Transforming a Distressed Brand into A Successful One
How do you take a distressed company and turn it into a profitable, successful business? What strategies should you use when doing a complete restart and transformation of a brand? Transforming a brand from failure to success requires immense work, strategy, and patience from those who are willing to take the chance.
In this episode of The Page One Podcast, Luke Peters speaks with Matt Damman about his success in transforming a distressed company and making it successful in a very short amount of time. Matt is the CEO of Commando Lock company in Michigan, a growing manufacturer of military-grade padlocks and security systems, and an entrepreneur. He turned the face of Commando Lock.
Listen in to learn how Matt transformed Commando Lock into a quality brand that resonates with the people. You will also learn the importance of recognizing and acknowledging operational challenges that will be more apparent after you start making sales.
- How to turn a distressed money-losing company into a profitable business.
- How to convince investors to take a bet on a highly risky product.
- Learning how to run a company and handle the division of labor during its initial stages.
- [1:59] Matt explains the size of his company and its customer base online and offline.
- [4:18] Why they’re looking into diversifying their client base and not solely depend on anyone plus how they landed a military deal.
- [5:54] Matt describes their heavy-duty padlocks, other security product lines, and their future target market.
- [8:34] He explains how they restarted Commando Lock Company doing things all over again from the start.
- [13:45] How they pitched to the investors using their world-class product even though it was a risky venture.
- [17:34] The process they used when relaunching Commando Lock by making the product resonate with the people.
- [19:53] How to divide the labor at the beginning when you cannot afford to hire experts.
- [22:14] Learning how to deal with operational challenges that are going to arise when your product becomes successful.
- [23:26] The process of prototyping that they engaged in before they had a quality finished product within a short period.
- [30:12] The lessons he borrowed from working in large companies about operating businesses.
- [33:13] The mistake he made with Commando Lock of using one data point and not doing his due diligence before relaunching.
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 launches, and all the details about how to accelerate your eCommerce sales with the big box retailers, or what we call rCommerce. Now here’s your host, Luke Peters.
Luke Peters: Thanks for joining us on The Page 1 Podcast. I’m your host, Luke Peters, and this is the podcast where I bring you the best and brightest leaders to share consumer product sales and marketing strategies that will help you grow your business. I’m the CEO and Founder of NewAir Appliances, where I cut my teeth selling products online and now have started Retail Band, where I hope to help other brands succeed in product launches, influencer marketing, and B2B online sales strategy. And right now I’m offering a free evaluation of your online sales strategy. If you’re interested, find me on LinkedIn or email me at email@example.com.
Luke Peters: And in this episode you’re going to learn from Matt Damman on how to launch products and maybe more interestingly or more importantly, how he turned around a distressed company.
Luke Peters: Matt is the CEO of Commando Lock Company in Troy, Michigan, a growing manufacturer of military grade padlocks and security systems. He’s an entrepreneur, he’s invented products, run small businesses, got a deal on Shark Tank, and spent the early part of his career in two Fortune 100 companies and a hedge fund. Matt loves crafting and building a brand and product companies. Matt holds an MBA from Michigan State University. Matt, welcome to the show.
Matt Damman: Hey, Luke. Thanks for having me. It’s a pleasure to be here.
Luke Peters: Great, so we’re going to get right into it. Matt, why don’t we learn, if you can fill us in about Commando Lock Company, why don’t we just break down how about total number of employees and maybe the physical footprint of the company so listeners can get an idea of what you do?
Matt Damman: Sure, Luke, I can give you an idea. We’re in Troy, Michigan. We’re a small business. Right now, we’ve got about 10 full-time employees. It is growing almost monthly. We’re in about just under a 10,000 square foot manufacturing facility, so not huge, but we’re able to pump out a significant amount of locks due to the stamping and automated nature of the process. So everything’s made here in Metro Detroit. Then we ship nationally and internationally right from here.
Luke Peters: Awesome. And who might be some of your customers, if you can run down on the retail side, customers and then also percentage of business that, say, would be online versus non-online?
Matt Damman: Oh sure. Yeah. We really break down the business into a few segments. Online right now, it’s probably only maybe about 15% of our revenue and it’s growing. At the same time the US military, we have won a pretty significant contract. We’re actually a subcontractor to a large military supplier on padlocks. And so that’s growing. So the US military, online through our website and Amazon, and then we’re in traditional retail. So right now we’re in Bass Pro Shops, in all their stores in the marine section. We’ve gotten set up with Home Depot, Lowe’s, and Tractor Supply. In fact, we’re in about 40 Tractor Supply stores now and we’re hoping to get in all 1,800. We’re in a store test.
