Promotional Products Industry Insights –Importance of Design Patents, Investor Partnerships, and made in the USA products – Mike Watts, CEO of LoveHandle – EP16

What you’ll learn:

A 6-time serial entrepreneur, Mike Watts, joins us on the show to take us through the process of creating a promotional product. He also shares the secrets to competing against an industry-leader, to building successful teams (6 times running), and to developing strong inventor partnerships.

About our guest:

Mike is founder and CEO of LoveHandle, an American Manufacturer of patented smartphone grips with over 30 full-time employees. Mike has three consecutive multi-million dollar startup companies totaling over $50 million in retail sales.

Key takeaways from this episode:

  • What makes Love Handle unique and innovative 1:19
  • The value of taking risks and jumping into the unknown as a successful entrepreneur — 5:11
  • Breakdown of LoveHandle’s sales channels — 10:14
  • How to get into promotional products and develop that side of the business — 14:12
  • Understanding the consumer behind a promotional product — 17:31
  • How Mike scaled and grew 6 successful businesses: have and build a great team — 19:52
  • More than just a consumer product company: graphic design, product invention, and marketing — 23:20
  • Partnering with inventors to develop new products — 30:36
  • Designer Patents, being first to market, and starting the journey — 36:00
  • Takeaway Advice: selling and standing out at tradeshows — 39:21

Podcast Transcription

Speaker 1: Welcome to the Page 1 Podcast, a weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies to tariffs, influencer marketing, best in class product launching and all the details about how to accelerate your eCommerce sales with the big box retailers for what we call rCommerce. Now here’s your host, Luke Peters.

Luke Peters: Thanks for joining us on the Page 1 Podcast. This is the podcast that deals with consumer products in relation to product launches and selling it to big box online platforms. I am your host, Luke Peters. I have 17 years of experience in this category. Today, I’m excited to have Mike Watts joining us from lovehandle.com.

Luke Peters: A little bit about Mike, Mike is the founder of six companies totaling over $150 million in sales and now teaches entrepreneurs to reach their financial and personal and spiritual goals. Currently serving as CE, Texas based manufacturer of 100% American-made patented, printed smartphone accessories. We’ll get into exactly what that’s all about. Mike’s products have been featured in Good Morning America, QVC, HSN, and the Today Show. They’re all sold on Walmart, CVS, Home Depot, Lowe’s, Rite Aid, Office Depot and more. Thanks for joining us, Mike. Welcome to the show.

Mike Watts: Thank you so much for having me on, Luke.

Luke Peters: Okay, great. Mike, I want to get into actually talk a lot about your sales channels. Before we do that, just a couple of quick questions. Why don’t you tell us quickly, what is LoveHandle do; just a little bit more about the product so the audience can understand what you have created here?

Mike Watts: Great, yeah. The LoveHandle is a low-profile, comfortable pocket-friendly smartphone grip that was patented and developed here in the States. We partnered actually with the inventor, which has been my game as to license patents for products that I think we’re going to be consumer facing and solve a real problem for the large number of people. We manufacturer our super-thin smartphone grip right here in suburban Houston, Texas and built all the automation equipment to be able to make up to 50,000 units a day, completely custom printed. We have some of our business in the promotional product space, a lot of it online. We’re just now breaking in a big way into retail.

Luke Peters: That’s really interesting that one part you mentioned about how you partner with the inventor. We’ll get into that a little bit later. Before we dive deeper into the business, you started it looks like six companies here reading your bio, which is really amazing. You’re speaking. You’ve worked with Daymond John from Shark Tank and your products are featured all over the place. Obviously, you’ve done well for yourself. Talk about your childhood. Was there a specific inspiration or somebody or something that nudged you down this road and got you so interested in entrepreneurship?

Mike Watts: Luke, I think I’ve always had an entrepreneurial spirit or maybe a blood line, as it were. My parents actually started the first company that was right in front of my face. Growing up as a kid, I always just like having extra money. My parents didn’t really have the resources to just hand it to me. Early on, I was selling Blow Pops in Now and Laters in the middle school lunchroom. I was cutting the neighbor’s yard and eventually built a little business around cutting quite a few lawns in the summertime.

Mike Watts: As I got older, in high school I started creating … and only seniors got to leave campus for off-campus lunch, which as a junior I was pretty jealous about. I figured out all it was was a little yellow piece of identification that I needed. I built a business around that for a short while until I got caught.

Luke Peters: Those are always the most fun.

Mike Watts: I learned my lesson about just because it’s entrepreneurial doesn’t mean that it’s the right thing to do. Each step along the way I’ve always been just willing to take risks and willing to put myself out there and learn as I go. I think that’s really the common factor for success is just being willing to just shoot forward without knowing the exact outcome, but be willing to learn as mistakes come and failures come along the way and course correct and then keep pushing.

Luke Peters: Did you grow up in the Houston area?

Mike Watts: I did. I’m actually a seventh generation Texan. I actually have family that fought in the Alamo way back in the day.

