like Italy's GDP. Per capita is, is still incredibly appropriate, right? It's not, they're not an impoverished state. They're not going backwards. They've figured out a way to make it work where part of what I'm going through right now is questioning, who's thinking, am I thinking? Like the thoughts that have made me a success, like whatever level of success I've achieved now, those same thoughts won't get me to the next level of success.

Ryan Niddel: I can't think harder. I can't work harder to get to the next place. I have to think differently and that's really a big shift for me. It's like reading another 30 books isn't gonna get me to this next place. It's reading one book 30 times to pull out the 20 or 30 incremental nuggets. And actually seeing them apply and change my thinking will help progress me that way.

Sean Weisbrot: And going to 30 different countries.

Ryan Niddel: That's exactly right.

Sean Weisbrot: Like Bali. Well, Bali's not a country, but yes. Because you were talking about Indonesia before, so I was thinking like, you, you were thinking what's the, the highest version of Ryan doing? It's not working harder. Yeah. It's sitting on a beach in Bali.

Ryan Niddel: Absolutely. It is. Feet back staring out knowing there's a manufacturing facility that could hop in a car and drive to or rickshaw perfectly. But then not, never, never stepping foot in there, having a video, having a screen on my phone where I can just confirm that things are happening.

Sean Weisbrot: Or just not having a phone.

Ryan Niddel: I love that you keep challenging me 'cause you're correct. But oddly enough, Sean, in this moment that doesn't speak to me right now, like I can see a version of myself that wants to live that way. It's just really far down the road. I feel like there's so much more to achieve. There's so much more to explore.

Ryan Niddel: There's so much more to see what I'm capable of, that feedback, no responsibility, like that is my seventh plane of hell right now. Would be that. That would be like. Pulling my hair out, going crazy with it, there's so much stuff I can do, so maybe you can help me work on that as I progress forward.

Sean Weisbrot: When I was younger, I used to travel through Asia for a month at a time, two months at a time where I wasn't doing business yet, and so I didn't have any work I could do at the time. So I would literally have a month of just nothing, just like actually having fun doing nothing. I tried like two days off in a row and I was like, what the hell am I doing with myself now?

Sean Weisbrot: Like now it's totally different. Now I can't take a month off. But, it was good. I remember those days fondly for sure. I