How to Ensure Your Business Survives by Being Resourceful - DryZzz.com

Linda Villena, Inventor & Founder

Susan Culmo, Sister & Co-Founder

DryZzz.com

When thousands of defect products were delivered from their suppliers in China, DryZzz's founders, Linda Villena and Susan Culmo, took a major hit. They forfeited a major marketing event at the last minute due to the subsequent lack of samples and couldn't get any refunds from the suppliers despite an existing contract. On today's podcast, both guests share that story, detailing how they survived it by being resourceful, how they've also responded to other unforeseen issues that threatened their company, and tips on avoiding common problems that tear up promising start-ups.

In today’s episode of the Harvest Growth Podcast, we’ll cover:

●      How to navigate the lows of outsourcing product manufacturing.

●      How to partner with family members the right way.

●      Why small, local pitch shows are a great starting point for new businesses and first-time entrepreneurs.

●      Why diversifying suppliers can be a feasible Plan B.

●      How to leverage past careers and corporate experience to build a good business foundation.

●      And so much more!

Visit DryZzz.com to learn more about their patented, dual-purpose pillowcase with two distinct sides; one absorbs moisture from wet hair and the other is for sleeping with your hair dry. Use the discount code "harvestgrowth" to receive 15% off at checkout!

Do you have a brand that you’d like to launch or grow? Do you want help from a partner that has successfully launched hundreds of brands that now total over $2 billion in revenues? Visit HarvestGrowth.com and set up a free consultation with us today!

Transcript

Jon LaClare: Successful entrepreneurs are resourceful. We all face problems. The difference in results comes from how we handle those challenges. Today I interview two sisters, a CPA and an attorney, that started with no experience marketing products and quickly grew their business by being resourceful and figuring things out along the way, you'll learn a lot from their journey.

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Advertiser: Are you looking for new ways to make your sales grow? You've tried other podcasts, but they don't seem to know. Harvest the growth potential of your product or service as we share stories and strategies that'll make your competitors nervous. Now here's the host of our Harvest Growth podcast, Jon LaClare.

Jon: Welcome back to the show. I'm really excited to have two sisters on our show today. They are involved with and really founded DryZzz. If you go to the website, it's dryzzz.com. Today we have Linda Villena, the founder and inventor, and her sister Susan Culmo, who's her sister as I mentioned, and co-founder of this business. They've developed the product. I'm going to let them describe it because they'll do a much better job than me, but it's an awesome product. Listen to this show. You're going to learn a lot from their story. As well as about their product. Linda and Susan, welcome to this show.

Susan: [crosstalk] Thank you.

Linda: Thank you for having us.

Jon: Yes, we're excited to have you today. Tell us about the DryZzz pillow. What is it? How does it work?

Linda: It's a pillow case that I invented for people that go to sleep with their hair wet. My daughter was having an invention convention at school where she had to come up with a product that solved an everyday problem. She was going to sleep that night with her hair wet. Very long hair, and I said, "Go get a towel to put on your pillow" She always did when she went to sleep with her hair wet. When she left the room, I looked at her pillow and I thought to myself, there should be a pillowcase that one side is a towel with some type of waterproof liner underneath it.

When she came back in the room, I told her, I have your idea for the invention convention. Of course, since it was her mother, she told me it was a stupid idea. [laughs] She went along with it anyway, and it was a great hit and that was the origins of the product.

Jon: You guys have had quite a road of success since then and it hasn't been that long. After that invention convention. What was the first time that you knew you, really had something in this that you'd, actually put a business behind?

Susan: I'll jump in here. Hi, Jon. For my niece's invention convention, my sister and my niece came over and they had bought a shower curtain, a towel and a pillowcase. We had my mom's old singer sewing machine here at my house. We cut it all up and made the first prototype. Then when all the kids were showing their inventions at the school cafeteria, all the moms and grandmoms were asking my niece, do you have more of those that we could buy, or if they sold this at Bed Bath & Beyond, I'd buy it. Then we thought-- my niece came home from school and told Linda, "Everybody said they would buy this if we had more of them."

That's when the first light bulb went off for Linda. Then we, being a CPA and an attorney, we didn't know anything about how to take an idea to an actual product and have it made. We had to start researching and going through the steps. We had an initial order made and sold them at the school fair. When complete strangers came up to the table, and actually plunked their money down and bought it, that's when we said--

Linda: Then also people, they would come up to the table when they saw what it was everybody would say, "Oh my gosh, my daughter goes to bed with her hair wet all the time, or my niece or my granddaughter. I've never seen a product like this." That was when we knew that we had helped solve a problem that nobody else had. We just went from there. We went from small school fairs to bigger and bigger. Finally up to the Miami Home Show where we sold hundreds of them.