Luke Peters: That’s amazing.

Mike Watts: People were in Texas when it was still Mexico. We go way back.

Luke Peters: That’s cool. I visited the Alamo actually, so that’s pretty cool. Getting into your entrepreneurial career, you graduated from Texas A&M with an agri business degree. Then you went and worked for corporate for eight years, which is interesting because I actually, after school, went and worked as a haz waste scientist for the government for a couple years, not quite eight. You’re entrepreneurial when you’re young. You got your degree. You went and worked and then somehow you decided to jump back into business. How did that happen?

Mike Watts: I think it’s probably like a lot of people that have been able to make that leap. Again, I’m not saying anything specifically against having a corporate traditional career, but for me, the frustration out of school … out of school, I was doing what I was supposed to do; go to school, get a good job. Get the job, get the security. I was working for the electric company. There’s nothing more secure really than that. It’s a monopoly. People just don’t get fired from there. It’s very much like working for the government. My grandmother was super happy. She said, “You’ve got the best job ever. You can never be fired and you’ve got security for your family.”

Mike Watts: The problem is that every year would come along. I can’t not give 110%. I’m just wired that way. I would give 110% and expect to be compensated relative to the people around me. That just didn’t happen that way. I would get my 3% cost of living adjustment because that was just what was standard. It was just this normalization of everyone back to the mean or even below the mean that really frustrated me.

Mike Watts: In the year 2000, my first son was born. He’s actually back at Texas A&M now, so it’s all come full circle. My wife bought me a copy of Rich Dad, Poor Dad and gave it to me. She had seen it on Oprah, gave it to me. I was reading that book together and understanding the principles and learning more about how money worked. We said you know what, let’s find a way to get an alternate stream of income somehow so that we can meet our personal family goal of being able to have her stay home and invest her time and effort during the days into our growing family. Then I would just find a way to make some money.

Mike Watts: That’s what started us on our journey. I started doing home and garden shows on the side. That’s one of the very first of those six businesses was this product called Rain Sorb that we sold at craft fairs. I’d buy it wholesale and package it up and created my first brand and grew it. There’s still a product out there today sold at Home Depot and Lowe’s that was my competitor at the time.

Mike Watts: From there, we just kept adding more products and started more little small companies based upon new product line yard decorations and wooden airplanes out of Vietnam that we sold in the malls at Christmastime in kiosks. We just kept trying new things. That eventually led me to believe that I needed a product I could protect because all of the products I was selling were commodities. Every time I would show up and do good at a show or at an event or at a mall, the next week somebody else would show up selling the exact same product. I just went to my source. That’s where I learned that I needed to be able to control my market. That’s when I started working in patented products or patent pending products at least.

Luke Peters: Yeah, and I definitely want to dive into that. I actually just had a patent attorney on my podcast, Tina Loza.

Mike Watts: Really?

Luke Peters: Yeah, she’s our IP attorney and has grown one of the largest female women-owned and minority-owned IP firms in the country. It’s pretty cool because we were just talking about how a brand should be protecting their business and how IP is that important asset. We’ll dive into that. Before we do, let’s talk … by the way, Rich Dad, Poor Dad, that’s a cool reference that you pointed out that you read that book and that was one of the things that got you on this journey. I’ve read a bunch of his books. They have a kid’s version. I got that for my kids too. It’s pretty cool. I don’t know if you knew that.

Mike Watts: We have a board game. We play the Cash Flow board game. It’s my kid’s favorite game. They can figure out how they can get out of the rat race and get out there on the fast track and get ahead.

Luke Peters: Yeah, it’s awesome. Let’s get, for the audience, a little bit of scale of the company. I think you have some of this. Your company right now with LoveHandle, you have 30 full-time staff?

Mike Watts: Yes sir. Yeah, we’re just over 30. Actually, right outside of the door in the studio right now, hopefully you can’t hear them, but I can vaguely hear them packaging up a large order we have going out for Academy Sports and Outdoors that’s adding the product line for the Christmas season. Right up behind that, we’re packing up for Albertsons. It’s neat because we’ve invested over the last few years into being able to manufacturer every piece, from A to Z, in one building.

Mike Watts: When they order, for example, Academy orders, and they wanted some cool phone grip designs that were specialized for Texas consumers for their Texas stores, so we made some that said this ain’t my first rodeo and made in Texas and Texas proud. We were able to make that and then also package it in-house and then put it into clip strips and then send it to the store with clip strips program where they can place it in there real easily. It just makes it really easy for the buyer to pick it up because it’s personal for them. It’s relevant for their consumer, and so we can take that same model and apply it across all different types of retailers and price point.

Luke Peters: What is the channel … if you could give me whatever you’re comfortable talking about but the breakdown in channel sales? It looks like you guys, you’re doing some direct to consumer commercials it looks like and also some direct to consumer marketing. Are you able to talk to maybe the percentage of sales that are in-store, the percentage of sales that are, say, Amazon, and then the percentage of sales that are just everything else on the web, maybe your own website? How does that look?