Matt Damman: And then we also have a significant part of our business and our growth plan is in the B2B space. So we’ve done a custom lock kit for Briggs & Stratton for all their commercial lawn care guys. And then also just selling locks B2B to the industrial folks, contractors. Locks can go in a lot of places. So we’ve got all different businesses that use them for a variety of things and we’re really cracking into that business. So we’ve got these different segments and they’re all growing in different ways. But certainly online it has started to grow as we’re doing more with SEO and more on Amazon, we’re seeing a nice uptick there.
Luke Peters: Sounds like you guys are really diversified though. That’s awesome that you got the big military contract and then you’re in that many important brick and mortar stores, like the Bass Pro and getting into HD, Lowe’s and all that Tractor Supply business. That’s going to really diversify the company and put you guys in a great position where you’re not too leveraged in one area, it sounds like.
Matt Damman: Yeah. And it is nice. And it’s been interesting, and we’ll get into it I’m sure, in how I came into the business and as we are really putting together a growth plan, but certainly these different channels have different volumes, different margins certainly where we can actually make a little more money in certain areas. And then also just the sales cycle and the buying patterns are very different. So yeah, the more we can have a diverse customer base and then it’ll allow us to grow and not be too wholly dependent on any one customer. The retail side is going to take a lot longer. We’re not in Home Depot and Lowe’s yet. We got set up online, set up at Home Depot Pro, which is their B2B channel. But those are going to take a while.
Matt Damman: Whereas the military, we got lucky. I’ll be honest. We were tracking down these guys out of North Carolina that had a large lock contract and it was actually the result of a cold call. I literally cold called their management because I saw they had this contract, and before you know it we were down there meeting with them and within a few months had a pretty significant PO. So that moved quickly and it’s a multi year contract, which is… What more can you ask for? We know we’re going to have revenue for a little while. So it was great.
Luke Peters: Wow. Well, and I do want to get into that story and that’s kind of what we’re featuring this around is you investing or getting a hold of a distressed company here. But before we do that, just quickly, you guys sell padlocks mostly. Is there anything else to describe about the product just so the listeners understand? It’s obviously made in the USA. You guys are making the product here, high quality, it looked like lifetime guarantee. Anything else about the product to talk about?
Matt Damman: Yeah, and I appreciate you asking that. They are. We make everything from just your standard, what you assume your normal everyday padlocks, but they’re heavy duty, BP heavy padlocks. We don’t make, I’d say, the stuff for the kids’ gym lockers or a luggage lock. That’s not us. These are what I would consider the premium level of padlocks that you’re going to find out in the consumer market. So there are some locks out there for three, four, $500 that you buy at a locksmith, that’s not really us. Our locks are price point about $15 up to about $35. And yes, what makes the Commando Lock a little different, we engineer into the cylinders security pins, which they’re very tough to pick. If you go on YouTube, there’s this Locksport community, they’re professional lock pickers. It’s fun to watch.
Luke Peters: That is funny.
Matt Damman: And our locks are tough to pick, and these are independent reviews. But a little more on that, so we have just traditional padlocks, but there is IP on the business. We’ve got multiple patents, one is on an interchangeable lock system and it’s pretty unique. So you’re able with the turn of the key to take the shackle off the lock and turn it into a cable lock, swap back and forth. And so it’s really a multiuse product. Folks that use locks a lot, some of the contractors, maintenance guys, lawn-care professionals, they love it because they can go from a long cable lock to a short shackle lock in seconds, and we’re the only ones that can do that. And then last, we have a cooler lock system, which is very unique. It would go well with a YETI cooler, RTIC coolers, but it’s a two lock system. So you can actually lock your cooler up to a fence post or to a boat, and then you also have a second lock to close it shut.
Matt Damman: So in certain situations, these $400 coolers can walk off.
Luke Peters: Yeah.
Matt Damman: Anyway, so we’ve got a nice, I think, IP portfolio. The interchangeable lock is really where I think the growth of this business is going to come from. We did a custom kit, like I said, for Briggs & Stratton. We’re trying to talk to folks like Jeep and Carhartt, some other brands that really have kind of that rugged outdoor customer that is going to use locks for different things. So I don’t know if that answers the question.
Luke Peters: Yeah.
