In this episode of the M&A Launchpad Podcast, hosts Feras Moussa and Casey Minshew interview Jens Grudno, delving into his journey from a finance background to acquiring and turning around a struggling German manufacturing business. Jens shares the challenges and intricacies of transitioning from corporate roles to entrepreneurship, including the complex process of acquiring a division of a bankrupt company, managing legacy issues, and scaling the business. Jens now currently owns and operates DOVO, a 100+ year old German straight-razor company with an incredible brand and story. Although the business ran into turbulent times, Jens recognized the opportunity and acquired the business a few years back.
The discussion covers Jens’ unique market in traditional straight razors, his strategic decision-making, and key lessons from his four-year experience. The episode offers valuable insights into the manufacturing sector, turnaround strategies, and the importance of tenacity in business.
Jens is an open book, and if you want to learn more about his story or are interested in talking through a potential acquisition or investment, he encourages you to contact him!
For 25% off DOVO Razors or Kits – Discount Code: LAUNCHPAD
In this podcast episode, we discuss:
- Turning Around a Distressed Business
- How Brand Appearance Matters
- Challenges of Operating a Business
- The Razor Market
Time stamp:
00:00 Introduction to Today’s Episode
02:16 Jens Grudno’s Background and Business Acquisition
05:03 Challenges and Strategies in Turnaround
11:26 Navigating the Acquisition Process
14:49 Post-Acquisition Challenges
26:24 Brand Value and Market Potential
31:02 Product Line and Market Strategy
35:34 Ups and Downs of Operating
38:08 Rocket Round
41:45 Conclusion and Contact Information
27:20 Conclusion and Contact Information
You can connect with Jens by email: j.grudno@dovo.com
Additional Resources:
- Access our archive of video interviews on YouTube
- Checkout our upcoming Conference – https://malaunchpad.com/
- Get in touch with show hosts Casey Minshew and Feras Moussa at – info@equitylaunchpad.com
- Looking to invest in M&A opportunities or partner with an advisor to acquire, scale or sell your business? Visit Equity Launchpad
Transcript
00:00 all right on today’s episode we
00:01 interviewed Yen grudo and we talked a
00:04 lot about manufacturing right what it
00:05 looked like the transition from kind of
00:07 having you know a day job some other
00:09 gigs and buying your first manufacturing
00:11 business and more importantly Not only
00:13 was this first business it was a
00:14 manufacturing business and it was a
00:16 turnaround so really talking through a
00:18 lot of the mistakes made and some of the
00:20 things to consider when you’re buying a
00:22 manufacturing business JC and I have
00:24 bought a Manufacturing Company
00:25 manufacturing is not easy right but also
00:27 that in there lies the opportunity to be
00:29 able to kind of Step is something that
01:31 most people are going to shy away from
01:32 and be able to go and you know get
01:34 something performing so Casey what were
01:35 some of your big takeways man I’ll say
01:36 warning to all Searchers do not follow
01:39 his rulebook on how he found the
01:40 business right it’s everything not to do
01:43 but it’s that tenacious you can see it
01:46 in his eyes he’s tenacious he’s not
01:47 going to give up he’s never going to
01:48 quit and after four years he’s starting
01:51 to see the results of that hard work and
01:53 that hard labor and you got to think
01:55 about it’s a it’s a straight Riser Niche
01:57 you know and like I I thought about
01:59 buying one but it’s just not something
01:00 we all talk about so it’s such a unique
01:03 in individual place but I will tell you
01:05 you know you could tell that there is a
01:07 a day I go every day with intention to
01:09 work hard and that’s what you get from
01:10 Yan and so that’s what I took from this
01:12 podcast guys incredible and maybe to add
01:15 to that too right you know the other
01:16 thing to kind of note is just talking
01:17 about incremental improvements right
01:19 it’s not about buying and turnaround
01:22 company and figuring out hey how do I
01:23 10x the revenue right like it’s not that
01:25 at all it’s hey can I make my given
01:27 products more profitable to at least I’m
01:29 making a profit on them set money right
02:31 can I do some small incremental
02:32 improvements both on the expense side
02:34 and the revenue side and get the
02:35 business from losing money to being an
02:37 actual profitable company right and the
02:39 other thing too to note is you know he
02:40 bought a division of a company which has
02:42 got its own challenges so in Germany in
02:44 Germany I mean this is this this is full
02:46 of great nuggets for somebody oh yeah
02:48 we’ll hop right
02:51 in welcome to the m&a Launchpad podcast
02:54 with your host Casey and Ferris with
02:55 Equity Launchpad on this podcast you
02:57 will gain insights on acquiring
02:59 investing in and selling profit
02:00 businesses in the lower to Middle Market
02:02 whether you’re a business owner investor
02:03 or Spa entrepreneur at Equity Launchpad
02:06 we will provide you with the knowledge
02:07 guidance and capital to navigate the
02:08 world of emergers and
02:11 Acquisitions hey everybody it’s Ferris
02:13 and would’ love to see you at our
02:14 upcoming m&a Launchpad conference in
02:16 Chicago October 26 at a conference we
02:19 talk about what it looks like to value a
02:20 business how to buy a business how do
02:22 you manage a team right and ultimately
02:24 we’re big Believers in the buy and build
02:26 concept so we’re going to have one of
02:27 our friends Walker Dall the author of
02:29 buy and build there as well one of our
03:30 Keynotes and many more so love to see
03:32 you there to kind of get exposure to the
03:33 space and Network all right hey yens
03:36 welcome to the show hi happy to be here
03:39 all right so today we’re gonna talk
03:41 about manufacturing Casey and I have
03:43 been through the School of Hard Knocks
03:44 on running a manufacturing business I
03:46 think we’re in the School of Hard we’re
03:47 still in the School of Hard kns of you
03:48 know what it takes to look at
03:49 manufacturer business figured you know
03:51 we can kind of learn from you as well
03:52 kind of what are some of your
03:53 experiences and for the audience to kind
03:55 of learn on just some of the pitfalls
03:56 and things to avoid and you’re in
03:58 Germany so it’s a it’s a different
03:59 convers a lot of the the the
03:01 entrepreneurs we’ve spoken to are in the
03:03 United States so this yeah to date
03:04 actually you the first International and
03:06 we’ve T we spoke an entrepreneur that
03:08 was where was he Malaysia or he there
03:11 visiting yeah but he was just kind of
03:13 out there visiting while he did the call
03:14 but his business are still State based
03:16 so we’ll learn a little bit more about
03:17 European business and culture and all
03:19 the things that that adds to it so y
