Ep. 37 - Toys, Bankruptcy, and Trying Again with Brad Pedersen

In this episode, Fahd sits down with Brad Pedersen, entrepreneur and founder behind Lomi, Pela, and one of Canada's largest independent toy distributors, to explore his journey from selling flying toys out of a mall kiosk to reinventing himself again and again across toys, consumer goods, and climate tech. Brad shares how getting fired from his own merged company and clawing back from bankruptcy taught him more about leadership than any success ever did, and how a naive 21-year-old with zero capital learned to outmaneuver Goliaths who were too slow, too bloated, or too afraid to compete on the ground.

From hand-selling toys at carnivals and shopping-channel gambles to reviving legacy brands like Tonka, and building Lomi, the world's first smart waste appliance, Brad discusses what it really takes for a David to survive collapse and come back stronger. He also shares insights on leadership, why keeping the wrong people off the team matters more than hiring the right ones, learning to empower instead of control, and the underdog playbook he's sharpened across four decades of building things the giants said couldn't be done.

Transcript

SPEAKER_01 0:00

90 days after we had officially merged the companies, which took about two years to do it, plus we did this acquisitional on the way, I got fired. I say more important than hiring the right people is keeping the wrong people from getting on the team. Because one person in your culture that is destructive is super caustic to the entire organization and will cost you a lot of money. Don't take yourself so seriously. None of us get out of this experience alive. The joy is in the journey.

SPEAKER_00 0:31

Today's guest didn't set out to lead one of the biggest sustainable tech launches in North America. In fact, he started by selling a flying toy in a mall kiosk with zero experience, zero capital, and nothing but sheer regret. That was Brad Petterson. He grew up in Alberta and went on to build one of Canada's largest independent toy distributors. Then reinvented himself after bankruptcy again, and again and again. From scaling global brands like Lightbright and Care Bears to co-founding Pela and launching Loomy, the world's first smart waste appliance to turn food scraps into dirt overnight. Brad has quietly outmaneuvered Goliath's and toys and consumer goods and built a climate attack. This is a story about second chances, about the courage to reinvent yourself after collapse, and about how small, value-driven teams in toys, hardware, and climate can beat the giants by solving the problems that they're too slow, too bloated, or too afraid to attach. In the conversation with Brad, we're gonna unpack the moment that Brad lost his first company, what it taught him about leadership, about grit, about betrayal, why attack for kids became a quiet juggernaut in the global toy market, and how it brought Tonka and Kinex back to life. The impossible bet behind Pella's first composable phone case and why no one was asking for it. The supply chain from hell of launching Loamy and how a small team broke the rules of climate tech hardware, and how Brad leads today with systems thinking, a mission over ego mindset, and an underdog playbook that he sharpened for decades. If you're building something bold, something physical, or something that the big players think you can't, this one's for you. Let's get into it. Brad, welcome to the show.

SPEAKER_01 2:28

Really looking forward to the conversation today and where we go with it.

SPEAKER_00 2:31

I gotta say, Brad, I I got pretty geeky about researching you and the work that you've done. I mean, just your products, your the toys that you've worked on, things that I've experienced. I said, Oh, I get to I get I get to meet Brad. I get to meet the person behind some of this stuff. So I'm I'm I'm pretty excited. But I think what I loved most as I was researching and what I think our audience will take away the most, Brad, is is a true underdog story. It's a it's a true David versus Goliath story. Like I I have the moment that sort of you get started with this, I have it in the mid-90s where you were on track to become a chiropractor, and then you you know find a magazine story about kids flying flying toys, and it inspires you to change course and you start selling that toy in parks or m mall kiosks as your first hustle, your first sales. Take me back to that first hustle, those first sale days, those early entrepreneurship days. You know, what was the decision to go from what is probably a stable career that mom and dad wants, and you know, with the degree and everything, to I'm gonna get into the world of toys and and I'm gonna get into the world of entrepreneurship and uh you know figure this out.

SPEAKER_01 3:42

Yeah, great question and happy to take you back there. Um, certainly humble beginnings. Uh it wasn't obvious what I was gonna do with my life. You know, I I've heard this that said that you know, man plants and then God laughs. Um so in my life, um, yeah, I was told I was gonna be a chiropractor, and literally that became from the fact that my father was a chiropractor, his father and mother were chiropractors, and my great-grandfather was the first chiropractor in Denmark. So, right from a very early age, this was what I was immersed in. It's what I believed I was called to do as a part of being a Pedterson. Um, and you know, it was it was it was something that I felt conviction about too. I saw how my my dad helped people, and I really felt a sense of like the the way we we we we create a life of meaning is we actually produce value and help people. Um but the other gift that I was given is that my both my dad and my grandfather were also business owners. They had businesses, they had, they were side hustles, of course, they were either invested in or involved in some way, but I was always immersed in this idea that business was a part of their life as well. And so at an early age, I showed a lot of entrepreneurial tendencies. Um, you know, I described myself as a mischievous kid. Um, I got into a lot of trouble. I mean, kind of good trouble, but I was always trying to push the envelope and try things and do things. And and it also resulted in just, you know, how could I make money by doing this thing, creating value, you know, from you know, this idea ex nihilo, creating something from nothing. You know, so for instance, I would sneak into golf courses late at night, uh, go into the pond with my fins and and mask and dive down and cat golf balls, come back, clean them up, put them in an egg carton, sell them for five bucks. Cost of goods, nothing, you know, move my time and effort, right? So that was, you know, an example of that. Or I started a wood cutting business. You know, my father had um, we lived on an acreage near all this crown land and had access to these forests. And so my dad had like chainsaws and and uh axes and all the things, because I was responsible for that as a kid. I had to do all the the keeping the the fireplaces going in the home. So I was like, hey, I could take all of his stuff. I could go into this forest, I could cut some wood, buck it up, and split it and then sell it. So again, my cost of goods was largely nothing, but it was a way to turn it into a business. So I had this intrigue with business. And as I was spending time getting ready to go down the path of being carpenter, I actually went to school, start down that path. I was reading uh a story in a magazine about a kid who invented a toy. And it was kind of this regs to riches story. Uh, I was intrigued by it. Um, I decided to buy some because I was curious. They're flying toys. I've always been intrigued by flight. You see behind me, I've got a P51 Mustang, so that that tells you I like things that fly. Uh, brought this thing up, thought, wow, this is such a cool What was the toy? Probably called Exylo. And it's a cylinder, and you throw it like a football, and this thing goes like super far. It gives it can fly over 600 feet. It's really incredible. And I um so I started, you know, playing with this and then you know, got the gears going, like, well, well, what about selling these things? And so I contacted the manufacturer and asked him, how do you buy these things in Canada? And he said, Well, the way you did, you import it. I'm like, Well, do you have a local source? And he was like, No. And fortunately for me, he was as naive about Canada as I was about the toy business. And so we were sort of a happy accident bedfellows. Um, I put a proposal together to become his distributor. He said yes, and now I found myself into the wonderful world of toys, trying to figure out how do I go from this idea into actually turning into something that's valuable and meaningful.

SPEAKER_00 7:18

Yeah, yeah, that's fun. I mean, I I love how how old are you at the time there, Brad? Like what's the 21. 21. 21. Has fun with the toy, decides to pick up a phone and go, hey, how do I how do I sell some of these? I I love what you described. So the night the naiveity is what allows you to start, right? You sort of like I if I knew any better, I probably would never start. I sort of naive to the reality say, hey, can I import this? Can I bring it in? Can I sell it? Um so so uh walk me through those early days. You get your first uh orders, what do you what do you do with it? How do you how do you how do you go about financing the first orders? Just walk, yeah, like what how do you stumbling through figuring this out at 21, having never run a business like that, or uh needing to deal with importing uh and distribute distribution?

SPEAKER_01 8:07

Yeah, it was literally a series of just mistakes, learning from your own mistakes and trying things, being willing to try things. And Mark Twain said there's two things you need to be successful in life. You need uh both ignorance and confidence. And trust me when I had plenty of both. I was confident that I could make it work, super ignorant about what was involved. And yes, importing things is more involved than you would think. You need a broker, you need to figure out shipping. Of course, I need money. How do I buy these things? Um, so yeah, I was like largely friends and family is how I got this thing going. I put together this business plan. I went out to some of my friends and family. I asked for some money to start this thing, and it was just, you know, a very small seed that was planted. And, you know, I brought product up. I still remember those shipments showing up, you know, a few boxes of this product. I'm like, okay, got the product. Now what? It's like, okay. Um, and it's one of those things, you know, it's like, well, um uh, you know, necessity is the mother of invention. I had product, I had borrowed money, now I need to go sell this. And so the beginning was, well, how do you actually sell this thing? Well, the same way that I uh became interested in it is I have to demonstrate what it does. People have to see what it does. So that led to where I was basically a carney for the beginning of my life. I would go to parks and festivals, we'd be throwing this thing around. And, you know, I my at that time my wife was my, like, she was the person who was my assistant. But eventually, you know, we figured a pattern that was repeatable that we could sell these things. When people saw it work, they were like, wow, like I was. And I was able to sell them. But then it was like, okay, I just got to keep doing this and going to all these different events and festivals. And my wife was not able to do that with me full time, so eventually led to me hiring a kid to go with me. And we started off with going to these festivals and parks, which eventually led to kiosks and malls. Um, and that's actually a pretty cool story because in order to sell in a kiosk, you can't throw it. So I had to create a video.

