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Transcript: Dan Vonderheide and Andy Eastes

Posted by Emilie Fritsch on Nov 8, 2013

Andy was featured on Louisville.AM's Startup Podcast! Recording and transcription below!

Transcript:


Dan
It's a new episode of Startup, Conversations with Louisville Entrepreneurs.  My name is Dan Vonderheide.  I'm your weekly host for these talks with people working here and on startups or those in the community who are investing in startups.  I always value your conversations.  It's one of my favorite hours I spend all week long.  I appreciate you listening.  This week we speak with Andy Eastes from Agile Harbor.  It evolved out of another startup several years old called Street Moda.  We talk about how Street Moda and Agile Harbor fit together.  How one spun off another one, so to speak.  We dig into their organization; how they work together, and how they define their roles.  We talk about why engineers make good entrepreneurs.  I've met all of these people who are engineers, and they have these entrepreneurial minds.  I just wanted to ask that question.  We dig into a little big bit about his impressions on what's good about the Louisville startup scene.

It's a very cool conversation.  Andy's a cool guy.  We had a good hour; we sat down and talked.  I don't think the interview is that long.  It's the stuff that goes on when the microphone isn't on that really is great for me, and I should record more of that stuff and put that up, so it's great for you too.  I appreciate you listening through the iTunes podcast app or downloading the I Heart Radio app.  It gives me great feedback on who's listening and how long they're listening.  I'm a big believer in podcasting, and this is the future of radio, so to speak.  That in 2013, we don't have to sit and wait for somebody to give us what we want.  It's just out there.  Some of you want this podcast, and I can't say enough about how much I appreciate you taking the time to listen and support my little project here.  If there's something that you want to say, you have some comment or feedback, by all means email me, startup@louisville.am.  You can find me on Twitter @danvonderheide.  I'm even on Google+.  Look me up there.  I like that.

Anyhow, let's get moving along.  It's Andy Eastes from Agile Harbor on the Startup podcasts.

Andy
Living on my meager kick starter budget here.  We do the best we can.

Dan
Agile Harbor is what you're working on now, which has been around for a couple of years?

Andy
Yeah, about two years.

Dan
Two years into it.  Okay.  It wasn't the first startup you worked on, which was Street Moda, correct?

Andy
Yep.

Dan
Start there.  Tell us just the brief history of Street Moda and how that, over the course of years, works into the Agile Harbor story.

Andy
All right, the quick dog-and-pony show.  Basically, me and my friend, Matt Kubancik, were selling stuff for our friends' parents on Ebay.  You probably remember those stores.  They were real popular in the 90s.  We sell your stuff on Ebay for you.  We were doing that.  Late middle school, early high school.

Dan
What year was this?  Late 90s, early 2000s?

Andy
Early 2000s, yeah.  It turns out, it's hard to find enough product that way.  We moved into doing yard sales early Saturday and Sunday mornings; still hard to find enough product.  After that, we found a Champs outlet store in Cleveland, Ohio.  We just got our licenses, and we would drive up there with two cars, fill them up with shoes, bring them back, sell them on Ebay.

Dan
These are discount shoes?

Andy
Yep, just little outlet stores and factory outlets.  From there, we eventually made relationships with the manager at the outlet stores.  They would just pack up a bunch of shoes and send them to us through UPS, so that really started us growing.  There was an article in Business First.  It really worked out well for us, because this guy had just moved back to Louisville, retired from the shoe business in New York for 40 years, saw the article, became interested, contacted us, and became a mentor.  He's who really helped take the business to the next level.

Dan
This person was?

Andy
Jerry Mudd.  He really taught us how to do vendor relationship management, get new accounts, and things like that.  That took us from just selling those discount outlet shoes to really getting accounts with companies and all that.  It was-

Dan
You were how old?  You were young guys, right?

Andy
Yeah.

Dan
You're still wet behind the ears, definitely.

Andy
The first Ebay conference we went to in Vegas, we were not old enough to get our hotel room.  We had to call a friend of ours that had been in the business for years, John Lawson, and he had to come help us get in the hotel.  That was interesting.  That's really what took that business to the next level.  It's still a growing and healthy business today.  I got out of it.

Dan
Street Moda is?

Andy
Yes.  It's about half a block from the Agile Harbor offices.  Works out nice.

Dan
That was your introduction to retail?

Andy
Yes.

Dan
Segues nicely to what you're doing now.

