To scale your business is to invite growth into your ranks. Scaling allows you to expand the field of possibilities your business can roam and venture, but it’s also a tough process that might ask a lot of you as a business owner going forward. Tracy Hazzard is the CEO of Brandcasters, Inc. She sits down with Michelle Seiler Tucker to talk about allowing yourself as a business owner to continually scale your business. If you’re feeling doubtful about the opportunities to scale your business, take it from Tracy and her years of entrepreneurial experience through which she has seen her own business continue to grow.
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Scaling A Business With Tracy Hazzard
I’m excited to have my very good friend, Tracy Hazzard. She helped me get started with the podcast. She has quite the entrepreneurial career and she’s been a former Inc. columnist, CEO of Hazz Design and Brandcasters, and developed 250-plus products generating almost $2 billion for her clients. For many years, she worked with design leading brands like Martha Stewart, Herman Miller and other huge brands. She also has 40 utility design patents. She has been featured in the Harvard Business Review, Forbes, Wired and CNN Money. She’s also been on The Larry King Show. She specializes in Podetize, which she helps entrepreneurs start a podcast and make money from it. Welcome, Tracy.
Thanks, Michelle. I’m excited you’ve got this started.
What’s good about you is you stayed on top of me.
That is because I believe strongly in your message because I’ve lived it. I’ve had businesses and sold them. I’ve had some I couldn’t sell. I’ve been there and I know how valuable your message is.
How long have you been an entrepreneur? At what age did you start?
It’s funny because I never considered myself an entrepreneur until about a few years ago. I didn’t use that term in my mind. I thought of myself as a business owner. I’ve been a business owner on and off for about my whole marriage, for sure. My husband is my partner, which is very common also in the world that you’re in business with your family.
You all work together every day, right?
We do. Not the whole time that we’ve been married that we’ve worked together every single day, but for the most part. This would be the third business officially that we’ve run together.
Talk to me about the first business, which were the products where you developed over 250 products and raised over $2 billion.
That’s the second business. The first business, we had stylus pens for handheld computers back in the late ‘90s, early 2000s. We made them go along with the Palm Pilots, if you remember back when. We designed stylus pens that had a unique patent on them. We were the cult favorite. Everyone loved our pens. We were featured in Wired and all of those things. That was our very first business and then the tech bubble burst, but we were okay because we had already expanded into ad specialty and enterprise. We have been doing well. We got our patent knocked off by IDEO, the largest industrial design firm in the world, and Palm themselves because they put it in their catalog. We had to go into an intellectual property fight over it and then 9/11 happened. We had a cascade of things. I’m proud of the fact that we did get out of the business by having all those patents in the products. We were able to license and sell them off and make back our investors’ money. We came out of that clean and not suffer as we could have, as most people did at that time.
That’s amazing because a lot of business owners get tied up in those lawsuits that can cost a significant amount of money, time, energy and effort. I always tell my clients, “One of the most important things is to have intellectual property and make sure you have those patents in place.”
You mentioned the Harvard Business Review. What we did in that business is taught in Harvard Business Review in 26 countries around the world as a case study in entrepreneurship and IP together. The professor who put the program together reached out to us and reformed the end of the program to get updated into how we looked at intellectual property and product design differently because of what happened to us then. We won that, but in a very odd way. Palm was trying to go public and we had launched what would be a viral social media viral campaign. We launched this grassroots campaign. Because it was a pen, we used to have on our website this big animation that said, “Do we detect a bit of pen envy?” We had their pen and our pen side-by-side. Everyone knows our pen predated theirs. The rules in patent law were different back then and it was who conceived of it first, not who filed first and not any of those things.
We did both though. We conceived of it because we filed first. We did what our lawyers told us not to do. We put all our dates right out there because we were confident that we were first. We put a timeline on our website along with that graphic. Their lawyers were getting nervous because they were like, “These people know what they’re doing. They must have a backup or they wouldn’t be putting this out on their website.” They got nervous and there was an indemnification clause and Palm forced IDEO to settle with us to get it out because they were trying to go public and they didn’t want negative publicity. We had already been picked up by a couple of newspapers at that point. It worked out in our favor, but when you go into a lawsuit, you always lose. You lose attention, money and focus.
The only people that win are the attorneys. That’s it.
Knowing that you don’t want to get into that changed our view of how we do it. Tom and I co-own all these patents together. It’s wonderful, but we utilize them in a very different way. We don’t file patents unless we know we’re going to commercialize them. We don’t waste money on stuff that people don’t want to buy. It’s a waste of money and time. You get caught up in the patent and not in the product and the sales and the marketing. We want that to be first. We always look at it from that perspective. The second thing that we do is we also look at it as it is an asset in a business. You want to sell it or license it as fast as possible or make money on those patents as fast as possible. That’s more important than fighting them off. It’s a slight defensive strategy in consumer retail because it’s a front line, “I have a patent on this.” It will help things a little bit, but it’s mostly an offensive strategy.
“When you enter a lawsuit, you lose attention and money, and you’re just focusing on the attorney.”
These 40 patents that you have, are they all commercialized?
Almost 90% of them, yeah.
Are they licensed for someone else?
Some of them we designed for our clients. There’s usually a royalty attached. That helps us with our revenue. We still have a royalty attached to them. Some of them outright sell to people. Some of them are ours. We’re using them for our own products and our own things and they’ll be caught up in the next company that we sell.