SPEAKER_00 10:00

How do you demonstrate how you did a video? Yeah.

SPEAKER_01 10:03

So we we created a video showing us throwing this thing, playing it, people would see it. Again, that worked. And then there was this epiphany of like, well, if I had a celebrity, so uh at that time, the greatest personality in the Canadian Football League was Doug Flutie, who played for the Toronto Orgonauts. And his story is pretty great in terms of, you know, he was a Heisman Trophy winner, you know, a popular American who came to Canada and absolutely crushed in the CFL. And um, so I reached out to his agent who was in Boston, and they were open to the idea they required a meeting. So keep in mind that I flew from Calgary to Boston. Um I didn't have, I wasn't old enough yet to rent a car. So I had to go off the uh traditional car rental grid to rent a car from some, I still remember, is this brown car with like um this the the tint on the windows was like peeling, was bubbling. And uh that was the vehicle I drove to my first meeting with his agent, slept in the car, actually changed uh in a in a restroom that was at a gas station, cleaned myself up, got to this meeting, and somehow again that confidence that I was confident in what I was doing and conveyed the communication to his agent, said, you know what, we're willing to do a deal with you. And so my deal consisted of I would pay him a royalty. I didn't even have to pay an upfront fee. I got a chance to pay a royalty on the product in exchange for her personality and him allowing us to go and film him throwing this thing from end zone to end zone at uh um a field. Actually, it was the Vancouver in BC at the BC Line fields where he threw it from end zones end zone to end zone. We captured that footage, turned it into a video, and then that became the gateway of going from kiosks to being able to get into major retail stores.

SPEAKER_00 11:47

Yeah, yeah, because now with the right video, this thing can sell itself without someone standing there to demonstrate it. So that's a big turning moment. That's an exciting moment. You're you're seeing movement there, you're it's it's it's picking up pace, you're selling more of these. What what where's the next moment where Brad goes, I I need multiple toys, I need more products? What's the what's the next evolution of that? You get into the retail stores and and you're excited because you see your product in the big stores. There's probably a moment of pride, a moment of happiness. Um what's the what's the next moment?

SPEAKER_01 12:20

Yeah, look, I actually there's you know, Eric Reese talks about this in a lean startup that the whole point of how we uh evolve our businesses is a series of of experiments. There's a whole bunch of like thesis and experiments, of which most are not gonna work. So the initial thought for this video was to turn into an infomercial. I was gonna sell it on the shopping channel. It's like, okay, if I get this video and put on the shopping channel, then all these people are gonna see it, and I'm gonna have all these people buy this product's gonna be incredible. But who watches the shopping channel?

SPEAKER_00 12:50

Is it the right audience?

SPEAKER_01 12:53

So this this is a great observation you're making. I I was naive. I assumed everybody watched it, or at least the distribution of the shopping channel was much higher than it really was. But we created this video, we actually got it on the shopping channel, they agreed to run it, they bought 20,000 pieces, which was a huge order at the time. And I had to finance that, but I was like, oh, this is gonna be incredible, it's gonna work, it's unbelievable. So we went went again, friends and family, raised some money, bought all this inventory, shipped it to them. Now, what they don't tell you at the shopping channel and the home shopping network is that all that is consignment. Uh all that inventory is a guaranteed sale. But again, confident. I mean, Doug Flutie, uh, he's gonna show up at the studio.

SPEAKER_00 13:36

This is this is a slam dunk. I've got the celebrity, I've got the products, I've got the info channel. What will what could go wrong? It's gonna be perfect.

SPEAKER_01 13:44

I still remember because you actually are in the studio. Uh, they're playing the B-roll, which is the footage we had from uh him throwing it at the football stadium. And then, of course, we had him and I on the show talking about the product, even throwing it around a little bit in the studio. And there's a TV monitor up in the corner that lets you know what's happening. You can see how many units are selling. And so I remember, you know, we're on, we're excited. This is gonna be unbelievable. And I look up and I see two, three, ten. I think it got to about 50. I think that's about where it got. And then that was about it. And I was like, what? We just bought 20,000 pieces. Right. And so I was like, well, we're gonna just we have more than more than more sessions coming up. The next one's gonna be better. We'll alter a little bit. And so we adapted things a little bit and we tried to get even more I would say, you know, we wanted to be charismatic as we could be to communicate this awesome as a toy. Netnet is out of the 20,000 pieces that we shipped in after all those episodes, we sold about 200.

SPEAKER_00 14:49

Oh my God.

SPEAKER_01 14:51

Yeah. Which led us to another very significant problem. I have a bunch of inventory that, you know, between my cash is tied up. I've clearly missed the market. I mean, a lesson learned now is who is watching the shopping channel? You actually nailed it. And if I had done my research on demographic, I would have said, oh, this is typically older ladies sitting at home looking for ways to improve the quality of their life at home. Like, how do I make my rugs cleaner, my cooking better, you know, my flowers grow at a nice rate?

SPEAKER_00 15:22

That's why shamwow works in the shopping channel, right? Like, or the magic bullet. Those are the ones I remember from the shopping channel, right?

SPEAKER_01 15:30

So that's right. That is exactly right. So I had a problem and instantly felt high motivation to solve it. And so that kind of leads to the next unlock, which is I was in Toronto already. Again, coming from Alberta, flew from Calgary was in Toronto already. I decided that, and by the way, up to that point I'd been calling all these buyers at large retailers, trying to get them to return my call, and they weren't, because I was a nobody. You know, but they have established suppliers, they have relationships with. I just, you know, I just figured I was gonna wear them down. Well, I finally got to the place where I said, I'm just gonna show up. I'm gonna just show up. I'm in Toronto, I'm gonna show up at the at the major retail stores and see if I can actually get an appointment with the buyer. So I went to Walmart's office and met with the um uh actually went for an appointment with the toy buyer. The toy buyer would not see me, even though I was insisting that he see me. But as I was sitting in the lobby, the sporting goods buyer walked by. He saw the exilo in my hand and said, That's the thing I saw with Doug Fluidi on the shopping channel a few days ago. And that was the beginning of getting into mass retail. He literally brought me into the back, said, We want to merchandise this thing, we want to put it on NCAPs. If you can get Doug to show up and do this and that, and it led to the opportunity of getting some distribution that was successful, which then leads on to, well, what was the next? Well, word got out that this little scrappy company from Canada was actually able to sell uh a lot of product. In fact, we were selling more units in Canada per capita than they were in the States because they were only in largely specialty stores, and we had it now in the mass market. Once Walmart had it, well, then Zellers wanted it, Canadian Tire wanted it, it just started creating this domino effect where we were um able to get lots of distribution. And with creating that success vacuum, you attract more opportunities. And that was literally the beginning of like, how do we build this distribution company? But if you have to look back and think about the strategy, it was that we're willing to do what other people weren't willing to do. We were willing to do that grassroots, very gorilla type marketing and thinking outside the box in terms of the problem is they have a product that solves a problem, and I need to communicate it in a way that connects with the audience that shows how can I create value. Because at the end of the day, dollars precede your ability to create value, and ultimately it's trust that makes that network connect in a way that's gonna be durable and enduring.

SPEAKER_00 17:58

Yeah, yeah. I love that, Brad. That's uh that's you know, there's sometimes when I hear these stories, we're going through these stories of David vs. Goliath, there's always these moments where you almost want to say the universe conspires in your favor, right? Like, what's what are you know the odds of you being in the waiting room, the guy having watched, you know, your shopping channel that didn't work out, knows the story, he runs into you in that moment and goes, Let's let's make this happen, right? Like again, you had to do all that stuff, you had to show up, you had to put yourself out there, you have to take risk after risk. And again, it's almost as if we want to call the shopping channel a failure, and it it was, but it was for that, but it created just enough brand awareness that opened the door um to this to this opportunity, and and it grew from there. So, so Brad, when when do you start um uh you know you you so you're growing, you're in the channels, do you start diversifying different products, different types of toys? What's what is the journey there um as you get into uh the retail stores and it goes one retail store after another, you increase distribution? I'm assuming at this point, you know, you're able to get loans, you're able to finance a bit better, you've got some revenue coming in, you've got a legitimate kind of business that's starting to get some legs.

SPEAKER_01 19:11

Yeah, no, it it literally was exactly how you've described it, and I think you've said it very well. I mean, I I think in every founder's journey, they often look back and say, you know, how did I get to this position? You know, was it because I was smart? Was it because I worked real hard? Or was it because I got lucky? And the truth is they all matter. But this last one, luck, which is really about timing. Like it was just lucky that I was in that place at that time with the product, and he happened to be there. But if I hadn't done the work, I hadn't been smart and worked hard, I wouldn't have been in the position to capture luck.