Susan: People also started coming up to our table saying, "Would this work for sweating? Would this work for drooling? Would this work for my dog, lays on my pillow and slobbers?" Then we started seeing that people could use it for other things because, just to explain to the listeners, so what we've done is on one side is a regular pillowcase. We have some SKUs that are 100% cotton, we have some that are satin. Then the other side is a very soft microfiber, absorbent, kind of like a soft towel, but it's not terry, it's microfiber. Behind the microfiber, is a quiet fabric waterproof liner.

Any wetness going on that side, wet hair or droll or, conditioning treatments, sweat is not only going to be absorbed by the microfiber so you don't feel like you're sleeping on a wet surface, but also, the liner blocks it from going through and staining your pillow and getting to your pillow. Then you can wash and dry it in the washing machine.

Jon: First of all, I've got to say, you could tell that you guys have sold this in live pitch environments like home shows, et cetera, because a lot of the questions as you're saying things or questions come to mind like, you think waterproof barriers, usually those are loud. You think the cheap liners that go under kids' beds, you hear that. You know that those questions come to mind so it becomes part of your pitch.

I think it's a great encouragement for others that are listening to get out and get into some of these shows. Whether they're small or big. Because in that live pitch environment, you do start to learn, okay, what are the questions they're asking? Then you can address them and now they can go on your website or when you market in other ways. You guys got onto TV later on too, and I'll talk about that. You're prepared for it because you know what the questions are.

I've shared with our audience, part of my backstory is years ago working at OxiClean with Billy Mays. That's where he got his background is he learned by pitching in a live environment. Even when we were a company that was $200 even $300 million, we would go to these pitch shows, home shows, home and garden shows, et cetera. It wasn't about making money any more really at that point, but about learning. Talking to people, there was nothing better. To be able to spend some time in front of people.

I was on the marketing side of the team and going there, man, after an hour or two you feel like you're done. I've got all the learnings I need because you learn so fast in that live environment. It's a great way to start a business like you guys have done. For those that are listening, I think later on in your life cycle too, if you haven't done it already, get back there and it's a great place to answer questions.

Linda: Yes, it gives you confidence. When you talk to the consumers and you hear like you said and like Susan said, that's how we came up with a couple of other markets that we didn't even know people would be using it for. It gives you confidence so you know that you have a good product and you won't be scared to continue pushing it.

Jon: Absolutely. An attorney and a CPA start a business. That sounds like the start of a joke. It's a very positive thing like I walk into a bar or whatever. What a great background I think to have both of you in there. As most of my audience knows, I'm a former CPA as well. I think there's great learnings that come from that, from the financial side as well as the legal side to know all that you need to know going into a business.

Even though you had no experience, the two of you launching or marketing products, the fundamentals of business, I think, would be extremely beneficial in starting a business. No joke at all. This is a very serious way. A great way to start a business. How do you guys think that's helped you? You talked about how some of the things you had to learn because you hadn't marketed products before, but your background in law and accounting, how has that helped you to build this business?

Linda: I would say definitely the accounting and the cost going into the product and if you're making any money. Especially when you're working with wholesale because as you know, when you sell wholesale you're getting basically half of what you would be getting if you sold directly to consumers. Several times we've been in a wholesale situation where we have to sit down and we get our Excel sheet out and we think of the different costs.

Not only, the labour to make it but the three different fabrics to make it. The postage, the shipping. We have an Excel sheet and our different SKUs are different prices so we'll have different profit margins on each one. We're very comfortable with sitting down and going through that exercise and seeing, is this going to be worth it. Are we going to make money? Sometimes you don't make a lot of money but it's the advertising that the exposure that you're going to get. We always sit down and do our spreadsheet so we know exactly where you are because--

Susan: It's easy when it's something that you invented yourself and you've put all this time into. You're so excited if somebody is interested in it. Sometimes I think small business owners can think like, "Oh my gosh, that's great." They want to sell my product on this show and offer it without doing the analysis. Okay, wait. I'm actually going to lose money on that deal. Sometimes things sound really good and we have, like Linda said, "you might want to go ahead and go into a situation where maybe you're going to break even on the cost but you're going to get basically nationwide free advertising like when we were on the Good Morning America deals and Steals, or the view deals, or Kelly Clarkson, we've been on some of those where they talk about our product on the show and they do for 24 hours our viewers get it at 50% off.

