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Coming to terms with failure - and coming back!
103 Plays1 year ago
Kris Ingham is the Founder of https://liquidation.store/ , the excess stock e-retailer which saves good stock from landfill via flash sales, offering consumers up to 75% off big brands. In this episode of the First-time Founders Podcast, Kris reflects on the failure of his first venture, Rejuvenation Water (which he managed to get stocked in 5 of the top 6 UK Grocers) and what he learned from the experience.
Interested listeners can reach Kris via his LinkedIn (https://www.linkedin.com/in/krisingham/) or Rob (https://www.linkedin.com/in/robertliddiard/) at Rob@mission-group.co.uk (or to book some free time with Rob, visit https://www.eosworldwide.com/rob-liddiard).
Kris’s blog on his Rejuvenation Water experience: https://www.linkedin.com/pulse/coming-terms-failure-kris-ingham-0dwye%3FtrackingId=TvqJR2pTRTyTv0gv%252FvmcIg%253D%253D/?trackingId=TvqJR2pTRTyTv0gv%2FvmcIg%3D%3D
First-time Founders on Spotify: https://open.spotify.com/show/7hcdluu5ywrZ6qFhhI8EVH?si=840a4f564e6d4ea4
First-time Founders on Youtube: https://www.youtube.com/channel/UC0SfnHZhV747su-Wnd-9Z0Q
First-time Founders on Apple: https://podcasts.apple.com/gb/podcast/first-time-founders/id1697488388
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Transcript
Introduction to the Podcast
00:00:00
Speaker
Hello and welcome to the First Time Founders Podcast, the show where we talk about how to start a business from nothing and grow it into something meaningful. I'm Rob Lydiard. I was the founding CEO of a software business called Yapster, which was acquired in December 22.
00:00:13
Speaker
I'm now a professional implementer of the entrepreneurial operating system, or EOS, which means I work with entrepreneurs and entrepreneurial leadership teams to implement EOS so that they can get more aligned around the vision, become more disciplined and accountable in execution against the vision, and frankly, become more healthy at leadership team and organizational level because the truth is we can be a bit chaotic and dysfunctional in startup land.
00:00:36
Speaker
That's my day job, but in my spare time, I love to speak to entrepreneurs about their own entrepreneurial experiences, their mistakes, their learnings, the gallows humor that many of us have when we're running a normal small entrepreneurial business, taking the, you know, enjoying those highs, but also suffering the lows together.
Purpose and Goals of the Podcast
00:00:56
Speaker
And I hope here on this podcast is that those coming through entrepreneurship now can hopefully take some comfort and learn a few things from our conversations.
00:01:04
Speaker
Today I'm speaking to Chris Ingham. Chris is the founder of Liquidation Store, which is a really exciting online kind of disruptor to TK Max or Poundland. But where he got to his current business is through an incredibly painful prior entrepreneurial experience.
00:01:20
Speaker
as the founder of Rejuvenation Drinks. Now, Chris came onto my radar because he published this incredibly straightforward, open, he's a straight talk in Yorkshire, by the way, missive on Rejuvenation Drinks, where he saw opportunity and perhaps where he made some missteps. And I just thought, what an interesting, honest guy. He very generously agreed to come on. And in this episode, I think you're gonna learn a ton if you're tempted to get into D2C and consumer facing businesses.
00:01:48
Speaker
But also I hope you're going to take tremendous heart if you're already in one of those businesses and perhaps it's not going that well from the fact that he's clearly bounced back, used his learnings and his access and insights to the liquidated stock sub-industry to come back stronger and doing something really exciting now. So make sure you listen to the end to hear the happy ending and hopefully take some inspiration from
Meet Chris Ingham: Entrepreneurial Journey Begins
00:02:10
Speaker
Chris's journey. So without further ado, I give you Chris Ingham.
00:02:17
Speaker
Chris, welcome to the First Life Founders podcast. Thank you for doing this, mate. Thanks for having me. So before we dive in, would you mind giving, I of course discovered you through your recent blog post that certainly many of my network I think would have read as well, because it did seem to get quite a lot of attention in the startup founder investor community. For those that didn't see it, and I'll post it in the show notes, would you mind giving a quick summary of the journey that you've recently been on and what you're up to now?
00:02:44
Speaker
Yes, so I founded a business called Rejuvenation Water back in 2015, launched it in 2016. It was very much a vitamin water to start with a soft drinks business that was enriching amino acids.
00:03:02
Speaker
We ran that up to COVID and we started changing the products around in order to meet the kind of stresses that were going on within the market and kind of like some of the rugs that were getting pulled from underneath us at the same time. It eventually changed into a mattress and coffee business within the espresso pods.
00:03:21
Speaker
and the blog you're referring to was kind of like my obituary of eight years of experience of going through all that. Being a first time founder as well with that business, my previous background being in finance, there was a lot of naivety and for almost me was looking back over eight years of
00:03:38
Speaker
how on earth did I come up with these ideas that make absolutely no sense now in hindsight but actually reflecting on those kind of things and talking about my experiences in major supermarkets and talking about the growth and the pains that actually exist and also I stripped back I was quite raw in my emotions and how I
00:03:59
Speaker
address some of the false positives that actually founders go chasing after that only end up leading to negativity necessarily further down the line.