03:21 honor didn’t know that I’m the first
03:23 actually outside the US that’s cool you
03:25 are yes yeah nice so maybe let’s hop
03:28 right in you so what do you have going
03:30 on today right and how did you get into
04:31 it uh let’s start what I’m doing at the
04:33 moment so I bought a business four years
04:35 ago and it’s the largest manufacture of
04:38 traditional straight risers so these
04:40 Cutthroat risers that you know from
04:42 mafia movies that very few people use
04:44 still and that 100 years ago or 150
04:47 years ago almost everyone used and now
04:49 it’s a tiny tiny Niche business which is
04:52 interesting because it’s a business
04:54 where there is a huge mod because the
04:57 knowledge also over the years and
04:59 decades went away and no one wrote it
04:01 down how to actually get from a rough
04:04 steel to something that is sharper than
04:06 a Gillette or some other brand uh blade
04:09 and I got into it four years ago now so
04:12 first of October was my fourth year with
04:14 the business congratulations thank you
04:17 so you bought it 19 end of 19 correct
04:20 yeah same my first acquisition was the
04:22 same exact time closed so I just had my
04:24 time so it’s interesting yeah and it
04:26 went past quite fast so I it’s probably
04:29 the same as if you have a kid I have a
05:31 son now that is almost years and the
05:34 time just flies it’s the same with the
05:35 business right you have so much going on
05:37 you have so many ups and downs that it
05:39 doesn’t feel like four years it feels
05:40 like one year or two years or something
05:42 awesome so so how did you find the
05:43 business right and were you going out
05:45 initially looking for a manufacturing
05:47 business or did you just kind of stumble
05:48 into it it was the second one it was
05:50 actually stumbling into it so the
05:51 business found me through a friend who
05:54 worked for the business as an outside
05:56 consultant he built the website of the
05:58 business he has started social media
05:01 marketing in the early
05:03 days
05:05 and um had his own agency placed in
05:07 Berlin and he was a friend from Berlin
05:09 and then one day he just said look
05:12 if they’re not paying their invoices
05:14 anymore and the CEO called me and said
05:18 oops we forgot to tell you a couple of
05:20 weeks ago we filed for bankruptcy wow so
05:23 this is a turnaround story it is a
05:25 turnaround yeah first business you did a
05:29 turnaround and Manu facturing you’re
06:30 crazier than I
06:32 thought I I actually read a book
06:35 afterwards it’s buy and builds and
06:36 there’s many things listed up that you
06:38 shouldn’t do especially for the first
06:40 time and all of them I have a check mark
06:43 at so taking money from friends and
06:45 family our buddy Walker wrote that book
06:48 and he’s a good dude um and so maybe
06:51 really quick though what what were you
06:52 doing before right what led you to start
06:54 looking to buy business to begin with
06:56 right and what did you have in mind
06:57 whenever you started that Journey right
06:59 ultimately you landed on manufacturing
06:00 business but you know what kind of what
06:02 were you thinking about
06:04 beforehand so I come from a completely
06:06 different background so when I was 1617
06:09 I wrote
06:11 the I I read not I wrote I read the
06:14 intelligent investor got into value
06:17 investing and my number one goal when I
06:20 was 17 18 was okay I want to be a
06:21 portfolio manager and manage money for
06:24 institutions or private individuals with
06:27 value investing principles because it’s
06:28 just click for me right it’s okay
06:30 whatever other people don’t like the
07:32 price is low you just buy it keep it for
07:35 forever or for a couple years and then
07:37 when it’s on Vogue again then you can
07:39 sell it so studied Finance studied uh
07:42 engineering did my CFA started working
07:45 for Pimco in Munich they had had a
07:46 Munich office and then went to a a fund
07:51 manager in Munich that is quite
07:52 specialized so there’s lots of Quant
07:54 Traders there and there was one fund
07:57 that did investing in equities but in
07:59 everything and I got sub fund and
07:00 invested that in small caps and special
07:02 situations which was quite fun W but did
07:05 not somehow make sense after a year for
07:08 me because I wanted to build something
07:10 right it was it was fun financially it
07:12 was fun from a bit intellectually
07:14 because it was like a investigative
07:16 journalist that is paid more than in
07:17 normal investigative journalists right
07:19 you you try to figure stuff out that
07:20 others haven’t figured out even though
07:22 they get paid a lot of money and are
07:24 very smart people and after a year I
07:26 said look this is this is fun I tried 10
07:28 years to get here now I got here and now
08:31 I’m figuring out this is not what I want
08:33 to do for the next years and especially
08:35 not for the next decades and I quit
08:38 before having a new job I asked a friend
08:40 hey I want to build something building
08:42 something in Germany means you go to
08:43 Berlin he was in Berlin he knew the
08:46 founders of Rocket internet and so met
08:48 with one of the founders and he said
08:50 look we have an opening come here in two
08:53 months and that’s what I did so I went
08:55 to Berlin started or or was there right
08:59 after rocket inter
08:60 bought a company to build that up quite
08:02 fast then was at another company that
08:04 was in the space of luxury watches
08:06 buying and selling them building a
08:08 Marketplace there then try two
08:10 businesses all on my own after reading
08:12 Tim Ferris is 4our work
08:15 week of course you don’t want any
08:17 employees right and externalize
08:20 everything every work and I tried to at
08:22 the same time and of course that doesn’t
08:24 I got to share with you Sim similar I’m
08:26 telling you I read the book or I tried
08:28 to emulate exactly man
09:30 it is not as easy as one likes to lead
09:32 it to be it is like it’s almost like
09:34 these uh no money down by companies
09:36 pitches put out there it’s like come on
09:39 really like all right where’s the catch
09:43 there there is a catch yeah most of the
09:45 time it just doesn’t work right but I
09:46 think it does in it is an initial
09:49 starting point for many people to even
09:50 think about yes getting off of being
09:54 employed to starting something on their
09:55 own even if it’s while they’re still
09:56 employed right so I think from changing
09:58 the mindset of many people that was very
09:60 valuable that book and for me it was
09:02 basically okay let’s try it failed with
09:05 both Ventures at the same time and then
09:07 founded something in the medical space
09:09 Elderly Care space iot so also no clue
09:12 about those topics did that for four
09:14 years and then while was slowly going
09:17 out of that business my friend talked to
09:20 me and said look this company called
09:22 dovo they make straight risers and I I