SPEAKER_00 19:50

Correct. Correct. And had you not said, I'm gonna just show up to their offices, right? A lot of people would not have done that, right? Again, it's all of these things that you were willing to put yourself out there. And then when you do, as I say, the the universe then conspires in your favor. It'll just here, I'll give you a little breadcrumb, see where it takes you, you know?

SPEAKER_01 20:07

So that was the beginning of just uh I would say a snowball of initially flying toys. So again, I had a flying toy. Other people with flying toys contacted me, so we had like boomerangs and we had planes and we had all kinds of things, and even Spinmaster Toys, who's a very prominent Canadian company. At that time, they were just launching a product called Airhogs, and it was an air-powered airplane. Um, and it was a pretty big bet those guys made. It was really the product that got them on the map. And the problem with that product is it was also hard to communicate, it was expensive. Uh, so um Anton Rabi, who was the one of the co-founders of that company, reached out to me and said, Hey, we're we hear you guys are good at being able to get into distribution. And we worked out a deal, and in the early days, we were their distribution partner uh for a lot of that product throughout not only Canada, but the United States, because we started to expand and grow the way we did things, which was just scrappy, creative, trying things that other people weren't doing. The traditional companies of that time were kind of fixed in this mindset of like the way that they did business was they bought product, they put it on TV, they sold it, and that was their their formula. And our formula was more of a grassroots gorilla in the public, trying things that other people wouldn't do, experimenting.

SPEAKER_00 21:19

Give me an example of that, Brad. You mentioned that a few times. So give me an example of a grassroots sort of gorilla campaign that like you know, they would have never, the the the Goliaths would have never tried to do, the Giants would have never, you know, done it that way.

SPEAKER_01 21:32

Yeah, we would uh we would go across the country. We would uh actually hire teams and we would send them across the country to carnivals events where they would actually demonstrate troys, try these different things uh hands on with the consumer. Um, and and just you know, we we brought in yo yo's, we started yo yo contests, things like that that other people wouldn't do. So we we created events around um like we really became event people. How do we take this toy and we create a Consumer experience that would then help create a connection that would spread by word of mouth. And the hope was by doing that, we would get this grassroots movement of people who would all of a sudden be built up to want to support it versus the easy path was here's a bunch of money, let me throw it at TV. And that's the path that most toy companies went. And quite frankly, we just couldn't afford it. It just wasn't a viable option for us at the time. So we had to think outside the box of how do we communicate, which is what marketing is about, the the benefits of this product to our target audience in a way that will find the customer and in a in a way that'll actually help become more memorable that then increases the likelihood of word of mouth.

unknown 22:39

Yeah.

SPEAKER_00 22:39

Yeah. I I mean I love that. Like one, you go, you go directly to the customer, where are they, right? You go to the carnivals, you have the experiences. And what's what's what's you know, another lesson that we see here with the Davids versus Gliots often is your constraints become your advantages. You can't buy TV ads, you don't have the capital. So it doesn't, it's not even an option, right? Because because the the the thing we often try to do as founders is like, okay, what's the best practice? What's the playbook here? And if you take the playbook of the giant toy industries, what would have they said? Well, get the product, run some TV ads, sell the like right, like that's the playbook. And so some it's funny, like when we study the playbook, we study the best practice, you get the opposite of what a David should do, and it's like take whatever that is, you probably can't afford it. So if you can't run TV, what are you gonna do? How do you get in front of them? How do you get people excited? And then that virality, that word of mouth. I mean, today it's do that experience, then capture it and put it free on social media and and let that social media virality go off to be your word of mouth in addition to the actual experience. Um just pretty pretty cool. So you expand in the air toys, the you know, the the boomerangs, the the air hugs, you start to become a trusted distributor, you're in the US, you're in Canada, it's growing. Um what's what are some of the give me some of the pivotal moments? What are the in that journey? Um, I know there's a sort of big moment that we're gonna get to in 2006 where things get a bit tough and difficult, but what are some of the key milestones before getting us there?

SPEAKER_01 24:11

Once we had developed this formula uh and reputation, again, that's you know the most valuable thing, most valuable currency we have is our reputation, the trust that you have the ability to connect, you know, integrity, say what you're gonna do and then do what you say. And we had that in spades because literally every product line that we took on, we were able to grow their distribution. A lot of that came to focus too. Uh so we started to build this little company up, started adding team members, and with that ability to scale, we started adding additional product lines beyond uh just the traditional flying toys, because flying toys is kind of seasonal. Uh, so we said, how do we get something that's less lumpy in terms of revenue? So we started going after some larger traditional toy companies. And uh sort of a pivotal moment for us was a company called Wild Planet who had a line called Spy Gear, and it took us from products that were just, you know, spring and summer into a year-round, in fact, maybe more fourth quarter, and we crushed it with that brand. We did incredible numbers with them, and again, Canada over-indexed any other market. A large part of that came from, again, creative merchandising, distribution solutions, and also opening up channels that were not obvious. As an example, we started opening up sporting goods stores. We started going into like uh dollar stores and convenience when they were just starting off. And a lot of toy companies at that time weren't doing that. They were traditionally just focused on your traditional mass market department store type opportunities. So we were diversifying and expanding our ability to um to sell products. And that led to a series of, I would say, awards and recognition. We, you know, grew the company very quickly for five years in a row. We were on the Profit 100 in Canada. I don't think it's called that anymore, but we were amongst the 100 fastest growing companies in Canada. Uh, came with a lot of recognition and opportunities to speak. And you know, we were these young guns from Alberta because all of our counter, all our peers were in Ontario. So it just didn't make sense that this this company from Alberta was doing this. Uh, and and we were really proud of the fact that we built this thing up and was creating significant uh success with it. Uh, and I would say that also allowed us to go to a point where we could now qualify for commercial lending because there's there's three things that you're gonna break when you're building a company. I've I've learned it now since, and it's one of the principles I teach in my book. It's like you're gonna break your people, your systems, and your capital. The people part is pretty obvious that you know, if you want to scale something to be twice as big as it currently is, it's probably something you can do on your own. But if you want to scale it 10 times, there is no way that you within your capacity can do something 10 times. So the only way to do that is by getting quality people. Um, I didn't know at the time that it needed to be quality people. I was just like, those just hire people.

SPEAKER_00 26:54

Yeah, yeah. Whoever's available, come on. Whoever's available. You know, this friend, this friend, that friend, my wife's friend. Yeah, just come join.

SPEAKER_01 27:02

100%, which I don't recommend, by the way. Looking back now, knowing I don't know now, I don't recommend that the strategy. But it was literally if if you could fog a mirror, then you could qualify to work for us. So we we were literally just trying to get people in. Uh the reality is the people you start with are usually not the people that you're gonna end with, right? That you know, you people have to evolve with your enterprise and or you need to continue to upgrade and find the right people. So the second thing you're gonna break is your capital. Uh, it takes money to make money, especially in a distribution company where you're buying products in advance, shipping them on the water, putting them into retailers who take 30, 60, 90 days. I mean, to build that model, if you just run the cash flows on it, it just takes a lot of capital. Um, and and then the third thing is the systems, which is this is how you keep everyone singing from the same song sheet. How do you get everybody working uh together in Sympatico to ensure that you're executing? Because more important than talent is the talent ability to execute, to deliver on the plan. Well, the capital piece, um, friends and family is only so scalable. You have to then go to commercial lenders, which we did. And we had qualified for a commercial line of credit, which was exciting. Uh, they required that we implement a new ERP as a part of the process of setting that up. And so we did that. Um, I had uh just finished an amazing year. It was a record year for the company, both in growth and sales and profits. We had this new large line from a commercial bank, and I got back from my Christmas vacation and I got a call from my business partner and my CFO. And he said, Brad, we have a problem. And I said, Really? Tell me more. Don't like getting problem questions from your CFO. That's usually not a good thing. He said, Well, it looks like when we implemented the ERP, we didn't properly account for the cost of goods. And now, after I run the numbers correctly, it shows that instead of having profits, we have losses. And unfortunately, with our covenants to the bank, that puts us into a whole bunch of default. And so literally, I found it the hard way that you can grow a company too quickly. And if you aren't inspecting what you're expecting and have the right systems in place, you can go from hero to zero, which is pretty much what happened. I went from high flying, you know, five years on the profit list to special loans. That fast. And it became um an inflection point that changed the way I would do business from that point forward.

SPEAKER_00 29:23

Yeah, that's uh I mean, you know, you learn that lesson because you are the physical goods space. There's a lot of founders I work with in the software space, and especially, you know, I think it's I think it's corrected a bit over the last few years, but there's a period of time where it was growth at all costs, burn the VC money to get growth, growth, growth. Right? I mean the early days, uh I mean Uber is the greatest example of this as like a highlight of like they weren't profitable forever, you know, like and it was just burn for market share at all costs. But they're not dealing with sort of physical goods, they're dealing with investor money, they're able to scale it a bit differently. But this lesson sort of really hits you front and center. And I a lot of the founders that we work with today, um, same thing. This sort of like, hey, I we've grown revenue to 3x, but my costs have equivalently grown. And um, I think it was interesting too, even with a lot of the AI AI companies that we're working with lately, AI is a different type of software in that it's not a bill, you know, before software scaled in terms of your price pretty well because you you're just duplicating the same software for more users, but now if your software is dependent on a lot of the AI, well your users also eat up more credits. So you're actually there's a there's an interesting new cost of goods that's i in software that's credit-based software that I think is a different math that I'm seeing a lot of founders have to try and calculate now. Um and and I've had a few already similar to what you've said here, where oh, we did the math wrong. Like our our our business model, our financial model's wrong. We're losing money on some of these users. And uh, and it's and if we don't catch it early enough, uh you know, as you've seen, sort of the if the math is wrong, you you go from here to zero, you go from thinking you had the best year ever to I owe a bunch of money. That's really interesting.