Challenges and New Ventures: Liquidation Store
00:04:09
Speaker
I loved it. I thought it was so good. It was so insightful, so helpful for founders that have the brains to pay attention. And of course, a lot of founders like to learn that the stove is hot by touching it themselves. So I'm sure many would have read it and plowed on anyway with their
00:04:24
Speaker
with their ideas and you've launched another business now haven't you so i think we're going to spend most of our time talking about the first time founder experience but what's what's the new business just so that we don't miss that yeah so kind of from the ashes of what was going on with my original business um one of the real sticking points i had with rejuvenation was when we were dealing with major supermarkets and
00:04:45
Speaker
projections of what they were going to be ordering from insights that were given from these supermarkets were wildly incorrect and it leave us at different times with mountains and mountains of excess stock and in that sense given the kind of like the cost of living crisis and the heating bills warehouse fees went through the roof and we were looking to try and get rid of them for at least cost of goods and when I was going to the major high street discounters
00:05:14
Speaker
we were getting like 2p in the pound where once upon a time we were getting off of 20p in the pound. Really? And when I was picking the brains of the brokers we were talking to, these guys have now become supermarkets when you start breaking it down. They've got planograms, they've got so many stalls that fundamentally there's not enough excess stock out there for them to be able to create a fixture and a portfolio and a planogram.
00:05:36
Speaker
So there's a mountain of excess stock out there and nobody really buying it and that was my first insight into excess stock and I've kind of
00:05:45
Speaker
You're always very much working in the trenches when you're a first-time founder, so you find some of these problems. You find a lot of problems. There's a hell of a lot of problems that exist, especially within the food and drink industry, but even more so within FMCG, whereby there's not enough hours in the day and enough businesses that you could possibly run in order to solve them all. But I found this one to be a glaring problem from a sustainability piece with Amazon throwing excess stock in the bin.
Sustainability and Business Management Insights
00:06:12
Speaker
So businesses just throwing things out of warehouses in order to try and cut down on costs. So I launched Liquidation.store, where I buy excess and liquidation stock from varying different businesses, but mostly big brands that are recognizable. I bought everything from kayaks and tents through to cosmetics and beauty gift boxes. There's a plethora of stock available. And essentially what I do on my website is I sell it for up to 75% off.
00:06:40
Speaker
That's awesome. Flash sales, get things in, get things out. But essentially, a lot of this stock would go to landfill if we didn't intervene. So for me, if it's good enough to sell, it's good enough to buy. And that was kind of disconnect as what I was seeing in the market firsthand. And with everything that's going on in terms of sustainability and traceability, there's a plethora of different ways that this business can benefit where the economics of the current climate is going.
00:07:08
Speaker
Yeah, it's really cool. And what's lovely is we're obviously gonna talk about your first time founders learnings and I'll of course, as usual, confess my many operating sins as well. And I guess the sort of positive that people listening can take out of that is whenever we go through these experiences and learn from our mistakes, if you want to, you can immediately apply pretty much, you know, a lot of what you learned going again. So it's nice to kind of start with that end in mind. So in going back to the original business,
00:07:35
Speaker
When you think about the vision, so where you were trying to take the organization, then we'll talk about how you were planning on trying to get there. How did the vision start and how did it change over time before you decided it wasn't going to be workable? How big did you think it could be and what was going to be the pathway to get there?
00:07:52
Speaker
So even for me, launching in 2015, by that stage, I've been working in banking for probably seven or eight years. And I had the idea actually before I went into the corporate career anyway. But for me, going back to university, I graduated 2007. And
Scaling Startups in FMCG
00:08:11
Speaker
there simply wasn't this kind of entrepreneurial environment that you see these days, where there's mentoring schemes, there's
00:08:19
Speaker
communities that are there to be able to assist and help. And even social media can level the playing field out to an extent where anyone can really grow a brand or really start a brand with just a social media presence, even a basic website that people can build from drag and drops like Shopify's.
00:08:37
Speaker
But for me, in 2007, that environment didn't really exist. And completing an economics degree kind of just made sense to me to go into corporate. So I was working on the concept on the side. And the concept was very much about bringing amino acids to the mass market. We'd kind of gone through proteins. We'd gone through all the different vitamins. And there was a big play around lifestyle within amino acids that only really had been advertised to the gyms, being able to recover from workouts. And actually, there was quite a lot of
00:09:06
Speaker
benefits around immune systems, around central nervous systems, around mental health that haven't really been brought to the mass market. Fast forward to where we are now. I don't think I was a million miles away from cracking the concept. There's a lot of drinks out there now that use BCAAs in energy drinks. I didn't really want to go down that because I found it a bit of an oxymoron to use something there you're looking to recover mixed with caffeine, but it's a concept that's really exploded.
00:09:35
Speaker
But when I launched it in 2015 and 2016 and quit a pretty well-paid banking job, if I'm honest, it was a big sacrifice. And it was a binary decision as well, because my banking contract said I wasn't allowed any business interests alongside my professional career. So it wasn't a case of building up to a critical mass. It was pull the safety net from underneath you and get cracking with it, which had its benefits.
00:10:00
Speaker
it's flaws at least you're fully focused on that you're not just working weekends and evenings and it certainly focuses the mind in that regard as well um i thought it could be massive and i still do think there's a lot of potential in what what we were looking at but to get into the supermarkets you think that's a
00:10:18
Speaker
Before COVID, we were in five supermarkets in places like Costco, in areas of the food service, probably in 500 headquarters around the country from major banks to the major tech businesses. We had the fundamentals there in order to grow.
00:10:34
Speaker
The problem is there's always a disconnect in these sort of elements where actually you probably need to raise the first million pounds of an organization within FMCG in order to do a million pounds in revenue, including all the extra overheads and working capital that's needed.
00:10:51
Speaker
when you deal with a major supermarket as well it's like great but can you afford to probably go six months without cash while providing orders as well at the same time which is one of the biggest problems with a lot of smaller businesses that simply don't have the working capital in order to grow and that was always one problem with those where we have to raise
00:11:11
Speaker
working capital via equity on an ongoing basis. So it almost became a house of cards where if we did not get our next equity funding round in or even individual investors to get them over the line, then we didn't have enough money to be able to produce enough stock and we didn't have enough stock to produce enough orders to be able to get paid in probably three months time when we actually get there in the first instance.
