From building a solid foundation to navigating the challenges of scaling, George’s insights offer invaluable guidance for aspiring entrepreneurs and business leaders looking to achieve high growth and sustained success.
Key Takeaway
- Clearly distinguish between building a lifestyle business and aiming for a venture capital-backed startup.
- Conduct a thorough SWOT analysis and create a detailed five-year plan to guide your business strategy.
- Focus on customer acquisition and retention from day one to ensure sustained business growth.
- Stay updated on AI technologies and incorporate them into your business to stay competitive.
- Go beyond transactional e-commerce by providing exceptional customer service to build long-term loyalty.
- Understand that scaling a business requires different skills and sometimes different leadership than starting one.
- Use specific demographic and behavioral targeting to attract high-repeat clients and maximize marketing ROI.
- Invest in building a strong company culture and ensure consistent communication of values across the organization.
- Carefully consider the implications of taking venture capital, including the need for a clear exit strategy and additional board oversight.
- Maintain a healthy balance between work and personal life to ensure long-term success and mental well-being.
View Written Interview
Hey everybody, man, do I have an exciting episode for you today because I am going to be featuring a subject matter expert, but he also knows, let's say a lot of things about a lot of really important things. So there's not a lot of people who know a lot of stuff about a lot of stuff, but my next guest, George, he knows what he's doing. He is not only a managing partner at Red Rocket Ventures, but he's also CEO of a very interesting business called Restaurant Furniture Plus. And there's just gonna be a lot of really fun stuff that we're gonna talk about on this episode from acquisitions to how to grow your business to should you even be growing your business and are you in the right industry? So many fun things. So welcome George Deeb to the podcast. Super excited to have you, George.
Thank you, Samir. I appreciate the invite.
Would love to have you just kick things off and tell us a little bit about yourself and kind of what you're up to these days.
Yeah, happy to. I mean, I'm a serial entrepreneur. After an eight -year career in investment banking, I got bit by the entrepreneurial bug, and that led to becoming the CEO of a handful of different companies. Most of those are venture capital -backed, so I have a history in fundraising, I have a history in scaling businesses and selling those companies for good returns for our investors. When I'm not running my own businesses, I'm helping to consult others that need help and trying to figure it out, that I do under the Red Rock Adventures brand.
Those typically revolve around, you know, growth strategies. They don't know how to necessarily scale their revenues and they need a fresh set of eyes to come in and help them figure it out. So that's a little bit about me and I'm excited to kind of dig in here.
Yeah, same. Tell us a little bit about Restaurant Furniture Plus. What's unique about the business? What got you excited about it? We'd love to know more.
Yeah, I'll give a little bit of history there. The business was founded in 2012 by a couple entrepreneurs based in California. And they grew it from zero revenues to about two million in revenues between 2012 and 2018. And they didn't really know how to grow it from there. So they put the business up for sale. My partner and I had been looking for a business to buy. We looked at over 100 different e -commerce businesses. We knew we wanted e -commerce, but we didn't know exactly what was in e -commerce until we saw this one. And what we liked about Restaurant Furniture Plus was it was a B2B story. So we thought that'd be a little bit more easy to be defensible up against businesses like Amazon and other sites online where it's a much more competitive B2C market. So we like the B2B angle. We like the fact they were leaders in the space. They had a lot of traffic coming in from organic SEO. They had a good brand name. They had good reviews online.
I really liked the unit economics of the business. It was a high average order size and a low cost of customer acquisition. And we knew exactly what to do with this business in terms of how to sprinkle the fairy dust on it and start to scale up the revenues. And that's pretty much what we've done. I mean, it was aggressive Google marketing growth strategy. We're doing other things, but that's the primary thing we're doing.
And you know, our marketing budget has grown from zero to two million a year and our revenues have grown from two million to 20 million a year. And, you know, it's been a great story and we've got a terrific brand name in the market and we're perceived as a thought leader in our space.
That's awesome. That's killer. I'm curious because we actually, we even had the CEO of Flippa on this podcast. And for those of you who are listening to that episode, you gotta go listen to it. We even pulled up some listings on Flippa and broke it down, like certain things to look at and how to analyze the financials and all the different things, at least what they have on their platform, right?
I'm curious as you said you looked through like 100 businesses, right? As you were looking through those, I love what you said about average order value and all these other aspects which I definitely believe are important. Love what you said even like, hey, you found, hey, there's a little niche here, they got a great customer base, B2B is gonna be better for us than B2C. Were there other aspects that you analyzed and and and and maybe what I'm getting at more specifically is for other people who might be trying to do a similar thing Maybe they're doing a flip on maybe they're doing a private something. They're doing whatever right were you looking for gaps where you had Really like high skill sets and you knew that you could like you said kind of come in and sprinkle your fairy dust or Or was a little bit more of like the hey We're just gonna look for the perfect business and and and then we'll be able to make that happen, yeah, I'm curious just kind of, you know, for others out there who may be trying to do something similar. I've got a lot of friends myself that don't have any good great business ideas, but they're always like, I'd love to acquire, you know, whatever it is, you know, the local business or the online business or anything like that. I'm just curious at any learnings or anything that we can kind of, any of, yeah, your knowledge that we can share.
Yeah, that's a huge question and I'll do my best to answer it. So first, why did we acquire a business instead of building something from scratch? The first is because it is established, right? There's an existing revenue stream. There's an existing profit stream. The hardest part of doing a startup is, you know, you don't know if it's going to get the right product market fit. You know, what's the go -to -market strategy? Are customers actually going to gravitate towards this thing or not? And there's a lot of testing that you need to do in those early months or years of getting a brand new startup.
The fact that this business was already up and running for a six year period of time and had a loyal customer base with a high level of repeat sales and a high level of revenues that it was de -risked. Right. So the reason you go down the &A path is you're looking for a more sure fire successful story. That's certainly one way to do it is down the & A path. Now in terms of what you're looking for, I would say, you know, you want to make sure you're in a sizable industry. You know, so how large is the market you're serving?