Are you still doing that? Are you still designing patents for other individuals?
We haven’t done it in a while because our focus is solely on this business, but we have filed a couple of new patents on some products that we’re working on within our podcasting business.
The parent company itself, you can’t sell, but you can sell off the patents, you can license the patents, etc. Let’s go back to the products company. You have 250 products. Were you able to sell that business?
We couldn’t. Hazz Design is still the name of the company. It still exists because we do have patents in there. We do have royalty contracts. The company still exists and it does make money, but it was a design consulting firm. It was Tom and I, and a bunch of freelancers that we hired whenever we needed to do an expanded project or if we needed a specialized engineer. We didn’t have them on staff because we couldn’t afford that. We have a team in China and a prototype shop and things that we would utilize. We had a direct relationship with them, but we had no investment in them. They weren’t our asset either. It was nothing to sell at the end of the day unless I wanted to stay attached to the business.
It wasn’t possible. That is why a few years ago, I took a look at our business and said, “This is not scalable. I don’t see how we’re going to do this.” We looked at it and we started thinking about what could be scalable. We started to explore multiple options, alternative revenue streams. That’s why we started our very first podcast on 3D printing because we thought, 3D print business, that product business, if we create a product catalog of 3D print items and designs, that would be salable. We thought, “That would be great. We could develop a 3D print business that we could then spin off and sell off.” That would allow us to do cheap Hazz Designs and do fun projects that we were interested in.
That’s how we looked at it. It was what were we going to create on the side? What we didn’t anticipate was that no one would want 3D print products, but that they wanted the information more and that our podcast would become more valuable. That’s what happened to us. In that process, we started a podcast business without realizing we were starting another business. That one, we’ve scaled it purposefully so that it is capable of being sold.
That’s why I love this conversation because there are 32.9 million businesses out there and 99.9% of them are small business owners. Most small business owners don’t plan their exit. They don’t want to think about selling until they have to sell due to an external catastrophic event like COVID-19. This is in time as far as what business owners need to know because many business owners have created a job versus a business. When it goes time to sell, you have to be tied to it for a while or you’re not able to sell it so.
That’s the thing, in the first business, we sold off the patents. We had to lay off all the workers. There was no existing business, even though we had an office back then. I always thought that was not the way to go. Part of it was why the Hazz Design consulting business was designed the way it was to not have employees or an office. It was designed that way as anti what had happened before. I didn’t feel that was right in the process. I didn’t have a choice. Looking through that, it also taught me though that business isn’t as viable either. That’s not a long-term solution for us. We could only take on two to three clients at a time before we’d max out. I couldn’t keep staff on because I couldn’t keep steady work at the level that we did it at. We would do a couple of $100,000 contracts for a couple of years at a time, but that was it. I could only hire them for the project because for the next project, who knew what it was going to be like.
That’s where it wasn’t viable. When we came to develop our business that’s known as Podetize, Brandcasters is the company, we built it to everything to scale. All the technology scaled. There are still patents involved in it. There are both software and hardware patents, and all of that goes together. All of the things we didn’t do in the first couple, we’re doing here. We have a 60-person team worldwide, but it’s all scalable so that we can add more clients and employees. The whole thing works like that. We have software and systems in there that manages everything for us. There are lots of proprietary things as well.
Everything that you’re talking about, I call that my 6 Ps. For business owners who go to businesses scalable and sellable when they’re ready to exit, then they have to base out on the six Ps. Many business owners go into business, but not understanding that concept like you did on the other two, but now you get it.
I did read your book, so I was always cognizant of that over the years.
“The retail world has been in trouble for a long time and we’ve been seeing that.”
The first P is People. When buyers buy businesses, they want to buy a business, not necessarily a job. People are the most important P. Proprietary, even though it’s my third P, it’s one of the most important as well.
We’ve done some things that are interesting. We helped a couple of our clients scale up enough to get sold for triple X, which you normally don’t go for in a retail business. A consumer product retail company, especially a furniture company, and that’s the business we were mostly working in. It doesn’t usually go for a multiplier. It doesn’t happen. They look at it and they go, “Maybe we’ll give you two times revenue,” but they usually downgrade it because the retail product industry is trendy and a product that could be in one year is out the next. One of my favorite people and I know you know him, the founder of UGG, Brian Smith. He always says, “I’d been in business and UGG had been popular for years. I would go to the bank and the bank would go, ‘We don’t know if we want to lend you more. They might be out this year.’” That’s how consumer rates help businesses but what we did for these clients to get them that multiplier is we created patents for them.
What we would do is if they had one core product or thing that was working, we would create a silo of patents around them. We would come up with and brainstorm. We would do it in two weeks. We wouldn’t take a long period of time. It would be what they call a design sprint. We would design every which way that we could hack the patent. In other words, to break it or do it a different way and go around them. We would do that and then they would file all those in provisionals. They wouldn’t necessarily take them all to final patents, but they would file them all to provisionals. That way they would have this maybe half a dozen patents surrounding the core patent that is already proven and working in the marketplace. We call it a little patent fortress.
You want to buy all those domain names, right?