00:11:34
Speaker
Guys, that's so crazy, isn't it? What do you think about the complexity of that model?
Supplier Management and Team Dynamics
00:11:38
Speaker
Minimum order quantities. I remember there was probably six or seven occasions during the life of the business where I'm like, shit, we are at the end of our business overdraft that's personally guaranteed by me. And I don't know how we're going to get to where we need to get to. And one of these elements was we launched cans for the first time. So it was a sparkling water, electrolytes, amino acids, natural fruit juices and fruit flavors.
00:12:04
Speaker
I'm like, right, we'll probably do 50,000 cans to start with, which is big anyway. We did it in Austria. We had a company in Austria that were assholes as well, for that matter. We're just trying to bully these little businesses around. Right. First order, you want to do 50,000. But you need to order 150,000 cans, aluminum cans, per flavor. And we had three flavors. So day one, I had to buy 450,000 aluminum cans, which cost the best part of 75 grand.
00:12:33
Speaker
just to fill that into a warehouse so i remember at the time we were going really quickly i basically had to stack half my workforce in order to be able to pay for the the actual delivery of aluminium cans and in the end after launching a couple of major retailers i don't think we got through half of those cans so through the rest of them in the bin
00:12:52
Speaker
Yeah, I guess which is where you come back to your passion now. So the vision is create a great product that's relevant in the market. I mean, I know my wife regularly drinks amino based drinks for relating to her gym activities. So I understand the space a little bit. And then
00:13:10
Speaker
build a great brand to associate with a great product and then get to scale through classic distribution, retail and food service. So I guess anyone can kind of understand that. And you've hinted at some of the challenges
00:13:24
Speaker
executing that model. When the world I operate in now, we think about vision, people, data, issues like problem solving processes and then traction, like the discipline and accountabilities of running a small business. I mean, maybe we'll try and just run around that wheel because it will help people picture.
00:13:43
Speaker
all of the crazy things that you've encountered on your journey and learn. So we know what the vision was and how we were going to get there. From a people perspective, what was the highest number of employees that you had? I mean, in my world, in the absolute world, we went up to 30, we had to go down to six to survive COVID, and then we went back up to 12, 15 prior to acquisition. So I definitely know what's going on that kind of
00:14:08
Speaker
accordion experiences as a hiring founder is pretty rough, right? What were your numbers at the peak? We peaked at four just as we were going into COVID. We had to get rid of everybody. I even put myself on furlough at one stage because there was literally not enough going on in order to warrant me working on a full-time basis.
00:14:31
Speaker
And then we just continued. I've used various different warehouses. I use various different agencies in order to bring in the expertise that you really needed without necessarily having to pay the full salary of those kind of people. So I had various outsourced back offices, outsourced warehouses, outsourced agencies helping with places like Amazon. So we were using various different means, but we just made a full-time employee after COVID.
00:14:58
Speaker
Oh, that's interesting. So a lot of your kind of management experience in a business like that, because I guess it is capital intensive and a bit different to building a software product where really all of the productive resources are employees. What did you learn about picking and managing suppliers? I mean, you sound like you've had some brutal experiences, because I guess because it's a scale game, right? There must be some real bullies in that world.
00:15:19
Speaker
for what you mean from a retailer perspective. Just from anybody that you were relying on as a kind of third-party extension to your team. What did you learn about supplier selection and management? The problem is you're essentially relying on everybody.
00:15:34
Speaker
And this is like one major thing that i learned. I had very little control from end to end whether it be creating a product all the way through to selling and distributing a product. We were completely in the hands of our manufacturers. If our manufacturer
00:15:50
Speaker
decided that it's no longer feasible for them to produce our drinks or they were full and they wanted to concentrate their efforts on a brand that was going faster or even their own brand. They could cut you off overnight and you just wouldn't have any supply. They were as simple as that. The element, they knew that.
00:16:07
Speaker
the one that we were dealing with in Austria would just try and bully it. No, no, you need to do this. They ended up throwing loads of our ingredients down the drain pretty much. And then they blamed us for not labeling them all properly, even though they were fully labeled. And then they were sending us debt collectors lists for fees on things that they've already thrown in the bin. Then they were trying to charge us for storage for. But then on the other end of that, you're trying to grow a business. You're trying to increase your distribution.
00:16:36
Speaker
But then you have public high concentrations of major retailers where if they dropped you and you've seen this a number of times in a number of different fmc businesses. Couple of key deal listings in key retailers and your business becomes unfeasible because you're scaling through the business you bring in people.
00:16:54
Speaker
manage those kind of listings the amount you spend is relative to the amount of revenue you're gonna bring in which is highly concentrated towards me major retailers one of those guys the list here you've almost. Lost the house of cards comes flying down at the same time as it would do as a manufacturer decided that long no longer want to do it and same with distribution as well if you are relying on a large amount of distribution by a couple of key distributors.
00:17:23
Speaker
and one of them goes busts and there's been a few of these occasions just recently in the food and drink industry where not only do your distribution channels become impacted but there's plenty of brands that had a lot of stock stored in those places that had outstanding invoices which simply didn't get paid and it's an exposure that a lot of brands don't really take into consideration.