How competitive is that market? In this particular case, there were not a lot of websites that were selling restaurant furniture online. It was relatively new in the e -commerce world and we like the idea of being a first mover in that market. So you got to look at your competition and kind of what you're up against. You got to look at the unit economics we talked about before. That basically means what's your average order size, what's your gross profit margin.
You know, what kind of return on ad spending or cost of customer acquisition are you dealing with to make sure the economics make sense so that when you actually go to scale it, you can actually get a good payback and return on that marketing investment. So, you know, we did a lot of homework on this business. We also, you know, we wanted to make sure we trusted the founders, right, that were these nice people. Did we trust them? Did we think we were getting sold some, you know, ridiculous story that wasn't credible? You know, they checked all the different boxes for us and, you know got us comfortable that we were making the right decision. And there's been no looking back. We've been very happy with it.
That's awesome. So I love a bunch of the points that you just made, because I think the team is super important as big as the business ideas and everything else, right? The team and the founders and everything like that. I think that's crucial when I mean, you've had successful exits at this point, right? Where you've had already learned from so much of that experience, which I definitely want to get to and touch a little bit on that, but do you feel like if someone is looking to potentially acquire a business or something like that or get into an existing business, do you think it's, because a little bit of what you're saying, I love the idea of even like franchises versus new startups in that sense, right? Because it's a little bit more, it's a little bit of what you alluded towards, right? There's a little bit more of a track record. You're more likely to succeed. It's why statistically speaking, someone opens a franchise versus a different type, you know, other type of business, like franchises will always win, right? And so do you feel like one of the major reasons, you know, for that success was of course kind of you've already successfully exited, you know what needs to happen in order to make that happen and, you know, alongside that, is that something where you feel, how do I ask this? Maybe, you know, is it, would you encourage kind of someone who's,maybe a little younger or something like that, or isn't, you know, isn't, you know, maybe, you know, an older generation that may have less experience to just go fail, go try something new and start it up and, and, and try to make that fail or, or, you know, or teeter along and then do that acquisition into something that's a little bit more proven. Or is it like, Hey, I've got this industry experience or you know, hey, the experience I've gotten from my day job or whatever, I feel confident enough to kind of run this business. I don't know if I'm asking that in the best way possible, but I hope that made sense.
Yeah, so there was a lot of questions in there. I'll try to answer them. What you're really talking about and part of your question is, does age matter for entrepreneurship? And in my belief, no, age itself doesn't matter. There are plenty of case studies where a 20 -year -old has had tremendous success or a 60 -year -old has had tremendous success. What matters is experience. And most likely, the 20 -year -old does not have the experience that the 60 -year -old has. So.
There's lots of lessons learned in those 40 years of difference that you're bringing to any new business initiative that you're doing. So in our case on Restaurant Furniture Plus, yes, we benefited from some of those years of experience. But if I was the 20 -year -old and I was looking for getting involved with the business again, I would almost prefer to go down the acquisition path because it's been de -risked. What they don't understand as a young entrepreneur.
Absolutely.
you've got a one in 10 chance of it actually being a huge hit. And if you could de -risk it and ensure that you're gonna have a future and a successful business and a good growth strategy from there, that's materially more valuable. I mean, I was looking at an article that only 90, or sorry, only 4 % of the businesses in the United States ever get larger than a million in revenues. Holy smokes, that means 96 % of businesses that are formed never get more than a million in revenue. So,
Hmm
you're trying to be building one of those scaling startups, you're going to have like going into battle with one arm tied behind your back as an inexperienced entrepreneur trying to figure out how to go into battle from scratch. You always want to surround yourself by experts or mentors or advisors or good board members or whatever it is to help you de -risk it and learn from people's past mistakes.
Yeah, man, that's so interesting. Do you have any advice of like red flags to look out for when you're looking towards some of those? Because even like I've analyzed a bunch of businesses and looked at things and maybe when you're lacking some of that experience to your point, right, of maybe you've already run a successful business or exited a successful business.
Yeah, are there certain red flags that you'd look for, right? Because I think sometimes the numbers look amazing, but we don't realize it just hit the ceiling or it's going to be next to impossible to be able to, right? Because you've had this exponential growth, which is incredible, and which all of us would obviously want if we were to acquire something. So yeah, are there certain red flags you feel like to look out for?
I feel there are. I mean, you got to know the right questions to ask during the due diligence process to make sure you don't make any mistakes and you do all the right analysis that needs to be done to make sure you're heading down the right direction. And you got to be really good at reading financial statements and knowing where there's a problem. If you see a growing debt balance or if you see declining profits or declining gross margins or whatever the metric is that the red flag is you gotta be really good at reading the numbers and knowing what's going on. There's usually a reason that a business is being sold and you wanna make sure that you get your arms around what that reason is. If the business has only been around for a year or two and they're selling, they're probably a trendy, fad business that's gonna come and go and they see the end of the road coming and they wanna get out before it's too late. But if you see an established business that's been around for 30 years and...
Their revenues have been consistent, their profits have been consistent. The CEO is a 65 -year -old that wants to retire and doesn't have any kids to hand the business off to. That's a much more reasonable business because there's a good exit plan there for that investor. And it's a reasonable story to kind of gravitate to. So it's a little bit of that kind of stuff.
Yeah, I know it makes sense. And it goes back to your earlier point of sort of trusting that founding team and whatnot, right? And yeah, I mean, you're alluding towards a couple of very important things that I think are super, super important. So, I mean, now you've built and led successful ventures, right? Across so many things, travel, media, now B2B e -commerce. What core growth principles have potentially remained constant across these industries?
I would say that the number one thing that an entrepreneur needs to focus on, which most of them are not very good at, are really the topics of this conversation we're having today. It's all about the marketing strategy. You know, the entrepreneur is so in love with their product. Look at all these bells and whistles and widgets and all the cool things this product can do. And they're very excited about the product. Well, that's great. Well, the product's never going to get sold unless you know how to sell it. And they got to put the energy around that sales and marketing plan.