Yes. That would work out well for them. We charge them a flat rate. We didn’t need investment because they were never going to make those other patents. A couple of them did. The funny part was we came up with a better, cheaper way and they ended up using it instead of their core patent. That was a happy accident. That’s what we did for them, plus bring them a broader product line. That’s one of the things people don’t understand. When you have a company and you have one amazing core product, you can’t stop there.
People like to see a portfolio of products. My specialty was always going into a company and looking at the products and saying, “Either you have too many, let’s cut them down and get to the core of what’s marketable, what’s going to sell,” or “Let’s broaden this because you’ve got a lot of gaps that you could be providing in the marketplace and that would get you more shelf space. That would get you more return clients or would get more people to buy multiple items when they’ve shopped from you. All of that would help to increase revenue quickly.” I used to do it, I used to call it my Cut, Clean and Create. Those are my three Cs. I would cut out of their program because you had to create cashflow. Somehow you had to get some money to be able to utilize to do some new things.
The Clean, usually they didn’t update the products over time because they get complacent with it. Sometimes you need a new color or you need a new feature. You’ve got to keep up with what’s going on in the market. You’ve got to make sure you’re staying on that. The Create would be to fill the gaps and to create that next level innovation. That’s how we would go in and look at a product line. That in and of itself would make the product line more valuable and long-term valuable. Many times, these kinds of companies were getting bought out for their positioning on the shelf, but also their future pipeline of product flow. That’s how we were able to create, not with the patents, but those things create an opportunity for them.
That drives value significantly when you have that real estate. If it’s on the shelf or if it’s on a radio show with direct response, like advertising Glenn Beck or somebody like that or at the top of Wayfair, Amazon or eBay, that real estate drives value. That drives some multiple ups significantly.
Nowadays, shelf space is your positioning on the page. It’s not the same as on the shelf. It’s changed but it’s still there.
Did you hear that JC Penney’s filed Chapter 11?
I know. The retail world has been in trouble for a long time and we’ve been seeing that. We knew it was coming. Think about it from this perspective. You think you have the long view as a manufacturer. Let’s say you’re selling office chairs. I can sell container load after container loads at Costco or I could put 400 units in Amazon and move them. You’re like, “Why do I even want to bother with Amazon?” Had they not bothered with Amazon? They have no place to move their inventory. There is no way to do it. It is important to always be looking at what’s going on and figuring out ways to be on that.
That’s what I always tell my clients, always preach and teach this. The business landscape has changed dramatically. You’ve heard me say this, it used to be 90%, 95% of the businesses will go out of business in the first five years. When I wrote Exit Rich in 2019, I did the research and I was flabbergasted because it changed dramatically. Only 30% will go out of business in the first five years and a whopping 70% of businesses have been in business ten years or more, out of 26 million businesses, will end up going out of business. The main reason for that is the lack of innovation and lack of marketing. Consumer buying habits have changed because Amazon changed our buying habits. You must innovate. If you don’t innovate, you’re going to get left behind.
I wrote my column on that for a long time. I would harp on it constantly. What I would say again and again in my column and to my clients and other places is that “It’s one thing to do what you’re doing well. Do that but you have to have systems and processes that are paying attention to the future and testing things out.” That’s how we got into 3D printing. We’d been using it as prototyping for a decade before 3D printing came into being able to stick one on my desktop. Tom said to me one night, he’s like, “We have to stay ahead of what our clients might be looking for in the future. If we don’t understand this technology deeply and how hard it is to use or how easy it is, we won’t understand how to stay in front of that from a design perspective.” He was right. I coughed up the $4,000 to buy a printer at that point. What we discovered was that it was incredibly hard to do this. We thought, “This is going to take so much longer than everyone imagined.”
I’ve been recording a special series for our 3D print podcast, which is called WTFFF?!, which is a geeky term for 3D printing fuse filament fabrication. It’s What The Fused Filament Fabrication. That means that you’re not listening to the right show if you don’t even know that already. We don’t dumb it down. It’s not like your average person wants to listen to that. We’ve been doing a special series with Hewlett-Packard. HP came to us because they wanted that designer view of the future. What they’re seeing and what they’ve been demonstrating to us is that there’s going to be a tremendous shift in digital manufacturing like we saw from 2D print on signage and all those things.
Think about it. If you are out there and you had a store. I had a storefront for a little while, I owned a shop in Northern California. I know what it’s like to be on Main Street. You would order these signs and they would pre-print it and they would take forever to get printed. If you screwed up, you screwed up and you couldn’t have them redone easily. They would be expensive. You would save them and reuse them. You’re careful how you design them. Now, we spit out these digital signs and before you know it, you can walk into the grocery store and within a month they all had a stand here six feet apart. You had all these floor decals going because everything’s digitally printed. You have that going on.
“You want to build off of what you’ve already got with things that make sense.”
We’re going to see the same shift in manufacturing. That’s because of what’s happening with COVID, with the sequestering, with all of the things where we’re need to be. We have a supply chain management problem. We’re going to see that shift happens. The 3D printers and everyone out there knew it was coming. They’ve been holding on. The industry has had a hard time with investment, but they’re in the right position. It’s going to be interesting. We’re going to see a dramatic shift to all kinds of businesses happen that was anticipated, then people will start to go out of the hype cycle and go, “This isn’t going to happen but now it’s going to.”