Investor Relations and Transparency
00:17:46
Speaker
and especially if you're a small supplier and one of these reputable distributors comes into you with a purchase order of $50,000, which might represent 25% of your balance sheet and then they don't pay for it, can bring your business to your knees just in the same way as losing a major retailer or a manufacturer would happen as well. But these are all risks as you're all clamoring around for
00:18:11
Speaker
growth. You're all looking at top level growth rather than trying to manage the bottom level because success for an FMCG business is very much revenue orientated. They want to see revenue growth. Nobody really cares about the net element of things. It means you're overstretching yourself and you're probably spending a lot of money in areas just to try and find areas for new distribution, new sales.
00:18:32
Speaker
Have you read Shoe Dog, the Nike story? Because it's interesting, isn't it? Someone listening to you might be like, crikey, that sounds hard. Because it's so different to my world where you're starting a software business. It's hard to find customers and build the right product.
00:18:47
Speaker
But there's not that many critical dependencies on external suppliers, really. You pick a hosting platform, AWS, but if they get too pricey or unreliable, you could switch to Google. You're largely only beholden to the quality of your employees, and hopefully you've got a good technical co-founder if you're non-technical. And you've pretty much taken all of those risks away. So I'm listening to you, and I'm thinking,
00:19:10
Speaker
God, that sounds hard and complex. And someone who hasn't been a first time founder and doesn't realize how humbling it is, might even listen to your story and be like, well, that's a bit naive doing that. But if you've read Shoe Dog, you'd know that like,
00:19:24
Speaker
Phil Knight dealt with pretty much all of the problems that you're describing and really only just about held on by a combination of luck and timing. And then of course there's some grit and talent and quality in the product as well. But they were like funding, that whole book is about trying to survive the working capital squeeze, isn't it? It was quite refreshing to read it when I was going through exactly the same experience myself. Like he was going to the bank manager, getting money from the bank. Business like us can't do that.
00:19:52
Speaker
And for me, at one stage, we were growing so quickly that I had to try and fund new launches. We're launching to Tesco and Sainsbury's at the same time. Right. And we had to produce enough stock in order to fulfill that. And it's very difficult to raise debt being a small business that's probably loss making as well at the same time. So we were going to pretty much, we're about two steps away from being loan sharks in effect.
00:20:18
Speaker
and offering personal guarantees. I don't have any assets. I've got no ability to be able to pay these debts back if the business went under. I remember at one stage as we were going into COVID, I was probably in for about 100 grand personally guaranteed, just in order to produce enough stock in order to fulfill orders that were coming through.
00:20:39
Speaker
And luckily when the business closed, I whittled all the way down to about six grand. Otherwise, the longer term impacts for me as a founder and wanting to go again could have been catastrophic.
00:20:52
Speaker
Yeah, it's not for the faint hearted, is it? But what listeners should know is that the experience you're describing is not particularly uncommon in a working capital intensive consumer-facing business. So let's talk data then. We talked a bit about vision and people. What was some of the, did you understand the leading indicators of success in the business you've chosen? Or did that become clear over time? Or did it really only become clear afterwards, you know, like as you think about
00:21:21
Speaker
checking the temperature on how the organised temperature is the wrong word, but understanding how well the mission is going based on numbers or was it really more of a kind of a feel type thing as you were in it? I mean, you were living hand to mouth to an extent, but I think the main data drives for business that works, especially within supermarkets, is you're looking at rate of sale, you're looking at distribution,
00:21:46
Speaker
you're multiplying those together and you could bring that picture to another supermarket and say, these are the numbers that we've done elsewhere, this is what we can bring to you. When we became much more of a digital first business, when we started doing the Nespresso pods, like the Matcha pods and the keto coffee pods that we had, then the data became much more e-commerce orientated, so cost of acquisitions.
00:22:12
Speaker
looking at all the different elements of, is this business sustainable for us to keep going? Where's the critical mass? And there were elements of that. There were big interjections between the amount of money we were actually spending hoping to get lifetime value on customers that just didn't really exist. And the market got ultra competitive, right? I think there was a number of different cliches that happened all the way through my experience as well.
00:22:38
Speaker
When we were leading into COVID, everybody was chasing down like a national account manager in order to manage all your supermarkets. And then as soon as we went into COVID, everybody was looking for like an e-commerce manager. We're all chasing like the same sort of unicorn managers to manage different elements of your business.
00:22:57
Speaker
But then there's another element, I think one of the other elements for this was from a funding perspective, you need to get to like the key indicators each funding round to be able to grow the business, to be able to bring in new investors. And I think one of the major ones within that was getting to a million pounds worth of yearly revenue, because then that opened up the market to like VC investors. I probably had conversations with 1000 different investors through my lifetime, but probably more than that when I start breaking it down.
00:23:26
Speaker
that when you look at institutional investment, which a business that wants to scale as much as it's great bringing angel investors in and we did we did a couple of crowdfunding rounds. So we probably had 500 investors by the time that we close the business and even touching upon the amount of risk that I was taking where I was personally leveraging my own finances and taking on
00:23:47
Speaker
debt with personal guarantees, if I wasn't willing to do that, then how on earth could I expect an investor to invest money in the business if I don't think it's worth taking a risk to put my own money and why would I take money from elsewhere?
Learning from the Past for Future Ventures
00:23:59
Speaker
So that was irrelevant. But when you were talking to institutional investors, you had to be doing a million pounds a year in order to bring that in. So it was kind of like,
00:24:08
Speaker
you are taking extra risk just to trying to hit those key metric indicators, but you end up jeopardizing the actual sustainability of your business, just trying to drive the hell out of your top line revenues to get to that key indicator where then someone could come in and put a million pounds into the business. So I do think there's an element like that. And I do think there's a big gap where businesses are doing
00:24:33
Speaker
300 to half a million pounds within FMCG, breaching that gap and getting to a million pounds, having to bring in talent and extra costs and the extra infrastructure that's needed to get to a million pounds. You find there's a lot of businesses that run out of steam, not necessarily.