Matt Damman: We’ve got not just the standard padlock, and if you go to our website, commandolock.com, you’ll see our bolt cutter proof lock, which is effectively… It’s a beast. You’re not going to cut through that thing if it’s on your tool shed or your fence or gate, what have you.
Luke Peters: Yeah, no, that’s-
Matt Damman: And they’re all made here in Michigan, like you said.
Luke Peters: Perfect. Okay, great. And so why don’t we get into it and how you got involved in Commando Lock. It sounds like from the background it was a distressed company. Did you invest in it? Purchase it? Why don’t you walk us through that story?
Matt Damman: Sure. Yeah, it’s pretty neat. So the founder of the company, Patrick Smith, and my partner, he’s a very bright, very talented engineer. And he and his father, they started the business about 12, 13 years ago now, and had the technology to really automate the stamping… It’s a progressive die. So they’ve automated the process to make the lock body. Not to get too technical, but what it allows you is manufacture very high quality locks very quickly here. So from a margin standpoint, we could compete with most of our competitors who make their locks in China or Mexico.
Matt Damman: So they had invented the process and he actually had some military contracts years ago and that was how they got started. Unfortunately, due to a variety of reasons, they lost those contract and his background was not in marketing or sales and how to get the product into a Home Depot or Lowe’s, or how to build these custom kits. He knew how to make the product.
Matt Damman: And so unfortunately, the company fell into a challenged time. But by good fortune and a little luck, I ended up meeting Pat about a year and a half ago and he actually had the business listed for sale. He was looking for help, either to sell it or bring in investors. And I met him and I came over and the thing that struck me was the name, just Commando Lock, military grade padlocks. And I thought, “That just sounds really cool.” I could see the marketing of this. And I talked to a contact that I had who was a rep who sold into Home Depot and I said, “Tell me about padlock market.” And he came back and he said, “Look, Master Lock owns the market and no one’s really innovated or done anything neat with a new brand in padlocks.”
Matt Damman: But they’re around, people buy them. They’re not going anywhere. And so I set off down a path to partner with Pat. You asked kind of how it happened and yes, I actually invested in the business because it was distressed. We had a pretty low valuation but I bought a nice piece of the equity and then set off on a path to really kind of clean everything up. He had been doing everything himself, which any entrepreneur, you just can’t do it all. So there was a lot of legal and some accounting things that we had to get just tidied up before we could go out and raise capital.
Matt Damman: And so we did that. We went out and raised close to a million dollars from local accredited investors and it was really guys in my network of folks that were supportive, they loved the story, they liked the product. But the deal, it wasn’t quite venture capital. Even though we were… I call this a restart. It was a restart of the business. We can get into some of the challenges of raising capital, but it kind of fell between venture and a junior private equity deal. But we went out, raised the capital, and then it was an all hands on deck to get the brand cleaned up. Everything from the logo on down, we started over. Really came up with the look and feel of what Commando Lock was going to be. All the sales assets, everything had to get redone, down to white box photography and everything.
Matt Damman: So that was all happening very quickly in the first few months. And then we were able to launch the website, start selling, not even a year ago. It was really March, April of last year. I don’t know if that’s a good overview, but that’s really kind of how it came to be. And it was a risk on both parts. Pat, to bring me on as a partner, and really I give him credit because he was humble in a way to say, “Hey, I can’t do it all and I need help.” And for me it was jumping into a distressed company that was losing money, and investors that are like, “All right, you’re going to turn this thing around?” And it’s like, “Yeah, we are.” So there’s some pressure there, but it’s good, right? It gets you up every morning. And so far so good. We’re hitting our plan and things are going well.
Luke Peters: Great. I got a couple of questions around that, but that’s a great foundation. And when you invested, for Patrick, was it initially a C-Corp or was it an S-Corp? Just because sometimes it’s harder with an S-Corp or an LLC to bring in additional investors or, it can be a little more challenging. I’m curious on that structure because then you had to go raise capital. And I ask that just because a lot of businesses from sole proprietors are set up as S-Corps and then so for those folks listening, curious how you guys went through that.
Matt Damman: Yep. It was an S-Corp, he owned 100% of it. And when I came in, we converted to an LLC.
Luke Peters: Got it.
Matt Damman: So basically did the conversion and then my interest in the LLC. And then when we raised capital we did it as just straight units out of the LLC. So one class of shares. There’s a little preferential treatment to the investors in terms of their payback, but in general no, just a straight LLC with units that we did under a subscription agreement. We spent $2,000 in legal to get it all done right with a good securities attorney. But yeah, it was in an LLC.