It’s definitely going to happen. There are many opportunities out there because of COVID. I always tell business owners, “Don’t panic. The worst thing you can do is panic.” What you need to do is first and foremost look at your financials. Look at what you can cut that is not serving you anymore. Look at what you need to add is double down on. One pivot, one tweak can take your business to the next level.
The one thing that I can say, Michelle, I’m seeing a shift in the cost of value investing. Sometimes, value investing is misunderstood by people. They get into value investing and they think, “There’s excitement here. This is a trendy thing. I want to invest in cannabis or blockchain or whatever that is. I want a business like that.” That’s exciting, but we forget the businesses like UGGs. We forget the ones that have deep proof that they’re selling day-after-day, that their business is growing. That’s one of the things that I know that I’ve done very successfully throughout my career. We build in proof early on that the market wants what we have to sell.
When you put more money in that, you only get more revenue. You’re able to scale that up. You know how to market. You know people want it. You now need more fuel. That’s the perfect kind of business. A business that has great proof that they have something of value and that it’s growing. You’re growing even in hard times and you have that steady growth happening. When you see that, that’s where you want to put your dollars. That’s the value investing because your dollars will be well-spent and grow faster than it is when you get on these like, “Maybe this one will work out because it’s going to be a 10X deal.”
You need to invest in what’s sustainable, what’s a proven concept and what continues to go up. That’s what I always talk to my business owners about. There are lots of business owners that continue to go up, but then they take a deep nosedive because they don’t continue to innovate.
They do. They hit the top of the curve.
Buyers changed. The way that we used to buy things is not the way we buy things anymore. With COVID, it’s changed dramatically more because we used to go to the grocery store. You don’t even have to go to the grocery store anymore. You order and it’s shipped to your door and put in your car. You don’t have to walk in and fight the traffic and right about getting germs. You got to see how you can ride this wave and how you can take advantage of this. You don’t survive but thrive later.
I’m a big fan of I would call it research testing. I guinea pig myself all the time. That’s why I have five podcasts that I host. I do that because I’m always out there. I start a new one every year. I’m testing it. How hard is it? What’s going on? What can I do? Video came along and we were already prepared for it because I’d been shifting one of my podcasts, testing out video casting, and seeing how it was going to work. How hard is it going to be? How stressful is it going to be on my system? Can I develop a team that works on that specifically? Do we have standard operating procedures on what’s best practices? I’m always out there testing it. That’s my role in the company as CEO, is to be out there testing it and to be the spokesperson.
Those are the two things, and on the backend, make sure that we get our funding. That’s my particular role in the company is to test those things out only because I’m not the kind of person who’s going to go, “Shiny object. I’m excited about this. Let’s shift everything.” That’s not me. I’ll be like, “There’s proof here or there’s no proof here.” I have that experience, that’s how we utilize that. That way, you’re not distracting your entire team. If you can’t be that person in your business, get someone in. There is business out there, I think it was called Skunk Works. There’s a person out there whose job it is to explore these new technologies and these new ways of doing business and understand from that perspective how we’re going to build a bridge to what you have now. Doing that is the best way to keep going.
Otherwise, what happens is a lot of businesses, and Michelle, I know a few of them who went completely out of business overnight because they didn’t do what was right by continuing with their existing customers, considering what they’re accessing technology. They would go, “Let’s shift gears,” and the whole company would have to shift. It destroyed productivity. It destroyed the revenue value. Everything happened like that. That’s not the way to innovate. You want to build off of what you’ve already got with things that make sense.
You don’t want to take your core product, your core competency and abandon that to jump ship to another shiny object somewhere else.
You want to get it up and running. One of the things that a lot of companies do have a hard time doing is deciding when it’s time to cut, when it’s time to let go of those old products. It’s a hard thing. I worked for Herman Miller and I was one of their in-house designers, which is very rare. They used to kick all the designers out and they’d have them out. I was in the color materials and finishes groups. My job was to handle all the things that went on every Herman Miller product. At that time, they were launching the Aeron chair. There were new materials coming in, but we had a budgetary constraint that said, “We can’t have more than this much dollars in material.” We had to cut some products and some of those colors and finishes were in the line since the ‘60s. They were like, “You’re never going to get the clients to agree to cut this. The clients are going to go up in arms. Coca-Cola is going to freak out if you discontinue Coca-Cola red. These things are going to happen.” What I did was I found a way to do it by first getting people excited and bringing in all the new things, and then slowly convincing them that we didn’t need the old thing.
It was this bridging thing that happens. That’s what I was referring to before. Making this bridge happen to where they want new things. They get used to them. I show them how great they’re going to work with what they already have and a way to discontinue the old. All of a sudden, everyone’s excited about the new. I cut their line, which used to be 600 SKUs, which is stock-keeping units, for those of you out there who don’t have products. Six hundred different items with different colors and materials. I cut it down to 350 and no one complained. Our profitability went way up on the product line. It can be done, but letting go and knowing when it’s time, they could have been profitable so many years earlier.
You have to have a good integrator to do that. The business owner is typically an entrepreneur who has shiny penny syndrome who says, “Let’s do this. Let’s do that.” They’re the visionary and they want to grow things huge. You need an integrator that says, “This is how we do it. This is the research we need. This is the proof we need. This is how we do it,” as you did.