So for us, that's making sure we're very clear on, OK, if we're going to be owning this company and kind of taking it to the next level, what are we exactly going to do to market this business? What channels are we going after? What are the marketing economics in those channels? Will we have a successful go -to -market strategy? What's the brand plan? What's the product plan? All the things that come around marketing. And most importantly, do I have it properly funded?
Most entrepreneurs go to buy a business and they have enough capital to buy the product or the technology or whatever it is that they're buying that they don't have enough money left to market the product. And it's that marketing capital that's the most important capital that ever gets put into the business because without it you don't have a way to get your product to market to have consumers actually identify it and purchase it. So yeah, a lot of energy around the marketing plan.
Makes sense, yeah, I mean, the livelihood, right, of most businesses, most important aspect. You know, but before we hit record, we were kind of talking about a little bit of that, right, with on the marketing side, but then also sort of how these brands can kind of differentiate themselves and, you know, and what to look for. You even kind of just mentioned like, hey, some of these businesses that are not been around for a long time can kind of be a trendy, fad business or something like that, right?
You know, I'm curious in your eyes, you know, maybe as a business, you were thinking about acquiring, maybe as a business, you were thinking about consulting with or, or, or investing in or, or anything like that. Right. It's, you know, if someone was thinking about maybe starting a business or, or, or coming out with someone and they're trying to think about, you know, what to put their time and effort into, maybe they have a good idea for a product or something like that. Right. But they, you know, they haven't fully vetted it yet or anything like that. you know, yeah. Is there any advice that you'd have? for them in trying to sort of start that business or come up with that idea.
Yeah, I think there's a couple of things. I think the first question they have to answer for themselves is why are they launching this business? And is it going to be a lifestyle business that is just going to be for them and their family and it's a way to make some income and pay their bills? Or are you trying to build a venture capital -backed startup business that's going to be the next billion dollar unicorn? Because those go -to -market strategies, those funding strategies, those corporate setups are completely different plans. So that's the first thing you've got to figure out is what are you trying to do?
And why you're trying to do it. Then the second thing you got to do is, not many entrepreneurs take the time to actually build a business plan. And that means, well, okay, we're going to do a SWOT analysis on this space. We're going to figure out what our strengths of this product are, what the weaknesses are, what are the opportunities for us to take it to the next level, any threats in the market we need to be aware of. Okay, now that we've done a little bit of external work, now let's take a look at, let's build a five -year plan.
It won't be perfect, we're gonna make lots of mistakes. It isn't exactly gonna roll out the way your plan says, but at least put some discipline in place to figure out, okay, well, how are my revenues gonna grow? How much money do I need in marketing to drive those revenues or sales if it's a sales team driven business? Most B2C companies are marketing driven, most B2B businesses are sales driven. And knowing that and putting the right go -to -market plan in place. So.
Do your homework would be the number one thing, and do not spend penny one until you've done your homework.
I love that. And I love that you're started with goals because I think that is so true. And I even find entrepreneurs and friends of mine that when you don't have extreme clarity on that, it's like you're running a race and you don't even know where it ends, right? You don't know if you're running a mile marathon or a hundred mile marathon. And then, so then what's the point, right? And I think a lot of people's almost like stress and anxiety even sometimes can stem out of that because then they're sort of focusing on the wrong things, right? Maybe they're focusing on, I haven't grown enough, but it's like, yeah, but did you want the lifestyle business instead? And if so, are you living that? Right, like, yeah, I think there's so many aspects to that that are dead on that I appreciate you kind of pointing that out as the first thing.
I'm, so you've written an incredible book, 101 Startup Lessons, an entrepreneur's handbook. What motivated you to write that?
Well, you know, in the preamble to that book, it talks about, you know, giving back to the startup ecosystem that has treated me so well over the years. You know, as I was building my companies, I was surrounded by great advisors and investors and, you know, other entrepreneurs that were helping me, you know, pave the path. So this was my little way to give back to the startup community, share all my learnings, document them down. They're, you know, they're kind of repeatable lessons that apply to most businesses evergreen. They sound like these ideas go stale. So you know, giving those words into the head of an entrepreneur that's about ready to figure out is about the best thing I could give them so they don't repeat the same mistakes that I made.
I love it and I highly recommend the book, it's excellent. And so now you've exited companies, you're growing so quickly on the restaurant furniture plus. Many startups really are.
You know, they face sort of that hurdle transitioning from that early stage growth into scaling and especially operationally and having the scaling operations. What are some of the biggest challenges companies encountered you feel like at that stage and, and you know, do you have any tips or, or, or, you know, any feedback for them?
This is probably one of the most important questions you're going to ask today because the entrepreneur that founds a business is not always the right CEO to scale the business. The skill sets are very, very different. And some entrepreneurs can make the pivot. Let's say the entrepreneur is responsible for revenues 0 to 10 million, but the scaling CEO is going to take it from 10 million to 50 million. It's a completely different playbook.
Right? I mean, when you're zero to 10 million, yeah, you got to know how to do some good Google marketing or social media on Facebook advertising or whatever it is to kind of get your product off the ground and into the market. But once you've tapped out on all those things and now you really got to do the hard work and take it from 10 million to 50, I don't know, do you have experience with mergers and acquisitions? Do you have experience with international expansion? Do you have experience with all the different...
cultural issues, the employee retention and training issues that come at scale. It's just a different, you're running a different organization when you're over 10 million in size. And some entrepreneurs that start their businesses are really good at making that pivot and some of them aren't. And you got to be honest with yourself. One, you got to know what the skill sets are that are required for success for that next stage of your growth. And either you need to have those skill sets yourself, congratulations, keep going. Or if you don't,
You need to surround yourself by mentors that do that can help you navigate the pitfalls that they had to live through in scaling their businesses. Or more practically, you hand the keys off to a new CEO and let that new experienced CEO that has a repeated history of taking a 10 million revenue company and building a 50 million revenue company and let him or her do it all over again. And you don't have to be in the CEO chair to ride that economic return. You're still going to be the owner.