Those by the time they take their cut, they sell it at 50% off, you have to pay postage, et cetera. You're not really making much of anything on the actual units themselves, but we're getting the nationwide exposure, so we figure it's buying advertising, but you do have to be careful because all these people come out of the woodwork. I'm sure you know we're constantly barraged with people, oh, I can get you on TV and sell millions. All you have to do is sign up with me here, sign on this dotted line.

To your question about how is our legal and accounting background helped, sometimes when people approach us with these proposals and you get down to the nitty gritty and it's an actual contract, and I review it and look at, I say, "No, we can't agree to this." I think there's a business common sense that we have had both of us that has helped and your antenna go up because you have to be really careful. If it sounds too good to be true, it probably is and you have to look a little more closely at the details before you just jump in.

Jon: Agreed. Well said. I would encourage our audience. Not everyone is lucky enough to have an attorney and a CPA as the founders, that background. If you don't, those are two key areas to evolve someone. It doesn't have to be a full-time employee, but make sure that there's, even in the early days, somebody who has expertise on both sides of those.

Talk with an attorney, talk to a CPA and there are hourly rates or maybe may have some costs behind them, but it doesn't have to take a lot of hours and you get a ton of value to make sure you're not going down the wrong road either financially or legally. I certainly would encourage everyone to do that. The other question I'll ask too is the two of you running this business together as sisters, how has that been? A lot of people talk about should I have a partner in my business, that kind of thing, but bringing true family into the business to really start and run this together, how has it been?

Linda: Well, Susan and I, we're actually Irish twins. We're only 11 months apart. We've been close our whole lives, but we do have very different personalities. Susie is definitely more detailed and--

Susan: I'm the talker, I'm the outgoing. Linda is [crosstalk]--

Linda: I'm more like, "Oh, I'll throw caution to the wind, let's try this." Susie is like, "No, blah, blah, blah." I'm like, "No." We definitely get into some discussions sometimes, but I think it's a great balancing. I think we work great together. Yes, we have our "discussion" sometimes where we might not agree, but in the end we know that we're just trying to push the business forward and we trust each other wholeheartedly and we both are very hard workers. That's one thing.

Susan: Yes. We feel like we're both putting in the same-- we don't quite-- neither one of us feels like the other one is more devoted to this project, but even given all of that, we do approach it in a business-like manner. In first year of law school you take contracts one and contracts two and the textbooks are this thick. Almost every single case that you read about and discuss in law school to learn are family members or friends that had oral agreements and didn't approach their business or whatever they were doing in a legal way with anything written. Then it evolves and ends up into a lawsuit that ended up in the textbook in every law school in America.

Knowing that, we also though are very upfront with each other about even down to small things like, Linda will text me and say, I used the business credit card when I went through Starbucks today because-- we're upfront about everything to do with money and being open and transparent with each other. If we have a question, even if it might feel a little awkward, we say it like, hey, I'm wondering why you did this, and we'll discuss things. We don't keep things inside not letting it out. I think that has helped. We address everything as it comes up and we try to be fair and honest with each other and everything. Even though we are sisters, if you are going to work with someone, you have to approach it that way or else things might go unspoken or start to be uneven.

Linda: One more thing I will add is we never make even-- Maybe a very small decision, but if we're ever in a deal with somebody, and if, let's say I'm taking the lead on it because Susie's busy, maybe she's dealing with project A and I'm dealing with project B, I will never just make decisions on my own without-- I'll get the information. Then I'll say, okay, I have to speak to my business partner and then we'll talk--

Susan: Make the final decision.

Linda: I think that's important too.

Susan: Yes.

Jon: I'm so glad I asked that question. You guys, that's a great response. Go ahead.

Susan: The final thing I was going to say is that I am a complete night out. I'm just getting my second win at 10:00 PM. I can start on a project late at night and be wide awake and by 9:00 PM Linda's yawning. She don't even talk to me, don't ask me a question. My brain won't process it, but she'll get up at 5:30 or 6:00 in the morning when I'm sleeping soundly. We cover 24 hours a day. At all times, one of us is looking at emails or fielding calls or--

Linda: Yes, we only live a couple miles apart, so sometimes it'll be about 8:30 or 9:00, she'll text me, "I'm coming over, we're going to get this order out." I'm like, "I'm not doing that. I already left my desk. I'm sitting in front of the TV, so if you want to come over you can pack it up, but I'm not doing it."