Andy
It does, very nicely.  A lot of old connections came in hand there.  Matt stayed in that.  I went to college and got out of it; went to U of L Speed School for industrial engineering.  I was working from a co-op there at a company out in Eminence, KY, a manufacturing plant.

Dan
Speakers?  Is that where the-

Andy
No, it's copper.

Dan
They make good speakers out there, man.

Andy
Yeah, they do.

Dan
I'm a guitar player.  I know these things.

Andy
Anyone out in Eminence knows of major players out there.

Dan
Yeah, sure.

Andy
Hussey Copper is the company.  After college, I started the consulting and custom software development company and was doing a lot of work for them, as well as a couple of other manufacturing companies.  We were focusing in on the inventory, forecasting, and reordering side.  Matt called me back in and said, "Hey, I don't know what to do here." Also, with my now partner, Slav Ivanyuk, who has been working in the industry doing custom software stuff for years for Street Moda, even before I left, basically asked us what he should do; he’d launched an inventory system, and it didn't work out.  Originally, we were just planning to look around in the market, find one, and help him implement it.  Didn't really find anything we liked, so we decided to build one.  He laughed at us, because he'd tried to build his own before.

Dan
Different perspective brings different results, you bet.

Andy
Yeah, exactly.  We did build it.  It wasn’t web based.  It was very custom for ordering shoes and apparel.  There was interest, so after we launched it, it was running well for a while.  A friend of Matt's in the business from California, actually he does outlet stores too.  He's in Ontario, which is outlet store heaven.  He wanted a system too, so we got him on it.  He's about the size of Street Moda.  There was more interest after that, and I was dealing with these people's servers, their internet connection is bad, all kinds of problems.  We decided if we were going to continue to sell it, we needed to take some time off, build a web based version so we didn't have to deal with all that, and make it where it would work for any product type, any industry.  We took that custom part for choosing apparel completely out, all custom attributes.  You can make it do whatever you want now, so it can work for any product type.  We thought that would take about a year, closer to two.  You know how that goes.

Dan
Did you do that full-time, or you still had your day job or..?

Andy
No, at that point, what we did to fund all this - because we started hiring developers before we were making any money off SkuVault - we aggregated Slav's custom and consulting work he was doing and mine into the one company.  That's what sustained us and allowed us to build SkuVault.

Dan
SkuVault is the name of the product.

Andy
SkuVault is the product, Agile Harbor's the company.

Dan
Just want to be clear.

Andy
It's like Microsoft Windows.

Dan
Got you.  Thank you for using that example.

Andy
The consulting still is a huge part of our monthly revenue that's coming in, and it's really what paid for us to live and for the developers we were hiring until we could actually start selling SkuVault.

Dan
Bootstrap situation entirely?

Andy
Yes, no outside money, no debt.

Dan
Nice.  No debt is good debt.

Andy
Sometimes it's hard, and you wish you had some money.  Also, at some level we always felt like if we got a bunch of money, we would hire too many people, and we'd become unorganized.  It really wouldn't help us.  It would hurt us more than anything.

Dan
Like everything else in life, more money, more problems, right?

Andy
I think I've messed that up, but ...

Dan
There you go.  All right, who's involved?  Back up, if I may have missed something.  Who's involved in Agile Harbor?  You’ve got partners that are involved?

Andy
Me and my partner Slav, and then Matt has a small interest from Street Moda as well.  He got in.  He was the one who really was like, "Hey, you’ve got to sell this, because it's working for me.  You’ve got the second guy on it.  You’ve got to package this up and start getting it rolling."  He also had lots of contacts in the industry, which I had fallen out of.  Really, our growth plan heavily relied upon a couple of key partnerships.  There's a company called ChannelAdvisor, which does ... it's a channel management system.  You list your products into one place, one inventory, and it shares it across all the online market places; all the Ebay U.S., U.K., Australia, Germany, Amazon U.S., Amazon U.K. -

Dan
It just manages all those?

Andy
Exactly.

Dan
Wow, okay.

Andy
The feeds to all those.

Dan
Right.  That's awesome.

Andy
They just went public a couple of weeks ago, I guess.  They're a growing company as well, but a lot bigger than us.  They've been around for a long time.  I guess we started using it for Street Moda in 2003 or 2004.  We met the CEO years ago when we were still under 18 at a conference double fisting beers.

Dan
"Can I buy you boys a beer?  I mean, I don't want to go to jail."

Andy
We were at his conference double fisting when he first met us.  We've grown a little since then, I hope.

Dan
The statute of limitations has run out on that, so I think you guys are fine.  It's just the three of you ...

Andy
Yes.