Luke Peters: Cool. And then why don’t we talk about raising the cash? That sounds like an interesting part. You came in, you brought some of your own money, it sounds like. And the company was losing money, so obviously you had a good valuation. Then you brought investors in and it sounds like you guys raised about a million dollars. And I’d love to learn what the pitch was. What were you going to do exactly with that million and how was the reception with the investors? How easy it was it to find them and how quickly to close that deal?
Matt Damman: Yeah. No, one thing that helped us was we had the product. The product is there. We could make padlocks day one, all the equipment’s here, everything is available. So the pitch to the investors was like, “Hey look, we have this fantastic product. I can literally put it in your hand at a meeting and you can hold this lock,” and without fail you put one of these heavy duty locks in somebody’s hand, and they go, “Oh wow, this thing’s real. This is heavy.”
Matt Damman: And so the product spoke for itself. So the pitch was really, “Hey, we’re going to build a brand.” Similar to the way Yeti took on coolers. They took somewhat of a commodity of coolers, and they put an aspirational brand around it. Gorilla Glue did the same thing before that in glue, where you had Elmers was just kind of like the generic glue that was out there. And then all of a sudden Gorilla Glue comes along with a little better product and better marketing.
Matt Damman: And I said, “We can do that in the padlock space.” So the pitch to the investors was, we have great margin in this product. We make it ourselves, product is done. It’s really a sales and marketing push at this point. And luckily a couple of them had seen what I had done in the past, so I had a bit of a track record. And they kind of bet on me knowing that we had really a world class product sitting in our hands. It just needed to be sold and have the story told. So I put together a two year and then a three year proforma and just said, “Hey look, here’s P and L. We’re going to do this lean.”
Matt Damman: But there were some sales, the business wasn’t a complete stop, but it was pretty close. And we looked at these different channels and I didn’t know what was going to hit or how or when, but I thought, “We have a lot of shots on goal here between the military and retail and B2B and online.” And we could have modest success in any one of those, it didn’t take a lot to move the needle here in terms of becoming profitable because the way we manufacture, our costs are fairly thick and low. And so when we get scale, our net margins become very good. So that was really the pitch to the investment. It’s like, “It’s a risky bet, we’re losing money. But if it works here in the next 12 to 24 months, it could become a very profitable business.”
Matt Damman: And I think the last thing that these guys looked at was, “Hey, if we’re successful, there’s some strategic buyers out there eventually who would probably come in and be interested in the business.” Anyone from the obvious beasts in the category of Master Lock and then there’s some other brand conglomerates that I think could have interest in a company like this. So that was the pitch to the investors. It wasn’t anything terribly sexy. It’s not software as a service or some biotech deal that’s going to be worth $1 billion. But I think they liked that it was tangible and real. And these are local guys in Detroit that knew me and took a bet on it. So, yeah.
Luke Peters: And so the company was losing money. Did it have a bank financing or how was Patrick able to keep it going at that time? Was that just from previous profits that he had within the company?
Matt Damman: Yeah, he had some sales coming in. He funded a lot of it himself. He had a couple of prior investors. A couple of you paid back and then we took one loan on the books and we turned it out over about seven years. So we have very little debt. To his credit, he kept the company alive. Kept it to the point where we could do something like this. And the money we’re burning, it’s overhead marketing, basically. What’s neat about this company too is we can buy raw materials and turn them into finished goods in a very short amount of time. So our WIP is days, it’s really good. So from that standpoint we have working capital but we didn’t need a lot. And I think we’ll go look at bank financing at some point once we really have… And these military POs can be helpful in that regard. But yeah, no, it was mostly Pat and then we raised the capital. That’s what we’re living off of.
Luke Peters: And so then you had these investors and you had some cash and you’re on and then you put your proforma together and now you had some pressure to grow this business. What were the keys to relaunching Commando Lock?
Matt Damman: Sure. And it’s a good question. I think to me the key was the brand, right? It was we need to make a splash with the look and feel of… Call it almost an aspirational product. And we knew who our customer is. Typically, it’s a male outdoor guy, probably owns a pickup truck, maybe a gun, gun cases, they hunt, fish. These are guys that are locking up valuable things, tool, equipment, guns, whatever. Or maybe they have a farm, they’ve got property, they’ve got gates, fences, barns. And we knew who our customer was for a product like this. And so to me, the key was coming up with a brand, a logo, an image that spoke to those guys. So we played off the military grade, which we actually exceed military grade in almost every way.