00:24:50
Speaker
fail in terms of what they're trying to do but just overstretch themselves trying to hit that key indicator and then they run out of steam or they give all the money to google and facebook and they don't want to get the investors into that next level which essentially means you're running a house of cards so the next investor doesn't come in the business is running unsustainably the business goes under
00:25:12
Speaker
Well, you hinted that in your note, which I thought was interesting. There was some interest from investors, wasn't there, in the direct-to-consumer business, but you felt like you would have needed to benefit disproportionately to some of the original investors to spin that part of the business outright. Did that have a different set of
00:25:33
Speaker
I think that was more to do with the pivot of the business where we started out with soft drinks and then we pivoted into Nespresso pods and doing like the matcha pods that we had for Nespresso machines were selling exponentially better online than anything that we launched prior to that.
00:25:50
Speaker
The problem was we just didn't have the funding in order to make it a full success. Plus the supply chain have become stressed with everything that's going on with shipping. We're bringing over Japanese matcha. It was quite a convoluted supply chain. But I think my point in my blog was I could have easily said, right, the soft drinks business had not worked. We could have closed a business three or four years ago.
00:26:14
Speaker
i could have completely wiped the cap table started a new business with a new concept based on matcha pods taking a hundred percent of the business for myself yeah we're back and we're back up and running without any baggage but for me as a first time founder i think the way that you treat your investors the way that you come across
00:26:33
Speaker
The way that you hold yourself and the way that you respect the people that are around you is going to speak exponentially into your next few businesses because it's a relatively small industry. There's a lot of people that know each other. So if you try and screw over a number of people are putting even six figures just in order to benefit yourself in the short term.
00:26:53
Speaker
then these things come back to bite you in the ass later on. So for me, and I fully appreciate everything that all my investors bearing in mind, I had no experience up to the point of launching my first business. And these guys didn't necessarily buy into the concept, but they bought very much into me and my passion and drive of what I was trying to achieve.
00:27:14
Speaker
I even gave my original investors in my first business a proportion of my next business as an element of thanks. And then there's an element of guilt in that within that I couldn't make this a success when we showed that we had the green roots of actually creating something that could have been successful. So I think there's an element of how he carries off. I always made a point of emailing all my investors every month to tell them exactly the experiences that I'd been through.
00:27:42
Speaker
not just the positives, quite a lot of the negatives as well. Actually, when it came down to me closing the business, I probably gave them a year's notice to say, right, unless we receive something significant investment from now, and it would be as potential.
00:27:58
Speaker
or unless we find someone to acquire the business in order to take it to the next level, then I will close the business. I gave them a countdown going through the motions of, this is what's going to happen. Eventually, when I did, bearing in mind I had 500 investors that lost some significant amount of money, then there was no one coming back to say,
00:28:19
Speaker
what the fuck's going on and where how on earth have you done this in fact quite a lot of the messages i got from investors was saying thanks like you've taken us on a journey here um a lot of other people would have thrown the towel in a lot a long time before you got to this kind of stage and you've done everything that you can so i do think having an open relationship between the people that invest whether it's people investing 10 pounds or 10 000
00:28:44
Speaker
they're not necessarily just buying into the business, they're buying into the experience and the adventure that they want to come along with you at the same time. So just taking an hour out of your time each month to be able to share your experiences firsthand and candidly, then those elements come back to reward you in your next journey or whatever else you're trying to achieve in your next point of call.
00:29:06
Speaker
I thought you came out really came across really well in the blog on that you know that that yeah you could have just shut it down early and started the new thing that looked promising but you didn't want to do the dirty on those that had backed you and then you you'd stood up tall and you've been honest all the way through i mean i always write i always wrote monthly notes as well whether it was going well or whether it wasn't when we then had to make the big layoffs to survive covid and i didn't think we were going to make it at all again
00:29:30
Speaker
stand up tall and tell the truth, then when we eventually saw acquisition because it was clear that the business was going to be more valuable to a business that had a broader market offer than our very narrow focus on communication software, again, you're able to hold your head high and say, we've pursued all the right options.
Resilience and Growth in Business
00:29:49
Speaker
This is the right option for as many of the stakeholders as possible. And I haven't put my own interests ahead.
00:29:55
Speaker
i agree you get benefits that sort of soft benefits afterwards i can actually i couldn't mean someone like phillip green is made a gazillion dollars doing all sorts of pretty shiny things as far as i can tell if the press is to believe be believed i'm clearly very successful man financially but
00:30:11
Speaker
It's not necessarily the type of life I want to live. It sounds like you're the same. Why don't we talk about false dawns? Can you give me some of the highlights where you just thought, this is it. I'm on TV or I'm in a supermarket. Look, mum, no hands. Would you mind if we could just relive some of those highs and then when the scales drop from the eyes? Because again, I've had a few of those.
00:30:37
Speaker
I think through my experience, it was always about getting a foot in the door somewhere and leveraging it for like every pound that it was worth. And I think one of them for me was when I first launched a business, I did a trade show at the end of 2015. I took a day off work. I managed to get some samples from the labs in and some stickers to stick on some bottles to make it look like the actual product itself. Put a bed sheet over a table, put some kind of jars on top.