Dan
... and then you have employees?

Andy
Yeah, we have ... it's a 10 person team now, including us.

Dan
All developers?

Andy
Some outside help.  Mostly developers.  We also have a customer support and office manager, and then a full-time graphic designer as well and a sales guy too.

Dan
How do you guys, the three of you, the three partners, how did you delineate roles within ... I don't want to call this accidental, but it was.  You developed something, and you're like, "Hey.  Oh, my gosh.  Look, somebody said we're on to something."  It's not like you intentionally went into this saying, "You're going to do this, and you're going to do this."  How did it all of that shake out?

Andy
It fell into place because, being from the retail side as well, we've seen hundreds of software companies today vying for the e-commerce retailers attention.  We've been on that side of the fence as well.  What we view as the problem with a lot of these tech companies and software companies is that it's all software people.  They don't have someone up at the top that can understand from the retailer's perspective that they're trying to sell to.  It's all B2B sales, right?  We have Slav, who's the tech genius here.  He's the one doing all the background architecture of the software, making sure it's all running good.  I'm more in the middle, so I help manage the relationships, and then also product development.  I'm not actually doing much of the programming anymore.  I'm working with-

Dan
Do you miss that?

Andy
No.  I was actually never a programmer.  I just ended up doing it in the industry.  It just became a necessity for me.  The part I like is, this is how it needs to work.

Dan
Now, go make it so.

Andy
Right.  Me and Slav have whiteboards all over the office.  We sit there for hours and map out how things are going to work, and then he manages the team, developers, to help him actually build it all.

Dan
Okay.  Does Matt have any day-to-day?

Andy
Yes.  He's really picked up recently here working key partnerships and marketing.  That's his role right now.

Dan
I guess I could've had all three of you in here.  I've got space.

Andy
It's hard to get us all three together.

Dan
Okay.  It's like the formula for Coke Cola, you can't all be in the same room at the same time.

Andy
Right, exactly.  When we take trips, we take different planes just in case.

Dan
Smart, very smart.  I've met, in the past 18 months of doing this podcast, dozens of engineers turned entrepreneurs.  There's something to that, and I don't know what it is.  What is it about engineering, and the way that you guys are wired up, that stokes that interest in entrepreneurship?

Andy
It's funny you bring that up.  I don't know exactly the answer to your question, but it's related, is that that's what we really look for in developers too.  What we found is a lot of developers are great at the actual developing side.  They know the languages, how to make things work.  When you give them a problem and say, "Hey, figure out a solution for it," that's where they lack.  We really look for that in our whole team, even, customer support included.  "Hey, what's this problem?  Let's not go to someone who you know can answer your question.  Can you figure it out on your own, so they can take it from there?"  I know what you're saying.  It seems like there are a lot of those around here.  I know when I was still in school, there was a big push to connect a lot of the engineers at U of L with the business department.  They were trying to get them together and start working together to do startups, because then you have the business guys and the engineers who can create the products.  Someone's got to sell it, because engineers are not good at selling.

Dan
My guess was, when I jotted that question down, is that I guess the underlying theme of a startup is that you're finding a solution to a problem.  Engineers, by the way your brains are wired, seek out solutions to problems.  You may proactively create something and go, "Ah, there's a work around right here," but then you can't slap a label on it, which is where guys like me come in.

Andy
Right.

Dan
I got into sales.

Andy
For a while there, I was trying to do sales.  That is not my forte.  I can sell processes to someone all day long and details on all that, but then when it's-

Dan
You need somebody to open up these lines of communication and close it down.

Andy
Hey, let me slide over this agreement right here.  That's not my specialty.

Dan
It's tough.

Andy
We finally got a sales guy in, and he's been great and really helped us grow.  We released the web based version of the product last December, and we have 32 companies on it now.  We're pretty happy with that growth.

Dan
How many companies would be enough?

Andy
Peak season for e-commerce retailers is holiday season, for most industries at least.

Dan
This is an active goal that you have set, written down?

Andy
Yes.

Dan
Oh, good.  I asked a good question.

Andy
Basically, like I was telling you, a good portion, still, of our revenue is the consulting, which we're going to keep that of course.  Why get rid of a good thing?  We have a subscription based pricing plan.  If you want to get on SkuVault, there is a launch fee which varies.  If you want us on site, which we do offer and all kinds of other things.  After that, it's a monthly pricing plan depending on tiers of users.  That monthly money is great for us.  Once we get you up and running, oh, a little support here and there, all the free upgrades you get, but we're having that money roll in.  My goal was to have by peak season for the retailers, which is our slow season.  No one in their crazy, busy season is going to be like, "Hey, let's install this huge new system that changes how we do everything in our warehouse."  I would like to have the monthlies being able to cover more than all the expenses by October, November at the latest.  That would be about 60 companies on average.  I'd like to double in the next couple of months.