Matt Damman: But you know that that to me was key. It’s like, “Okay, how do we craft this thing?” And the locks are beautiful too. It’s crazy. The locks look really, really good. And so I had a buddy of mine who’s a freelancer who does a bunch of photography and graphic work and we really sent out between the logo and then the photography to try and tell the story visually. And it’s not perfect, it’ll get better, but once we had that and the sales collateral, sale sheets and different things, I was able to really go out, start talking to people. And it resonated right away. Tractor Supply’s a good one. One meeting with a buyer down there set us up as a vendor and gave us a 40 store test, right out of the gate. So that was really the key, I think was how the product looked and the brand was going to feel.
Luke Peters: And so when you came on, and I’m guessing they didn’t have the sales team that was needed and I’m guessing you guys didn’t have kind of the digital DNA to put together the right assets online. So you talked a little bit about having your friend, a freelancer, work with some of the photography, but then you still had to build a website and now you’re going to be launched, you’re selling on Amazon, and then you’re going to be launching on HD and lowes.com. So you had to do that, which takes some digital understanding. And then you also had to get your sales going. Obviously you landed the military deal and then the Bass Pro Shop. What happened there? Did you have to do a lot of that? Did you hire in some new talent to head that? How did the actual org chart have to change for you guys to be successful in those areas?
Matt Damman: No, I wish I could hire. No, we were on a budget. That’s what I did and that’s what I pitched to the investors that I knew how to do. So I built the website, Shopify, with my graphics guy giving me the photography and the images. Literally did that. Home Depot, Lowe’s, and I knew from my background, we sold a bunch of the major retailers. So we got our ducks in a row. So in terms of the size of the files, what I knew they were going to need, but all the vendors set up all the imagery, all of that, no, that was me. That’s what you do when you’re running a little company.
Luke Peters: Yep.
Matt Damman: Of course you have to do a lot of stuff. But yeah, Google Ad Words, SEO, I’ve done a lot of that in my past, so I knew kind of how to get that, and it’s not perfect. The goal here is to grow and be able to hire in real experts. But at the beginning, it was me and we run on QuickBooks. So I brought in a couple of accounting resources to help get that cleaned up. Some very smart guys that were willing to help. And yeah, you’re right. It’s a lot of work. It wasn’t an easy year, tell you that. Just the past year. And doing it while you’re watching this cash balance saying, “Okay we need to ramp sales.”
Matt Damman: So part of it was very quickly trying to figure out where the low hanging fruit was from a revenue standpoint. And we had a couple of nice hits. This deal with Briggs & Stratton, there was a vice president there that saw the lock kit and knew it could resonate with the commercial lawn care guys.
Matt Damman: So we got that developed very quickly and that was a feat in itself. And we developed about $130 retail kit. It’s multiple locks that all interchange in a really nice box. And we got that done in the matter of four months. We shipped a thousand of those kits in the fourth quarter last year to them. But yeah, to answer your question, it was just a ton of work and I did most of it all myself. We don’t have a sales team. I will say, I use manufacturer’s rep and manage that very tightly and I’ve done that for years. So you get the right guys working for you on the outside and make things move very quickly, too.
Luke Peters: Yeah. So before we transition onto prototyping and product development, and we’ll leave this chapter on turning around a distressed company, what do you think is your biggest learning? Maybe your biggest one or two takeaways or something that if others were in this situation, you can speed up their move through it because you’ve already done it. What did you take away the most?
Matt Damman: Yeah. I think the biggest, probably… No, that’s a great question. The thing I learned is it was easier to sell at the beginning when we were selling this idea and the image and everything. Then we started getting orders and I thought we had it in place. We are there now, but you better be able to handle, if you’re doing everything yourself or you just have a couple of guys on the team, be able to handle the success. If you’re successful and you start getting orders and they’re coming in from all different people and certain things have to get customized, or whatever, you have to be able to ship those products too. And I think that can be a trap sometimes. It’s easy to sell and market when there’s not much else going on behind you. Once that operation starts kicking up, now you’ve got operational challenges and you have to be ready for that.
Luke Peters: Makes a lot of sense. And your whole focus wasn’t on that area probably. You’re just trying to get the sale and now you’re like, “Oops, now we got to figure out how to complete this thing.”
Matt Damman: Right.