Another thing is it’s too easy to go look in at the bottom-line results. If I looked at products and go, “This one is not profitable, but that one may be exactly why people come to you to buy.” Lost leaders are what we call them in the industry. You can’t cut based on numbers alone. You can’t go the opposite way. You can’t do your gut and to say, “Everything’s great and I love my stuff.” You can’t go by numbers. There has to be that understanding and analysis of both parts together to say, “This is what’s attracting people to us. This is what’s making us money. Let’s make sure that we make all of this together profitable.”
It needs to be a logical decision based upon facts.
Also, based upon the market interest. At the end of the day, if people don’t want it, just because you love it and you think it’s going to be great, no. It’s time to cut.
It’s like when Steve Jobs came in. What did Steve Jobs do? He got rid of the dumb phone and invented the smartphone. Now, we can’t live without it.
These are things. Every company needs someone like that. If they don’t have it in-house, then they need somebody to sit in with them, get in with their business as you do, Michelle. Get in with them and start to analyze and look at these things with a keen eye on creating value. At the end of the day, that’s what we need to do. Whether it’s creating value so we can sell our company, creating value for our own businesses, our own employees, our families or everything, and creating value for our customers and clients. Those three parts, if that value chain isn’t there, it will not work in anyone’s business. It’s not viable.
That value chain changes. That’s what I tell my clients. You have to get into with your customers, your clients, to see what their needs are. What are their problems? What their problems were before COVID are not their problems now. You need to find out what they need and become the solution expert.
A friend of ours, Betsy Westhafer, she’s starting a new podcast with Tony Bodoh and they have a podcast called (Really) Know Your Customer. The part about that which is critically important is that so often, we don’t ask the right customers. In the 3D print world, part of the reason many printer companies went out of business was they were asking the early adopters. They weren’t asking the people who are mainstream. They weren’t getting this understanding of like, “This printer is too complicated to run. I don’t know how to do it.” No wonder people aren’t buying it off the shelf easily.
You’ve got to understand which customers to ask the questions of. Betsy creates customer advisory boards where you come back to them again and again, and verify what you’re saying and doing is what they were talking about or how they’re seeing it. What I know from branding things is brand is a perception. It isn’t what I say I am. I’m the best podcast production company in the world. It’s what Michelle thinks of that at the end of the day because she’s my customer and my client. If she says Podetize is the best, then that means more. It’s their perception that matters in it. That’s how you become a household name at the end of the day. That’s how you become Kleenex. People will perceive you as an essential thing.
That’s called brand advocacy. When somebody says, “You have to use Tracy, she’s the best. There’s nobody better than what Podetize is.”
That’s a great way to create proof in your business. I looked at that. I shared that with my potential investment groups. We have a 90% referral rate. Ninety percent of our business comes from referrals from our own clients and partners. Only 10% comes from our advertising or me out there speaking. There’s a lot of brand awareness going on out there, so it does have residual value but 90% of that, the exact people we are closing and we’re bringing in, we’re not overspending to do that. It’s proof that we have desired value because people don’t put themselves on the line and refer somebody unless they believe you’re going to get the same value they did and they believe in that value. It’s a sign of a great brand. That in and of itself, if you create that in your business, it doesn’t cost a lot of money.
I call it the branding ladder because at the bottom of the ladder you’re starting from brand absence. Nobody knows who you are and what you do. You go from brand absence to brand awareness. At least they know at least who you are. You go from brand awareness to brand preference. I prefer to drink Coke over Pepsi. You go from brand preference to brand insistence saying “I only drink Coke.” Through brand advocacy, they go, “Go Xerox it.” “Go Podetize it.” “You don’t have an Apple? What’s wrong with you?” If you have brand advocacy, you don’t have to do much marketing. You don’t have to spend a lot of money on marketing.
I’m a big fan of getting that fast start and creating the hypothesis brand. You start a hypothesis brand to test out, “Does the customer want what I think they want?” It’s this dialogue that you’re going to do. We very often don’t go into our full invention of a product. We won’t go tool for something, spend a lot of inventory dollars. We’ll do a test in another way. We call it A/B testing. If you’re in marketing, you have A/B testing, you’ll do an A-ad that has a certain color or headline, and then you’ll do B that’s slightly different. We do the same thing with products. A good example of that is we were going to create a line of dog collars that were for an invisible fence, but they had on the neck a cool design.
The dog collars themselves were selling gangbusters. While we were designing, I sent that client off to go, “Start selling them. Start getting clients on them. When you have that client base, you’re going to send out a survey to them of these new designs we’re creating and saying, ‘If you could have bought our collar with this, which one would you have bought?’ We now have a ranking of the different designs.” We did a 3Dprint runs. This is going into our C model. We did our A model. Our B model is to do the 3D print test. We ran 100 of each item and they sold them on Amazon. You’re testing out a small run. Which one got sold fastest? Which one sold first? Which one sold out? That’s the one they go to tool for. That’s your C model. You’re in the marketplace and you know you’ve got the best hit. While you may refine the other ones, change them, test them out again and see if we should bring them on next.
It doesn’t cost that much.
All along the way, they were generating revenue for the project because they were selling the core neck collar portion. They were selling a whole electric fence thing. They were selling that all already and making a profit off of it. It was funding the project instead of them going, “I had this great idea and this great design. I want to market it, but I need money for inventory. I need money for tooling.” They didn’t have to do that in that process. They created proof from the beginning, so they knew it was a worthwhile investment for themselves.