You're still going to be on the board of directors guiding them, but you don't have to be the one doing the work when it gets to that size.
Yeah, I think it's hard for a lot of people sometimes when they're at that seat, right? Cause then they were the ones who, who, who potentially got it there, right? Or one of the main drivers, their personal identity, a lot of us, right? Our personal identities are sometimes sort of tied to the business or tied to our, our, our title or anything like that. Right. We're very proud of that. And to let that go is an emotional roller coaster. Sometimes you and I have both been there, so we both know. Right. And, and so then, but then it's, it's,
But to your point, if you can let go of that and you do put the ego, if you can reduce your ego enough to kind of set that aside, then yeah, then you actually kind of get to see your baby grow that much more. And if you can look at it almost like a 20 ,000 foot view, you can see, help that CEO transition correctly, help them grow the business, play to your strengths, right? And whatever those look like.
I mean, it's a very, very interesting point that you're making. I mean, one, I don't remember who it was, but I was listening to another podcast and the person who was being interviewed was saying he felt like it came in ones and threes. So like one million, three million, 10 million, 30 million, a hundred million, right, et cetera. And so he was saying that he felt like the team, right, the team that got you to one million is not gonna be the same team that gets you to three million and et cetera, et cetera.
Do you feel like that can end up playing a big role as well, right? Where like, hey, maybe there's a couple C level changes that need to happen or, you know, or maybe there's whatever it is, right? Or strategic partners or et cetera, et cetera. You think that can play just as big of a role?
Yeah, I don't think there's a single right answer here. I think every situation has its own set of inputs here. But in terms of, you know, it's their baby. It is my baby. It's I'm the brand. I'm the business. That's part of the problem. Right. You're using the word I and me too much. Right. When you're in a big company, it's not about I and me. It's about us and we. Right. And they got to make that pivot. And you know, the biggest CEO responsibility change that happens between 1 to 10 and from 10 to 50 is the 1 to 10 CEO is very much focused internally inside the company, right? They're living and breathing all the details on the product development or the details of the marketing decisions or the details of whatever it is that everybody's doing. And they've got their fingers in everybody's pie and they've got a very loud voice in getting to the business to that level. That was partially required.
And you need to have that level of ownership to have the success. But part of it is because they didn't know any better. And if they were actually hiring smart team members, if they could trust to make their own decisions and empower them to put them in the right direction, they would have equal amount of success. But that's sort of an internal focus of that young stage business. As you move from 10 to 50, the role of the CEO is nothing to do inside the walls of the company. It has everything to do with outside the walls of the company. What am I doing to...
Look for external partners and merges acquisitions. What am I doing to keep my finger on the pulse of competition? What am I doing to you know reach out to international partners to open up international satellite offices or international expansion or whatever it is so, you know Not everybody one has the skill sets for that or the appetite for that So you just got to understand that the role is different figure out whether or not that's the job that you're gonna want to do or not If you think you can do it successfully and get out of the way of your team, hire smart and let them do their thing, then great, keep going. But if you can't, get out of their way because you're gonna become the anchor that keeps the business from succeeding.
Love that. Great, great, great advice. And I'm curious on early, I've seen a lot of times early stage teams often are very tight knit, right? How do you navigate then building and integrating new talent as the company scales?
That's an excellent question. So one, you never stop investing in your culture, right? I mean, culture set from day one, it's a top down thing. And you got to be the one that defines it and sets the direction of kind of where the culture of the company wants to be. And you as the CEO need to make sure that that is getting clearly communicated to the team below you. It's their job to make sure it's getting clearly communicated to the team below them.
So as this company scales from one employee to 10 employees to 50 employees to 100 employees, everyone along the way has got that same DNA and the company is all beating to the same drum and marching in the same direction. So it's a very, very important thing to do. It's not easy to do. I mean, it's hard to do. You mentioned as you're scaling, it's hard to get that actually to resonate in the newer employees. But part of the success of scaling is making sure that it happens. And not only that it happens, it happens at scale because, these companies that are getting bigger, if you're going from 10 million to 50 million in revenue, you're going from 20 employees to 100 employees. And now you're hiring 20 or 30 new employees in each chunk of new hires. That's a lot of people to keep motivated and beating to the same drum. So make sure everything's documented and make sure there's good solid training program. And most importantly, live it, learn it. Make sure that you're behaving the way you want the culture to actually behave.
yeah
Yeah, I love that. I love that. Can you share maybe some practical strategies entrepreneurs can use to sort of ensure that smooth transition from that early stage growth to scaling?
Yeah, I think at the end of the day, number one is just make sure it's been defined and documented so that when new employees are coming into the fold and they're getting their new employee handbook, they're learning about, okay, here's our company values and here's our mission statement, here's our vision statement, here's what we're working towards building, and they know right out of the gate, high level directionally kind of where they're heading. And then in all the company meetings, you know, as you're having either an all company meeting once a quarter or you're having your department meetings once a week, you got to make sure that those key things that are built into the values of the business are being demonstrated in the actions of the company. And maybe you have some key KPIs around those key, you know, culture points to make sure that we're measuring how we're doing. And, you know, one of the key measures of culture is, you know, what's the turnover rate? Are you losing your employees? If you have a revolving door on talent, you most likely have a problem that you need to fix. And sometimes that problem is you. And you got to understand when you're getting in the way and when maybe you're holding too tight of a grip on the business.
Yeah, no, I agree. And I think also paying really close attention to like who those players are, because if your B players are the ones that are sticking around, but your A players are leaving, right? There's fundamentally, you know, a different type of issue than if the B players are leaving, right? Like it just, it's so different, right? And I agree with you on analyzing that and looking at that and figuring out, hey, maybe we're not growing fast enough for the eight players and that's the problem, right? And they want growth opportunities and they wanna be able to look out for that. But maybe you're not utilizing them enough that they actually could help you with that growth and right, trusting your people and you're hiring them for a reason, right? And they should be a better expert in what you hired them to do than you are. And so are you learning from them, right? And their knowledge and experience to then, you know, to just have that be like that revolving door of creativity and flourishing and everything else, right, to just kind of scale the business.