00:31:07
Speaker
wrote my brother into coming down to do it and essentially launched the business there and then I was still working in banking so I took like a day off work. I got chatting to the John Lewis buyer at the very beginning and she was like actually if you get some distribution because even for us like you think
00:31:24
Speaker
I was very naive when i first started where it's like great you want to get into supermarket you just deal with these guys directly like it doesn't work like that all there's so much behind the scenes in order for your supply chain and the buyer said look get yourself some distribution and then let's have a chat and i pestered her for about 80 months after
00:31:43
Speaker
Eventually, they put us into the John Lewis Food Hall in Oxford Circus. We didn't have any distribution to get in there, so we were driving the drinks in there. We had a van, a hider van, and we'd take the drinks and deliver them to John Lewis on a weekly basis. They loved us going in there and sampling. So I think at one stage, I was sampling the food hall four times a week. Really? And then when you're on the system at John Lewis, you're on the system at Waitrose as well.
00:32:11
Speaker
So I squeezed every element of value out of that listing in just one supermarket until the Waitrose buyer contacted us and said, I don't know what you're doing, but you're one of the best-selling drinks within that food hall. And then we ended up getting a nationwide listing with Waitrose on the back of it. And that's it. I thought we were done. I thought we were made for life. And then from that, we took all the data from there, and we presented that to Tesco's and Sainsbury's. And then they ended up launching it as well.
00:32:39
Speaker
And anybody that would, anyone that had listened, the first like, hi, well, what do you do for business? Oh, rejuvenation water. We're in all the supermarkets. We're like, we're in Waitrose, we're in Tesco's, we're in Sainsbury's. But even within that, like, you think you're done. And I also think that everybody over strides to get into these elements. But looking back now, we were in, I think,
00:33:01
Speaker
300 Tesco stars, but like big extra stars, like out-of-town superstars in places like Middlesbrough where innovation goes to die. It was important, one, and we had no express stores, we had no meal deals. We're in the back of store next to two litre bottles of lemonade and Coca-Cola. How hard is it to shift product through a supermarket? Like, can you give us a sense of like what sort of
00:33:31
Speaker
Yeah, what sort of sales could you expect if you did nothing? And then like, what sort of things did you do to try and tip the scales in your favor? I mean, it's very much weather dependent, right? The summer months when it was like 40 degrees, things would go crazy without really doing anything. Even in some of the supermarkets, even when you're doing like big discounts to get acquisition and get people involved to start with,
00:33:54
Speaker
even doing 50% off, the problem was in like a big out of town superstar, there's a million products in there. How can you cut through the brands that have been in existence for 100 years and people go there subliminally without even having to think about making a buying decision. So even like that, there was no amount of discounts that would get people in. But I remember I'm always being a bit of a hustler. I've always been a fighter with doing these things.
00:34:22
Speaker
We were given a back of star listing in Sainsbury's and they're like you can launch four packs, you can launch singles, what do you want to launch? Let's go with singles because then I can move them into front of star if the sales are good enough then all I have to do is just move them into front of star. You didn't, did you say that to Sainsbury's or that internal monologue?
00:34:41
Speaker
The issue is, once you get into the stars with the product, then that product's much more easily interchangeable between different stars and different listings. If you launch a four-pack and then you want to launch a single, it became a different skew on a system that had to be uploaded.
00:34:57
Speaker
let's make it nice and straightforward let's just do singles back of star and i think i had in london maybe about a dozen but like big stores it's like one round the corner in onesworth where where i am right what i was doing i was probably doing about 20 kilometers a day going and what i would do is going to the back of star take all my cases out of the back of star
00:35:20
Speaker
march them to the front of store, take the label out of the barcode at the bottom and stick it all in the front of store next to the sandwiches. And the sales would go exponential because the people coming into supermarkets to buy a sandwich and picking up a drink would pick up one of our cans even though it shouldn't have been there. Lots of these stores would carry on restocking and see who's out of our stock and they'd continue to restock in that sense.
00:35:44
Speaker
The issue that we had was when we signed out, the superstars weren't coming back to buy anymore. I think in one week, we sold like 150 cans in a store in Milton Keynes, and we could see all the data. So you could see the rate of sale, you could see how much stock. So it's like, yeah, we sold 150.
00:36:02
Speaker
But there's zero, there's no stock in there. So we can't keep that up. And then it was zero, zero, zero, zero. Then it was blank, where not only they stopped restocking it, but they're just taking us out of that stall altogether. So we became like a victim of our own success. By the supply chain of what you believe would be a super slick operation like Sainsbury's.
00:36:22
Speaker
just didn't happen. And even with this Sainsbury's, they sent out like a distress flare, I remember during COVID, where I don't know if you can think back to it, there was nothing on shelves right at one stage at the very beginning of COVID. I remember, yeah. Now a distress flare to all the suppliers, if anyone can go to your local Sainsbury's to get stock on shelves,
00:36:40
Speaker
can you go and do that? So I dragged my brother around to the one round the corner and we were moving like cages onto the shop floor and stacking the shelves with other people's brands to try and get product on shelf. And it's like, now I know why it's so difficult for Sainsbury's to get products on shelf because it was a right shag show. They had pet food mixed in with protein shakes, with drinks. But this cage was probably doing like half a mile round Sainsbury's just trying to get product on shelf. They've got no idea.
Adapting to Market Dynamics
00:37:09
Speaker
if the product's on shelf, if it's in the back of the store, if it's on the back of a lorry and this is someone that you want to rely on in order to grow a brand and they just didn't know whether they were coming or going and that kind of highlighted it for it during COVID. That's amazing. What are the hardest things about your new business? Because I appreciate it was sort of inspired by an insight from the old business. What are the hardest things about the new business and are there any kind of like meta-learnings that you picked up from the first thing you're doing differently this time?
00:37:38
Speaker
I think to answer your second question first, I think there's a lot of elements that I want to take from my learning to my first business. Control is one of them whereby even what we've touched upon already with being completely in the hands of the retailer, the hands of the distributor, and the hands of the manufacturer, and if one of those falls down, your business is unsustainable pretty much overnight.