SPEAKER_01 31:17

It's a thin, thin line. I look, I think um I had a coffee with a founder yesterday who's got a AI SaaS business, um, which almost seems like an oxymoron these days, but he does, and it's it's growing. But he's in a place where he's he's burning cash. And and so look, I think not all businesses are equal, not all business models are equal. That's actually a better thing to say. There's different um value propositions and different cash requirements depending on the type of business, and often small changes can change how efficient you are. But the truth is that acquisition costs are going up, it's getting harder and harder to acquire customers. Churn is also increasing because of the fact that people are fickle and there's more and more competitive items coming on the market. Uh, and your ability to uh use talent and retain talent continues to be a going concern. And of course, you need to have talent to be able to grow and scale these things. So the thing I've learned, this is the principle I now live by, which is you know, top line's vanity, bottom line sanity. Your cash flow is your reality. You can never ever run out of cash. And I will say, so, you know, sometimes the best gifts come wrapped in ugly paper. Going through uh special loans, which led to restructuring, which is a fancy word for bankruptcy, that forced us into a discipline of a 90-day cash flow, which I have never not done since. We always, always run 90-day cash flows. Why? The only person that likes a surprise is somebody on their birthday. Nobody wants to get a cash call surprise in the middle of trying to build and scale something. So you should never, ever, ever have that show up. If if it does, quite frankly, you need to change out whoever's leading your finance team because they're just they've lost trust. There should never be that position. So I think, you know, it is the lifeblood of your business. And the other piece of it is that most founders, and I'm certainly uh find this true for myself, we choke from biting on off more than we can chew, then we starve from lack of opportunity. We just, you know, I've got this um, you know, ADD mind that sees all the potential, all the possibilities, and we got to do it all at once.

SPEAKER_00 33:36

Yeah, yeah.

SPEAKER_01 33:37

And the truth is, that's actually the recipe for disaster. It's about looking at, yeah, you need to here's what I tell people you need both a telescope and a microscope. You need a telescope to be able to zoom out and see all the potential. That's that's why you're in this business. You see the potential of what you can create. And then you need a microscope to come in to focus on what needs to be true today, and that I need to focus on that allows me to get to that future. And that usually means doing less, not more. It's like, what are the one or two things I need to be excellent at today, which can compound over time to give me the optionality and opportunity to do more? Steve Jobs said that he was more proud of the things they didn't do than the things they did. And the first thing he did when he came back to Apple is he took the 130 products they had and cut it down to under 10. Like that was the very first thing. And that focus, that vigilance about being focused on what they could be excellent at, what they could absolutely dominate at was the thing that allowed them to go on to what they are today.

SPEAKER_00 34:36

Yeah, yeah. That focus, I mean, so so the the cash flow moment uh really puts things into focus for you. Cash flow moment tells you what's important and what's not, especially when you're and you're having to. I think as a founder, you you've got the natural, like the ADHD thing is is sort of very natural. This curiosity, this like, what's the next thing I want to do? What's the next project? You always have the next idea. Um, so you you you install a new system, you install a new cash system, you guys figure it out, you have special loans, and you move on to the next challenge.

SPEAKER_01 35:06

Well, yeah, I I'm a slow learner. I tell people I don't have an MBA from university, but I have a PhD in D UMB um from the school hard knocks. Uh it's because what happened is that my ego got in the way of actually common sense. So my identity to that point was all about I scale companies, I scale them fast, I'm part of the you know, profit 100. I can fix this. I just need more money. And so I literally, you know, part of the restructuring came out of the fact that I went out and raised more money. This was um secondary capital market, so it came from like um a merchant bank uh in the market that offered to put some money in in exchange for some equity and an interest rate on it, and of course I had to go through restructuring because they wanted to clean up the balance sheet, yada yada yada, all that stuff. And for two years, I naively thought I could fix it with just by having more money. But what I didn't do is question the model. Like, why were our margins so thin? Why was the cost of goods out of whack? So I was trying to scale something that wasn't scalable, and I think that is part of the problem where uh founders, their business becomes a part of their identity.

SPEAKER_00 36:14

Yeah.

SPEAKER_01 36:15

You know, I've I've now had this like sort of clarity moment about your business is just a it is a piece of art. It is a representation of who you are. It is not what you are, it's a representation. Um, and there's lots of other art in you. And this should have been in his in in retrospect a time when I would have stopped and evaluated did the business model still make sense? Was it the right opportunity, or could I take the lessons that I learned and apply to something where I would actually make something more meaningful? So I took two years of me wrestling with this business only to figure out, oh no, the business model's broke and I've now burned through another five million dollars in in capital, which I had personal guarantees, by the way, so that was very exciting for me. Um and your wife? The fact she's still with me tells me that uh she, you know, she I I I'm pretty sure she should have hit the eject button uh somewhere along the way, but she didn't, which I'm very grateful for. It's the most important part of my life. But two years later, we finally put a bullet in the company for the the last time. And, you know, it's again, this is part of build measure learn is this idea, what do you want to do? Do you persist, or perhaps you pivot? And in some cases, you need to put a bullet in it and just move on to a new opportunity. And the dynamic there was that the investors who had put the money in actually came to me and said, Okay, we we don't love the fact that now our money is underwater. Um, and we want you to figure out a way to repay it, and you have personal guarantees, so I think you're motivated to do that. And they weren't wrong, I was. So I went away and sort of had a chance to reimagine the business. And the way I got clear, quite frankly, wasn't by figuring out what I wanted to do. I figured out what I didn't want to ever do again. So I reviewed all the things that had happened and said, okay, here's what I never want to do again. I don't want to be just focused on Canada. It's it's it's a small market relative to other markets in the world. I don't want to be focused on distribution, it's somebody else's product, so I don't have much margin because there's already a manufacturer and now I'm a distributor, have thinner margins. Uh, I don't want to be sitting on millions of dollars on inventory in a warehouse, you know. Um I don't want to try and continue to run these uh these these events and try and do these grassroots events because it's it's exhausting. It's you know, trying to market that way or spend money on TV, it's just marketing is a is a high cost. So by getting clear on all the things I didn't want, indirectly I created a new business model, which was I was gonna get into manufacturing, I was gonna focus outside of uh Canada Global, I was gonna focus on a business that shipped directly from the factories instead of having in a warehouse. And instead of trying to build a brand from scratch, I was gonna work with licensing, licensers who already had brand equity, and I'd license their equity in exchange for royalty, and that would be the way that I can then communicate the value of the product. And that became the launch of Tech for Kids. And, you know, the thing that I learned, and this is the value lesson of it all, is that endings are also new beginnings. They're super uncomfortable because we hate uncertainty, we hate ambiguity in life. Um, and I encourage people, you don't need to go through a bankruptcy to find a new beginning. It might be something going on in your business right now that just you should stop and question. Like, am I being disrupted? You know, there's this idea that Jim Collins has called productive paranoia, where you're constantly kind of looking down to see what might be coming and how I could be disrupted. And I think that's um a healthy way to look at life. I I don't love the word paranoia, it means irrational fear, so I don't like that. The word I use is active uneasiness. I'm actively uneasy about the fact that I could be disrupted. And when that when you're in that place, it forces you to evaluate. And it might uh give you the, I guess, clarity to say that I need to reinvent my business, reinvent the model, make small tweaks that actually can make it a better overall opportunity. Because the truth was, the next company I launched, Tech for Kids, became significantly more impactful, significantly more um uh uh rewarding for me as an entrepreneur. Like on every level. And the crazy part was if I hadn't been disrupted, this is part of that best gifts come wrapped in ugly paper, if I hadn't been put into you know, special loans that ultimately led to bankruptcy, I never would have found that better future. Right? So that is endings are also new beginnings. And my experience so far, every new beginning has actually been a better outcome than that initial um business would have been.