Luke Peters: Yeah, that’s a great story. And from that we’ll transition into this, because I know you enjoy launching products and obviously you’ve been successful here quickly ramping up the sales. Why don’t you talk about prototyping products? Maybe give an example or two or walk us through a process, time and cost and how that looks as far as prototyping and launching new products.
Matt Damman: Yeah, I think this lock kit we did for Briggs & Stratton is probably a good example. We pitched the idea and it was literally a graphic rendering of what this kit could look like. So I had a graphics guy that I use really kind of directed him and said, “Hey, put together a one pager showing this interchangeable kit. So multiple shackles, cables, lock, what it could look like.” We dropped in some neat imagery from some of the commercial lawn care, big lawn mowers and stuff. We made this kind of a one page sale sheet and pitched it to the VP there. And the guy said, “This looks great. Can you send me samples?” Now, in this case, it wasn’t a total prototype because we actually had the locks, so we mocked up what they could look like under the Ferris brand.
Matt Damman: Which Ferris is their commercial lawn care… One of the brands they sell lawnmowers under. So anyway, we mocked those up with the Ferris graphic, mocked up a package, mocked up some of the bumpers that go on the lock, and sent it to him. And he liked it. And so then it was a matter of prototyping the packaging, and packaging can always be tricky. So they wanted to go with a box, not like a heavy tool kit, plastic, not like a toolbox but it’s actually like a heavy cardboard window box. You start backing those things up, literally buying some cardboard and boxes and cutting things, getting the size and shape right. The locks fit in a die cut foam, that’s what they rest in in the box. And so we kind of laid that out, got all the measurements right.
Matt Damman: And at that point I worked with a good friend of mine who owns a sourcing company and they actually source packaging all over the world. They do stuff in the U.S, out of China and India, and showed him this kind of mock up of what the package was going to look like. That’s where you get real experts involved and they take it, go to the factory and got us a price quote to say, “Okay, do this.”
Matt Damman: And then we started tweaking the finish and tweaking the foam and getting it right. But that was the biggest part was getting the packaging set, because we did have the product. And then these rubber bumpers on the lock to keep them from scratching things. We mocked those up, got the design right and worked with a factory on a mold which costs a few thousand dollars and got the bumpers done. And then at that point we had the final price quote and we had really what the kit would look like. And went back to Briggs Stratton and they okayed it. They had a couple little tweaks to the packaging and then we were ready to go. So I don’t know if that oversimplifies it.
Luke Peters: No. What was the time, start to finish? There was an idea at the beginning and then from there all the way to getting it finalized. What type of timeframe are we looking at?
Matt Damman: Yeah, so this one was record time and I would say record time for something like this because I was super engaged in it. It was a huge priority to me. The Briggs & Stratton VP was very engaged. So the customer was engaged, I was engaged. And then my sourcing contact is just a world-class guy who moves very quickly. So everybody was aligned and everybody was motivated to get it done. So from probably first pitch was April of last year. It was done by July. So maybe 120 days or so.
Luke Peters: Yeah, that is quick.
Matt Damman: It was really quick. And you got to remember too, we’re designing packaging and instruction sheets for a major corporation, Briggs & Stratton. The instruction sheet looks awesome. It looks like something you’d get if you bought a big lawn mower or something cool. And so then I think we got the purchase order, it was maybe around July, had to wait on the packaging to get produced and make the locks. And then we shipped the first order, went out the door, middle of the fourth quarter. So by November it was going out the door and that was a thousand of these custom kits. So yeah, it was an adventure. And from a product development standpoint, I think one that I’m pretty proud of. So yeah, that was a big one.
Luke Peters: And what store were they selling in?
Matt Damman: Yeah, so they have a thousand dealers in the U.S that are Ferris dealers. These are lawn care dealers. So stuff you probably would drive right by and not notice. But if you ever see any of these places on an express way or the highway where they’ve got these big industrial lawn mowers and tractors and that kind of stuff, that’s where they’re sold. So it’s one of the first accessory kits that they had done and they thought, “Geez, these commercial guys, all this equipment, they get stuff stolen all the time.” I think they’re a target for theft. And now they have a kit that they have these cable locks and they can lock all their stuff up and it looks great too. It’s cool. It’s all Ferris branded. So they’re in those dealers and we don’t have them online yet. They want to keep it kind of in the dealer network to start. So that’s just all ramping up as we get spring here.