Susan: We have home offices and we have our DryZzz's fulfillment center. Right now is actually constructed at Linda's house. We've turned a room into an office and it's inventory storage and everything. Linda's husband-- we're a family affair also. My grown daughter, Kristen, is a graphic designer and a textile designer website. She does our website, all our graphic design. She's on our DryZzz'a team. She also is the textile artist behind two of our SKUs that are hand dyed. Our dreamy rose in our ocean blue that the viewers can see they're on 100% cotton. They're a pillowcase that's a work of art. Then Linda's husband is also very helpful with our-

Linda: The shipping.

Susan: -home office. Our home warehouse.

Jon: Oh, fantastic. I think that's all great advice. For the listeners, whether it's your sister, a family member or a friend, or simply a partner, that's all great advice to make sure that you follow. If you are in a partnership or considering one, I'd encourage you to rewind and listen to that section again. That was great advice going into it. Next question I want to ask is the biggest challenge you've faced as a business?

Linda: Yes, this was a biggie. Couple years ago we were going to actually be on a show and we had to place an order for several thousand, I think it was 6,000 units. We placed an order a second time with the same people we had worked with out of China. Well, the order came in and we always test the product because has to be waterproof. It was waterproof before I washed it and I remember Susan called me and said, "Did you test it after you washed it?" I said, "Oh no." I washed them and when I tested it after, it was not waterproof, which is the whole premise of our product. We were supposed to be-- I think at a week beyond this show, this national show. I was like, "Oh my gosh," and we had put in a lot of money into this one order, basically most of our money.

We had to call the show and back out because of course we don't want to sell defective product and we told them, "I'm sorry, we cannot be on the show and we'll basically get back to you when we can." Which we tried for a couple years to get back with them, but finally we did get back on with them. It was a blow and it was shocking to us because like I said, we had ordered from these people before.

Susan: Multiple time and we had production samples.

Linda: We contacted them and they're basically showing on their end video saying, no, it's working fine. It's like the battle of the videos, no, it's not working fine. We went to an independent lab and had one of the original ones from a couple years before that we had made with them, which was fine. We sent them one from this order and the result of the test was they were not the same waterproof fabric.

Susan: I'll jump in here with the legal side of it. Of course, we had something in writing from them, this factory in China, guaranteeing that their product would work and if it didn't they would either refund or replace the units. When you're in America and your written contract is with a factory in China, it's only worth the paper it's written on or whatever that expression is they say. You can't really enforce it. At that point, thank goodness, we had an intermediary contact here in the United States who had found that factory for us and he was able to apply some pressure to them because they were still in business with him. It took several years and getting these lab results. Finally, what? Two and a half years later the day comes and we're getting the 6,000 replacement units sent to us.

Linda: They come in, the truck backs up in my driveway, and 6,000 units which is a lot.

Susan: We're like, "Yay, two years of hard work."

Linda: Then Susie says, "Test them." I'm like, "Okay." I test them and they were defective too. I couldn't believe it. I couldn't believe my eyes after all this back and forth but we did what we've always done. Even with that first order, we found a workaround. We found some waterproof fabric here in the United States and we had them fixed. It says that's all the money and the inventory we had at the time. Even though we had to put more dollars into each one, at least we were going to have inventory to continue our business.

Susan: It was an obstacle and we said, "Okay, what can we do with these 12,000 units now?" Essentially they were all very well made except for the waterproof liner. Then we realized, okay, if we can solve the issue of how do we make the liner work we might be able to use these units. We went to a seamstress. It would've been way too expensive to have them completely pulled apart and resewn but a lady, a local seamstress lady here said, you don't really have to take it apart. If you get new liner that works, we can turn it inside out, sew the good liner on the inside which essentially sandwiched the ineffective liner in between the good one and the microfiber, it didn't make it that much thicker. It made it work. When you turned it right side out again and repackaged it, you could literally tell no difference from one that was made correctly.

In having done that, we were able to actually use those units that we were in need of because we were starting to sell more at that time. Then eventually we never did get 6,000 more units from them that worked, but we really liked the microfiber they had. We said okay, your microfiber is great, which was something we were having trouble sourcing elsewhere. We essentially got them to ship to us bulk microfiber in huge rolls of the value that they owed us. Not only were we able to make use of the defective units by putting a little more money into them, now we've had a source of really good microfiber to make new inventory that we had been unable to find.