SPEAKER_00 40:45

I I think I think that's such a such a beautiful lesson wrapped up. Uh I think you get you get to this sorry, you get to this point where with the previous you were chasing vanity. You were chasing the top line dollars, you were chasing the like, you know, where five years in or five straight years in a row where the profit at 100, and like you don't care for those allocades uh, you know, on the next venture. You go actually doesn't none of that matters. And I see it with founders, with young founders who are getting started, they they want the award and the recognition and the incubator and there and that incubator and that, and they're just like they're chasing the validation of being a founder, but second time founders I find are n are often not involved in any of that stuff, and they're just so focused on does this is is this product market fit? And then if third time founders aren't even product market fit, they're just market. Where's the market? They just it like where where's the market and what market do I want to be in? Forget the product as a whole. Um, and and there's this transformation that happens. But I'm sort of even seeing it in your language here, which is you know, the first time around, there was a lot of that top line scaling, big dollars. It's it's the young ego that needs to be fed, right, and told that you're great and that you are special and you are a founder of of great magnitude, but then you go into the second one with a a a list of clarity on what you want, and not just chasing any dollar, not just chasing anything. That list of clarity and sort of the analogy we use becomes your slingshot, becomes this David slingshot, this really focused area of where you want to be and where you want to go, and allows you to really make this new model, which is direct uh direct to consumer from the factory, licensing, all of this stuff that you've named here really impactful. So walk me through the the kind of the years because 2009 is where you co-found Tech for Kids, is what I have here. And you you kind of are more deliberate in building your leadership team this time around. Um talk to me about the early days of Tech for Kids.

SPEAKER_01 42:47

Yeah, well, just for clarity on some of the other founders, I founded two other companies while I was in that initial business. So I had a distribution company in sporting goods that we eventually sold as a part of the, I guess, the restructuring. And I had a company in Hong Kong that was manufacturing products for the US market, which ultimately we bankrupted. And it was a third bankruptcy in my you know history of companies. So there that accounts for a couple more of the nine. Uh so Tech for Kids uh takes off. Well, you know, humble begins. And by the way, we went from a team of you talk about small teams. Uh at my first enterprise, we got it up to about 65 people. And when we finally uh wound it down, we took 65 and turned it to eight. So eight of us uh launching this business and focusing on an FOB model, meaning we're shipping directly from our factories in China. Um and in fact, our initial office was my uh head of development's office um apartment in Hong Kong, which was a whopping 400 square feet. So he literally had a bedroom, a kitchen, a bathroom, and we had a table with employees that sat there with computers, and that is. How we launched Tech for Kids. And it was uh a terror, we called it a terror citing moment, both terrifying and exciting at the same time. Uh, but we had some pretty great licenses out of the gate. And so we had product ideas, we had some licenses, it worked, got traction. Um, that business started to scale uh a lot faster than the other business. And because we were not financing the inventory anymore, uh, it was actually very sustainable because nobody, everybody who bought product had to prepay it out of the factories. So our factories gave us terms, so we didn't have to advance money there. Uh, our customers put deposits, so that became the money, became the lifeblood for us, and then we got paid on shipment. So that kept the cash flow coming in very sustainably, and suddenly we had a flywheel. We could actually scale and grow this thing infinitely based on that. And we started off with focusing on distribution primarily to uh developing markets. Like we did a lot of business in Latin America, we did some business in uh in Australasia, and then even in parts of Europe, even before we did significant business in North America. But eventually it all kind of came over time because again, consistency uh value over time builds trust, and trust gets you access to new markets and new distribution opportunities. Uh, and it just became something that was pretty, pretty exciting. What happened though, is that the investors who uh were made whole, by the way, after this business started to be successful and generate profits, they wanted to see an an exit. They wanted a way out. Because I mean, this is part of the truth that I think your founders need to uh to identify with is that we celebrate raising money, we think that that's a success, but actually it's an obligation. You've just agreed to some sort of an exit event at some point in the future, right? That is the the truth of raising money.

SPEAKER_00 45:49

And well, even the word exit, Brad, I've I've started to like just dig in. Think about it, who's exiting? The inv the investors are exiting, not the founder. Yeah right, like even calling it an exit. I mean, this the the founder can get cash out and get some money and and make themselves you know, the but it's still like the exit is the investors exiting it r really than than it is the founding team, right? Who who often stay or want to continue building or so on and so forth. Even the language sort of overweights the investor versus the founder.

SPEAKER_01 46:21

Well said, that's exactly the truth. So we had people kind of long in the tooth, they're like, we want out of this, and we had a couple uh I say close calls for people to acquire the company outright. Uh, but the toy business is fickle. Um, you know, a lot of like that business is driven on like hits. You need to find the next hit. What are kids intrigued with? What's what's driving them? And we've been pretty good at picking and betting right, but it requires that ongoing ability to do that. Uh, anyways, we came down to like, well, if we're not going to be able to sell it outright, then maybe there's another way to reverse engineer this. And so we started talking to some other Toikos in the United States about how do we potentially merge the company and create a greater company, get uh economies of scale by consolidating operations and finance and stuff like that, but also then look to create some liquidity through that process by going to private equity and/or commercial lending. We found a partner in the States uh who, quite frankly, was perfect for us. They were uh the founder was 10 years my senior. He'd had lots of success in the business. This was his second go-around. He was also looking for ways to scale, and there was this plan to eventually go public. And so we agreed to merge the companies and put them together, and the resulting company became Basic Fun. And those were the brands that you already talked about: Connects, Tonka, Lightbright. Um, and the nice thing about that is those have some enduring equity to them. They're not so much hit-driven, they're the perennials that just show up and they're consistently a part of the distribution. So these two companies coming together, and we actually, while we were putting the companies together, we acquired another company, so we kind of proved out that we could acquire businesses and build this roll-up model to eventually go public. Uh, it all seemed to be great, but the one thing that I was ignoring was the fact that this other founder and myself, who are now gonna be co-founders, had very different sort of philosophies and values around how to build businesses. And while on paper it looked great, uh, it looked like this was gonna be a perfect fit. While we were putting things together, I started to realize that his style and my style, they're just really different. The cultures of our team and their teams, not such a great fit. And I just kind of stuck my head in the sand saying, you know what, I'm I'm more focused on the outcome here. If I can get this exit, which provided liquidity to my investors as well as allow me to take some chips off the table, keeping in mind that I had some scarcity mindset knowing I'd, you know, PTSD about going bankrupt like three times. So it would be nice to actually have some security in my life. I just sort of stuck my head in the sand. 90 days after we had officially merged the companies, which took about two years to do it, plus we did this acquisition along the way, I got fired.

unknown 49:10

Ouch.

SPEAKER_01 49:11

Yeah, it was uh another one of those, like, wow, okay. And I found out the hard way.

SPEAKER_00 49:17

When you go from a majority, was it the board? Uh yeah.

SPEAKER_01 49:21

Exactly right. I was a majority in my company. I had majority uh shares as well as vote, but in this new company, I was a minority, and uh there was a board, and the board had sort of sniffed out that there was this conflict between the personalities that we had two leaders who, even though on paper we had different titles, our styles were combative, and ultimately somebody had to go. Well, within 90 days. Within 90 days, yeah. He's 10 years my senior. He had had more experience, plus he based in the US, just deeper connections in the community as a large. So um, I don't fault them for picking him because certainly on paper he was the guy that I I think had the most tenure.

SPEAKER_00 50:04

But you don't think the board could have restructured in a way where you two could have worked together?

SPEAKER_01 50:08

Yeah, I I mean I can look back and and consider all those possibilities. Um and quite frankly, I we had had a heart-to-heart just before I got fired. I I had gone to him and I said, I just we just have to kind of lay all the cards out. And I had basically submitted like this is the things that I see that are a problem, and I'm willing to work through them if you're willing to. And I remember his response was a little bit coy. It wasn't exactly like uh hell yeah, or thank you. It was like, appreciate this, thank you for coming to me. I'm not sure. That was kind of my takeaway. And um following week I got let go. So suddenly I'm in a in a very strange place, and you know, I've spent almost 30 years of my life focused on one industry, have been through some highs, some lows, and certainly you know, a lot of battle scars from the journey. Um, but again, this is one of those, you know, best kifts come wrapped in ugly paper, right? There is always purpose to your pain. You just need to give time and reflection to figure out what it's about. Um that ultimately led to them buying up my shares. Uh, that didn't happen right away, but we've we figured out a solution. They they they saw a path to grow it and to continue to scale it. And I decided that, you know, I was ready to move on to something different. And it gave me the freedom and optionality to reimagine what I wanted to do when I grow up and the opportunity to just sit back and dream in technical and say, this is the things I really love. Like I enjoyed the toy business. I wouldn't say I loved it, I was passionate about it. Um, and quite frankly, there were some things about that business that I was a little conflicted with, particularly how things are made and the sustainability of it all. Um, it all just kind of sat like it there was a better way to do it.

SPEAKER_00 51:55

Yeah.

SPEAKER_01 51:56

So that was the beginning of where I'm at in my current chapter, which is becoming the co-founder of Peel of Case and Loamy. And how that came about is that I was in a business forum with a guy by the name of Matt Bertuli, who, uh a founder from Toronto. We both were uh connected through this forum together. And I had just gotten let in go. We were at a forum meeting and we had a layover in Boston. And he we were in the lounge having a glass of wine, and he was telling me about this business he'd just invested into called Pila Case. Came from the prairies of Canada, and it was a world's first compostable phone case. And the person that made it knew how to make it, but didn't know how to market it. Matt knew how to market. And what he'd done is done a bunch of marketing and broken their supply chain. So what they were looking for was somebody who knew how to scale it. Well, I had lots of experience in making products and scaling it. So that became the beginning of us figuring out could we work together, could we play nice? Um, were we good founder fit? Because quite frankly, you know, two most important decisions you're gonna make in life that affects your happiness is who do you marry and who you choose to get in business with. Largely those two things, if you get those right, your life, the level of joy in your life will be affected by getting that either right or wrong. And uh and so Matt and I became co-founders and took this business that was at that time uh under a million dollars in revenue to uh become a nine-figure enterprise.