Proof of concept. Go out there and sell it, then build it. Kevin Harrington does the same thing. He has all kinds of different ideas that they get dropped on his lap and he does the same thing. He goes, “I’m supposed to post it on Facebook, Google, Amazon and all those different platforms.” He decides what product is going to take.
It’s harder to do. When we’re direct marketing, it’s harder because we have all this online selling and it’s not you’re can touch it, feel it. There are products that are difficult to explain, difficult to communicate in that mode. You have to test that to make sure.
Let’s talk a little bit more about Podetize.
We created Podetize because people like you, Michelle, demanded it. We started it and people were like, “What are you doing? Your show is doing so well.” When we started our 3D print show, we had zero email lists. We had zero followers because we’d been ghost designers for Martha Stewart and Herman Miller, people like that. No one knew who we were.
It’s like me selling businesses.
Nobody knows you. You’re behind the scenes.
It’s the best-kept secret.
Lots of you can relate to being a hidden expert, being that ghost behind the scenes. That’s where we were. We realized we needed to step up front for podcast help. The podcast itself went from no listeners in five months to 25,000 listeners a month. Shortly after that, it hit 100,000 the following January. It was within nine months, we were hitting 100,000 listeners a month. We were producing a lot of shows. We were creating blogs. We weren’t doing video at that time. We were doing video companions so that people could see the printer running. We would run that on YouTube and run that on our website. We had hit on this process and formula that was trending and working with the algorithms that were going on and shifting at Google and iTunes and other places. We didn’t know it was happening. We were tapped into it. That was because voice recognition technology was coming into play. As soon as we realized that’s what we were doing and we could see the pattern of it increasing our business increasing again, we were able to set up more best practices and dial into what we were doing right. That’s where our special sauce, where that proprietary process comes in for us. We created what we call Verbal SEO or Verbal Search Engine Optimization.
We’re talking to Alexa, we’re talking to our Siri, we’re talking to Google. They want to match that instead of keyword cram like people used to do. Instead of typing in odd ways to search for things, we’re asking for things in a much more normal question way. The results need to be in a normal conversational way. That’s what’s being rewarded in the process. That’s what we tapped into. On top of it, we looked at companies like yours and our own. We realized that we have things we need to advertise for ourselves. We don’t want to go in that old school radio model of taking advertisements from Kindle and from the latest Coca-Cola, or whoever wants to advertise generally across our platforms. We have specific things we want to promote. It might be a book, a program, an event that we want to have tickets for. It might be a charity. It might be someone we could help with what’s going on in our local area or our industry. We look at that.
What happened was, and this is funny because the original editor of our podcast is now my son-in-law. He was a video student back then. He told me that in order to put an ad in and then take it out later, because I wanted to take it out a month later when this program was over. He told me he costs me as much as it did to edit it originally because it takes as much time to remove it and then re-encode the files. I said, “That is ridiculous.” I challenged my husband and a tech friend of ours to come up with a solution. That’s what they did. When you have a deep need and you say, “I don’t have this need. I know other people are going to have this need.” We say, “Let’s brainstorm and figure out a way.” Within a couple of weeks, they had a solution for us. That is the core patent-pending part of Podetize. It’s this admixing system where you can put your ad for your book when it’s on sale. We then take it off and put a different ad in and put a different program in and you never touch the actual episode itself. That’s why people come to us because we have all that service side and we have this technology side.
It’s hard to do it yourself. I am the type of person that says, “That’s not for me.”
I learned that in my consulting business. I could go in and say, “Here’s my plan for you to design,” but then they’d go like, “How do I get it made?” We always had a done heavily level consulting. It’s what I’m comfortable in and what I know because I don’t want to do it. That’s why I had a team, to begin with. Anything that I don’t want to do that seems too cumbersome that’s repetitive, we’re going to have developed a system for it. That’s how it is.
Now, you have 350 clients that you work with.
We have 350 clients and 60 employees worldwide. We produce episodes in about 7 to 10 days, depending on when they’re submitted and the length. It’s expanding so quickly and we’re looking at a large acquisition plan for the latter half of the year, which is another great strategy because we can’t grow fast enough. We can acquire some things that we need faster.
That’s where I come in.
That’s where Michelle comes in from me.
Instead of trying to go out and reinvent the wheel, acquire it. I own a graphics company that specializes in first responders and that’s what we’re doing. We are growing through acquisitions.
There’s proof in the podcast industry. They announced that there are a million podcasts on Apple Podcasts, but there are only 300,000 or so that are active. That’s how hard it is.
They’re recording every week.
They’re posting every week. They actively have a show. Sometimes they’re dropping seasons. That still counts as active. Most people have abandoned their show. We call it podfading because they usually don’t mean to quit. It happens. They didn’t have enough episodes and they go a week and then it goes to two then three weeks and then they’re like, “I haven’t posted in a while. Was it worth it?” They don’t do it.
You’re my coach. You’re going to stay on top of me.
We found in our research on podfading that those who had coaches, those who had services, those podfaded at a much lower rate. If you look at that number, that industry-standard, 70% to 80% quit rate of shows. Our actual platform has less than 12% quit rate. The support matters at the end of the day. Get yourself some support.