Dan
Goals always seem so arbitrary to me.

Andy
They can be.

Dan
Okay.  I'm seeking some backup on that, because they do ... it’d be great to have 10,000 downloads in ...

Andy
It was a two second calculation.  It was one of those, "Okay, let's take all our current clients, see what our average monthly income is per client, multiply that out by average monthly expenses to see what we need to cover it all.

Dan
All right.  I've always been curious about that.  I understand the importance of goals and following and tracking and measuring and all that stuff.  Where does that original number come from?  It's got to be something that's attainable, but it can't be something that easily attainable.  Where do you draw the line there?  That's always seemed so weird to me.

Andy
Three months ago when we made that, we had no idea if it was possible or not.  We think it is now, but we will really have to push to meet it.

Dan
Okay.  Are you working like ... I guess this would be a question for the sales guy.  Is he working regionally, or does he have targeted, "We want manufacturers of this size, and so we're going to go chase these guys?"

Andy
We target the mid-tier e-commerce retailer, so we're not targeting-

Dan
That's how I meant to say it, sorry.

Andy
That's in the future, the manufacturing.  All of them want to go vertical right now.  They see the people they're selling their product to selling it at much higher margins online, and they think, "Why can't we do that ourselves?"  It's a completely different business model, so if you're used to the wholesale ... wholesale, it's okay if you sell 300, you only have 200, no big deal.  You'll get them on the next order, whatever.  In e-commerce, when you're B2C instead of B2B, that's a huge deal.  On the online market places, if you have negative feedback, that's your visibility, which hurts your sales and so on and so forth.  It becomes much bigger of a problem ... what was the original question?

Dan
I don't remember.  Goals, something like that.  How we come up with it.

Andy
Right, with the sales guy.  Our main hubs are ... Salt Lake City's a huge one actually.  Surprise, surprise.  New York, of course, LA.  LA, out in California is the biggest one, and then Chicago, a little bit of Saint Louis.  The bigger cities are really ... we've done a few rural area installs.  What we try to do is, surprisingly a lot of people pay for the onsite, which is great, because it's-

Dan
You get to see the world, or at least the country.

Andy
What we do is try, oh, if we're going to New York, we have these potentials we've been talking to, "Hey, we're going to be out there.  Let us just stop by and talk to you in person."  That was one thing, Jerry, the mentor ... he's still a mentor for this business now too, has always tried to drill into us was, "Hey, there's nothing that can replace shaking hands."

Dan
Shaking hands, baby.

Andy
You can do webinars all day long, but when you can shake someone's hand, and then they trust you, and they know you're not there just to screw them over.  That makes a big difference in their buying decisions.

Dan
I know, because last night I was talking with somebody who owns a monument company.  They sell these gigantic granite monuments that cost thousands and thousands and thousands of dollars, if they get the good customer.  Some guy from Texas bought one, and he was thinking about it, and he says, "Well, listen.  I'm going to fly in to Louisville."  They spent the day just showing him Louisville and shaking hands, and then he wrote them a check at the end of the day.  He says, "I just don't do business with people I've never met."  He took the time.  He was going to buy a $100,000 monument, so he could afford to fly up for the day.  That just underscores your point there.

Andy
We've had a few people come.  We had a guy in Thursday.  They come here some, mostly we go there.

Dan
That's cool though.  You married?

Andy
No.

Dan
Okay, so you have the flexibility to wing off into the clouds with no notice.

Andy
You come into, "Oh, well.  We're still trying to run this startup at home.  Who's running the office now."

Dan
That's right.  That's the lean, somebody's got ... but technology helps you there, right?

Andy
Yeah, it does help a lot.  This has also come from Jerry, and we did this for years at Street Moda.  We always try to promote from within.  At least at Street Moda, it always turned out you go hire what you think are the big guns, and they just don't fit the culture of the company.  I guess is what happens a lot, and it just doesn't work out.

Dan
You've got to grow your farm team.

Andy
Exactly.  We're trying to follow that same model still and trying to get it where, if I'm out of town, things are still running smooth.

Dan
You guys have been active in the startup scene for 11 years?  2002, right?

Andy
Yep.