I mean, what you're talking about is you don't want to be the smartest guy in the room. Some entrepreneurs have to be the smartest in the room. The only person, the only opinion that matters in the room is theirs, and they're going to talk 90 % of the time. Well, that's a disaster. That's a cultural disaster waiting to happen. What you really need to do is hire the best talent you could possibly hire. I hope they're materially smarter than you are, especially in their domain. Point them in the right direction.
Motivate them, encourage them, and let them do their job and get out of their way. It's a very, very important distinction that many entrepreneurs feel they have to control everything and then they end up demotivating everybody and nobody wants to work for them.
Yeah, I don't know. It makes perfect sense. I think there was one I heard with Jeff Bezos where he always likes to be the last person to speak in a meeting, right? Because then...
Well, it's important. I try to live by the rule of in a company meeting, you know, don't speak more than 10 % of the time. The ideas that matter are the ones that are the people in the trenches. They're the ones that are closest to it. They're going to have the best ideas. And you want to listen to them and incorporate a lot of their ideas into the plan because when they hear their ideas being listened to and actioned upon, they are going to love you and they're going to love the company and they're building loyalty and long term traction. And now you're not dealing with a revolving door, they're never going to leave the company because they feel heard and listened to. So it's a very, very important part of the distinction.
Yeah, yeah, it's so true. It's so true. I don't think we've had any episode where we haven't talked about either customer acquisition or retention or improving customer lifetime value or what have you, right? It's an important topic that we have pretty much with everybody. But I'm really curious, especially in your perspective and especially even what you've done with Restaurant Furniture Plus and other businesses.
Where do you feel, and maybe specifically in the e -commerce side, but doesn't have to be, at what stage of growth should entrepreneurs prioritize either retention strategies or customer acquisition strategies?
Yeah, I don't think it's an either or. I think you want to be leaning into both all the time. I mean, once you've acquired your first customer on the day one of opening up your business, you want that customer to buy from you on day two and day three as well. Right. So you need to make sure you got proper plans in place for both customer acquisition and customer retention always. Right. So that I don't think is a decision point. I think it's just got to build your process. So it's actually happening. So.
For me on the customer acquisition side, great, we just brought them in from some Google pay -per -click advertising. And now that they're part of the family, we want to hit them with our email newsletter and make sure they're hearing from them once a month. And if you're a sales driven business, your sales person's got to be talking to them once a month or once a quarter, whatever the right frequency is, and hug these people because acquiring customers is very expensive. Retaining customers is not, it's much less expensive. And so how you drive the profit of a company, especially in the world of digital advertising, where in most industries, you're going to be lucky to break even on your first purchase, right? So it's all about those repeat sales and hopefully your product lend itself well to high frequency, high repeat purchase rates. But if it doesn't, you got to figure out how to get those repeat customers buying from you in a high volume because, you know, in our case with the restaurant furniture business, 40 % of our business is repeat customers.
I'm always impressed with that number for this particular business because furniture has a six year life. That means they're not going to need new furniture in that restaurant for another six years. So for 40 % of our clients to be buying from us year after year, that tells you that they like the service, they like the people, they're going to come back to you for everything they need, they need replacements, they're going to open up a new location, they're going to tell their friends, whatever it is, that's where you really want to lean into.
Mm -hmm.
I'd love to dig into that more too, specifically in your business, because I think there's a couple, you know, there's a couple things that I'm really curious on. One, you know, the first one is, so as you're kind of looking at your existing customer base and prioritizing maybe outreach or any kind of upsell or sales opportunity or anything like that, is that something that you feel like, you know, being proactive about?
is helpful or you just said, right, the life cycle is kind of several years, but is there kind of like a perfect size where you feel like, yeah, okay, once we notice that they spend this much with us, hey, they're probably growing or they might open a new location or, right, not necessarily the specifics of who that is or what that size is, but more so like.
If you're doing that, how did you come up with that data or how did you try to analyze some of those numbers? Right? Because I'm sure as you bring out a new customer, there's certain that some are just worth more than others. Right? If you get a franchise and then that franchise can go into others or whatever it is. Right? I'm sure there's plenty of, you know, I'm sure you've got big and small clients. I can only imagine the gap between them. So, you know, do you have your sales team kind of prioritizing those accordingly? And then how did you kind of come up?
Yeah, for sure.
with those data points.
Yeah, it's a very insightful question. So in our world, in the world of Google, someone going to Google and typing in restaurant furniture, you're going to get the good, the bad, and the ugly. You're going to get the single location Manhattan pizzeria that you're only going to be a one and done transaction and you're never going to see them again. Or you're going to get the chain that's growing and they're adding 100 units over the next five years.
and you're gonna get repeat sales in every single month as they're adding in two units this month and two units the month after and things like that. So we learned quickly that we wanted to laser focus our marketing efforts around those high repeat client potential categories. So for us, it was the small chains, the chains that had five to 50 units that are gonna add a couple units a year. We didn't think the big chains really...
would embrace our model because we're a heavy customer service first model where a lot of the services we're bringing the medium sized companies, these big enterprise scale chains have already got those services built into their home offices. So it was the small chains for us. So we laser focused our marketing efforts around the small chains. And it was around middlemen like an interior designer or an architect that's doing work on behalf for multiple clients.
So you worked with them on project number one this year, we're working on project number two next year, project number three the year after that. All different brands, all different clients, but that agency is your relationship and they're the ones that are helping you to drive those repeat sales.
Yeah, no, it makes perfect sense. Was there then, you know, did you use maybe the messaging? Did you use sort of the marketing strategy? Like how then did you try to make sure that you are focusing on that more ideal customer profile than just casting that super wide net? Or did you not really even need to necessarily focus on that because it kind of, the market kind of autocorrects itself for you?