SPEAKER_00 53:17

Wow. Wow. And that's the current journey.

SPEAKER_01 53:21

That is the current journey, and it continues to evolve. We've since introduced Loamy, which you mentioned earlier up front. So Loamy is just an extension of that. It was an opportunity to, you know, peel a case is about how do we start with the end of life up front? How do we make this thing out of materials that actually have a grace bundle life? Uh loamy was there's missing infrastructure. There's not compostable infrastructure up there to give things end-of-life. And so Loamy was an opportunity to actually provide an end-of-life story for both our compostable products as well as organic waste in general, which is largely food waste. And so both of those uh are part of the current um uh product offering. Uh, we continue to expand. And by the way, Loamy, we launched a crowdfunding campaign. Um, it's uh if you know anything.

SPEAKER_00 54:09

I think I've seen Loamy. Does is Loamy are you guys in in Ottawa? Are you in Vest Ottawa? Like, are you or is it a different? Is it a different uh there's a competitor in Ottawa? Maybe it's the competitor that I'm getting confused. I gotta apologize. I apologize. I've done it. All good, it's all good. It's all good.

SPEAKER_01 54:24

Yeah, but it's it it they have a machine as well. I mean, there's a few people who have come into the space. It's it's it's exciting because it really is the you know, in God's economy, there's no waste. Everything that has an end of life is the beginning of something else, right? All organic weight has organic waste has an end of life that's helpful. And so only humans create a trash, something that goes to a landfill and sits down for hundreds, if not thousands of years. So this is reimagining ways to get us back to the original economy of all end of life should be the beginning of new life for something else.

SPEAKER_00 54:55

I really like that. That's what I'm saying. So so you're you're on your you're on your next uh kind of ventures here. So let's take a back at take a uh moment and reflect. Um what are what are some of the lessons that you as a founder now you know lead with differently today than you did before? So when you think about your leadership, or you think about how you lead teams, how you lead meetings, like some of the like the operational leadership. Um give me a before versus after. What you would have done before what you do now, how how that's shifted, it's still being a David in this space, still being the sort of small player that's trying to enter bigger markets, trying to disrupt markets. Obviously with Lomi, um this is fairly innovative. This not fairly, it is innovative. There aren't no big players that are uh uh doing that, but your biggest competitors are the fact that well people put in the green bin, right? Like your biggest competitors is an institutional service that I sort of just put my stuff and yeah, I don't get it, you know, I don't get my own compost, but I sort of still feel good about the fact that my compost is being taken care of. Um so I I want us to reflect as to how things have shifted for you in leadership, in teams, and in strategy. And we'll go through it one by one so not to overload the question, but I kind of want to get the lessons out of you now, Brad, a little bit as we've gotten the story. Um, how are you leading differently today than before?

SPEAKER_01 56:21

Look, there's a whole bunch of lessons, but I think if you want me to kind of keep this top line in terms of where do I really see how do I create value at this age and stage of life? Um I've come to learn that my role in the company is not to do everything. Okay. I mean, in the past I was kind of, you know, jack of all trades, master of none. I was involved in everything, had to be aware of everything. It felt overwhelming, quite frankly. And again, it's not just not scalable. Um, I've now landed on that my role is really three things. My first role is to actually set the vision for the business, to really get clear on where am I going with this business? What is it we're trying to do that's going to reshape the world, reshape the future. So you're a time traveler. You travel in the future, you imagine in the way it can be, and then you're coming back and providing a roadmap of how would you create it. So getting really clear on that, your team needs to see that, by the way. They need to see that you are clear about the future within. Second, is that you are the person living out those values that you ascribe to in the business better than anyone. The thing I've come to learn is that most people, you know, they'll get about 80% of what you get right, but they will replicate 120 to maybe 150% of what you get wrong. So the way you show up and behave, which is the values, the virtues of that business, you have to be the person that embodies them more and better than anyone consistently throughout the organization, which is also meaning you need to be attitude dependable. This highs and lows business doesn't work well. People need to see that confidence, the attributes that they're looking for, your leadership, quite frankly, integrity. Say what you're gonna do and then do what you say, and then confidence. And I say I'm often wrong, but seldom in doubt. So I'm very confident. It doesn't mean I'm always right about the direction, but I'm also confident in the ability to redirect, right? So we talk about, you know, goals and concrete plans in sand. Be willing to shift and change based on feedback in the market. Yeah, right. And the third thing you need to do is then hire the people. Hire the talent around you and empower them to be able to do what they need to do with their work. Meaning you have to give them the tools, you have to give them the level of capital that's necessary, the playbooks, all of that that they actually can be effective in the marketplace. And so those are really the three things that I am thinking about from a leadership perspective is how do I show up in the enterprise and consistently do those three things. And you know, finding the people is one part, retaining them and empowering them is another part. And it all has to be cohesive. You have to build a culture that reinforces that. And I would say that is probably the area of the business that I've overinvested into is how do I get really good at read, you know, finding the right talent, hiring them, and then retaining them and ensuring that around that, the culture that you embody is infused into the way that they show up. So we just this is a big part of just building a company that's going to be enduring and durable. I mean, you talk about unicorns. I tell people that, you know, we we think it's a billion-dollar valuation. The real unicorns, companies have been around hundreds of years. And so imagine your enterprise as if it could be around hundreds of years and build it that way. Yeah, you might change plans, you might continue on a different path, you might have an opportunity to exit, whatever, but just imagine you're building this to be enduring and durable for the long term. I mean, that I think that's what a lot of people appreciate about Elon Musk. Like him or not, they love the fact that this guy's got a vision for a future that he may not see.

unknown 59:57

Yeah. Yeah.

SPEAKER_01 59:58

Govern Mars. I mean, he may not see that, but he's got a clear vision for it that's going to live on beyond him.

SPEAKER_00 1:00:03

Talk to me to a moment in the past where you struggled with empowerment, where perhaps you didn't empower well in one of the previous companies. And and so what you would have done before versus what you do now. So you talked about playbooks, you talked about giving people time, you know, recruiting these individuals. I think empowerment is one of those pieces we teach it a lot too at Unicorn Labs. We talk about you know pushing decision making down, all of these tactics, all these things, but it is consistently the the the most talked about, but the hardest, right? Like it's it's we talk about I feel like vision, founders get it a bit more, they'll they'll set a vision, they'll they'll they'll be pretty big picture, but empowerment f the fights against some of their biological, the natural instincts. And so it's one and and it's it's the one that impedes their ability to actually get the best talent. It actually it sort of is a is a if they don't get empowerment right, they end up not getting the best talent, which then further feeds their point of well, ZP people can't do it without me. And it's like, well, you haven't actually gotten your A team yet because you can't afford your A team and you're not an A player yet yourself. As a leader, you've yet to become an A player, um, and so you're not attracting the right other leaders around you. But walk me through your experience around kind of some failures around empowerment and maybe uh what you've done differently this time.