00:38:02
Speaker
And so for me, starting Liquidation Store, if I can't have control over the retailer, then I simply became the retailer, which is what I've done there with Liquidation Store, where I've got much more control about what I sell and therefore what I buy. And that feeds into that. From a funding perspective, I bootstrapped the hell out of this business already with a little bit of money that I've put in there. I don't want to go back down
00:38:29
Speaker
the root of taking large amounts of angel investment, then large amounts of VC investment, and have to grow unsustainably. So what I'm doing now, I don't even do any social media ads. I've not given any money to Google. I've not given any money to Facebook. And I'd rather grow sustainably based on me having big branded products. I'm buying in at a fraction of the price that other people are. Therefore, I'm simply undercutting them on value. And being much more hands-on.
00:38:59
Speaker
rather there's an element of chicken and egg which has always occurred in this industry whereby do you bring in the people they want that can get your business to scale but at that point you've got no revenue therefore you can't really afford them so already you're overreaching.
00:39:16
Speaker
or do you get to a stage where you can grow a business sustainably and then bring in the expertise as you can afford it as you're going through the steps one by one and i'm very much doing that at the moment now i'm probably doing
00:39:30
Speaker
30 grand a month and I'm the only person in the organization but I'm working seven days a week. I've got a small storage unit in Vauxhall which is 200 square feet that I'm paying 55 pounds a week for but really I need probably a 3,000 square foot warehouse in order to be able to process things economically
00:39:50
Speaker
For me, it's like, right, let's go through the stepping stones of this. Let's grow where we can and hustle the hell out of it until we can get to a stage where we can afford to take in the right kind of people. I probably need 10 people where we sit already, which means I end up chasing my tail a lot. I probably got 200 products, but I've probably only got 100 listed on the website because I can't physically keep up with the amount of stock that I'm buying in and being able to list it over and over.
00:40:15
Speaker
but then I use eBay, I use TikTok shop, I use Amazon, we're even on voucher because a velocity player as fast as I can get these things in is as fast as I can get them out and I need to get them out faster in order to put money back into the flywheel to go again. So for me, I've kind of gone old school to an extent where I've kind of been born into entrepreneurship in this environment where it's go to VC with a fact packet calculation of what money you need for the next 18 months, raise as much as money as you want.
00:40:44
Speaker
give away 30% of your business based on some metrics and some projections that don't really have any credibility. But don't be afraid about burning cash, because it's all about growth to what I'm doing now. And each month, we've actually created a net profit in everything that we're doing, which
00:41:02
Speaker
seems to have no value in this kind of economic climate well actually it does in this economic climate now when i was going to say i think it does i'll start doubling down and stepping away from businesses that are unsustainable which the fundamental amount during tech
00:41:18
Speaker
And I don't want to run a business where, in fact, my experience through rejuvenation water is I didn't actually have time to grow a brand because all I was doing was a full-time roadshow of trying to get money in in order to keep up with demand.
The Liquidation Industry: Challenges and Strategies
00:41:33
Speaker
I didn't have much time to spend drawing the business because I was just a glorified fundraiser. I think a lot of people can relate to that experience. One of the things you've alluded to, I just want to touch on it to make sure I've understood,
00:41:45
Speaker
All running all businesses is hard, right? But you have that like the type of hard where your my favorite description is all running all businesses is hard. But there's the hard way you're pushing a boulder up a hill and there's a hard way you're running down a hill trying to keep up with the boulder. And it sounds like what you're doing now because you've kept your costs so low. Every now and again, or quite often, there's a volume of work that you physically can't do. So you're chasing this boulder down the hill because you know, it's a it's basically working economic model. Yeah, short staffed versus previously.
00:42:15
Speaker
you've got the money, but actually all the effort is trying to get the sodding thing to work. Does that make sense? Yeah. I reckon in the first six months of launching Liquidation stock, I've been offered somewhere in the region, £150 million worth of excess on Liquidation stock. Jeez. For me bootstrapping that, it's difficult because what I want to do is I want to corner the market. I don't want to buy one palette out of 50.
00:42:42
Speaker
because that opens up to other people to buy it and then compete against me for price. I kind of want to take the job lot and then when people want to buy product. One of the prime examples of this, I've got The Ordinary, which is a Canadian skincare brand. They had a foundation that they discontinued
00:43:00
Speaker
And with all those kinds of things, once something that's a big brand that's being discontinued, it has economic value because people can't get hold of it anymore. It becomes scarce. So actually, I'm listing that for above retail because there's not enough supply versus the demand of this kind of product in there. But if I'm to do that properly, I need to buy everything. When I first launched, I got offered 50,000 of these foundations for around
00:43:25
Speaker
like a pound each or something like that. TK Maxx came in and bought pretty much everything and left me with like 2000. So but then TK Maxx sold out pretty much instantaneously. While my business now we've been buying more and more tranches and more we find of it. So then even like that becomes a much more sustainable model when you can take the entire job lot. Another one we bought some ride on kids diggers before Christmas.
00:43:50
Speaker
Yeah. This product we ever bought, but the brand that went under had 640 pallets of stock. Everything from like ride on Lamborghinis, ride on JCBs, little Audis. And I'm like, I would love to be able to buy everything. That's unreal. That's not going to fit in a 200 square feet industry unit in Boxhall, but have the means of moving that out or even the means of buying it. So I had to cherry pick, which I've always had to do. It's like, great, I want to buy everything, but
00:44:19
Speaker
Fundamentally, I can. This sounds like a fun business. It is a lot of fun, but I do find the liquidation industry is rife for distribution because these guys have been working in the industry for like 40 or 50 years and all these guys do is move pallets from A to B.