Mike Watts: Yeah. I’m pretty much an open book. Right now, actually, and to date, one of our niches that we’ve been very, very strong in is in promotional products. Right now, I would say that around 50 to 55% of our business is strictly promotional where we’re putting brand names from companies big and small onto the product. We’ve even developed a way to be able to customize the packaging. We actually print custom marketing literature here and then attach our phone grips to it. Marketers love that because they can put all their marketing material on the card, their extended messaging, links to their website, QR codes. It’s got a cool gift that will then be seen hundreds if not thousands of times a day or total through its lifetime on the back of a smartphone. From a marketing perspective, it’s fantastic.

Mike Watts: That’s not what I thought the product would be when I licensed it. I really didn’t give much credence to the promotional products industry at all but it’s much bigger than I ever thought it was. You look at a pen. It’s 50 cents for a pen or whatever. You’re like, oh, there’s not much money in it. When they bought 10,000 or 50,000 at a time, that is a lot of money. It’s been a really strong part of our business. We’ve dedicated a lot of our effort into that space.

Mike Watts: One of the good things about the promotional space is there’s really only two closed net search engines out there. When it comes down to protecting your product and your brand, particularly with a patent or a brand name, having two closed loop systems makes it much more attainable. We’ve been able to grow that business well.

Mike Watts: The rest of the half of the business, 40 to 45% of the business is to the consumer, and that is either they’re brick and mortar retail, which is really right now only about 10 to 15% but growing quickly. Amazon, the dot com space is huge for us. We spend a lot of time and effort doing a good job on Amazon, being a great seller on there, optimizing our ads, making sure our listings look good, and then making sure that we add great customer service so that our ratings are higher than our competitor.

Mike Watts: We’ve got one big competitor that set historic records over the last few years. They were number two on the Fortune 5000 and started the same month that we did in their inception. I’m a pretty competitive guy. It’s been hard for me sometimes to just be second place for so long and wanting to win in a category. At least in the Amazon space, we are winning there. I think at retail, we’re due to win pretty quickly.

Luke Peters: Awesome. Thanks for that breakdown. Just to reiterate, it’s about 50% or so promotional and then about 10 to 15 in-store, so the rest about 35% or so is going to be the dot com and Amazon?

Mike Watts: Dot com and Amazon, mm-hmm (affirmative). We have lovehandle.com and then Amazon. I’d say from that breakdown, probably 10% is our own website and then the balance would be Amazon.

Luke Peters: Back to promotional, because that is surprising. I think the audience would find it really interesting too. I totally agree, it’s a great product. I’ll probably end up being a customer of yours for one of the trade shows because I can see this is an ideal thing that tons of people could use on their phones. How do you actually get into the promotional side? It sounds like you said there’s just two search engines or websites that you literally have to list your product in and then you’re working with them. How does the promotional business work in a nutshell?

Mike Watts: That’s a great question. This is good knowledge for people to have. I had to learn it all going in. In fact, when I started out, they had this coding in their industry that masks the actual pricing. Everybody in there is a middle man. The guy selling to the brand, let’s say Coca Cola, he’s a distributor but he sells them everything and flyers and shirts and caps and phone grips. He’ll make anywhere between 25 to 40% margin on everything he sells them. He wants to be able to list the pricing out there, so there’s codes based on whether it’s a 40% item or a 50% item or a 10% item and how much margin he’s going to make. I didn’t even know what those codes were the first show I went to.

Mike Watts: There’s two industries. There’s ASI, which is Advertising Specialties Institute. You can Google it and find them. They’re a great organization out of New Jersey. They produce shows coast-to-coast. There’s a total of five shows a year that they do. These are closed shows that only their official distributors come to. They have the search engine that they call ESP. I’m not even sure what that stands for. It’s a search engine for promotional products. Again, it’s closed. I can’t even search as a supplier. I can’t search as a distributor would against my competitors. I can only see my own listing on there. It has all the coded pricing, all the sales literature and everything that they’ll need to then turn around and market it to the brand as a potential product for them.

Mike Watts: The other industry organization is PPAI. They use a search engine called Sage, S-A-G-E. Sage is based out of Dallas, Texas. They have a great search engine too. It’s just like a Google/Yahoo thing, one or the other. A lot of people will use both. There’s membership fees associated with both, not as much for the distributor there. Some for them but for the supplier, and it’s based on your revenue. Starting out, I think with a start-up, it’s around $500 a month that it costs you to be an official supplier and to have a listing in there. Really, if you want to do it, I think there’s 1.4 million products in there, so you can’t just show up and put your product in there and expect it’s going to be found. You either have to be at shows promoting it and getting people to look for it and build your brand, or you need to be doing some sort of marketing and advertising to show up in the searches, product features.

Mike Watts: Like anything else, there’s pay-for-placement across the board there. Those two search engines are really where most of the business happens. There’s another one called Distributor Central out there. Sage and ESP are the two Yahoo and Google of the promotional products industry.

