Two of my favorite quotes from this episode are “Engage in the careful selection of customers” and “You can’t dominate everything. You’ve got to pick what you’re good at and who you’re working with.”
Dana Gleason has been making bags, packs and outdoor gear for four decades, but has stayed on top of the changing retail landscape with continuous innovation. Sometimes, that required a complete relaunch as a new brand, but his successful track record made me wonder: How does he keep adapting to changing needs, the changing retail landscape, and changing consumer habits? It’s all here in this incredible episode, featuring my most charismatic guest yet. We cover domestic versus Asian manufacturing, quality control, the different types of customers and who to watch out for, and when to fire your dealers altogether.
- 01:45 – How Dana got started in the outdoor equipment industry.
- 09:00 – The first mistake cost him his first business.
- 11:20 – New company, new challenges, like learning to delegate.
- 17:40 – The sale isn’t complete until you get paid.
- 22:30 – Different classes of customers, and hidden costs of growth.
- 27:20 – The evolution to Dana Designs involved a portable 8-Track player.
- 33:10 – Changing trends killed the market for pro-level bags.
- 36:30 – Pros and cons of keeping manufacturing local.
- 39:00 – Changing how they ran the business as they grew.
- 41:40 – Batching production to manage inventory.
- 44:25 – Selling Dana Designs to K2 once they hit critical mass.
- 50:50 – Maintaining quality control by maintaining control.
- 55:20 – An attempt at expanding through brand acquisition.
- 59:20 – Why start another bag company?
- 1:04:00 – Focusing on niche customers that need what you’re selling.
- 1:13:00 – What should you protect?
- 1:15:15 – Moving back into consumer goods, and using retail as a marketing tool.
- 1:25:18 – Keeping things fresh.
- 1:28:10 – Parting advice and challenges.
POST GAME ANALYSIS
Dana Gleason started by taking in repair work, using his sewing machine to build his own gear between jobs. One day, he set aside an entire week to do nothing but creative design, and that’s what set him on the path to launching his first brand. Then came the real test, as he put it: “Once you’ve created a product that you think is so good people would want to buy it as soon as they see it, then it’s time to test that by seeing if someone will actually pay for it with their hard earned money.”
He also mentioned that the best way to figure something out is to fix things. That taught Dana how packs were constructed, which has served him well for more than four decades.
His second venture, Mojo Designs, showed the limitation of a one-man-show. He had more than $1 million in orders, but could only produce $20,000 worth of product per month himself. Once he figured out he had to delegate, the real challenge became figuring out what to delegate and how to trust others to do the things you used to do.
When you’re dealing with an extended sales system, it’s the easiest thing in the world to be selling stuff to people who may or may not actually be paying for it.” In other words, know when you’re getting paid, and IF you’re getting paid, before you keep sending out product.
“Engage in the careful selection of customers.”
Dana explains some of the hidden costs of selling direct. If you’re thinking you won’t have the same overhead as a brick and mortar store and can sell for less, you should think about how your storage, sales and shipping costs might grow as your volume grows. For example, warehousing space expands because now you’re stocking all of the inventory that your retail customers used to.
Regarding crowd funding campaigns, he says too often inventors aren’t asking for enough money to truly launch a company. If you’re bringing in just enough to cover that first production run and meet the campaign’s sales, you’ve got nothing left to order a second round and build a business on.
Mojo Systems, which changed its name to Quest Systems, saw the impact of two things take its business down. First, smaller point-and-shoot cameras came to market, which didn’t need their giant, professional equipment bags. Second, competitors adapted quickly with smaller bags and sent manufacturing overseas, which made them more competitive on price and features. The lesson: Pay attention to trends and be prepared to act quickly.
Where the domestic manufacturing helped was with quick-turnaround, seasonal items that change frequently. Having their manufacturing located in their home state of Montana let them react quickly to new laptop, camera and other electronics’ designs, which gave Dana Designs an edge.
Regarding management, process and inventory, Dana says you need to optimize your processes as you scale to make the best use of your resources -human, time, materials, cash flow- so the company runs lean and healthy. His example is batching production into smaller blocks to produce just enough inventory to meet short term demand. This helps prevent overstock. The other side of that equation is keeping your raw materials inventory under control, too, particularly once they’ve been modified in some way as part of your manufacturing process. Why? Because once you cut the fabric, mold the plastic or whatever, those “goods” no longer have market value, but have soaked up cash from your company.
“If you aren’t growing, you are most likely shrinking.”
He sold Dana Designs to K2 because they’d hit a point in their growth where they were only going to make incremental gains in their core market. The larger conglomerate offered more resources for them to grow into new markets, but it came with the downsides of new financial pressures to meet shareholder expectations.
Like me, and so many of you, Dana was at his best when he was making things and creating his processes. Not when he had to work within a politically charged, corporate environment. If that describes you, think long and hard before selling your company, particularly if you’re expected to remain at the company or have to sign a non-compete.
Dana maintains his quality control by keeping a local production facility building his gear the way they want it to be built. Even though some Mystery Ranch gear is made in Asia, they maintain quality by keeping people on site year ‘round, inspecting raw materials, and using ISO 9001 certified contractors.
“Every time you make a concerted effort to get a lower price, you get a lower price. You just won’t get the same product you started with.”
Regarding their experiment with acquiring another brand and trying to build that as their price point line, it became very difficult to build a second brand. But that’s what K2 tried to do by acquiring them, which ultimately didn’t work as well. Why? In these cases, it’s because their passion was in their original companies and brands. The acquisitions weren’t their babies, so they just weren’t as excited about it. There’s nothing wrong with building a business for business’ sake, which is what the bean counters at K2 were doing to enhance shareholder value. They were passionate about that, and that’s OK. But for adventurous entrepreneurs like us, it’s all about doing something we’re passionate about and enhances our own lifestyle.
“You can’t dominate everything. You’ve got to pick what you’re good at and who you’re working with.”
Ultimately, that’s why Dana started Mystery Ranch. He just enjoys doing it – making the gear, building the brand. His new challenge was the drastically different retail landscape. Their equipment was specialized and needed some instruction to use, which was a challenge when store employees were inexperienced or the item was being sold online. So, he simply fired their entire dealer base just four years after launching. Instead, he focused their product line and sales efforts on the customers that needed it the most.
As he put it: “The longer we tried to support people that weren’t supporting us back, the more money we lost.” This pivot was crucial. They could have switched to a more general pack, or jumped on the ultra light bandwagon, but he’d have been competing with every outdoor equipment brand. Instead, he focused on U.S.-made goods that he could sell to the military, and solving problems for users that needed specific functions and features.
The real takeaway? If you think you can do it, go for it. As Dana says, “there is no substitute for getting out and doing it!” Do something your passionate about, do it as well as you possibly can, and solve problems for customers.