00:44:38
Speaker
really ever stepped in to do like a DTC element where there's so much liquidation stock, it just gets shipped overseas to Eastern Europe or the Middle East or the Far East. And that's it. They're just moving things out. They're making 10% on stuff here and there.
00:44:53
Speaker
But most of it will put even in that sense with liquidation, excess stock will end up in landfill in some which were shaped off on because people will pick through it, find the most valuable items and then just not bother with the cheaper items. It is the sum of it, which is very much like the old school storage walls where there's there's like mystery pallets available that are trying to avoid where possible because you've got no idea what you're going to buy. But you've also got people in this industry like bought some some liquidation stock from a German retailer.
00:45:23
Speaker
Couple of months ago when it arrived it was all faulty returns from John Lewis and boots. So I'm like this shit has no residual value Going to war with the business over that saying like this is not what was advertised But you're dealing with like these old-school guys that like just don't give a shit
00:45:40
Speaker
So there's an element like that you've got to have fighting you to do this. Otherwise people roll straight over the top here and especially an experience like that if that was the first buying decision that made in liquidation then you'd shot before you even started.
00:45:55
Speaker
I mean, I'm listening to you and I'm thinking, shit, Chris, I want to come and be an intern. It sounds so interesting. And the proposition is basically to be like a D to C digital first, TK Max almost, right?
00:46:11
Speaker
People like my wife that loves a bargain, this presumably becomes one of your members and just starts to keep her eagle eye on your listings. Is that the idea? And you end up with a kind of million of those sort of bargain hunters. I do think that the big guys like the B&Ms at TK Maxx have been underserving online for the beginning of the night, which makes sense. They've got the bricks and mortar. The very kind of products that they sell are low value items. So some of it is just not e-commerce.
00:46:40
Speaker
friendly. You've got to really think about value density when you're selling these kind of things. But then I've just, for us, I can't sell a can of baked beans on my website because it'll cost me three quid to go and sell it in there. So I kind of look for higher value items where it makes sense to me to be able to apportion 5% of the retail value into shipping it out left, right and center. We've got like
00:47:01
Speaker
We've got kayaks that we picked up that are worth like 800 pounds that we're selling for 400 quid. That's bullshit to somebody for 25 quid. So that makes perfect sense in that. And that was like a big leisure business that went under with like three warehouses full of stock that I wanted to go and see.
Reflections and Future Plans
00:47:19
Speaker
And it's wild what some of these businesses have in terms of excess stock, whereby they're having to run three warehouses, think about the light and electricity and the
00:47:28
Speaker
the heating that's actually takes to power one of those units in this kind of climate where everything's gone through the roof. Yeah, totally. Three warehouses becomes a quarter of a million pounds worth of cost and it's not sustainable for these businesses anymore. So that's what we're trying to do there. We've taken in electrical stock, high value cosmetics, anything that weathers value. I've just bought, even today, about 900 weightlifting belts.
00:47:56
Speaker
Really? But they sell really well online from my research that I've done there, and I've researched it. It'll probably take me three to four months to sell through, but I'll probably make 50% net on everything that I'm selling. And it's a total bargain for the customer. It's really interesting, actually. Listen, I love when you hear people that are in a given sub-sector where they acquire the language. The only time I've ever heard about value density is, I don't know if you've read the book Becoming Trader Joe. It's like the story of Trader Joe's.
00:48:24
Speaker
was a value-based supermarket. It's owned by Aldi now in the States, but it's a really good book as to how he built this brand, Trader Joe's, which was always about affordable luxuries in the supermarket space. And he did really well with wines and knickers and things. And as you were talking, it was made me think at that point, kind of washed over me in that book.
00:48:45
Speaker
But now I'm thinking about it, I'm like, Christ, now I know why that bloke was so obsessed with that, because it's like the dollars he could achieve retailing in a smaller unit made it worthwhile. And he just couldn't compete against Walmart with big Costco with big pallets of things that had lower price and took up more floor space. So there's been educational listening to you, Chris, are you going to continue to be as open
00:49:05
Speaker
Going forward, now you're enjoying this bit of success as you've been talking about the last business because I'm sure anybody that listens to this is going to want to be following you, rooting for you and frankly buying kayaks off you. I think it's part of my makeup anywhere. When you come from Yorkshire, you call the spare the spared.
00:49:22
Speaker
you do yeah and even even my negative experiences i posted the tick i'm not a tick tocker like it's completely out of my generation i posted a video on liquidation.stores tick tock the other day talking about this shit pallets i got like 14 pallets of shit that we've been promised and we spent all this money and i posted that on tick tock the other day and it got like a hundred thousand views
00:49:44
Speaker
I mean a lot of negative comments, it's the nature of it. But I'm like, yeah, of course you guys in that kind of sense. But actually, people that were commenting was actually respect because a lot of people are posting like buying liquidation palettes from Amazon for a grand and it's actually worth 100 grand and it's mostly bullshit.
00:50:04
Speaker
And me posting the other side of the coin where actually this is what it's really like and it's actually very difficult to make a quick book that everybody aspires to do. If it was that easy, everyone would be doing it and seeing the truth of what happens when things go wrong. It's a refreshing way of marketing and it's a refreshing way of building an audience as well at the same time.
00:50:24
Speaker
No,
Conclusion and Gratitude
00:50:25
Speaker
I love it. Well, listen, we'll put the links to all of your various online properties in the notes. I know people are going to get so much value out of this. There's the sort of cathartic bit in being able to relate to somebody that's already been through a hard experience as a first-time founder, but also that joy of coming out and using the experience to win with that new thick skin. Mate, thank you so much for doing this. It's been an absolute pleasure. You're welcome.