Mike Beckham
@mikebeckhamsm
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Co-Founder and CEO of Simple Modern. Follower of Jesus. Operators Podcast Co-Host. Proud Husband and Father of 2.
Norman, OK
Joined March 2009
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In 2016 I co-founded a drinkware company.
It seemed insane to others
We would be competing with great brands like Yeti and Hydroflask.
We only had $200,000 while our competitors had hundreds of millions.
Today we sell over $100,000,000 annually.
A secret on how we did it:
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Recently one of our newest team members asked if he could decorate his cubical. When I said yes, I wasn't expecting this...
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I’m not crying, you’re crying
This is the most memorable 2 minutes you will spend today
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That's a full wood cabin motif including a stove, hardwood floor, and stuffed moose head
He told me afterward that he actually held back a bit. He had bought an authentic cabin chandelier but realized it was a bit much just before he hung it.
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One of the easiest ways to be generous is with your words.
It doesn't cost anything to say:
"Thank you for..."
"I love you."
"Great job on..."
Generosity is about the attitude of your heart, not the size of your bank account
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Congrats
@lucas_mundt
, you win employee decorator of the year. We all salute you!
Having creative teammates like you is one of the things I enjoy most about Simple Modern
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Update:
Simple Modern will be instituting a workspace personalization and decoration budget for each employee. Excited to see what each team member comes up with!
Also, today Lucas gave us a guided tour of his mountain getaway👏🏻
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There is a major storm brewing in the supply chain. It could dramatically impact everyone's life next year, but almost no one knows about it yet.
We are talking empty shelves, crazy inflation, etc.
Here's what I am learning about the problem from my contacts in China 🧵👇
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We began manufacturing in America in 2022. We will make over a million bottles domestically in our first year.
I’ve learned first hand why it is so hard to build things in America.
For us, the biggest barrier hasn’t been wages or regulation.
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Retailers are slashing prices because they are drowning in inventory.
Over the last month, both Walmart and Target reported earnings results that took billions off their valuations.
If you want to know how it happened, then this thread is for you:
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The challenge is the United State’s anemic manufacturing ecosystem. Compared to China we aren’t even close.
If you want to build a high quality tool or source a new material it is 10x more difficult in the US compared to China. The reason is simple-there are a lot less experts…
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If you want to learn more about our company, Simple Modern, and why our mission statement is “We exist to give generously” you can watch this video:
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This year we will sell over $100 million in hydration products at Target, Sam’s Club, and Walmart.
The most surprising part?
When I co-founded Simple Modern six years ago, I had zero experience in physical retail.
Want to sell into mass retail? Here’s what you need to know:
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One of the most essential things I've learned:
Be proactive in addressing conflict. Go directly to the source, communicate clearly, and be humble. Don't be afraid to apologize, display empathy, and be willing to offer forgiveness.
I dislike conflict as much as anyone, but not…
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The new way for corporations to avoid paying full refunds.
I had an account with Verizon and it transitioned to a business account so I was due a refund.
For years, I have paid via credit card. But they didn’t credit my card with the refund. Instead they send me a debit card.…
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Faith became an important part of my life when I was in college. People frequently ask me how being a follower of Jesus impacts my approach to business.After reflecting on it, here are three ways my faith impacts how I approach my job as a CEO.
1. My identity does not come from…
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Recently I celebrated my 42nd birthday. I took some time to reflect on life and business. Here are some of the top things I have learned: 🧵👇
1. Relationships with depth, trust, and intimacy are the primary way to achieve lasting contentment in life.
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There's a simple principle about optimization. The more optimized and fine-tuned a system is, the more fragile it is to a major shock.
The global supply chain was a highly optimized system that had been pretty stable up until this point.
This pause in ordering broke it.
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You do need a different strategy than your competition.
Use this process:
1. Find a product that has robust demand
2. Examine the strategies and strengths of the existing companies
3. Find white space
Ask: Where do your skills and abilities line up with white space?
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Big News🎉
I am proud to announce that every team member at Simple Modern will now be an owner! In the first year alone, we will allocate 5 million dollars in stock across the team.
The plan includes everyone. It spans from senior leaders to the team members who work in our…
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Thanks for reading. In addition to leading Simple Modern, I also teach entrepreneurship at the University of Oklahoma. I tweet about what I'm learning along the way.
If you liked this thread please like or retweet it so it can be shared with others.
In 2016 I co-founded a drinkware company.
It seemed insane to others
We would be competing with great brands like Yeti and Hydroflask.
We only had $200,000 while our competitors had hundreds of millions.
Today we sell over $100,000,000 annually.