I think in the early years, it was pretty much we were going after everybody just to get the leads and the revenues and the transactions coming in. From there, we got learnings. And then once we know what we were looking for, then you could start to change your Google settings in a way where you're leaning into more of those behaviors that you're looking for. So, you know, and what could those settings be? Well, maybe it was the time of day that there's shopping during the day because, you know the the bigger businesses are working in their nine to five hours and the small guys are busy doing their work during that five or or maybe it was the targeting by geography and where they are and we wanted to go after the big cities. Yeah the people that are opening multiple units in a New York or Florida or Texas are bigger companies bigger opportunities than maybe that single location in South Dakota.
Stuff like that. You can also do demographic and behavioral and psychographic targeting within Google and some of their Google advertisements. So we did a lot of sharpening the pencil to make sure we were bringing in the right type of buyer.
Yeah, it makes sense. Are you also doing that on the SEO side? Cause I know you said SEO has been a really strong driver. You get a lot of organic traffic. Are you really kind of isolating? Okay, Hey, here's the issues that we know our ideal customer profile has, and they may be searching for and trying to kind of come up with content surrounding that. Or is it more so just supporting those or is it just an effort to become a thought leader and just promote kind of those top keywords that you know?
hey, these are the top keywords people are gonna be searching for, more customer acquisition focused type of keywords versus customer research or just kind of looking to read some blog articles or something kind of content.
Yeah, SEO is much harder to control than the pay -per -click marketing. So, you know, you have to be a little bit more flexible on your SEO efforts versus your pay -per -click efforts. You could do things like the articles that you're writing and the blog posts that you're putting up on your website. The topics that you select on those can be more tailored towards a chain than it could be towards an independent. So, yeah, you could get some of that targeting from some of the articles you're writing.
But it's harder to get Google to make a distinction on where these backlinks are coming from and making the importance on how high on the research results pages they're going to put you.
Yeah, no, it makes sense, makes sense. Do you find that you have certain like hero products or some sort of average order value or something that you then know is going to turn into a really great customer or is that maybe not necessarily so much the case because hey, if they get some furniture off of us, they're gonna be delighted by our level of service or price or something like that.
Yeah, it can be that. I mean, you have customers that, you know, if they're spending $10 ,000 or more on a transaction, they're most likely retrofitting a whole new facility, either a remodel or a brand new location. And if they're spending $1 ,000, they're probably just replacing a few pieces. The question is, the big companies might be doing a replacement or the small companies might be doing a replacement. It's hard to get the target based on average order alone.
But once we get a sense to kind of who the customer is and what they are, we assign them to a dedicated project manager. We have what we call our white glove list of clients that have spent more than $10 ,000 a year with us. We put them into a repeat marketing cycle, a repeat sales cycle to make sure that they're hearing from us at least once a month. And any opportunity they need, we want to be the first of mind that they called for those extra needs as they happen over time. So.
We put those processes in place to help make sure we were driving repeat sales and appears to be working.
Yeah, are there any things that you're doing, not to help your competitors, but more so to help other entrepreneurs out there and other business owners, are there any things that you're doing to nurture that relationship over that timeframe so that way they don't forget maybe five years from now when they do need to go replace all their chairs or their tables or whatever it is?
Well, it's being in the right place at the right time. If the product really has a six year life, that means over the next six years, we need to be on top of them. And when the time is right, when they decide they need a refresh, maybe it's six years, maybe it's a little early, it came in four years, or maybe it's late at eight years, whenever it comes, it's gonna come. And we've got to make sure that we're constantly marketing to them and being there when they need it. So it's the frequency. It's not just one and done and talk to them once a year.
is talk to them once a month, they won't need you once a month, which means that you need to be delivering them content that's valuable to them once a month that keeps them engaged in your list, talking about some interesting articles or trends in the industry, or has nothing to do with furniture, just has something to do that's important to them as a restaurant, so that they want to keep those emails coming in so that when they are ready to purchase and they have that next need, you're in the right place at the right time.
Yeah, that is so important and I don't care. I literally do not, I can't think of a business model that that's not important. Now we all have different customer life cycles, right, and how long that lasts. And there's different ways that you can do that. Like you said, content. Maybe your customers are huge and you wanna actually have just customer relationships and have someone just follow up with them over the phone just to build rapport with them or share some information with them or, you know, or maybe your customer really say like three months or six months. And so you gotta be much more specific and catered to adding a lot of value in a shorter span of time and then trying to get the repeat purchase at that point, right? But I also appreciate that you're also realizing, hey, you're in this for the long game, right? No matter what your goals are for the business, obviously it's to grow, but whether it's to be acquired or grow, whatever it is, you're still thinking long -term no matter what. You're like, hey, if I get a customer today,
I've got a surprise and delight them for the next six years so they come back. And so often, unfortunately, I see so many, especially on the e -comm side, I understand why, but it's so short -sighted sometimes, right? I'm just kind of like, they're only thinking about it in the next six months or 12 months and nothing else, right? Where you even said it in the beginning, you gotta put your five -year plan, it's not gonna be perfect, but you gotta put that in place. And so, A, I really appreciate you saying that, but then, B, I'm just trying to also push that point a little bit further that you really do need to be thinking of that long -term growth and what that looks like and what is it, and yeah, how do you continue to nurture those customers over the long haul, even if you are a one -time customer? I think this was a really important one that we've even hit home with a few of our clients that were one -time purchases and you never buy from them ever again right, sort of $1 ,600 electric skateboard. You're not really gonna buy another one, but if you can surprise and delight them through the net, right, you're gonna ensure that they actually use that thing. You're gonna ensure that they become advocates of your brand. There's so many other pieces to it, right?
The possible order monster comes from that for sure. But to get that long -term loyalty, you really got to wall them up front in the first transaction. The internet is our primary marketing channel, and most e -commerce businesses are designed for putting products in your cart, checking out the cart, swiping the credit card, and you're done. We do everything humanly possible for that not to happen. We do not want them to run through a normal e -commerce experience.
We want them to pick up the phone and call us. We want them to ask us questions. We want to serve them. We want to prove our worth. We want to coach them to the right product strategies and the right vendor decisions and the right shipping optimization so they're not overpaying for shipping and putting out fires when something happens and transit and product gets damaged and we will deal with the claims so they don't have to. And really hug them and wow them and impress them during that purchase because...