Luke Peters: Wow. Congrats. That’s an awesome story,. actually start to finish and then definitely, I can understand who that customer is and it, again, diversifies your company because it’s a niche customer. It can’t be found, price compared, because it’s just going into these physical stores already with your target customer. So, wow, that’s exciting. And who came up with that? Is that an idea you came up with at the beginning and how did that idea initially come to life? How’d you know it was a good idea?
Matt Damman: Yeah, so the actual technology, the interchangeable lock, was all Pat Smith and his dad. They invented that. I mean that’s the IP that he’s had on the business. And he’s had that technology for a few years. He had created it and like a lot happens often is the inventor has the mind to create it but isn’t really sure how to get it out to market or maybe market it the right way. So myself and then my contact, he got us into Briggs & Stratton. We took that IP, that interchangeable kit, and I think we put the story together with some nice sales assets.
Matt Damman: And then we shopped it around. The Briggs & Stratton was a contact that we had. And you get a little lucky where the guy that we were talking to, he knew locks, he knew security, he had the vision to say, “Oh, this would resonate with our customers.” So that’s really how that came about. And I’ve got the same concept, this interchangeable lock system, we’re showing it to a Jeep, like I said, Carhartt, any of these kind of rugged brands. The guys that may have equipment, pickup trucks, whatever, or Jeeps, that’s who we’re going after.
Luke Peters: Got it. Well thanks for that, walking us all the way through that, Matt. I think it’s really descriptive and cool just to hear about the final customer and how all the ideation happened. Packaging as you know, there’s so many different things. It’s not just a product. You’ve got the packaging and the rubber bumpers and even had the do tooling on that and then the instruction. So that was great.
Matt Damman: Oh, yeah.
Luke Peters: And you’re running a small business made in America. You guys are 10 employees or so. But previous to this you’ve worked for some large Fortune 100 companies and so it sounds like you’re bringing that discipline and those connections to Commando Lock. But I’m curious, what are the most important things you think that you are bringing to the business, as far as skills that you’ve learned in those large companies that you’re able to translate into success here at the smaller company?
Matt Damman: Yeah. I appreciate that. I did. Out of school, I ended up at a couple of large companies. One was Cardinal Health, they’re a big healthcare distributor. I was in the Chicago area and then later was with JP Morgan, which is a bank. So nothing to do with product or locks. But at both places, I was fortunate enough to work for some really top notch management. And I think probably with my natural bend, I love sales, I love marketing, but I was lucky enough to work in some situations where there was really, really high level and strong operational management. And so understanding kind of financial discipline, how to read financials, how to run a P and L, how to manage cashflow, how to look in an organization and know where kind of the financial levers are, and then dig into them and understand how to change things.
Matt Damman: Just an example in cashflow, when I got in here, one of the first things we did was really go to all our suppliers and try and get established terms, understandable what it was going to take to get payment terms, and then extend those terms. And then went to the customers, especially even the military guys up front, and tried to reign in our terms with them. Say, “Hey, can you pay us quicker or what can we do to have you pay us quicker?” So to just tighten up our cashflow.
Matt Damman: I think I brought, again, the sales and marketing knowhow, but then also having been around kind of well-run, well-managed companies, just that operational oversight and probably systems. I’ve trained and obviously can use Excel and some of the ERP systems and different things that we use, lucky enough to get exposed to that stuff.
Matt Damman: So a little bit of everything, if that makes sense. But yeah, at the end of the day, the biggest difference is that the big company, you’ve got teams of smart people around you and somebody’s always there to get something done. Whereas here, if you want the light bulb changed, you got to go change it.
Luke Peters: Yeah.
Matt Damman: But there’s no red tape, you don’t have to get board approval to change the light bulb, you just walk over and change it. So that’s what I love about small businesses. You can do things immediately. If I want to put our logo on a sweatshirt and order 50 of them, I can do that and I can do it tomorrow. I don’t have to go through the HR department and make sure everybody likes a certain color. That’s what I like about being in a small company versus the big company is just the ability to move quickly and impact change immediately.
Luke Peters: Yeah. And it’s a helpful question because obviously… And the audience here is a huge range. We have sub $5 million to $200 plus million companies, a lot of housewares industry and hardware industry, which you guys fit right into. But it’s interesting because what did you bring? You brought a lot of discipline, it sounds like. Stronger operations or operational knowhow, cashflow, systems knowledge, and probably along with it, you didn’t say it, but I’m guessing, more accountability and expectations because often in smaller companies those can be lacking. So great story. And I think to finish with what I’d like to ask is, what’s been your biggest mistake? Something that maybe really hurt, but at the same time something you learned from and the audience can learn from.