Dan
I have to preface this by saying I started doing this podcast in February of 2012, and I fell backwards to, what seems to me, as a scene that is happening.  There are lots of things happening, and I don't know how far in advance that preceded my paying attention to it.  What's your take or your view on the scene that's being fostered here, and what do we have going on here that's good, and what do you think we could do better?

Andy
I think in the last two or three years, there's been a lot of growth in that area.  I know just in the past year or so, with us, GLI's been very helpful.  Everyone over there has been great with us, and we've met a few other people -

Dan
Also, a Startup podcast veteran.

Andy
Yes.

Dan
Twice, he's a two time vet.

Andy
Oh, really?

Dan
Yeah.

Andy
We've just met other people around that are very interested in helping the startup scene, Greg Langdon.  With Street Moda, we didn't have a lot of that when we were doing it.  I don't know if it was that we were younger and not as involved.  We're still not super involved in things like that.  It's hard to make time for everything, basically being out of town all the time.

Dan
That's the thing, is there’s a lot of stuff that you now ... and maybe there wasn't before, I don't know.  Like I said, I just walked into this thing and said, "Hey, everybody.  Come talk to me."  That, I think, is the point, is there is a lot of stuff.  There are luncheons, and there are meetups, and just beer drinking.

Andy
There's Velocity, and then they have some of those tech competitions that have been going on.

Dan
Startup Weekend.

Andy
Right, and then there's the BEAM Initiative.  Are you familiar with that at all?

Dan
Refresh my memory.

Andy
Bluegrass Economic Advance Movement.  I don't know exactly what it stands for.

Dan
Thank you for enlightening us.

Andy
It's a committee that's working together with the mayor of Louisville and Lexington and a few other people.  They're trying to really promote tech and startups and everything in the region.  I think that's a great thing to get the kids interested, because it is hard to find developers here.  What we see a lot is some of the best ones, if you do get them, great, but they're going to be moving out to California soon where there's a million jobs.

Dan
Yeah.  You just highlighted something that is bad that's going on in the scene.  Some people make a big deal about that, but maybe it's inevitable.  What needs to happen for us to keep those people here?  I'm asking.

Andy
If we keep growing the jobs here, I think it'll just naturally happen on its own.  I think for a long time that was the problem.  There weren't a lot of tech companies around.  If you're in software, where are you going to go?  Humana, right?

Dan
Yeah.  You need money to hire to people, so you need more people to invest money.  That's what you're saying?

Andy
Yeah, that's exactly what I'm saying.

Dan
All right, but you guys aren't willing.  You don't want to take on any money to hire people, so are you a part of the problem or a part of the solution here, Andy?  Come on, baby.  You got to think about that tonight.

Andy
We're not opposed to it forever, but that's just what we were brought up in.  If you don't need it, don't take it.

Dan
Okay, that makes sense.  What do you do when ... this is a you question, not a scene question or a business question.  When Andy's relaxing, where is Andy, and what is he doing?  Do you just eat, drink, and sleep startup?  That's an okay answer, if that's what's true.

Andy
I try to not go too crazy.  I do work a lot, but I get around town, check out the new areas coming out.  I like to find the new restaurants, and, especially when I'm traveling, the little local places.

Dan
What's your favorite city that you've traveled to?

Andy
Salt Lake City, actually, has a lot of great little restaurants, so restaurants-

Dan
Not a whole lot of drinking, I'm guessing.

Andy
No, I was there on Saint Patrick's Day just this past-

Dan
Oh, no.  That's the worst day to be there.

Andy
It was.  It was not good.  We flew in that day, and there was not anything to do.

Dan
Oh, my gosh.  That is so opposite.

Andy
Yeah.  We're from Louisville, so we're used to multiple parades all over town and all that.

Dan
Yeah, that's crazy.

Andy
That's disappointing.

Dan
You guys keep blog, right, as to what's going on?

Andy
Yeah, we have a blog.  It's connected to our website, agileharbor.com.  There's a product website at skuvault.com, as well.  Our phone numbers, emails, everything are on there.

Dan
You tweet personally?  You impart your wisdom upon the ...

Andy
I do not.  Our blog gets tweeted @skuvault and Pinterest and Facebook all those we have by ...

Dan
If anybody listening is an online retailer-

Andy
Yes, SkuVault.

Dan
Pay some attention here.  I, of course, think everybody ought to pay attention.  What you guys are doing is pretty cool, and you're adding into the scene.  It's a good story.  We're glad you guys are here, and I appreciate you stopping by, man.

Andy
Yeah.  Thanks for having us.

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