Who in the customer service world and the e -commerce world is doing that today. If you call our competitors, I sure hope you have a SKU number and a quantity number, because that's about as far as that call center agent's gonna be able to take it. And if you have any questions and need any help, you're pretty much on your own. And we take the completely opposite approach. We wanna come across as the experts, we wanna be an extension of their in -house procurement department. We want them to look at us as a part of their team. And they can count on us in good times and in bad.
Especially in the bad. When something goes wrong, we're gonna jump on that and we're gonna solve it. And there, you know, I always said you're always gonna gain two new customers when something goes well, from the positive word of mouth. You're gonna lose 10 customers when something goes bad. But if you can take a bad and turn it into a good, that will spread like wildfire that you will not believe what this company did for us and turn a bad situation into a good situation and they will love that more than anything else.
Hmm.
No, I love that you're pointing that out because you know, I understand right, especially in the e -commerce space of your transaction, your average order value isn't that high. You kind of look at things more transactionally than as you know, actual customers kind of a thing. But I mean, you're still, you're still hitting so many important pieces that I still feel like no matter what size you are, do ring true or even what size your customer or your order value or anything like that is still really rings true because.
Even if you do sell like a $20 doodad, which, you know, hopefully there's opportunity for you to upsell them and create a lot more value to them than just that $20 doodad. But I do feel like it's so important to then take that into consideration. And so often, right, we, especially in e -comm, like we're so hesitant to even pick up the phone and why would a customer is going to be so angry if I call them, right? Or something like that, right? But like if someone, if,
If you're usually a $50 order and someone just made like a thousand dollar order and you call them and you just say like, hey, I'm the CMO or I'm the CEO or I'm the owner or I'm the whoever, I'm even a customer service rep. It doesn't matter. I just wanted to A, thank you for your order, B, like, you know, just, you know, what brought you to whatever it is. Like most people are willing if they answer the phone, they're going to be, you know, they're more than willing to kind of share some insights and those insights that you can even gain from that become so valuable into how do you get more of those types of customers, right? Because those are the ones that you want, those soulmate customers that spend the most and are loyal to you and come back to you and sing your praises and all those types of things. But like so often I find so many business owners avoid that.
Yeah, well, it's very important to actually get them to pick up the phone because we've learned that average transaction size is three times bigger when they pick up the phone. So if you would like to triple your revenues, get them on the phone. Because if they're calling me for a table, why be stupid not to ask them, do they need chairs? Do you need stools? Do you need a booth? Do you have other locations that you're planning on retrofitting?
So our sales team has done a really, really spectacular job of taking that $2 ,000 initial caller and upselling them into a $6 ,000 buyer.
Yeah, I love that. I'm curious, especially with your experience, there's always kind of this debate, which I understand why and I know the answer is very much so it depends, but there's this debate between kind of bootstrapping and fundraising. And I'm curious, how do you advise entrepreneurs on choosing the right path for their business?
Well, I mean, bootstrapping to me is sort of the capital raising required prior to going out and doing a regular venture capital raise. And that's all the things that all of us know how to do as good entrepreneurs, right? We're stretching our credit cards, or we're stretching our home equity loans, or we're doing whatever we can to kind of source capital from wherever we can source it, talking to our friends and family, or whatever we got to do to kind of get the business off the ground. And then when you go down the venture capital path, I think...
Not all businesses are made for venture capital. That's number one. You gotta make sure that you really have a venture capital friendly story before you even pitch it and knowing what those venture capitalists are looking for. And even if you do have a venture capital friendly business, do you wanna take it? Because you are now signing up a five to seven year horizon where that investor needs to get an exit strategy. And...
I've been forced to sell companies in the past to get our investors in an exit that I didn't want to sell. My first startup, iExplorer, was an adventure travel company. I'd probably still be running that business today. I loved it so much. But I had to get an exit for my investors, and we had to sell it to a big company that wanted to buy it so that they could get their cash out. So not everybody thinks about that. They just think, I need money, I need money, give me the money. And the reality is, OK, well, that money comes with it.
Yep. Yeah, but I want my ROI.
Now that money now comes at a cost and you got to be prepared to have an additional voice at the boardroom. You got to be prepared to get the business teed up for a sale, you know, five years from now and you got to be perfectly happy with that exit and not look over your shoulder wishing it hadn't happened.
Yeah, no, really great advice. And so, okay, maybe I've identified that venture capital is in my sights, and I do see that five -year plan in order to exit or IPO or whatever it is. Now, do you have any tips for those kind of early stage founders that are, maybe how they could cultivate those relationships with some VCs, right, who might be a good fit for their company?
Yeah, for sure. First and foremost, understand an adventure capitalist and how they work and what they're looking for and do your homework before you actually show up. So, for example, know that a venture capitalist is going to see a thousand business plans a year. And if you're lucky, they're going to invest in ten of them. They're going to pick their favorite ten out of a thousand. So, the odds are not in your favor before you even go in. So, you've got to really have something outstanding that's gonna break through the clutter and really get their attention. So what is outstanding? What's gonna break through the clutter? Something that's gonna easily show them a path to at least a 10 times return on their invested capital within a five year period of time. And it's gotta be a sizable business, right? They're not gonna help you grow from a million to 10 million. They wanna know how you're gonna go from a million to 100 million and beyond, right? Is this industry large enough to support the next?
Google or the next Uber or the next AI invention or whatever it is. So just know how the investor thinks. They want to, they're in the business of getting a high return on their investment. They all have specific areas of focus. So do not pitch them if your industry is not what they want to focus on. If you're in the e -commerce world and they focus on manufacturing, you're pitching to the wrong guy. So you want to make sure that he invests in e -commerce. Two, he invests in your stage of e -commerce. Because somebody that invests in a million dollar e -commerce business is not the same investor that's investing in a hundred million dollar e -commerce business. So the industries and the stage of growth are two really important drivers you gotta do your homework on for that particular firm before you actually pitch them.