09:24 knew them before because he talked about
09:26 them quite often because he was he was
09:29 Consulting for them right same friend
10:30 yeah yeah and he started collecting
10:33 razors when he was in college so he knew
10:36 the company already he knew how valuable
10:37 the brand was how known the brand was
10:40 all around the world but it’s it’s very
10:42 very nichy and he told me it’s a huge
10:44 shame that that brand goes bus because
10:46 they were the largest ones and I think
10:48 once they go the smaller ones also might
10:50 go because they think hey it’s not worth
10:53 staying in this business so after he
10:54 said look I I would want to buy this on
10:57 my own because he saw how many things
10:59 were managed wrong how old certain
10:03 structures were how bad clients were
10:05 treated both BTC and B2B I said look
10:08 let’s just look into it right I’m I’m
10:10 shifting out of my old business I have a
10:12 friend who was in the restructuring
10:15 business so I talked to him we got the
10:18 the numbers we got the the data room
10:20 from the lawyers and said look let’s
10:22 just drive there right the the numbers
10:23 look okay right there were three sectors
10:25 in that business one was scissors one
10:28 was Nippers and one was was straight
10:30 risers or shaving in general and the
11:32 straight Riser part was actually quite
11:33 profitable compared to the others and
11:35 you do a straight Razer right it’s it’s
11:37 like one of the things I I don’t like
11:38 about Gillette is that you got to
11:39 replace it you it’s wasteful I mean all
11:41 these things that you can think about
11:43 right and and it’s quite pricey now you
11:45 did you get a great shave right but I
11:46 take it with the straight razor the
11:48 selling point is is like once you buy
11:49 one you keep it sharp you know you don’t
11:51 have to buy another razor right I mean
11:53 is that the kind of the selling point
11:54 correct it it feels different on the
11:56 skin so it’s a lot easier on the skin
11:57 even though it looks a lot more
11:59 dangerous and of course you can give it
11:01 to your kids or kids kids right so it it
11:03 lasts forever I was shaved with a razor
11:05 from 17 something out of Japan right say
11:08 if you take care of them you can use
11:09 them literally forever for yourself and
11:11 then your kids could also use them but
11:13 it’s like a good watch right you can
11:14 invest in a in a very shitty watch that
11:16 goes bus once it hits water or that you
11:19 smack somewhere and then you have really
11:20 expensive watches that can last for
11:22 generations and it’s same with straight
11:23 rer so you can buy one from us for $120
11:26 and use it all your life you have to
11:28 hone it every couple times but that’s it
12:30 right the H honing Stone normally if you
12:32 use it every couple of days that also
12:34 lasts a
12:36 lifetime it guys CER more towards the
12:39 trimming hair and not the slitting
12:41 throats part of the marketing right so
12:44 so on that one so so walk walk us
12:46 through the deal right I mean you know
12:47 how much revenue how big was this
12:49 business you know was it actually for
12:51 sale or are they just structuring Bank
12:53 you know just doing a bankruptcy
12:54 restructuring and us just stepped in and
12:56 they like you know what maybe we will
12:57 offload I mean how did that the actual
12:59 transaction take place it was kind quite
12:01 strange because normally you think if a
12:03 business is valuable there should be
12:06 some people bidding on it and we figured
12:08 out in the process that we’re the only
12:09 bidder that should never leak to any
12:11 bidder because then you can just say
12:12 look what does it cost for the the
12:15 lawyers to wind down the business and we
12:18 just bid one year above it right and
12:20 they save time we didn’t do it that
12:22 extreme but we bid 10% over the
12:24 calculated cost of winding down the
12:26 whole business and we got the we got the
12:28 business for that amount right because
12:29 we were 98% sure that we’re the only
13:32 better I think the old owner because
13:35 they still had cash in the bank if they
13:37 wanted to shut down the business
13:39 normally it would have cost a lot of
13:40 money because at the company the people
13:43 once they were hired they stayed so
13:44 there were people that were 45 years 40
13:46 years 35 years in that business right
13:48 there were if you were there you stay
13:49 there right it was super interesting for
13:51 people to be there because they were the
13:53 number one in scissors and stuff and if
13:56 you wind it down without a bankruptcy
13:58 you have to pay a lot of money to get
13:00 rid of the people so I think the old
13:03 owner didn’t even want a bidder they
13:05 just wanted to wind it down and that was
13:08 the most cash efficient way to do it for
13:10 them and then we came along and actually
13:12 bid on it Goa which I think in Retros
13:15 yeah so is there like a pension is that
13:17 kind of a thing in Germany where you
13:19 know like if they’ve worked for you for
13:20 a certain amount of time you have to pay
13:21 them a certain thing you can’t just say
13:23 we’re going out of business you know you
13:25 have to pay them something right yeah
13:27 it’s not pension but it’s for every year
13:30 you with the company there’s I think one
14:33 half half a month or one month of pay
14:36 you have to pay them right so if you’re
14:37 there for I don’t know 20 years or
14:38 something you have to pay them two years
14:40 or a bit more or less of salary and if
14:43 you have 45 people or 50 people that
14:45 gets oh anti- capitalist because it’s
14:47 only that only matters whenever you’re
14:48 shutting down a business which is
14:50 usually the time you don’t have the
14:51 money to spend on that but it’s
14:52 different rules right it’s different
14:54 it’s different rules and that’s the
14:55 other thing we want to talk about
14:56 navigate but finish on the deal yeah so
14:58 then so how big was a how many employees
14:00 you know what was the dollar amount that
14:01 you bought it for how much revenue was
14:03 it doing Etc uh it’s it’s four years
14:05 back but I’m trying to think of numbers
14:06 so there were 45 employees at the top
14:09 time I think 15 years ago 20 years ago
14:11 when the business was really booming
14:12 they had 80 85 people it got down to 45
14:16 when they declared bankruptcy and then I
14:18 took over only the raight Riser part
14:20 which was 10 people I didn’t take anyone
14:23 in the office anyone in admin anyone
14:25 sales and marketing because you brought
14:26 just a piece of the company basically
14:27 and the brand you brought the division
14:29 right you took the straight razor
15:30 division the whole division yeah yeah
15:32 got it plus the contract of the workers
15:34 in that Division and then
15:37 hired six other people after that from
15:42 um e mostly external because finding
15:46 someone in Zing that is best at their
15:48 craft in marketing for example onmar