A secret on how we did it:
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This is the thought process of mastery. Nuanced quality thought built over years and decades.
There is no shortcut. It is only achievable through thousands of hours of focus.
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Our brand sells millions of units through Amazon each year. Contrary to public sentiment, they've been a great partner to our business.
But 2022 is a major crossroads because Amazon retail will likely shrink this year
My thoughts on what's wrong and how to fix it (1 of many)
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I co-founded a company that has grown to national prominence. I'm often asked about our "eureka" moment, where we had our vision for what we wanted to build.
That moment never happened. Instead, it has been a day-by-day process that has unfolded over the past 8 years.
When…
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I hope this thread was helpful. Retweets, comments, and likes on the original tweet in this thread are appreciated.
You can follow me for more content like this.
Retailers are slashing prices because they are drowning in inventory.
Over the last month, both Walmart and Target reported earnings results that took billions off their valuations.
If you want to know how it happened, then this thread is for you:
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Never look down on someone when they mispronounce a word
It’s because they learned it from reading
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Many aspiring entrepreneurs get stuck trying to invent a new product to sell.
It's a trap.
99.9% of successful businesses sell an established product in a new way.
"But if I sell something other people are selling I'll have competition!"
My response:
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The most successful companies in the world are selling an improved derivative of an already successful product:
Netflix -> Video + Streaming
Tesla -> Cars + Electric Power
Apple ->Phones + Apps & Internet
You don't have to reinvent the wheel.
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Some of our primary production is in a yellow region. These partners now have electricity caps and can work 4 days a week instead of 6. Their production has been cut by 33% and these cuts are likely to last until Chinese New Year.
This is a BIG deal.
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Thus, there was a 2 month period when ordering from Chinese factories fell off a cliff.
IMPORTANT: This is where all the pain in the logistics industry started. This is why inventory is such an issue now. It goes back to this moment.
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The problem with COVID is that it has led to cascading failures throughout the supply chain.
If production drops so dramatically over the coming months then empty shelves will be commonplace. We are talking about a situation where many product types will be completely nuked.
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Competition always comes with demand.
If you're launching a product that has no competition there are only two possible reasons:
1. There is great demand and fortunately you were the first person on earth to tap into it (unlikely)
2. There is not much demand for that product
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A key characteristic of successful people I know:
They are process-oriented instead of outcome-oriented.
Outcome-oriented = all the focus is on results
This mindset inspires sayings like, "Winning isn't everything; it's the only thing."
But this thinking has a fatal flaw:
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Retail is described as a "Ditch to ditch" industry.
Two predictions about the future:
1. The next few months are going to see lots of sales and lower margins for everyone.
2. The next time the retail sector misses, it's going to be too little inventory instead of too much.
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All the retailers are heavy on inventory.
All the consumer brands are heavy on inventory.
If you want a deflationary force, then you are going to love what comes next.
We are about to see some crazy sales! Seasonal items are going to be priced to move.
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What happens when you get unprecedented ordering?
You get unprecedented shipping and logistics demand.
Immediately, container prices skyrocket hundreds of percent. Some of the inflation we are dealing with today comes from this huge surge in logistics costs.
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This is the all-time best order shipping status update:
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In stainless steel drinkware, 93% of the world's production happens in one province in China. Of that production, about half happens from now until Chinese New Year.
What that means is that almost 20% of the world's production isn't going to get built this year!
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As a communist country, China is centrally planned. That means that things like electricity usage are planned in Beijing by party officials instead of governed by the supply and demand of the market.
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This year, we will sell several hundred million dollars worth of hydration products with retail partners like Target, Walmart, and Costco.
But when I co-founded Simple Modern eight years ago, I had zero experience in physical retail.
Here's what I've learned along the way:
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At the beginning of the year, China set electricity quotas for each province. As a result of supply chain disruptions from COVID and unprecedented factory demand, many of the provinces have used way more electricity than planned.
Now, China doesn't have enough coal power
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Products being produced in the more restricted "red" regions are going to be hit even harder. There are already stories about regions having to operate by candlelight due to the power rationing.
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Ships literally spend months waiting to unload.
The inventory planning that all consumer brands and retailers do depends on some assumptions about how long production and shipping will take.
All those assumptions are suddenly WAY off.
120 days is the new 60 days.
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It's very likely if that happens that we see the biggest traffic jam that the supply chain has ever experienced.
This year we got a taste of what happens when you apply pressure to the logistics supply chain. Next year we may see a full break in some places.
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Over the past 24 hours I have learned that the problem is deeper than just planning. Electricity prices in China are regulated and capped. Recently the cost of coal has skyrocketed and Chinese power companies have a disincentive to produce more power because it is unprofitable
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If you don't know when you will get your next shipment, the only way you can stay in stock is to keep more inventory on hand.