I always say if you don’t have an assistant, you’re the assistant. You hire people that are more competent than you in areas that are not your core competency. Donald Trump did it. He hired George Ross because he is an attorney. Everybody thinks Donald Trump was a doormat. Donald Trump was a visionary. Who made that deal those deals work? George Ross made them.
The other thing that happens too often is when, and this is how most call mom and pop businesses don’t get out of where they are is that when we look at us, we get at a casual assistant, a virtual assistant and those kinds of things nowadays. We can put and set ourselves up for a lot of trouble. Sometimes, service companies in essential parts of your business make sense. We’ve seen a lot of people whose assistant said, “I got my kids at home. I can’t do this anymore.” All of the core knowledge that they developed for you are gone because you weren’t putting that into systems and processes and team or a service bureau that you could utilize that would stay stable for you. You’ve got to make sure that if you have an essential part, it’s like your supply chain. An essential part of that has to stay with your business. It has to be able to stay with that. If you’re creating core knowledge, it better to stay in your business, not be a single person dependent.
That’s processes, which is my third P. It’s about People, number one. Number two, Product. The Process is number three and Proprietary is number four. That’s so true. You have to have those policy procedure manuals. When I go to sell an $18 million company, what was I doing on closing day? Walking around and getting everybody’s employee handbook signed. I got everybody’s non-employee non-compete because the CPA that works for the company, come to find out, we found it out during the diligence, was embezzling money. I called her during due diligence. She took all the employee records, so here I am. Always have those backup files.
A great book that I like is Clockwork by Mike Michalowicz. If your readers haven’t read it yet, he talks about ways to create those procedures simply. We do this all the time here. When something changes and it happens all the time, like the way you submit a podcast to iTunes changes every few months. Every time they notice a change, the person who’s going and loading in a new podcast will do a screen share report. That replaces the file on how to do this in our standards manual. We’re always keeping that stuff up-to-date. If they learn something like, “This didn’t work,” they’ll create a short little video saying, “This is important. Don’t mess up this part of it. I discovered after the fact, then a podcast doesn’t get launched because iTunes says no.” That’s critically important as you built that process. He’s got a great little book about it and it’s fascinating.
Even in Exit Rich, we take a deep dive into each one of the six Ps, especially processes. We have special bonuses where somebody can go to the free book membership and get employee handbook samples, operation manual samples, and all those documents. A lot of owners are like, “Where do I start?” For me, it has to be a checklist in every department. Every department has to have an SOP checklist and it’s simple. We check it off. That way if we lose somebody, then the next person can come in and we can train them pretty quickly. How do you think McDonald’s train people all around the world? It’s because they have those SOPs in place. They have those processes. Did you ever watch a movie, The Founder?
I did. I loved it.
I loved it because they went to an empty tennis court, spent an entire day there orchestrating who’s going to take the order? Who’s going to cook the hamburger? Who’s going to put the mustard on the button? Who’s going to put the pickles there? It’s all about processes. It’s undervalued in a lot of companies because a lot of M&A advisors don’t get it. We get it. We understand processes. A lot of my companies have proprietary processes and that’s worth money.
It’s worth more money because it’s scalable then. That’s probably the biggest difference.
Whether it is strategic, a competitor or something, that’s what they look for.
That’s why we’re partnered up, Michelle.
What is your number one business tip that you have, Tracy?
We have a mantra. It’s not a tip here, but it’s a mantra. We call it hope is not a plan. If you’re going to hope that this stuff is going to work out, you’re sorely mistaken here. This is my COVID advice as well. If we look at everything as a short-term problem, we’ve got to get through this. Often in family-run businesses, whether you’re running a shop, because I know it’s like, “I’ve got to get through this and then I’ll hire some employees. I’ve got to get to this revenue level.” You don’t look at that as saying, “That’s short-term thinking. I need to lay in place. That’s not going to mean that I need that employee yet. Maybe I need a system, I need efficiencies.” I have to scrutinize that every single day and create strategies and plans. As long as I’m always taking a look at everything, then I’m not hoping the result is going to happen. I’m making it happen.
I’m curious and I know this is going to be a crazy question, but what were you like as a child?
Evidently, I was very curious. I think that’s part of what has made me who I am. It’s part of what I hope that I give my daughters. I hope that at the end of the day that their curiosity is the biggest thing. My mom learned how to weave because we lived in South Africa for a couple of years while my dad was on an assignment. We lived there and it was at the height of apartheid. It was ‘78, ‘79, so I was 8, 9 years old. My mom learned to weave and I would sit below the loom and read. I would be reading things Shakespeare and whatever because my dad was a Literature major and it was the only books in English we could get.
I’m reading his books. I’m sure I didn’t understand them, but I was reading them because I needed to read. I’m sitting below it and my mom would say, “Tracy, this doesn’t look right. What do you think?” I would look up and I go, “You skipped this. This pattern is not right.” There’s this high level of curiosity combined with pattern recognition. I could see things clear about how they’re supposed to work and how they could look. I think that’s exactly what I ended up tapping into as my gifts in the world.
I always say I’m curious too. I’m like a kid in a candy store. What gets me excited, what gets my juices flowing is to learn how a business owner has started a business out of a garage, on her kitchen table, and now it’s a multimillion-dollar company or a billion-dollar company. That’s what gets me excited. I’m like a kid in the candy store.