15:50 marketing is uh is not going to happen
15:52 right they’re going to sit somewhere in
15:53 Berlin or Munich or cologne or something
15:55 so hired them externally Marketing sales
15:59 and and admin people Finance people and
15:03 two three more in manufacturing just to
15:07 to scale of the business and then went
15:09 into restructuring mode right so they
15:12 had an old Erp system I did a huge
15:15 mistake in switching it directly in the
15:16 beginning that’s never do that again
15:19 wait wait one year until you even
15:20 understand what kind of exactly what we
15:22 did on our manufacturing business so
15:24 right about the year and a half Market
15:26 got switched yeah I try to do everything
16:30 at the same time and at the beginning of
16:32 course then it doesn’t work properly
16:34 right normally you would say look do
16:36 nothing for a couple of weeks or months
16:37 and then start prioritizing what to do
16:40 the biggest mistake even before buying
16:42 the business was that when I think at
16:45 two weeks or three weeks before the
16:47 transition of the business right the
16:49 German word bet so the transition of the
16:52 old company to to our new company we
16:54 founded an LLC uh we didn’t buy an
16:58 existing LLC which we should have done
16:59 because then you once when it’s founded
16:01 right it has to be notorized then you
16:04 have to wait until it’s actually in the
16:06 registry and then you can go and get
16:08 your tax numbers your vat numbers your
16:12 export numbers and stuff like that right
16:14 in a going concern if you don’t have
16:16 those things it can take for especially
16:19 the export part it took us I think five
16:21 six months to get that is that a big
16:23 part of your business H it’s 75 is
16:26 export now it’s actually went up to 80%
16:28 because us US market is is growing that
17:30 much right so we were basically sitting
17:32 there oh we can’t write any invoice
17:35 because we’re not allowed to right so
17:37 and we had to go to the lawyers of the
17:38 old business and say look please let us
17:41 write invoices over the old business so
17:43 the old business writes all the invoices
17:44 does all the business and then we we do
17:47 transactions that way which was also
17:50 tough because
17:52 uh they’re in bankruptcy right yeah
17:55 they’re in bankruptcy and How’s that
17:56 gonna impact you and your money and is
17:57 it gonna be your moneyy or their money
17:59 that that that’s the thing right so they
17:01 can’t transfer the clients still have if
17:04 they transfer you money they still have
17:06 the old bank accounts so some transfer
17:08 there then we can’t get it and the
17:11 attorney can’t get it because he has a
17:13 huge legal OB obligation that no scent
17:15 that is in that bank account goes out
17:18 because it it belongs to the the debtors
17:22 uh they formed a new bank account just
17:24 for us um and they had two other bank
17:26 accounts of The Old Company right so the
17:28 money went into all kinds of bank
17:30 accounts and then we had to somehow
18:31 figure out what money belongs to what
18:33 because there were still old orders new
18:35 orders that was a huge mess right it was
18:38 100 120 hours a week figuring out not
18:41 just restructuring the whole thing but
18:43 also figuring out how do we get to our
18:45 money because the sales were there but
18:47 we didn’t have any money going into our
18:48 bank account right it was a huge mess
18:50 and I had to pay invo not just invoices
18:52 but also after the first month you pay
18:55 salary you have to pay salary and we
18:58 didn’t really have enough money in the
18:01 bank because we didn’t think of that
18:04 case happening right so it’s not like we
18:06 had a couple 100,000 laying around there
18:09 where we could pay at least salaries and
18:10 invoices for six months it was very very
18:13 tightly calculated what we put in that
18:15 and that accounts so you had to like
18:17 you’re talking about on the-go problem
18:19 solving 247 in that first you know what
18:22 six months right there because one
18:24 you’re dealing with a
18:27 restructuring you said three years that
18:30 was the the first problem the second
19:32 problem was that in the last couple of
19:33 years the old business or the old
19:36 management of the business they cut
19:38 costs quite a bit and not just cut costs
19:40 but said look even if there are small
19:42 mistakes in the product just ship them
19:45 out right they they they ran the whole
19:47 business and the the brand down right so
19:50 we had to simultaneously ensure all the
19:53 B2B clients because that was still 95%
19:56 of the business that now everything is
19:58 different and we’re taking care of
19:60 quality then actually taking care of
19:01 quality and figuring out at What stages
19:04 do mistakes happen because in the
19:05 beginning everyone’s pointing fingers at
19:08 everyone else right you go to someone
19:09 say look how can this happen that this
19:11 is actually being sent out because a
19:13 client complains and then it’s yeah they
19:15 this person did it then they point the
19:16 finger somewhere else so simultaneously
19:18 figuring out okay where actually
19:19 mistakes happen and how can we also
19:21 revamp the brands that the people trust
19:23 that when they get something from us
19:25 it’s 100% certain that that that it’s
19:27 good right it’s it’s basically like
19:28 Rolex where you say every watch that
19:30 comes out is Flawless and that took
20:32 quite a while because I was super into
20:35 the getting money to somehow keep the
20:38 float and the the second big problem was
20:41 that financially was good in the long
20:44 term but not in the short term so we
20:45 bought the inventory of the old company
20:48 that was in the razor part and there was
20:49 a huge huge huge inventory hundreds of
20:52 thousands of worth of finished goods in
20:54 the old inventory but we didn’t know how
20:56 to Value it so we said look we pay
20:58 nothing for for it we don’t own it it’s
20:00 still in the old company and we do a
20:02 fact um how do you call it Consignment
20:06 yeah Consignment so you sell it and they
20:07 get a percentage right yeah it’s 5050
20:09 right if we sell something we you’re
20:11 happy because you get 50% otherwise you
20:13 would actually throw it away that’s what
20:14 you would have done and if we if we sell
20:17 it why we we did the acquisition then we
20:19 get 50% for us the problem was that of
20:23 course you need a basis of what’s in the
20:24 inventory right so you have look this
20:26 product 100 times this product 500 times
20:28 this product 10,000 times so we signed
21:30 that the the lawyer signed that I signed
21:33 that but we didn’t check if the numbers
21:35 are correct and the person that did the
21:37 counting and it’s you have to imagine
21:39 it’s it’s 1,200 different products right
21:41 it’s not just hey I’m going to count it
21:42 it’s one small room it’s huge amounts of
21:45 products sometimes 60 70 years old
21:47 because the company is 116 years old and