Matt Damman: Yeah. And it’s a good question. I think for me, as it applies to Commando Lock, getting into a new business, maybe this isn’t a mistake or it’s really just something you learn the hard way. I came in and I made… There were some assumptions around where we could sell locks, and you think, “Oh.” I made assumption based on maybe one data point that we would sell a lot of locks into the self storage channel. All the storage facilities that you see all over the place. Public storage and all these guys, right? Oh my gosh, there’s locks on all those doors. There’s 50,000 of those storage facilities in the U.S. We can crack a bunch. We sell one local group here in Michigan or in Detroit, I kind of extrapolated that out and said, “Yeah, we’ll be able to get into a hundred, 500,000 stores.”
Matt Damman: And I was wrong. And I think the mistake I made is I didn’t really understand that market at all, the price point and the quality of the product. I just assumed a lock’s a lock. And we’ll go in and we’ll sell and have good service and we’ll win business. And it was not the case. The locks that are typically bought and used in that channel are really very cheap import locks. They’re buying $2, $3 kind of cheapy padlocks out of China, and no one really cared to change.
Matt Damman: And so again, the mistake I think I made is I use one data point of, “Hey, we’re selling 10 locations here, we’ll get into 500, 300 whatever.” And it really wasn’t the case. And I think if I would’ve gone down the path a little deeper, maybe talk to three or four more of these storage facility folks, understand what they buy and why they buy it, I would have probably figured that out earlier. And the reason it was a problem is that was part of my growth proforma. It was like, “Oh yeah, we’re going to penetrate this channel,” and it’s really just gone nowhere.
Matt Damman: Luckily we found other stuff, but it’s probably you’re moving quickly and you’re making some assumptions and you see what you want to see. So it was like, “Oh yeah, we’re in a couple of these storage facilities, so yeah, we’ll get more.” And it was like, “No, there’s more to it.” And you just kind of have to dig a little deeper in that due diligence.
Luke Peters: It’s hard. I’ve product brand obviously with NewAir and in the listeners will know this, it’s really difficult. Like you said, you could have talked to more people, but beyond that, sometimes this market research is so difficult until you get and start selling. You don’t realize that pushback and what the rejections going to look like. But the truth, is we probably all could do more market research, and prevent these things. But it’s hard, because we want to move quick and we think the idea looks obvious. And that’s a great example right there. So cool story. And I guess the take away is research that customer a little bit more, spend some more time up front than losing time in the backend.
Matt Damman: Right.
Luke Peters: Wow. Cool.
Matt Damman: Yeah. That was it. And again, luckily we were going after a lot of different channels. So you kind of knew something wasn’t going to work, you just didn’t know what. And you’re right, if you spend too much time doing your analysis, you’re not actually out there selling. And at some point you just have to get out of the building and get going.
Luke Peters: Yeah, I think we’ve all made that error, but it’s a good one because it’s tangible. I can definitely see it and understand it and see how you would have thought that would be a perfect customer, but it’s a good story.
Luke Peters: How can listeners connect with you or learn more about you or Commando Lock?
Matt Damman: Sure, Luke. Well, commandolock.com is our website. Commandolock.com. I’m on LinkedIn, Matt Damman. It’s not like the actor, it’s spelled D-A-M-M-A-N.
Luke Peters: I was going to make a joke about that, that’s funny.
Matt Damman: But yeah, no, I’d be happy to hear from your listeners and if I could be helpful in any way, I’m here and available.
Luke Peters: Awesome. Well, it’s been a pleasure having Matt Damman on The Page 1 Podcast and definitely encourage you guys to go check them out and look at commandolock.com, and we’ll have this in the show notes so listeners can click and learn more about you. And also want to just thank the listeners for joining us on this episode of The Page 1 Podcast, sponsored by Retail Band. Quick reminder, I am offering free valuation of your online sales strategy. I can look at your digital strategy on Amazon, Home Depot, Wayfair, and all the other channels. We can see if influencer marketing is a good fit from you and look at all the other selling tools and options that you might have to push your digital sales. And if you’re interested, find me on LinkedIn or email me at firstname.lastname@example.org. Thanks again for listening, appreciate all of your comments, suggestions, and especially your reviews on iTunes. We’ll see in the next episode.
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