SPEAKER_01 1:01:24

Yeah. Well, it's starts with you. I think you kind of talked about that in terms of just the idea that you are gonna only attract people who you are becoming like. You will be the limiter to your ability to get the right talent in your team. So I big believer in work hard in yourself than anything else, continue to grow yourself. And I would also say that I have been um, particularly because of the failings in my life, and I use the word failing specifically. Failure is when you get knocked down and choose to stay down. Failing is getting knocked down and figuring out how to bounce back up again. So we're gonna fail forward. We talk about fail often, fail fast, fail cheap. The price of failing, andor being a failure in the case of going bankrupt, is you have all kinds of like issues with your self-worth and identity and the confidence. I mean, I have struggled most of my life with being an imposter. Like, when are they gonna come find me out? That I don't have what it takes to actually lead this thing. I, you know, my resume doesn't read that I should be doing what I'm doing right now. Literally, like I'm a prairie kid. It doesn't really make sense what I'm doing right now, right? So that is something that you're going to struggle with, by the way, for the rest of your life. It's a matter of identifying it, getting clear about it, and then just kind of pushing it down into a small corner of your being. And the the thing that overcomes uh the fear of that is action, is actually being willing to take the action and the small steps, particularly in investing yourself. So it's like you can't get what you don't have. So it's investing in yourself in terms of your physical, mental, emotional, spiritual health, doing what you need to do, because you can't give to others if you haven't built it into yourself first, right? The second thing I would say is as a leader and empowering, there's this phenom called the Wizard of Oz, where initially you as a founder feel very empowered by the fact that you have the answers. You know, you you just you're in this room, you're you're the smartest person in the room, you've got the answers, and it results in this lineup of people who come to you for uh validation for their ideas. In the beginning, it feels pretty good. It's like, oh, I've got the answers. I'm I'm a value creator in this enterprise, but it's not scalable. And eventually, given enough time, it becomes incredibly debilitating. So, one of the principles that we've established in the company, um, a couple that come out of this, but the first one is this anybody who we hire who comes into a session with the leaders and has an issue, they have to present it under the one-three-one format, which is what is the one problem you have? What are the three possible solutions you've imagined for it, and then what's your one recommendation? And it's an incredibly um powerful tactic to get your leaders to think for themselves because you don't get what you want, you get what you tolerate. And if you just continue to have people line up and see you as a wizard of oz with all the knowledge and understanding, then you're just gonna get more of that. So you have to figure out ways to actually extract the value from the people. And then it comes down to the people. So, principle is this if you hire the right people, they're free. They literally create more value than anything you will pay them. In fact, you get to finance them, you don't pay them all at once, you pay them over time. It's incredible. So, when I landed on that and got clear on that, I got to a place where I actually got comfortable with I just need to go hire the best talent. And um, you know, there's a few books out there I recommend highly in terms of this process. One's called Who, the other is the ideal team player. I think they're both very helpful to help you find the right talent and then build the right playbooks to go get them. But then I was willing to pay people more than I was even making myself at the time. I was like, whoa, this is very uncomfortable. But pretty soon I went from being the smartest person in the room to surrounding myself with people that were smarter than me in any one specific area, whether it was in marketing, whether it was in product development, whether it was in sales, they were all specialists, not general specialists, because we all start off with generalists, but then we need to go to specialists who are really, really good at that. And when you get people that are really good at that, all singing from the same song sheet, working in Sympatico, that's where the magic happens. And I was no longer the smartest person in the room, but I was the smartest person because I realized that their efforts while I was paying them a nice, healthy salary with bonuses, was building equity for me. And that's ultimately long term what we want to create as founders.

SPEAKER_00 1:05:48

Yeah. Yeah. I like that. I like how you've gotten to it. So, from a leadership perspective, some of the stuff that the Davids have to do that you see, where you've shifted, is really focus on the vision for. Focus on the values, uh, you know, really live those values um and and um you know hire the team. Hire the team and and empower them, hire the team and k let them loose, give them the opportunities to actually lead and bring their brilliance. And I love your term here. Like, yeah, you get to finance them. It's so true. I didn't think about that. You don't pay them up front. Like you do it like you right, like you're you're financing them over time. Um okay, so then talk to me about strategies of the Davids. So you know, you know, there's a lot of sayings when they z when you know they zag you, zag, when the giants in the toy industry were doing the TV markets, you went to the events, um, you know, guerrilla marketing. Uh uh today with Lomi, today with uh Pella, how are you employing, you know, David strategies in the in these industries? Uh how are you disrupting, you know, in in in how you go about it? And one of the kind of common themes we talk about is you can't fight you can't fight Goliath head on, because if you do, you will lose. Like the without a doubt, right? The the Davids that survive, they find another battlefield or they they they find, you know, a uh idea of a blue ocean strategy, they find another space that they can be in, um, or they partner and they find another Goliath that they actually ride the coattails with and and go fight that, right? Like they find a partner who they have to uh work with. So, what has it been for you as as you sort of get into being a David again?

SPEAKER_01 1:07:28

Yeah, no, I it's a great question. So I think we're we're kind of in the middle of it right now. Um so I'll use Peel of Case as a great example. So um Peel of Case is is kind of a small player relative to some of the juggernauts industry. I mean, obviously, Apple makes phone cases, OtterBox, there's a number of very large significant players in this market. And uh, you know, our initial positioning, which is around sustainability, was different. And again, better is not a sustainable strategy, it's got to be different. So, how can you be different? So, that sustainability was something that stood out. Well, based upon the current, I would say, consumer psyche and the election cycles, sustainability is not such a hot topic these days. Uh so we had to pivot and reimagine what is the value proposition that we're trying to create as a brand and how do we continue to compete against these guys who have just mass distribution. And where we started was that, you know, initially we started doing our manufacturing in Saskatchewan. We eventually moved it all to Asia based upon my experience of manufacturing there. But then we set up a manufacturing facility here in North America to run some trial stuff. Um and we also spent a lot of time trying to perfect the North American manufacturing process to see how we could optimize it. One of the trends that came out of the last election, which was pretty huge, was domiciling manufacturing, figuring out how do we actually make more stuff in North America. And we already had this sort of head start because we had a factory here. So we chose to go all in on how do we just repatriate manufacturing to North America versus doing the traditional off in China making like hundreds of thousands of pieces, which gives us the ability to do something more uh craft niche and focused. At the same time, we have a direct-to-consumer marketing engine, which is unique to us, that allows us to do more personalization. So the combination of localized manufacturing and a personalized uh interface with our consumer has given us this very potent ability to be nimble, meaning that we can test hundreds, thousands of pieces of artwork online and only go with what works and produce it the same day, like quickly turn things around. And as a result, the other piece that's fascinating here is that it improves the cash conversion cycle, being that we get to sell stuff even before we make it and ship it, because we have localized manufacturing. Which also led to marketing opportunities, right? This is another great example. So because there was this sort of like um the Canadian uh pride thing, based upon the recent uh, I would just say, uh noise that's come from south of the border, allowed us to promote in Canada that they're made in Canada. Well, guess how that worked out? A lot of Canadians started buying our product because it was made in Canada. Whereas that probably didn't work in the States, so instead we said in the States, not made in China. Just true. Two different messages for two different audiences that we could be specific to and in both cases resonated deeply, so much so that we are now replicating that manufacturing facility in the states and using this model to scale and AI tools to help us replicate even faster uh artwork and ads that reinforce what we're doing. So the product is still sustainable, but the message we now lead with is fashion, your ability to choose your identity, your view, your case, protection. It is the best, most durable product you can buy. And then, oh, by the way, it's also good for the planet, but that's much less of a priority based upon the current climate. The environment will come back in. It's not a matter if, it's when. It is not a flight, it's a trend. But for the moment, we're able to pivot our messaging in a way that connects the market. That is more David than anybody else in the market at this point in time.

SPEAKER_00 1:11:10

Because the environment piece couldn't be couldn't be the only reason. I'm not gonna give you all this extra money just because you're environmentally friendly. I'll give you the win if it looks nice and and and and it's environmental, right? Like, like it it it it's the piece that pushes it over the edge that makes me make that decision, that buying decision, but perhaps not the only reason. Um and uh I like that. I like that you're kind of reproducing the factories in in local. You reproduce a factory and it's made it's made there, and and that way um people feel more connected to it, you know, at uh and and choose to engage. I like that. I like that. Um talk to me about um uh uh you know uh we actually we talked about a bit about hiring the team and building the team. What about team culture? Um you know, what do you do today that's different than what you did before in regards to team culture? We talked about empowerment from a culture perspective. We talked about the values that you have as a leader, but what do you do to foster team culture, especially as teams grow? I think there's there's a challenge of the David's um, you know, in the analogy that we use is there's two analogies. We use the sort of explore versus exploit uh mentality of the early days of exploring product market fit until you have gotten to a point where you can you can cross over to exploit, where you have you know efficient capital returns. Um, you know, you could use the crossing the chasm mentality of like, you know, have you gotten enough uh uh uh uh to get you over to the other side. Well, what we say is that as as David grows, he puts on more armor and he gets slower and slower. And this is the sort of constant challenge that David has. He wants to build more processes and systems so that he can build a more repeatable, efficient business, but then as you build more processes and systems, you become less and less nimble than you were before, and there's this tension of scaling yet remaining nimble, and this is a core tension of a David, and a lot has to do with the the culture of a team. And I often joke with a lot of organizations we work with. I say, I can usually tell you the culture of your team by the size of your HR policy book. Um because the more things you think you have to write in your HR policies, the more you tell me you have a team that you don't trust can actually act like humans, or you can't out policy a bad employee and you can't out policy a poor culture. Um so so yeah, so I sort of open it up that way, but I'd love for you to take us. You've had a number of companies now, you have you know, you've had different types of cultures and different types of companies. What have been some of the through lines, some of the cultures that uh that you were intentional with that worked, and some mistakes where maybe you let some things you tolerated some parts of the culture for too long that that really was destructive?