Luke Peters: Wow. Thanks for that breakdown. I’m definitely going to dive in. Our products are, we’re selling compact appliances and generally wouldn’t fit into this category but there is related accessories that would. I just find it really interesting that 50% of your business comes from this industry. I get it. Your product is perfect for this category. Even you said, you weren’t even sure that that’s where things were going to go. That’s something that you’re doing right now and succeeding at it, so it’s super interesting.

Mike Watts: For us, it was understanding … and this is true for no matter how you’re going to go to market, just to understand your consumer, and then in this case, the consumer’s a marketer. If you put your marketing hat on, you say, “I’m going to go to this trade show. How am I going to get people’s attention?” People are like, “I’m going to give them something with my logo. I’m going to give someone a gift at their essence but then I also have my brochure sitting here beside it.”

Mike Watts: By us, nobody picks up the brochure. They just take the squeegee ball or the coozi or whatever. We said why not be a super relevant product that we can price affordably. Again, the margins in that space are much tighter than they are at retail but the volumes are higher. Let’s make it even better and let’s put it on a customer card so that they get that brochure attached to the product. Then let’s do it, and like everybody else in the industry, they charge for color. We don’t charge for color. Everyone else in the industry charges rush fees. We don’t charge those. We produce it in three and up to 50,000 units. No one else can do that because most of these guys are just sourcing the stuff in China.

Mike Watts: By us investing in our capacity that produce high-quality product really, really fast and then have that extra layer of that extended marketing on the card, it really positioned us at … It’s like the … if you’ve ever read the Blue Ocean Strategy …

Luke Peters: Yeah, great book.

Mike Watts: … a perfect example … Yeah, it’s a perfect example of that. We don’t really have any competition per se. We have such a unique proposition for these marketers that they can’t help … our reorder rate is over 70%. That’s ultimately the best indicator any business can have is your reorder rate. We were very pleased with the results there. We’re now number eight. Out of the 1.4 million products I mentioned, we’re the number eight searched for product in the whole search engine.

Luke Peters: Wow. That’s got to be a good place to be, so congrats. That’s awesome. You’ve started a lot of companies. You’ve obviously grown them. It looks like six total and then I think three multi-million and over 50 million in sales. A question here: You have about 30 staff right now. I’m listening to your sales process. I’m going to ask some questions about how you set up your sales team because you guys are really diverse on who you’re selling into and all of the accounts you have.

Luke Peters: What was maybe the major learning you had going from, say, a smaller company, say, under 10 employees to now 30. Curious, was there a key hires you had to make that you have now that you couldn’t have or didn’t have back then? Just curious on the transition as the company has grown.

Mike Watts: Yeah. I would say that you need A-plus caliber people. You just can’t compromise on that. I’ve learned that lesson the hard way. The thing is, an A-plus person, they’re going to stand out. The gentleman that runs my promotional product sales department, he started in my production team. He started as an intern, moved into production and just continued to show himself as somebody that shows up, has a great attitude, is humble, hard-working, and plenty smart. Didn’t have any sales experience. Never really knew how to build a quote or send a PO, none of that stuff. I saw in him the right kind of attitude and the drive and the passion and the humility, above all things, that I’ve continued to promote him, and he has risen to the occasion every time. He’s a rock star.

Mike Watts: I’ve also hired in people that had the pedigree to the moon that were complete flops because they thought they were the best thing since sliced bread. That comes through when you talk to customers and you think you’re better than them or you’re just not willing to do whatever it takes to make a customer happy, and that’s what he does.

Mike Watts: I think that trying to find someone that fits your culture, because that’s very much the culture that I … Every one of my companies have been successful because of our unwavering passion for the customer and willingness to do anything for the customer to make them happy. If you’re not willing to do that, you’re probably not going to be successful, in my opinion, especially, the field’s been leveled now with Amazon and their reviews. If you’re only providing a really great product and a really great service and standing behind it, then you’re going to pay for it. As far as personnel goes and then treating people right, for me, I know our team would go to the moon.

Mike Watts: In fact, I was at a show last week in Tennessee. We had these rush orders come in for Albertsons and Kroger and Academy. Our guys had to run 24-hours a day for six days straight in order to get all these orders out. Not one person said I can’t come in. They all showed up, smiles on their faces, and they rotated shifts and things like that, but they made it happen. It’s just because we have the right people, people feel valued, they feel appreciated. That starts at the top. I always try to say that I want to be a servant leader, and I’ve been all the way to the bottom. I’ve been to the bottom. I’ve got some terrible jobs in my back pocket and had some terrible bosses in my back pocket through the years. As you learn those things and you understand about how to be a leader, then you hopefully can transfer those values onto your team. When you do need to lean on them, everybody’s paddling hard in the right direction because they do feel valued and a part of something bigger.

Luke Peters: Great answer. Have a great team but also build a great team with culture. It sounds like you’ve done that. That’s a cool story about the team going 24/7 for six days. When you run businesses, time flies. You’ve got to be able to put that thing down on paper, somehow remember those stories, I guess. Christmas parties are coming up, so that’s where those things come out. Those are always fun to have at every company.