21:50 at the same spot right so it never moved
21:52 so it kept really old products still
21:54 there because one day you might still
21:55 sell them so he counted them and the
21:58 ones that are smaller ones like nail
21:00 files that are I don’t know production
21:03 value 100 or1 20 or something sometimes
21:06 there’s 10,000 of those products so the
21:08 total value is quite high but of course
21:10 you don’t count those you count maybe 10
21:12 or 100 and then you put it on a scale
21:14 and then you you say look this is um
21:17 times a thousands so it’s this many
21:20 right it’s quite close and plusus 10
21:22 which doesn’t matter the problem was
21:24 that the scale he used was was not
21:27 what’s the English word
21:30 yes correct it was not it was not
22:31 calibrated oh my God and it was not
22:33 calibrated by 14
22:35 15% so we we sold everything it went
22:38 into the account of The Old Company
22:41 right because we couldn’t write invoices
22:43 yet and then at the end of the month we
22:45 said look we’re going to count what was
22:46 sold right we see it in the invoices and
22:49 we compare it to what is still in stock
22:52 and we had a huge discrepancy with some
22:54 right because we actually used a
22:56 different scale then we like okay what
22:58 the hell is going on right are the olds
22:00 employees stealing right because they’re
22:03 so pissed about the old company or
22:05 something he brought out the old scale
22:07 the one they’ve used for a hundred years
22:09 to win deals didn’t he it
22:11 works sounds like it was your your DD
22:14 guy right the guy that on your side that
22:16 made that mistake uh it it was the guy
22:19 that I also took over from The Old
22:21 Company it was the old lawyer that
22:23 didn’t check it and it was me that
22:25 didn’t check it so no one checked what
22:26 was in there right everyone if one just
22:29 so everyone should have checked no one
23:30 checked really bad right so we have to
23:33 figure out what what going on it took
23:35 actually weeks and sometimes months for
23:36 some numbers to figure out what was
23:38 going on right because with 1,200
23:40 products and a huge mess in the
23:42 inventory management plus the Erp system
23:44 which didn’t work properly that took two
23:46 years to then get the last payments from
23:49 the attorneys of the old companies and
23:52 yeah it was every month every two months
23:55 a huge multiple all nighters to then
23:57 tell them again this is
23:59 valid uh yeah it was a mess so I would
23:01 never do a consignment inventory again
23:05 without checking every number yeah oh
23:08 wow that’s so a couple questions for you
23:11 right so really quick so the you know
23:12 you bought the division of a company
23:15 correct what happened to the rest of the
23:16 company they shut down shop on
23:17 everything yeah so that so and and as
23:20 part of the buying the division you got
23:21 to keep the brand right because you you
23:23 know you didn’t care about the scissors
23:24 and some of the other stuff only the
23:26 razors the other stuff essentially
23:28 complet complely shut down right went
23:30 bankrupt but you got to keep the name
24:32 for your company right correct yeah over
24:35 all the IP and the manufacturing
24:37 production machines for my division plus
24:40 the inventory for my division and
24:42 everything else we we didn’t take over
24:44 got it and and how much revenue was it
24:45 doing it was doing 4.5 million with all
24:50 divisions with a huge loss and then we
24:53 took it over and it made 2 point
24:57 something because we only took over a
24:59 small part of it so year one you did a
24:02 little over 2 million it sounds like of
24:04 Revenue yeah now trying to get and we
24:07 grew I think 12% 14% every year in the
24:11 core business if you count out the
24:14 beginning of the of the old inventory we
24:16 sold right because that that went down
24:18 to zero over you had years and now
24:21 you’re having to make more right so you
24:24 yeah at one point you’re not
24:25 manufacturing as much you’re able to
24:26 you’re just selling out that inventory
24:28 as consignment but at some point you
24:30 have to start manufacturing more is that
25:33 kind of the the yeah got it and so then
25:35 maybe so another question because this
25:36 is kind of a a unique structure right
25:39 how did you value that portion of the
25:41 business and how did you fund that right
25:42 was it just boost trapped out of your
25:43 own pocket did you have investors you
25:45 know how did you all come up you know
25:46 basically how’ you come to valuation
25:47 with the sellers that that was Equitable
25:49 for both parties and then how did you
25:51 fin 10% over the bankruptcy cost but I
25:53 mean how did just the sellers just
25:55 agreed to it and that’s it yeah because
25:57 we’re the only biders so they also know
25:00 because they’re the largest bankruptcy
25:03 company that does all big cases in all
25:05 of North Ryan velia so they have they
25:08 have companies that have a couple of
25:09 hundred millions of Revenue or billions
25:11 of Revenue and then you have this tiny
25:13 Port right so they don’t want invest any
25:15 time in that small company so no one
25:18 bids they would shut it down then
25:19 someone comes along and says look I’m
25:20 gonna take over at least this part so
25:22 for them it’s fine because they don’t
25:24 have to wind down 10 people they don’t
25:26 have to take care of the so you’re
25:28 talking low six figures then right it
25:30 sounds like for the whole thing I think
26:32 it was 200 something thousand was the
26:34 Machinery worth more than that by itself
26:36 you thought yeah even especially if the
26:40 inventory was worth a lot more even if
26:41 would if you would sell it as as a
26:43 discount right buy buying a value invest
26:46 yeah value value in that I mean you know
26:49 the end of day he’s seeing it that’s the
26:51 one nice thing about asset based
26:52 businesses right where like the business
26:54 valuation is screwed up because you know
26:57 the Ia the revenues aren’t there but you
26:59 have all that equipment that still is
26:00 needed and so that’s a pretty sweet deal
26:03 and it makes it manageable enough too
26:04 that you probably you’re able to kind of
26:06 not you didn’t have to go off and create
26:08 a big syndication and raise a lot of
26:09 money it probably sounds like it’s
26:10 probably just you or you and a friend to
26:11 be able to take that down and get to
26:13 keep 100% of that business I didn’t have
26:15 much money so I had other investors that
26:18 I knew from Munich from from studying
26:20 Munich and from Berlin and now we’re
26:23 actually let me see 15 investors like
26:27 from 0.4 % to um 37% roughly
27:33 myself so there are many people inside
27:37 from all different backgrounds but most
27:39 of them are there themselves
27:42 entrepreneurs yeah got it but you’re
27:44 you’re so really going kind of going
27:45 back to your friend that was doing the
27:47 Consulting and the marketing he had to