SPEAKER_01 1:14:00

Yeah, it's a great question, and it certainly has evolved. Um yeah, I I once heard Ed Catmill, uh former of uh Pixar, talk about what's more important people or ideas. And the I the obvious answer is it's people, because without people there are no ideas. So the business of business is people. It comes down to the right people in the right seats, all doing the right work. And uh in order for that to happen, it comes down to a really rigorous selection process. We we have a super rigorous process. Like people feel like they earned the right to get on our team. It wasn't something like we have a gauntlet people go through. And the reason for that, I say more important than hiring the wrong the right people is keeping the wrong people from getting on the team. Because one person in your culture that is destructive is super caustic to the entire organization and will cost you a lot of money. So we are really, really clear on the hiring process up front. And once they are there, I mean, we've we've created things like we actually have our own academy where when people get involved with us, they there's like an onboarding process. There's an academy they go through to actually learn about the company. We've invested in that why we want them to feel like they've they're special, that this is something that they is a part of, that want them to develop some identity around this. We have some vernacular in the company that is unique to us, so we make sure that they read certain books as a part of that too. It's a part of the onboarding. Um, and we just it's our investment into those people. And I would say it's an ongoing. We we we send people off to courses, we invest in their development, we want to encourage to grow them to continue to be better because if they become more valuable, they create more value in the organization. And then the final piece to it, I'd say, is your job as a CEO is to constantly be cascading rays within the organization. Now, people think rays of sunshine, and certainly there's a lot of sun coming up in my face right now. But ray stands for recognition. You need to recognize people for doing good work. You know, babies cry for it, young men die for it. Recognition is such a human need, recognizing for what you do on a daily basis, right? So that's the R. A is appreciation. You appreciate people, not just for the work they did, because if you only appreciate them for just the good job they did, then that feels like it's a very transactional uh type uh position. So you want to appreciate for who they are and who they're becoming in the organization. And it's different than recognition. And then finally, ease encouragement, which is typically somebody's made a mistake. Somebody has screwed up, they've done something wrong. And in our culture, it's okay to make mistakes. It's just not okay to repeat them. So we give them an opportunity to make the mistake, encourage them through that. What did you learn? And how do we then take that mistake and that adversity and turn toward advantage for the future? Because you can never overinvest in your team and your people in terms of the attention you give them. Of course, that you can't you can't delegate that to an AI. You can't get a bot to do this for you. It requires the leadership to do it. And you as the leader set the tone that the other leaders in your organization will then uh, like I said, they'll get 80% right and 150% of what you do wrong. So you're not doing it at all, they will do an even worse job. So you just have to set that tone within the organization. The health of your organization, the health of your people, the health of that culture ultimately delivers the health of the products and value you're putting into the marketplace. And if you take a look at companies who do it incredibly, like look at Patagonia, there's this kind of a shiny example of a leader who lives these values, who, you know, writes manifestos in the form of books, and he's got raving fans within his organization. There's a passion about their vision, their impact that they're gonna make. Um, you know, uh Tony Shea with what he created as well. Like there's so many good examples of leaders who have embodied this and in such an incredible way, understanding that for me to get most from this organiz from this opportunity, it comes down to me empowering my people and being there to cascade these rays across the organization.

SPEAKER_00 1:17:59

So as we start to wrap up part of this episode here, Brad, it's uh I I sort of I'm I'm looking through my notes and kind of reflecting on how this all kind of comes together, how this resolves. You you you know, you start off as this David, as this toy, you know, distributor, and you go from toy distributor who bankrupts his own company to toy manufacturer um who builds a a pretty big empire, uh, who merges uh with another, you know, uh uh uh uh another company, unfortunately gets you know uh removed, but you know, has a big win there and has gets their shares and really does that. And you get a chance to restart. And so you restart and you go into kind of uh space that's really environmentally friendly, right? Space around uh these these phone cases that are by degree you know environmentally uh impactful and and and and and and loamy who which actually helps you know uh local householder, you know, households really uh compost and and better use of their of their I mean I'm not doing I'm not doing any marketing justice here to to either I'll own that, but I uh sort of looking at your journey here, I go, okay, what's what's your strat what's your philosophy now? What's your philosophy in um you share a bit of your philosophy in leadership, even the philosophy in strategy, but what's your life philosophy? Like you're you're you've you've built some companies, you're doing this for fun, is a sense I get at this point in life. You've written a book, um, uh you've you've you share and you mentor and you do advisory work. Where where are you at uh in in this journey? What what drives you today?

SPEAKER_01 1:19:42

Yeah, I I appreciate the question so much because I really uh see myself in a bit of a transition in my life. Um look out of all my uh first half of life. I call myself kind of I'm in sort of in the halftime. If you want to talk about a football analogy, the the first half is really about proving. Um, you know, there's a few things that are happening. There's uncertainty that is out there, and we are trying to create certainty out of it, right? So we're wrestling with those two things. And we do that by building companies, failing, make mistakes, growing back, come back. Why? Because we want significance. Like we want to build some kind of significance, some sort of confidence that we're we're aspiring to. But what we also find out is that that's kind of fleeting. External validation is not very lasting, and it's also you're as good as your last at bat. You know, like uh as much as we idolize, you know, uh sports stars or uh musicians, I mean, the the tragedy is that they're as good as the last time they performed. And after that, who knows? They got to continue at that level, or it's the law of diminishing returns. So as I start thinking about the sort of the back half of my life, um, I still want to use my um my drive, my ability to create things to my advantage. That's part of my my God-given faculty. But it's really more now about how do I connect in a deeper way with my primary relationship with my wife, but also my kids and then my extended friend community that I belong to, as well as just the founder community and the people I've gotten to know. How do I create connections that are less transactional and maybe more transformational? Things that actually uh go from superficial to more significant. Uh, how do I continue to grow myself? And maybe it's not growing in the ways that I previously valued, um, but exploring other parts of my being that I haven't had a chance to. And then ultimately, how do I give? How do I become a force for good in the world and into the ecosystem? I I mean, being on your podcast today and carving up this time is literally me leaning into that, where before I would have had no time, too busy, you know? Um so wanting to provide an opportunity to use my the wisdom of my experience, some of the wisdom from my wounds and lessons from my journey to pass on to other people that they can use it as a way for them to help navigate their own journey is part of the conviction. And it's not necessarily just altruism. It's literally uh, I'm a big believer that when you become a giving person, you actually get most of the benefit from the givingness. Like it just changes your beingness and the way that you show up in the world. And I can certainly say from my um most recent uh path, I feel that way. I started something called full spectrum. And it's where I lean into some of this mentorship where the idea behind full spectrum is that light is made up of multiple wavelengths. Um, I found in my life that I was really good at two or three of those wavelengths, got really good at business, really good at a handful of things, and then at the expense of everything else. And sort of this back half of life, it's like, how do I ensure that I have wealth beyond money across the full spectrum of my life, across everything that I was given and my opportunity to know that at the end of my life, when I'm 85 or however old, that I'll look back and say, I'm so glad I did, versus I wish I had, right? How do I avoid that regret piece? Um, you know, Jeff Bezos talks about regret minimization, fast forward to your future and then think about the decision you're in right now, and will you say you're glad you did or wish you had? I I think it's super helpful framing for how I make decisions today.

SPEAKER_00 1:23:14

Yeah, yeah. I think that really that really aligns because you know, one of the questions I had here for you, which you sort of answered, I was is you know, what's what does winning look like? Because because you've won in many areas, you know, you know, uh Pila's doing well, you got a mission to eliminate one billion pounds of plastic. Uh, you know, Lomi's in 215,000 households already composting food waste. You've got these wins from uh what an entreprene a younger entrepreneur will be looking up and go like, yeah, yeah, he got the companies, he made some money, he built this, he scaled that. And and I love this sort of full circle moment here for you of yeah, my my win now is leaning into the community and pouring back into it. Um and I see that. I see that in how you're showing up here today, but even in in in the book that you wrote, the The Startup Santa, right, which is all about the idea of generosity in business, right? And and um you're you I think you have a saying you're either growing or you're giving. And uh um, you know, I I I see that practice in you, I see that practice in in how you share so so so freely. Brad, let's end us here with with your last thoughts on David versus Goliath. What is the you know few things that you want founders to know, to take away, and to live with as they are, you know, building their Davids, taking on Goliaths and trying to, you know, find a legacy for themselves, find some success in all the craziness of the startup world.

SPEAKER_01 1:24:41

Don't take yourself so seriously. None of us get out of this experience alive. It's really this the the joy is in the journey. And I know that sounds so trite to say it, but I used to be so future focused, uh, which creates anxiety. Just by setting a goal, quite frankly, you've just created anxiety because you've said, I'll be happy when. I'll be happy if. And it's still important to set goals and it's still important to push yourself and try things, but also be present. Understand that this moment right now is the only true currency you have, right? Actually, this is a great, great saying I once heard. I love it. It says, you know, tomorrow's a promissory note, yesterday's a canceled check, today is the only cash you have. So choose to invest or spend it wisely. So take this precious life you have, invest it into something that's going to be aligned with your values, that helps build your character, and enjoy the journey and be willing to make mistakes and laugh at yourself, and it's okay. It's totally okay because it's a part God's crucible was for learning, requires us to go through struggles, to build our strength, to deal with challenges in order to forge a character. It's a part of how you become the best and brightest version of yourself. So enjoy the journey.

unknown 1:25:58

Yeah, I love that.

SPEAKER_00 1:25:59

Enjoy the journey. Well, Brad, we've enjoyed this journey. I've enjoyed this conversation. I've learned a lot. I was taking notes. I feel like we've gotten through quite a bit in terms of our questions to understand, you know, the kind of leader you are, the kind of David you are, and in the in the industries, the Goliath industries that you played in, learning about your toy industries, learning about all the the fun and crazy decisions early on and to how they've led into the ventures that you're working on today. So, Brad, thank you. Thank you for your time, thank you for your energy, and thank you so much for being here with us. Um, and uh bless everything that's to come.