Mike Watts: Yeah.

Luke Peters: With your team of 30, again, let’s get into the sales, if you don’t mind telling me quickly about the, say, the org structure, how you have it set up. The only reason I bring it up is because selling into Walmart is going to take a different discipline than selling promotional goods, then maybe even selling into Kroger because it’s a little bit different, and then also totally different than selling into Amazon. How are you able to do it? How many people is it taking? What are the basic breakdown of responsibilities?

Mike Watts: Yeah, that’s a great question. This business is unique because we’re not only a sales and marketing department but we’re graphics. We do a lot of interaction with customers back and forth on design for their logo and layouts and things like that. We have a large graphic team and then the actual manufacturing team.

Mike Watts: Out of the 30, it splits out a bit like this. We’ve got about 50% of them that are, it’s a two-story building, so the upstairs is production. Fifteen or so are in production. About 60% of those are in the actual assembly of the product and then 40% are in the printing section. They’re actually printing onto the elastic that we use for the bands. They’re cutting the elastic. They’re quality controlling it. They’re printing the cards and printing the cards.

Mike Watts: The other side is actually assembling the product, putting it on the cards, boxing it, packaging it, retail packaging it and clip strip and all that stuff to get it out. The other 15 people are going to be sales, marketing, admin, customer service and graphics. Graphics team is a team of five now. That takes up 30% of our workforce downstairs. Then we’ve got one general manager. She’s been with me since three start-up back and through a big exit and everything. She’s the right-hand person. It’s very much like I’m the big picture guy. I’m the visionary, if you follow any of that type of a visionary, and then the integrator. She’s my integrator. She makes sure that things happen. If something has to happen, she’ll make sure it happens. She’s a great leader. Nobody can outwork her.

Mike Watts: Then I have an accountant that keeps our books straight, makes sure we get paid on time and that invoices are right, and the work we do, we do get paid for. He’s amazing. We have a shipping and customer service and internet fulfillment manager. She makes sure all the shipments go out on time, the customers receive communication about their orders and all our website orders and any seller-fulfilled Amazon orders are fulfilled on time every time. She’s a very detail oriented person and really good at it. She’s also our party planner, which is great to have someone there that loves party planning. She loves it and she does a great job.

Luke Peters: Always got to have one of those.

Mike Watts: Got to have that, right, party planning committee. The sales and marketing, right, that really centers around me. That’s my strength. I head up both in a way, but then as far as the action and then I have an executive assistant, which ironically, she keeps us all straight. She’s that super organized person. We use some tools, two particular pieces of software that really help us. We use Slack to communicate in each work group. If you’re in the promotional products sales team, there’s a communication group for that. If you’re in the retail team, there’s a different group for that. She keeps us all communicated on there.

Mike Watts: We use monday.com. It’s a rolling to-do list that she monitors and make sure that we … She goes through my email and makes sure … I think I have 175 thousand emails right now in there. I don’t know how many come in a day. She’s go through and she’ll make sure that the important ones go onto monday.com and I get those taken care of. She’ll remind me because I’m a little bit scatterbrained in that way. She’ll make sure that that happens.

Mike Watts: This is me shoring up … I think as an entrepreneur, we all have to understand our weaknesses, maybe more so than we need to understand our strength. You need to fill those weaknesses in with people that that’s their strength. Then you’ll have something robust.

Mike Watts: We have one person that runs our promotional product sales, one person that runs our retail sales, and then I have a floater who’s been my right-hand marketing manager. He’s also an excellent graphic artist. He does all our design work for packaging, all of our design work for displays, and our logos and any high-end collabs we do with celebrities, he does all of that premiere work. He’s in the office with me.

Mike Watts: That rounds everybody out. Really, our sales and marketing team is only five people total including my executive assistant. We each have our silo. Now, I do have one other person. You mentioned Amazon. I have an Amazon manager in-house, but all he does is do fulfillment to the FBA centers. We’ll do maybe three million this year on Amazon with just our one product line. We do a lot of business over there. You’ve got to keep the shelves full over there if you want them to keep populating you to the top of the listings. He does a great job there.

Mike Watts: Then I have an independent contractor out of California that manages the nuts and bolts, the back end side of it and makes sure that all of our listings are populating well. He opens up case logs with Amazon to make sure that any … There’s all kinds of weird issues that happen. If any of you guys out there listening fill to Amazon, or you know that there’s some weird nuances that happen. The resale team will jump in and change your listing title or they’ll change the way your brand is listed in the brand registry and things like that. They do that. They do that for a small percentage of our sales, but it’s well worth it because we have a perfect filler rating. We have a perfect customer service rating. That’s the whole team from front to back.

Luke Peters: Yeah, really interesting. I was taking notes there. I just find this part of it really fascinating in how businesses grow and how you have to decide how to allocate all these people. You’ve got half in production and five out of the 30 in graphics, which is huge. Gosh, you and I probably read the same book because you used the terminology your GM is an integrator. Oh, man, I’ll come back to you on that book.