27:49 come to you and say listen there is a
27:51 market here online there’s a following I
27:54 mean something had to be able to go look
27:55 there is a sell through here so what was
27:57 that feedback gave you that kind of made
27:59 you yeah there’s an opportunity here so
27:01 he knew how powerful the brand was and
27:03 they that they still even had clients
27:06 even after the old management really
27:09 Bringing Down the quality of the
27:11 products and saving like doing
27:13 everything wrong right instead of
27:15 upgrading the brand or upgrading the
27:17 packaging right that even if you open
27:18 the packaging right that that’s the
27:19 first step of something of the brand
27:21 right how you experience the brand as a
27:23 buyer and they went from the the
27:25 traditional really nice really expensive
27:27 also packaging that was made in in to
27:29 packaging that was basically sunglass
28:33 aluminum thing with very flimsy wobbly
28:37 plastic inside that really smelled toxic
28:39 from China oh no so even after all those
28:43 steps and after all those years and
28:44 really treating the customers shitty
28:46 they were still the biggest one and they
28:47 were still having quite nice revenues
28:49 with good margins right so from myself
28:51 it’s okay um assuming I’m an average
28:55 person how much do I have to screw up to
28:57 not make this work and for me it was
28:59 look there’s very high likelihood that
28:01 no other company will actually go into
28:03 this Market New because it’s not worth
28:05 it it’s too small so the only
28:07 competition is the competition that’s in
28:09 the market the biggest competition for
28:11 other companies in the cutlery space in
28:13 the US and in Germany is Pakistan and
28:16 China right they make similar quality if
28:20 not better sometimes for a tenth of the
28:22 price right so competing in the in the
28:24 cuticle scissors or nail scissors part
28:25 or something that’s completely waste of
28:27 time right you always is going to lose
28:29 in the long run so straight risers is
29:31 the is it something that other other
29:33 people in other countries no matter
29:35 where in the world could come in and for
29:37 me it’s could maybe yes but the market
29:40 is too small and it’s the the number one
29:44 hardest thing to manufacture by far it
29:47 takes four five six years for a certain
29:51 steps to to be actually learned well
29:54 from someone that we start
29:56 training five to six year process to
29:59 replace them to to be to to really be
29:02 very good at at a certain amount of
29:04 steps yeah so did you create like an
29:07 apprentice program like did you come in
29:09 and think like hey let’s create this
29:11 program to build the employee base I
29:13 mean did that like is that some of the
29:15 value ads that you brought it’s loading
29:17 by doing so you hire someone that
29:18 already has so we hired one that already
29:21 has done that very similar work if not
29:23 the same work for two years before so he
29:26 already knew how to do it but still
29:27 after he’s there for two years now he’s
29:29 not not as good as the guy that there’s
30:31 for 16 years so it takes just a lot of
30:33 time because you do everything by hand
30:35 right it’s not that you have something
30:37 or you move something it’s still the old
30:38 Machinery is exactly the same as you did
30:41 at 116 years ago and you can’t really
30:43 automatize right you could probably
30:44 build something to automatize it but the
30:46 market is just too small right it
30:47 doesn’t make sense right you have to
30:49 invest a couple of millions to build
30:50 those machines right and that would you
30:52 would just recoup the investment over
30:54 the land next 50 years it doesn’t make
30:55 sense at all right which is also nice
30:58 because you have old machines there
30:59 sometimes 60 70 years old it looks
30:01 exactly the way it looked 100 years ago
30:03 exactly the same chairs they used 100
30:07 years ago but for me itair didn’t break
30:10 so
30:11 quickly for me it was very clear that
30:13 there would be no New Market entrance so
30:15 that that’s a huge mode right no new
30:17 entrance looking at the the people in
30:18 the markets saying look there is no
30:21 company where that is the main business
30:24 right the largest competitor from us
30:26 it’s two 3% of the revenue
30:29 most of the things is tactical knives
31:30 they they build in zing and in China and
31:32 then ship it to United States and
31:34 they’re going bu maybe two in the next
31:35 couple months right so they completely
31:37 overplayed their hands so for me it was
31:39 the the competition there’s four major
31:41 ones they will most likely not all be
31:44 there in the next five years so it’s a
31:46 shrinking amount of companies that offer
31:48 that product we’re the largest one we
31:50 have the best reputation and it was run
31:53 terribly bad from treating the employees
31:55 bad to having the packaging bad there’s
31:58 very bad branding no customer service no
31:60 sales no marketing at all like they had
31:02 no person in marketing and sales right
31:04 so for me it was just a no- brander it
31:06 was okay it checks every box it’s almost
31:08 too good to be true got it and and so
31:11 you’ve had it for four years and so
31:12 where have you taken it to today I take
31:15 myself 10 years
31:16 older minim age 10 years and four years
31:19 that’s entrepreneurship will do that for
31:20 you that’s roughly two and a half yeah
31:22 so we we had a portfolio of 800 products
31:26 roughly when taking over the business
31:28 and cut that down into 70 and then build
32:31 it up over the last years to 95 again
32:35 right so we said look it cut everything
32:37 that is beneath a certain Revenue no one
32:40 complained we increased the price four
32:42 times over that time just to see okay
32:44 when will actually people buy less and
32:47 so far there is no impact on the sales
32:50 volume is it sounds like you buy one and
32:53 you you’re you buy one right and so
32:55 you’re gonna buy one of these and and
32:57 you may buy more because you’re
32:58 collector but like for me you know i’
32:00 I’ve been really considering a straight
32:02 Razer right I just I don’t like the idea
32:04 of throwing my Razor out every two weeks
32:05 and like crap it’s just so I’ve been
32:07 thinking about it right but then there’s
32:09 all these other concerns like oh my God
32:11 but will that cut my neck or you know
32:13 all these things but I’ve gotta I’ve got
32:15 to go through the process but but I’m
32:17 only GNA buy one I don’t see myself
32:19 buying like 30 of these unless I’m
32:20 collecting right I’ve got one really
32:22 really nice watch right I don’t wear it
32:24 all the time I wear it occasionally but
32:26 I have a really nice watch that I like
32:29 um and so is that most of your customers
33:32 or is it people that you’re thinking
33:33 like okay 30% of the Market’s going to
33:35 buy one and then there’s several that
33:37 are buying three four and five and then