The delays cause everyone to order even MORE products. We are now fully stuck in a negative feedback loop.
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The Chinese government has begun restricting electrical usage for the provinces based on how much electricity they have used so far this year. There is a green, yellow, red system that has been put in place. The map below shows the provinces and their color.
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When we decided to take on manufacturing products in America, I knew it would be a massive challenge.
Today, I saw a video of a machine that took us years to help create. It is hard to overstate how much this automation will help us scale.🚀
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Being a CEO of a quickly growing company is hard.
There are stressful aspects that you don't control (economy, COVID, competition) but you do control your actions
Here are 5 things I have learned in the process of leading a company from founding to millions of customers.
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Even worse is one simple fact: The system is not set up to move this much product, no matter how much you pay.
The bay of the heavily trafficked Long Beach port begins to look like a nautical parking lot.
Shipments are diverted to other ports, they clog too.
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An experience that made a huge impact on my life:
Years ago, when I was a college student, there was a class that I really wanted to take. "Freedom in Greece" was the most popular course at the university. Hundreds of people wanted to take it each semester. Unfortunately, it was…
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This year we will sell over 100,000,000 in retail value on Amazon.
Over the past few months, Amazon released a treasure trove of data. This information has helped take our business to the next level.
If you sell on Amazon, here are seven ways to level up with a new tool:
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Our newest endcap in
@walmart
just hit stores this week.
My favorite part is that we manufactured over 150,000 bottles here in 🇺🇸!
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None of this is anyone's fault. The retail sector is full of amazing people who have worked incredibly hard throughout the pandemic to keep the good ship lollipop afloat.
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This photo hits home with me.
I want to be a parent that avoids the path of least resistance with devices. I want to help my kids develop an imagination and expand their mind.
There’s nothing I love more than hearing one of my kids pronounce a word wrong. When I hear that I…
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Today we started our five year lease on this 175k sq foot space in Oklahoma City.
This is where Simple Modern is going to start manufacturing products in the USA!
It’s a big challenge and I’m excited to share what we learn in the process.
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We didn't know:
How long lockdowns would last
How dangerous COVID was
When consumer behavior would normalize
As a result, every consumer products leader I know did the only sensible thing. They paused all production.
No reason to make inventory that you don't know you can sell
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Did anyone on Twitter know that hotdogs are only $1.50 at Costco?
How do they keep prices this low? Is there a story behind this?
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One additional point is that China is simultaneously rolling out its “2021-2022 Autumn and Winter Action Plan for Air Polution Mangement"
This plan curtails even more production from factories with higher pollution.
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This year our company will achieve almost 9 figures in revenue.
After 6 years of passionate work, we will be doing our first(!) profit distribution to owners.
Even incredibly successful businesses require patience and a long-term mindset.
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Guess what? All the uncertainty about timetables is about to matter.
Riddle me this: What happens when a retailer owns 100 containers of Christmas trees that were supposed to arrive in October, but instead they sit on the water for 70 extra days?
Disaster
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The problem started in March 2020. When COVID began spreading in the US and led to stay-at-home directives the purchasing behavior of everyone changed.
Demand for toilet paper, masks, hand sanitizer, and other "essential supplies" skyrocketed.
Retailers had to pivot quickly.
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Every retailer runs their inventory through a sorting center called a "Distribution Center".
A direct quote from a major retailer: "We're stuffed so full of Christmas trees and air fryers that we can't buy or move the product we need through the distribution centers."
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Even more concerning is what will happen on the other side of Chinese New Year. The lack of production caused by the electrical shortages is going to cause an unprecedented amount of demand on Chinese factories in 2022.
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So to recap:
Retailers buying loads of inventory
Retailers buying a lot more inventory in China
Brands manufacturing at a torrid pace
Really unpredictable shipping time-tables
People buying heavily for their homes
Costs up across the board
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I have been told by contacts at discount stores that they are being offered the best deals they have ever seen from inventory-laden brands.
But just like anything else, this too shall pass.
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Today I spent two hours at the most remarkable funeral I have ever attended.
The man had 5 sons. Each spoke for nearly 15 minutes about the profound impact their father had on their life.
There were over 1,000 people in attendance...
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Today was a big day for Simple Modern. We prepared to ship our first mass retail order that was manufactured in the USA!
The entire team helped with the packing process. Then we celebrated with our version of the manufacturing Olympics.🏅
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If you made essential items you were working round the clock to spin up production to meet the unprecedented demand.
But for most product categories you had a sudden and violent drop off of demand.