Mike Watts: Oh, yeah, yeah. There’s a couple of books. Yeah. I can’t remember it either. You know what I’m talking about.

Luke Peters: Yeah, yeah. We’re talking about the same book but we don’t know. I’ll put it in the show notes and I’ll tell you guys. I’ll tell you afterwards, Mike. Anyways, yeah, it sounds like you run a lean team. I took those notes for monday.com. I’m going to take a look at that. Obviously, I’ve heard of Slack. Haven’t heard of monday.com. It looks like that’s your tool that you use to make sure the key tasks, everybody understands the key elements, or you at least understand your own key tasks that you’ve got to get done and then utilize an assistant, which is pretty cool too. Good overall feel. I think the audience will get a good feel for how your company is set up. Now we know how you’re driving revenue.

Luke Peters: Quickly, because it seems like it’s one of the parts of your success is back to the beginning, you talked about how you partner with inventors. Do you want to go into that? How do the ideas actually come to you? How do the inventors know to come to you? How do you partner with them? How do they win in the relationship? It’d be great to hear how that works.

Mike Watts: Yeah. Every single bit of this, even the org chart, all that’s happened organically by the need arising for something. Back to the story when I was working my corporate job and I was doing home and garden shows and mall kiosks on the side and then found the need to have something I could control, that’s when I met my very first inventor at a home and garden show. He had developed this aftermarket weed eater head that later became the PivotTrim and the number one selling weed eater head in the world once we got our hands on it and then eventually, sold that company.

Mike Watts: Partnering with him, he was a unique character too. I just feel like everybody has their own strength and God-given talent. A lot of these inventors that I run into and meet and I now speak at entrepreneur conferences, I speak at inventor clubs in Houston and around. They’re very much similar types of personalities on par. You can’t paint too broad of a brush, but generally speaking, they like to be in the details. They like to be coming up with innovative solutions and prototypes and trying to fix problems that may or may not be right for the marketplace. There’s a big difference in a product or an idea that you should just make one of and just use around the house because it’s a good little gadget for you and something you should cash your 401(k) in and go all in and make it a new company.

Mike Watts: I think my strength has been to able to see the vision for, hey, this product fits these criteria. I have a very specific list of criteria. It can be demonstrated. It’s relevant. It solves a real problem that people can know of already, that you don’t have to convince them they have. It’s in an industry. There’s not some huge barriers from enormous competitors or domineering safety compliance or something like that that can derail you. It’s not too big of a huge barrier of entry. If all those criteria are met, then I will partner with an inventor through a license arrangement. I license the patents from them.

Mike Watts: In every case, ironically, I’ve licensed pending patents. That means that they’ve just filed for their patents. We don’t know whether they’re going to issue or not issue in which case I’m taking on some risk because if they don’t issue, well then all this effort that I’ve put into this so far, I’m not going to be able to protect it, at least not from a patent standpoint.

Mike Watts: We partner up, and the good thing about it is that I can do what I do best which is creating a great brand, marketing, I’m starting to attend trade shows and building a network, leaning on my network of distribution or whatever sales channels are emerging, which is where I’ve been able to make my way just trying to stay ahead of the curve in marketing in emerging ways, social media being one example.

Mike Watts: The best thing is that the inventor can then go back to the workshop where they’re most happy, where they produce their best work and develop the next version or the next machine, in this case. All the machines that we use to manufacturer the LoveHandle here, were invented and developed and built by the inventor of the LoveHandle. In his basement, he took 80/20, which is a type of rail system. It looks very much like large Tinker Toys with Arduino circuits and actuaries and circuit boards and pneumatics. He just started with the idea that, hey, I want to make something that will build this part at scale. It took him six months and then he built it, loaded it in a U-haul truck, he’s from Minnesota, drove it down here to Texas, set it up in our little shop, and that thing started spitting parts out.

Mike Watts: Now we’ve got three of those machines up there and can produce 50,000 units a day off of these machines. He can build other machines for us that stick the parts on the cards. He’s just built one he’s bringing down in two weeks that will actually completely package our product and print the barcode on the packaging for each style that we were making. He is amazing at that.

Mike Watts: If he was tied up doing customer services calls or package design or attending trade shows or whatever, then he wouldn’t be able to be in his sweet spot. This partnership, it’s a great example like a marriage where the whole is greater than the sum of the parts. He’s contributing in ways that only he can do, and I’m contributing in ways in only that I can do. In the end, we both get to be millionaires, hopefully, one day.

Luke Peters: Wow. It sounds like you hit a home run with this guy, Mike. I can tell you, not only he’s got the idea, the product, but then also the ability to make the product. Wow, that’s a cool story. I guess a key thing I took out of this, and again, is it’s not about the idea. You’re dealing mostly with patented product ideas, right? Would that be fair to say? Even before the consideration point, you’re waiting for something that’s already … it’s not patent pending. You mentioned you might work with those but generally it’s patented. At the idea stage, it wouldn’t even garner interest until maybe it had a patent? Is that how you look at it?