33:40 you have this group of collectors how
33:42 how does that usually how does that
33:44 working out in that in that space I
33:46 think it’s similar what you said about
33:48 watches right there’s many people that
33:49 have one luxury watch and then there are
33:52 some that are collectors that go
33:54 completely nuts or with shoes right they
33:56 have a whole room of of of very
33:57 expensive shoes they’re shoe Traders and
33:60 same goes for us so there’s people that
33:01 have 300 razors um from 17 1800
33:05 something they’re collectors they will
33:07 always buy everything that they they
33:08 think they might like and then there’s
33:10 some people that just want to try once
33:11 right and then they stop using it maybe
33:13 even or they use one and then they get a
33:16 hang of it and buy a second one third
33:18 one buy or buy a used one first love it
33:21 and then buy a new one many people buy
33:23 it I think also as presents for someone
33:26 yeah so
33:28 good guess you know their whole
33:30 marketing is basically you know be a
34:31 real man he’s a straight Razer I think
34:34 so so so yeah so so you and you said you
34:38 youve you so you clearly improved your
34:39 margins right you know got the pricing
34:41 figured out and where it probably should
34:43 be or where you could push it to and you
34:44 said you were able to kind of grow
34:45 Revenue 10 15 per a year for four years
34:48 yeah yeah I mean those little those
34:51 tweaks what’s that with new products
34:54 that we introduced that are not
34:56 manufactured in our facility but in
34:58 zingan so for example cuticle scissor
34:01 and nail scissors and hair scissors and
34:02 beard scissors we don’t manufacture them
34:05 internally any longer but someone that
34:07 worked for Doo over I think 20 30 years
34:11 he has a own small company and he
34:14 manufactur those for us because we know
34:16 that’s the number one quality and so for
34:19 that the margin is is is good because we
34:21 don’t have to increase our fixed cost we
34:23 basically brand them with our logo we
34:27 package them and we ship them out right
34:28 so I don’t need more people hire more
35:30 people if that volume grows you’re able
35:33 to just Leverage The Brand and
35:34 essentially make Revenue out of thin air
35:36 right is what that let you do so that’s
35:37 great and then and then consumables of
35:39 course right because but like you said
35:41 already if you buy one straight Razer
35:42 you don’t you you shouldn’t need one
35:44 afterwards unless you drop it and it it
35:46 breaks or something right so having
35:48 soaps After Shave U developing uh
35:53 double-edged safety razor it was two and
35:57 a half years of of really excruciating
35:59 painful work with the with the partners
35:02 that are building that those things are
35:05 are also nice right because the work
35:06 internally is very low they’re sometimes
35:10 most of them I can reach via bike even
35:11 in zing and they have a nice margin so
35:14 what’s so I so you guys ship to United
35:17 States yall have a y’all have that
35:18 retail outlet case is gonna get an order
35:20 place today I have a birthday coming up
35:22 my mom literally asked me the other day
35:24 what do I want for my birthday and I was
35:26 like I have no idea and I’m like you
35:28 know what great rer set perfect I was
36:30 like let’s check it out yeah so which
36:32 one do you make the most margin on get
36:35 the right one
36:36 ordered um
36:38 so so maybe last question before we wrap
36:41 up so you know your four years into it
36:42 right how do you feel about it you feel
36:44 great about it you’re like all right you
36:45 know we’re in our stride it’s getting
36:47 profitable you feel really good about it
36:48 or do you feel like hey you’re four
36:50 months into this thing and you still
36:51 don’t really have a good light into the
36:52 tunnel I always think I’m over the worst
36:56 and then something new happens right so
36:58 for example two years ago we had the the
36:01 largest partner like we had products
36:04 that we dealt for another company and we
36:06 were the largest dealer for them and
36:08 from one day to another they didn’t tell
36:10 us that they had someone else taken over
36:12 that business instead of us right we
36:13 didn’t have huge margin on that but it
36:15 was onethird of the revenue so that
36:17 broke down even without them telling us
36:19 we figured out through other people that
36:21 by the way for one months now someone
36:23 else is stealing the products right so
36:25 that was a huge loss then one and a half
36:28 years ago we had to move the company for
37:31 the first time 116 years and that went
37:34 three times over budget we lost one and
37:37 a half months at least of production
37:40 because the electrician didn’t start
37:42 work early enough for the machines to
37:44 run so we just couldn’t work so that was
37:46 hugely expensive so every year there’s
37:48 at least one time where you say oh come
37:50 on not again right and it’s this year it
37:54 was the first part of the year that was
37:56 really really bad from revenue
37:57 perspective right that was all over Zing
37:59 like most companies had short work a
37:01 couple of them closed shop I know a
37:03 couple of them are looking to be sold um
37:07 doing huge discounts to to get their
37:09 inventory out because this this huge
37:11 craze about buying knives in every every
37:15 kind of Cutlery where people were in
37:17 lockdown and say look what am I doing at
37:18 home I can start shaving with a straight
37:20 razor or hey I can uh now that I’m
37:22 cooking at home I want new knives new
37:25 knife set and stuff like that right so
37:28 the companies in Zing that are shipping
37:29 all over the world they made the mistake
38:31 that said look we have two years now of
38:34 huge uh growth and they basically put a
38:37 ruler on that growth and said look we
38:38 were even building more facilities
38:40 building everything out hiring people
38:42 and then it of course tanked again right
38:44 so the first half year was really bad
38:46 also for us um and now the last couple
38:49 of weeks are are picking up again so I’m
38:51 quite positive for the second half and
38:53 we’re bringing out your products uh that
38:55 are in a different space again that has
38:57 a way Broad
38:58 audience than straight risers and it’s
38:01 produced again in in Zing but but not
38:04 from us so we don’t have to hire people
38:05 to actually help with that Revenue
38:09 sounds like you’re still going through
38:10 the motions
38:12 so the answer if you ask me one week I’m
38:14 very happy if you ask me another week
38:16 I’m like why did I ever do this okay
38:18 good I’m not the only
38:20 one awesome all right well we can go
38:22 ahead and move on to our rocket round
38:24 where we ask the the the interviewer the
38:26 same three questions so first question
38:28 what do you like to do in your free time
39:30 now that I have a son spend every fre
39:32 minute with my son and with my delmi