As a CEO, I know I experienced a massive amount of FUD. I wasn't alone.
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Government stimulus is coming
Reopening begins
Vaccines are coming by end of year
People begin buying "non-essential" items again, but spending habits are still altered. Everyone is buying things for their homes.
Home workout, renovation materials, air fryers, etc.
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Tons of extra inventory because demand was less than expected (see Peleton for example)
Tons of inventory that missed a critical window but has to go somewhere (our Christmas tree example)
And now we have arrived at today.
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There was a lot of talk and concern on the bird app (and in very knowledgable industry circles) about huge out of stocks during the 2021 holidays.
That didn't happen, but it was because everyone bought a ridiculous amount of inventory and paid through the nose to get it here.
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September 7th is not a special e-commerce shopping day
But we are having a pretty explosive sales day.
The reason? We dropped some 🔥fall ornamentations today. We have used our 4d printing technology to create some awesome looks.
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In order to meet this challenge, retailers greatly reduced purchases of non-essential supplies.
We sell at Target and were told we wouldn't receive purchase orders for several weeks.
We sell on Amazon and our deliveries went from 2-day timelines to 1 month.
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So you have a 2 month period where not much gets ordered in many consumer categories.
Then around May, it becomes obvious that COVID is serious and can be deadly, but it isn't going to be a worst-case scenario. This isn't the onset of some zombie apocalypse.
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Josh McDaniels was fired by the Raiders, but how it happened is the more interesting story.
This has to be the craziest way a coach has been let go
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I believe the birth of Jesus was the defining moment in history.
I'm not alone. Previous generations certified it as the focal point in history. This is why Jesus's birth marks the calendar transition from BC to AD.
Christmas points to 4 important truths about God:
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I'm in my 8th year as a CEO, and I've been a part of growing multiple startups from founding to 9 figures of revenue.
When asked for leadership advice from younger leaders, I always mention one principle.
To scale, you have to excel in three roles:
Player
Player/Coach…
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Consumer companies begin reordering in a huge way. They realize that they need to do their normal ordering + account for new demand + make up for the production they missed over the last few weeks.
Factories are inundated with orders. You can probably guess what happens next.
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You can read more here: I contributed my company’s experience to this Wall Street Journal piece on the subject
China is struggling with widespread power shortfalls, risking disruption to global supply chains and heightened inflationary pressure around the world
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What happens next is a two-headed dragon:
1. 2021 Holiday season
2. Consumer behavior changes
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People have been dunking on this girl. That is everything toxic about social media.
Transitioning to adulthood is freaking hard. Working full time is draining. It does suck when you leave work and it’s already dark outside.
Venting about it makes sense
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By early 2022 we were seeing the other shoe drop.
People were buying different things. They were going back to the office. They had purchased all those items they needed for their home. A lot of spending was shifting to services.
So add it all up and what do you have:
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Built this gym on the first floor of Simple Modern HQ in January.
Return on investment has been ♾️
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Target, Walmart, Costco, and the other largest retailers have the best shipping rates and the most efficient logistics operations in the world.
Brands began offering better pricing to offload the uncertainty of the supply chain.
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Why is DTC so difficult? Why is the physical retail landscape dominated by a few massive companies?
I think the reason is a dynamic I've coined "the milk problem."
If you into a Target or a Walmart the milk is in the back of the store. Why?
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It worked. As we saw initial traction we reinvested all our profits into online growth.
6 years later we sell more drinkware units on Amazon than anyone in the world.
Our success with e-commerce created future opportunities with partners like Target, Walmart, and Sam's Club.
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In addition, retailers are having record years so they are buying inventory at unprecedented rates.
No one knows how much of this is sustainable, but you can't say "I have a hunch that this won't last so I'm going to just start ordering less than people are buying of this item."
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The less you care about credentials, the better you are at entrepreneurship.
Conversely, don’t expect someone with a history of chasing credentials to excel in an entrepreneurial environment.
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Most SMB consumer brands don't have the pricing power, expertise, or personnel to fight these forces.
So they began to ask retailers to ramp up something called Direct Import.
Direct Import is when you sell goods to a retailer in a foreign country and they own shipping it.
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When we founded
@simplemodernco
, we saw an opportunity in licensed drinkware.
The problem: We had no idea where to start.
This year we will sell > $20,000,000 in licensed sales with partners like Disney and the NFL.
The epic inside story and what I've learned in the process 🧵
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I’ve learned something important building several companies: entrepreneurship takes a level of optimism that borders on naïveté.
If I had known my odds of success, I never would’ve started.
Experienced founders aren’t flippant about starting companies
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