Love that, yeah, no, super great advice. I'm curious now, just based on your background, you seem like a world traveler and you're first in your original business, so all right, so I'm just safe to assume. I'm curious, as a successful entrepreneur, with a demanding schedule, what advice do you have for maintaining a healthy work -life balance?
I think it's critical. I mean, you have to work hard and play hard. You can't, you know, all work and no play makes George a dull boy, I guess. So you gotta keep your mental sanity. If all you're doing is working and you're burning the hours from, you know, nine in the morning to midnight every night, and you're not spending time with your friends and family, and you're not getting out and, you know, recharging the batteries while you're on vacation, you're not doing it right.
Now, I'm not saying you don't need to work hard because it takes a lot of hard work for these startups to be successful, but you gotta make sure you got the good mental health in place for you to be effective at what you're doing. And it's been always important to me to make sure I'm taking my vacations and spending time with my family and that's equally important. And the older you get, the more efficient you're gonna get in terms of, I've done this hundred times in my past. I know how to do this. A project that used to take me a day, I could probably do in an hour as an older executive that's already done it several times before. So, you know, with experience will come efficiencies and hopefully some more vacations.
Yeah, heck yeah, I love it. Second to last question, curious on the AI side, right? Everyone should be using it and incorporating it, we know this. So if you are, what's the best use of AI you're doing right now at either Red Rock Adventures or for the Restaurant Furniture Plus that you're the most excited about?
Let me answer more broadly in terms of AI I've seen in terms of stuff that's really got my attention because it goes beyond the walls of Red Rocket. If you're not thinking about AI and you're not investing in AI and you're not really embracing AI today, you're going to get disintermediated pretty fast. This is one of those technologies which is next generational and it's going to completely reinvent everything and anything you could possibly think about.
So make sure you're employing those tools into your own businesses and your own product designs or whatever it is because your customers will be looking for those solutions and if you're not providing them, some competitor of yours will be and you got to make sure you're employing those. That's number one. Number two, the AI that has my attention the most are the ones that are the most disruptive. So for example, I was playing with ChatGPT the other day and I was thinking of it as a travel agent and I was putting in some of the most complex questions that I could ask a travel agent that I said, there's no possible way an AI technology could pull off the answer to this question. And, you know, because I was working with a startup that was trying to launch an AI in the travel space. And my reaction on the back end was, holy crap, it answered every single one of these questions. And it's, honestly, it's a Google killer. It's going to change the way people think about search.
Sure.
And you're gonna have information at your fingertips at a much deeper level than you've ever had it before. And I'll use this example. In the old ways of buying travel, you had to have a destination in mind, you had to have a date in mind, you had to have maybe an itinerary or an activity in mind that you wanted to do. And that was pretty much how most of the travel engines work, whether you're purchasing your airfare, your car rental, or a tour, or whatever it is. well I threw at things like, I'm a Taylor Swift fan and I want to go see Taylor Swift in Europe and what is the cheapest market for me to travel to starting in Detroit, Michigan and combining the air, the car, the hotel, the concert tickets, everything into one price, coach me to the right answer. And I hit enter, I go, there's no way this is going to figure this out. And about 10 seconds later, here's the answer.
No!
And it knew all the price of the airfare, it knew all the price of the hotels, it coached me to the right answer, and I was just completely in amazement of what these technologies are doing now. So, however we think businesses have been built and have been run to date is old school, and we all need to educate ourselves on what is new school, because new school is where we need to be focused.
Yeah, yeah, and how do you, not only how do you incorporate it, but I think you're even hitting the point of how do I show up in it too, right? I mean, I think that's when, of course, every customer that comes, every client that comes our way, or prospective client comes our way to Fetch and Funnel, we're always gonna ask them how they heard about us, or where they came from kind of thing. And it's the biggest compliment when they say, ChatGPT recommended you as the best marketing agency. Like, okay, great. That's the best compliment we could get, so yeah, it's also how do you show up, right? If I go in there and I say, hey, well, I need new furniture for my restaurant, who should I go with? Right? And then, of course, you want Restaurant Furniture Plus to show up, right? And so...
Digital marketer that is the scariest thing in the world. We have been doing the Google game for 20 years and we know it inside and out and we can control it. Right. Or quote unquote control it. These AI agents are all new. They all work differently and they don't even have advertising around the perimeter. So at least yet. And you know so there's no way to get your paper click into the resolve. And how are we going to change this random AI technology that we even exist and.
Absolutely. That's right. That's right.
I don't know how they're indexing websites on the internet or how they even get the data into their data architecture. We don't know any of this stuff. So if there's this mass evolution from Google to chat GPT and we're not prepared for it and you're Google dependent today, you could lose all your revenues in a snap of a finger.
Yeah, no, absolutely, absolutely. All right, on that shocking moment, last question, George, any book recommendations, anything either that's really influenced you or changed your life or career or anything that you've been reading lately that you recommend?
let's see on the reading front. I would say, I mean, I've been reading a lot of these books about AI and how the evolution is going. No particular book comes to mind that I would recommend, but just in general, that category, just to educate yourself on what is really happening and how do these technologies work and what can you do about it, both from a product development standpoint and from a marketer standpoint and how do you get around it and learn those different things. So,
I would educate yourself as much as you can about these newer technologies because they are not only the future, they are the today. And most of us don't know anything about how they work or how to manipulate them or optimize them or kind of use them to your advantage.
No, yeah, no, absolutely. I really appreciate that. George, man, this has been a great episode. I know people have not had enough time unless they were pausing along the way to have taken enough notes. So go back and re -listen to this podcast probably, or hopefully you did pause it and take really awesome notes. If anybody wants to reach out to you, is there a good way for them to reach out?
Definitely visit redrocketvc .com and you can get our contact information there. You can either call us or email us with the information on that website.
Love it. Again, really appreciate the time, George, and the insights. Really, really appreciate it.
My pleasure, Samir. Thanks for the invite.