39:35 back there my dog uh go in the forest or
39:38 something have him look as a at acorns
39:41 run around and have the dog run around
39:44 uh read Lots about all kinds of topics
39:46 from restructuring topics to finance
39:48 topics to political topics to everyone
39:50 on Twitter and in blogs and reading a
39:52 lot and listening to podcasts like a
39:54 madman like my my wife hates me for that
39:57 that I always have something in my ear
39:58 and listen two times here if I’m in the
39:02 bathroom it doesn’t matter before I fall
39:03 asleep directly when I wake up while
39:06 working on something it’s podcast
39:08 addicted and I listen at a 1.5x which
39:10 drives my wife even more nuts because
39:12 you know like how do you listen to that
39:14 you know so anyways I’m getting I start
39:17 twitching after a
39:18 while all right next question so what’s
39:20 what’s been your most memorable moment
39:22 in the business Journey Only The Hard
39:24 parts so the the message that a third of
39:27 the revenue break away that was one part
39:29 the and I that’s what the fear is
40:33 ingrained in the brain somehow right the
40:35 good parts you actually have to look at
40:38 it objectively which you normally can’t
40:40 right so many many things were done and
40:41 if you talk to outside parties in zing
40:43 and in the industry they tell you hey
40:45 this is amazing what you did and I don’t
40:47 know what like I I don’t feel that way
40:50 because I only focus of course on what
40:52 is not working that’s we do that’s what
40:55 we do as entrepreneurs I tell that to my
40:57 partner tell that to team I mean you’re
40:58 my leadership at least right like we’re
40:00 in those positions because we solve
40:02 problems and so you only see the
40:04 negative because you’re constantly
40:06 solving one problem after the other
40:07 you’re not there to solve the good
40:08 things or you’re there to solve the bad
40:10 things and but I will encourage you all
40:12 to slap give yourself a high five and to
40:15 because I am I am also I come from a
40:16 different side I’m an encourager you
40:18 know I like to say hey look what we did
40:19 today right because I know tomorrow it’s
40:21 we’re going to be we’re going to get our
40:22 asses kicked again but let’s celebrate
40:25 the little things so don’t forget that I
40:26 I’m a big celebrate the the little
40:28 things I do that for others to motivate
41:30 them with the team and with other
41:33 parties I myself don’t feel that I don’t
41:35 feel the success even if something great
41:37 same it’s Lonely at the Top about the
41:40 something bad again yeah yeah that’s
41:42 where least you know having partners is
41:43 nice because at least partners are
41:44 usually people you can go vent to and
41:46 you know commiserate with too so it’s
41:48 not completely lonely but it sounds like
41:49 you’re you know you’re kind of in it a
41:50 little bit on your own all right and
41:53 last question what’s your favorite tool
41:54 or resource the most recent tool I use
41:57 quite a bit is what probably most people
41:00 are using by now is Claud and chat GPT
41:04 just for brainstorming certain things
41:06 for structuring my thoughts because I’m
41:07 quite chaotic in the brain so feeding it
41:10 to
41:11 actually um structure my my thoughts and
41:14 Minds because I take quite a lot of
41:15 notes from listening to podcast from
41:18 reading stuff and so I use Evernote and
41:20 then if you have a huge Evernote that
41:22 that was grown over 10 15 years or
41:24 something and you have an I go over it
41:28 and structure it that is quite quite
42:31 potent and coming up with marketing
42:33 ideas and and so on second is the whole
42:36 Adobe suite because it’s something
42:38 creative that even if at night I can’t
42:41 do anything that requires a brain I can
42:44 still create pictures or use mid Journey
42:47 or something to create something and
42:49 then actually work with the Adobe
42:51 Illustrator and adobi Photoshop to to
42:53 create certain things like etchings for
42:55 a new knife for Halloween for example
42:58 awesome so Claude chat GPT and Adobe
42:60 sweet yeah well you know how can let’s
42:03 just get a hold of you uh email actually
42:06 all right you want or LinkedIn email
42:08 would be J dots and then my second name
42:12 which is not easy to spell it’s grol
42:15 spelled
42:16 Gru DN o and then at doo.com D
42:22 oo.com so j.
42:24 Ruto doo.com and that’s where I can buy
42:27 my razor right ado.com yes please write
42:29 me all right we’ll put all that on the
43:30 show notes for the listeners but hey
43:32 yens thank you very much lots of make a
43:34 discount code for anyone that buy so
43:36 actually we have a store in Europe we
43:38 we’re shipping Europe UK and the United
43:40 States directly from the countries in
43:45 one or two days delivery okay what’s let
43:49 25% discount code you tell me the code
43:51 I’ll set it up right now let’s call it
43:54 Launchpad Launchpad good perfect awesome
43:58 25% I’ll set up right now appreciate it
43:01 perfect outstanding good you just made a
43:03 sale all right good no and thank you for
43:05 sharing the information I mean I think
43:07 you know wealth and knowledge like I
43:08 said manufacturing is tough and it’s
43:09 good to kind of get that out there and
43:10 help share with our listeners yeah and
43:12 then the distress and all that man
43:13 totally man all props to you I know
43:15 you’re not celebrating your success
43:16 until you see your big win but man I’m
43:19 I’m thoroughly impressed thank you if
43:21 anyone wants to contact me to pitch
43:24 something they want to buy I will do my
43:26 best to discourage
43:28 them to not make too many mistakes or
44:31 encourage them if I think okay that’s
44:33 actually something where we something
44:34 there so feel free everyone to contact
44:36 me and I already did that for for a
44:39 couple of other people in Switzerland us
44:41 and in Germany just for them to have
44:43 someone that actually went through
44:45 certain steps already for four years
44:47 yeah and we’ll put all that in show
44:50 notes came out of it yeah perfect all
44:52 right thank you very much and I really
44:54 appreciate the so nice to meet you very
44:55 nice to meet you thank you for listen
44:57 listening to the m&a Launchpad podcast
44:59 if you’ve enjoyed today’s podcast and
44:01 would like to support us please leave us
44:02 a rating and a review after you listen
44:04 if you’re looking for guidance on your
44:05 next business acquisition or sale
44:07 Capital to support your next business
44:09 transaction or to invest in a private
44:11 Equity opportunity visit Equity
44:13 launchpad.com to learn more and to
44:15 connect with our team if you know of an
44:17 individual who would be a great guest
44:18 for the show head over to equity
44:20 launchpad.com SL nominate where you’ll
44:23 have the chance to refer yourself or
44:25 someone else to be a guest on our show
44:27 I’m Casey you and I look forward to
44:28 talking with you next week