Mike Watts: Yeah. Patents are a funny thing. Yeah, it just happens to work out that way, that they’ve been pending patents. I like that runway because when it’s pending, you can claim the moon. You can say I invented the wheel.

Luke Peters: Yeah, totally.

Mike Watts: Until the examiner gets in there and says no, actually it’s been done or whatever, you get to claim the moon. That’s a cool time to be launching a brand. Beyond that, if it issues, doesn’t issue, it’s all perception to a point, especially utility patents are. Again, I’m not a patent attorney but from a marketing perspective, I have seen over this time of being an entrepreneur, a growth in the importance of design patents and trademarks because of the digital age that we live in.

Mike Watts: The best example is Amazon. I can show Amazon a design patent which is a visual representation of my product and I can show them a trademark, which is a group of letters together or a logo. They can very quickly say yes or no. That is protected or not protected. You give them a utility patent, well now they have to decipher whether this language inside the utility patent that describes this mechanical invention or whatever it is that you’ve invented, makes some judgment call as to whether this other product infringes on your product or not, and they’re not going to do that and they’re not qualified to do that.

Mike Watts: It’s been pretty interesting. Early on, I was like, it’s all about the utility patent. Anymore, it’s more about the design patent and the trademark that become important. Ultimately, the most important thing is that you get to the market first, and you show up with the best solution first.

Mike Watts: I was listening to a podcast the other day with Seth Godin. A big fan of Seth Godin. He was talking about this website called The Wayback Machine. You ever heard of that?

Luke Peters: Yeah, yup. For sure. I still use it, I think.

Mike Watts: Yeah. You can go back and see what Amazon looked like back in 2000 or 2004 or whatever and see how imperfect their product was. But you know what? They were first, and they kept getting better and kept getting better. That’s a whole lot of it is starting a journey and just pushing your imperfect idea out there into the marketplace and then course correct as you go.

Luke Peters: Yeah, and that’s great advice. Amazon’s never had actually the best shopping experience in my opinion. They do everything else right. They never really cared about how the page looked. Everybody else is always focused on having the better customer experience on the page, but Amazon’s just like, well, we’re going to get it to you in a day or two. That’s what customers value more than having the fonts look a different style or the page, the layout a little bit better like some others have tried. Yeah, it’s interesting.

Luke Peters: Man, we could talk for hours probably on the marketing side, and we haven’t even talked about that. We’ve covered a lot about your company and how you think and how you sell and where you sell to and all about promotional goods. Now we just talked about partnering with inventors. All of it is so fascinating. Just wrapping things up here, what do you think is … You said you speak a lot. I’m sure you talk about some of these subjects, but what is maybe your best advice that you could pass on to brand owners? These wouldn’t be start-ups. These would be this audience which might be comprised of hardware show, house ware show, brands.

Luke Peters: At the same time, a lot of them are old school. They’re thinking traditional in-store only options and not always up-to-date on the digital age. If you had to speak to that audience, what would the theme be?

Mike Watts: That’s a great question. It’s hard to paint a broad brush across it. I would say that if your business, let’s say for example that you attend a lot of trade shows, which a lot of us do and house ware show, the hardware show, on and on. We attend the Consumer Electronic Show and promotional products shows and on and on. I can’t tell you the number of shows that I’ve done. It’s got to be up in the hundreds, probably in the thousands at this point.

Mike Watts: The key is to be better than everyone around you. Whether that’s that your backdrop is bright and clean and your stuff is lit and it really stands out and that you have a very good location in that show such that natural traffic will find you, those are some small tangible things. Work with show management. Don’t accept a terrible booth spot. Keep pushing. Keep asking. Email them every day, did something open up? Did you get a better spot?

Mike Watts: What happens, you can look at a floor plan. I learned this from doing the home and garden shows, the retail shows when I was cash and carry. People walk in the front, they turn right and they start going up and down the aisles, most of them. If you got them too early, well, they weren’t ready to buy yet. If you got them too late, they were out of money. It’s the same thing. You’re third or fourth aisle, a cross aisle, and people walk on the right side of the aisle just like they drive on the right side of the road. You want to be able to stop them. You want a facing corner on the right side, third or fourth, fifth aisle, somewhere in there where it’s going to be a natural stop for people. You want to make sure that it’s a visual difference from the people around you.

Mike Watts: Don’t sit on your laurels. You didn’t spend all that money to go to the show to sit in a chair. You shouldn’t have a chair in your booth. You can go sit some other time. Don’t sit while you’re at the show. You need to be stopping every single person and starting a conversation. If it’s a busy show, then yeah, be more selective about who you talk to. Use your time wisely.