You and I are probably very similar to that. That’s why I love designing all those years because it was never the same. It was always something new and different. Some new businesses grow in a different way. Some new products tackle and innovate on. You also have that newness of each business is slightly different. Each story is new.
You did what I always tell my clients to do, especially now more than ever, is think about your business. What business are you in and what business should you be at? You did that with Podetize.
We are temporarily in the production business. That’s how I look at it. We’re at a tech company at the end of the day. We have a big tech plan for where we’re going. In order to do that, we had to have the best-produced shows. We couldn’t get clients to do that on their own. First off, there’s nothing wrong with that business, but I didn’t want to be in a total service business. I want to be in an innovation and tech business. We see that as the two things go hand-in-hand nicely. Think about it this way. You can have GoDaddy. It is arguably a tech company with servers and all of these things and all that, but at the end of the day, somebody still has to build websites for people. That’s why they offer those services. Because they couldn’t get enough people out there doing it, you got to also offer them yourself. That’s where we see ourselves, not like GoDaddy, but we see ourselves in that combination of tech and hosting and having to have the services so that people can utilize it to its best.
Tracy, last question, are you planning your exit from Podetize?
We are. We’re planning a large exit. We’re planning a billion-dollar exit. We’re planning that because what we see is that we’re intersecting a gap in the marketplace and there are some big players in a lot of big movements going on in the industry. What we see is that they do not value investing. They’re hype investing. We say we’re going to quietly plot our way to this place where we’ve got the most consolidated best technology, best of everything that is doing the daily business and doing the hard work that everybody wants, and that’s where we’re going to put ourselves. All someone has to do is come in and buy us and move us into that next level, which we won’t be able to get on our own without a lot of investment dollars.
Also, expertise. It’s hard to read the label from the inside of the bottle. You need an outsider’s perspective. Tracy, if our readers want to get in touch with you, how do they get in touch with you? I think every business owner should start with Podetize.
I have five podcasts out there, so you can google my name and it’s Tracy Hazzard and that’s the best way to find it. If you’re interested in the product side, I have a podcast called Product Launch Hazzards. There are over 120 episodes or something like that. I go over my Ps, which I have seven of them that are all about the product process. If you’re struggling with any side of that, that’s a great one. Plus, I introduced people to the people that I used to create products, whether it’s over in Asia or get it sold into Costco. I introduce them to all my partners because I don’t do that business anymore. I wanted them to know who they were so they could access them. That’s there and that’s my gift out to everyone.
The Binge Factor and Feed Your Brand are our podcasts for aspiring podcasters if you’re interested there. I told you about WTFFF?!. I have one on blockchain because blockchain is a secret to my new technology that we’re developing. Sometimes when we want to learn something, I make time for it by having a podcast on it. I can ask important people like IBM, what they’re working on in their blockchain. I can get the inside scoop and understand what’s going on in the industry so I can prep myself for being a part of that future. The New Trust Economy is that show and that’s what landed me on Larry King.
You have one of my 8 Ps, which I call his passion. I came up with pivot too, because with what we’re doing, everybody has to pivot. I love the passion that you have and I think it’s important to have passion in what you do on a daily basis.
If you don’t have passion for your business, it’s going to be hard to make it succeed.
I always ask my clients, “Would you do what you do if you didn’t make any money?”
I absolutely would because I love it every day.
I love saving businesses. I love helping business owners exit. I love helping them obtain their desired dream price that they deserve and have always dreamed of.
I love that I can provide businesses a how-to. You don’t have to know it. I’ve got the how-to covered for you. I’m your how-to girl.
If you’re the how-to for Podetize, I’m the how-to of exiting. It’s been wonderful. Thank you so much. I appreciate everything you do and you’re the queen of Podetize.
Thanks so much. I appreciate it and I look forward to exiting rich with you.
I interviewed Tracy Hazzard, the queen of podcasts who owns Podetize. She has many great golden nuggets, so many words of wisdom. She tied in some of the 6 Ps that I use and I teach in my book, Exit Rich. She talks about product and how it is so important and how you should be innovating. She also talked about processes and her number one is IP, Intellectual Property. She has 40 utility brands, so I’m going to be talking about the 6 Ps and I’m going to be doing an individual podcast on each one of the Ps. Stay tuned. Make sure you go check out Tracy. You can go to FindYourExit.org to get all the information about Tracy and all the words, the nuggets that she dropped on us, and the 6 Ps that we talked about as well.
- Hazz Design
- Exit Rich
- (Really) Know Your Customer
- Kevin Harrington
- Product Launch Hazzards
- The Binge Factor
- Feed Your Brand
- New Trust Economy
About Tracy Hazzard
As an Inc. Innovation Columnist, Expert Product Designer, Tracy has worked with leading brands like Herman Miller, and Martha Stewart Living among others throughout her career. Her rich professional experience has given her the expertise and genuine pulse to know what clients want and how brands can promote with purpose.
Tracy delights in the privilege of being able to talk about things she is passionate about, and deeply appreciates the exchange of viewpoints during interviews with interesting people on the podcasts she co-hosts (Product Launch Hazzards, WTFFF?! 3D Printing, and Feed Your Brand) with her husband and business partner, Tom, and her other shows, The New Trust Economy and The Binge Factor – a publicity podcast for podcasters.
On top of being at the height of her career, she is mom to three girls, and is a voracious reader with a current all-time record of finishing 300 books in one year.
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