Jon: Ah, sorry, you had to go through that. There's so many stories with Chinese manufacturing that man, we go there because it's so much less expensive but there are often issues that come up and it's one of the natures and it's great that you guys have been able to find a solution for that. Thanks for sharing that with our audience. Is there anything I didn't ask in this interview that you think would be helpful for our audience?

Susan: On that one topic I want to say we have made new connections with some manufacturing in India. Viewers might look into that. The arrival time-

Linda: Shipping time is about half.

Susan: -to the East Coast is a lot faster. We have found that they're much more forthright and honest in their dealings. They have nicer fabrics so people could look into that because we are trying to get away from anything to do with China. Then we also have been working with some local Venezuelan ladies who live here in Miami and they make curtains and balances for hotels. We were able to get them on the side. They can make small amounts of inventory for us when we need it.

Linda: We're using both. We have a manufacturer that can provide thousands when we need that but also we have a local seamstress that helps us. Let's say sometimes we want to try a color out and we don't want the order 3,000 of them. She'll make a color of 200 and we'll throw them up on the website and we'll see how they do.

Susan: See how they sell before we invest a lot of money into a large amount of inventory. These ladies have been amazing that we work with here in Miami.

Linda: I guess to answer your question, one of the other things is we have learned to pivot. We don't give up. For instance, we were selling on the [unintelligible 00:25:50] and we did very well with them but as maybe your listeners know they went out of business in July. That was sad for us because we were looking forward to another great holiday season with them. Instead of just saying, oh, we called them and we said, "Oh, is there any of your competitors that maybe you could tell us about that we could approach?" They said, "Yes, Uncommon Goods is a similar catalog," so we've reached out to them and now we're seeing how we can work with them.

I guess we like to do our own research and when we would come up with a problem, we just think about it about maybe some ways that we could fix it and we do research and we go from there.

Susan: You have to-- I think I read once some expression about the only difference between successful people or successful entrepreneurs and those who don't make it is perseverance. It's not that successful people have any greater may be qualities or skills about them than anybody else but you can't give up. You are going to run into obstacles and you are going to run into problems. You have to really work hard. There's no way around it. It's not like what the number of people who become millionaires overnight with their idea has to be some minuscule percentage over the last 100 years.

Linda: Then two more things I would think of. When I look back, when you're in the moment it's hard to see your progress and when I look back even two years, I see how far we've come and it's not usually like one big deal made us successful. It's little stepping stones, I would say. Like when we said some of these shows we get on, we might not profit wise make a lot but our name gets out there and sure enough, I'll get calls, I'll get emails after that, "Oh, I saw you on this, I saw you on this" It might be a little higher deal. It's just, I think, stepping stones and I always think about Daymond John where he says the power of broke.

I would so agree with that. As soon as you start getting a little success, people will be emailing you, calling you with, like Susie said, "Oh, I can do this, I can do this for you, I can do this, it only costs this much." Your money can go so fast so you really have to protect your money.

Susan: Actually if you have a good product that people really feel solves a problem where they want to buy it, you don't have to spend a lot of money. In fact, some of our most successful advertising or promotion-type things that we got the most bang from were actually free. It wasn't anything we paid for it. One lady comes to mind that she was a beauty blogger and she actually bought one of our DryZzz pillowcases on Amazon and loved it.

She contacted us and said, "Hey, can I write about you guys?" Then I send out an article to different websites. She wrote fashion, function, and philanthropy. We forgot to mention we give a portion of our gross proceeds to Sofia's Hope who my niece's little friend in her invention convention passed away the following year from complications of childhood cancer chemotherapy.

Linda: She had heart failure. I told her mom who was a friend of mine, I said if this DryZzz thing ever goes anywhere, I want to donate to Sofia's Hope. We've done that every year and thank God our contribution has gone up [crosstalk]--

Susan: Each year the check we write to them gets a little bigger or a lot bigger.

Linda: Customers like that when you have a passion or you have a charity partner that you work with.

Jon: Absolutely when it gives you value for working. That's why we're doing this is to, of course, support ourselves and our families, but to help others as well. This has been an amazing interview, Susan and Linda, I really appreciate your time. Thank you guys so much for taking the time today for this interview. For the listeners, please go to dryzzz.com, again, that's dryzzz.com, to learn more. If you use a promo code harvestgrowth, you'll get a discount on your purchase as well. Be sure to check out harvestgrowth.com to see other episodes we've recorded. If you like this episode, you want to learn more about how you can profitably grow your own consumer product business, please subscribe to our show and be sure to leave us a review. Again, thank you guys so much.

Susan: Thank you, Jon.

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