Mike Watts: We go even a step further and we start to network with other people in the industry, competitors. You have a competitor there? Don’t be standoffish with your competitor. Go make friends with them. Take them to dinner. Get to know them. I did that with my first company, my first big company, PivotTrim. We started talking to our competitor over there. Went to dinner with him, built a great relationship. They became our largest distributor and eventually purchased our company for over $6 million, all because I was able to set my ego to the side and say, you know what, how can I create a win-win with these guys?

Mike Watts: I think that that approach to trade shows and being more creative, taking some time to plan it out, and it looks visually great and that you’re ready and prepared for it instead of just showing up, putting your stuff up and sitting down and waiting for people to stop at your booth, because that’s not the way to get the best return on your investment.

Luke Peters: That’s funny that you brought up the … In summary, obviously have a beautiful booth and spend some time and obviously some money on that. Stand out more than everybody is around you was your key point. Meet the competition. A hundred percent, I agree. Hey, business, it’s usually a huge market. Sometimes everybody gets caught up and thinking that it’s just them and the competition, but there’s so many other people probably involved in most markets. The pie is usually huge. There’s so much to learn from the competition. Obviously get that great location.

Luke Peters: The other one I was laughing a little bit when you talked about stand up, don’t have a chair. Get in there and meet with people. I always find it so funny when people are having lunch in their booth. If there is not a bigger turnoff for a perspective buyer and they’re walking down the aisle and someone eating food in their booth, that’s what the lunch hall’s for. I still it. Those are things to avoid at a trade show. Wow, you’ve been to a lot of them. A heck of a lot more than I have. You’ve put your time in.

Mike Watts: Yeah. There’s more coming. Just to jump in real quick just based on your previous question, the other piece of it outside of the trade show, in the age that we live in, as uncomfortable as it might be, you have to get good at video. Video is king for any brand today. If you’re not creating good video around your product and showing the world why they want it or your service and why they want it, then you are really missing the boat because that’s what works. That’s the end game is creating great video content. If you think you’re creating enough today, then double it. You just need to create as much as you can around your brand.

Luke Peters: Yeah, well said. YouTube is like the modern day blog. Everybody’s getting their information off YouTube. Creating that, it’s just a template that, the medium that everybody is using, and interestingly. I started another company where we’re doing agency consultancy style work. One of the most interesting offerings that we have is doing influencer marketing for people where we’re getting influencers to create videos of their product, third-party talking about their product. Anyways, yeah, you’re 100% right on video. It’s a huge deal. It’s perfect for this audience because it’s not taking advantage of enough.

Luke Peters: People I think are just now catching up to having great photo collateral. That’s still a work in progress, right, and then video’s the next level. People still have to up their game to get to that point.

Mike Watts: Yeah. Don’t think it has to be perfect. It’s okay to be a little bit imperfect with it as long as you put it out there.

Luke Peters: Yeah. Engaging is always going to take precedence over having everything perfect. Yeah, you’re probably the same way as me. I’d rather get it out the door with a great message than have all the lighting and the backgrounds and everything perfect. I think at the end of the day, usually the artist or the videographer cares more about that than the actual audience might.

Mike Watts: Right, yup.

Luke Peters: Cool. Listen, Mike, this has been really interesting. I learned a lot right here. I’m taking notes on the promotional engine. I’m going to look it up myself although I may not totally qualify in my type of business. I learned so much, and I know the audience has. Where can the audience get ahold of you and learn more from you?

Mike Watts: I’m active on two main platforms. On Instagram, I’m @MikeWatts. I was able to get my name. I had to buy it from a Brit, but I think it was worth it. Reach out to me there. I answer DMs. If you have a question about anything you heard on here, I do answer them. Sometimes it’ll be a video response or an audio response because that’s an efficient way to do it, or send me a video or audio message. I read them all, and I respond to them all.

Mike Watts: I am launching a live show on LinkedIn. That’s going to launch in the spring of next year. That’s going to be around just launching businesses and taking things to the next level. We’re going to be bringing on some great guests, I think, that we have lined up for that in digital marketing. We’re excited. Definitely connect with me on LinkedIn as well.

Luke Peters: Thanks a lot, Mike. It’s great getting to know you here. Maybe down the road I’ll have you on again and we can talk more about marketing product launches because it sounds like you have a lot of expertise there. Yeah, I just want to thank you for being a part of the Page 1 Podcast. Thank you, audience, as well for joining us today. If you need help launching products yourselves or you’re looking for help with influencer marketing or selling on homedepot.com or wayfair.com or any of the other large big box online channels, check us out at retailband.com. You can also find more information about how we actually can help you in those specific areas with case studies. You can reach out to me directly at luke@retailband or find me on LinkedIn. Also, if you enjoyed the podcast today, would truly appreciate a review on iTunes. Thanks again, everybody. Hope you all have a wonderful day.

Speaker 1: Thanks for listening to the Page 1 Podcast with Luke Peters. If you like our show and want to know more, check out our other segments. Also, please help us out by leaving us a rating on iTunes. Want to learn more about rCommerce? Check out www.retailband.com to get more great tips and tricks on how to accelerate your eCommerce sales with the big box retailers.

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