What happens when a trial attorney who spent his days in courtrooms becomes the CEO of one of the fastest-growing premium tool belt companies online? Connor Crook's journey from practicing law to building Diamondback Tools into an 8-figure business is packed with unconventional strategies that any DTC brand owner can apply. In this episode, Connor reveals how he leveraged Instagram to become "trade-famous," built an Apple-like product ecosystem that keeps customers upgrading, and made the bold decision to slash his cost of goods by 70% while simultaneously improving quality - a move that transformed his entire business model.

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Sponsored by OMG Commerce - go to (https://www.omgcommerce.com/contact) and request your FREE strategy session today!

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Chapters: 

(00:00) Intro

(03:47) From Trial Attorney to Toolbelt CEO

(06:45) Building Community and Becoming Insta-Famous

(10:26) Promotional Strategies and Customer Engagement

(14:45) Open Source Product Development

(26:02) Save Money and Connect Your Marketing Channels with Channable

(27:25) Creating a Product Ecosystem

(32:23) Unlocking Repeat Business Through Product Upgrades

(36:14) Reducing Costs and Improving Quality: The Vietnam Shift

(46:54) Cash Flow and Profitability in E-Commerce

(56:21) Transform Your Subscription Business with Loop

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Connect With Brett: 

• LinkedIn: https://www.linkedin.com/in/thebrettcurry/ 
• YouTube: https://www.youtube.com/@omgcommerce 
• Website: https://www.omgcommerce.com/ 
• Request a Free Strategy Session: https://www.omgcommerce.com/contact 

Relevant Links:

• Connor’sLinkedIn: https://www.linkedin.com/in/connor-crook-bb82b110
• Diamondback Website: https://toolbelts.com/
• Special Offer | Channable (Mention Ecommerce Evolution): https://www.channable.com/
• Special Offer | Loop (Mention Ecommerce Evolution): https://www.loopwork.co/

Transcription:

Connor Crook:

Our decision was early on to make our product as open source or open as you want. Now you could use my competitor's pouches on my belt. You could use my pouches on a competitor's belt because we just wanted to get people into the system.

Brett Curry:

Hey, thanks again for tuning in. This episode's brought to you by OMG Commerce. That's my agency. Hey, we're specialists at creating omni-channel growth for brands profitably. Now, the greatest brands we know are no longer just D two C. Yes, they're masters of D two C, but they're also growing and scaling on marketplaces and in retail stores. And we understand the complexities of how to grow in all of those channels from a campaign strategy, a creative strategy, and a measurement strategy. In fact, we recently won a Google Agency Excellence Award for helping Arctic coolers grow their retail sales in Walmart using YouTube. We've helped add almost eight figures in growth on Amazon for brands, and we've even helped a brand go from nine to 10 figures. And so we want to help you grow. So if you're not satisfied with your growth in any of those channels or you're looking to unlock new growth, we should probably chat.

Visit us@omgcommerce.com, click that let's Talk button. We love to schedule a strategy session with you. With that back to the show. Well, hello and welcome to another edition of the E-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today I'm so excited about this topic and about our guest. You're going to get to hear directly from a successful eight figure D two C store owner and CEO and so many valuable lessons here as we look at a couple of really cool topics, open source product development, building product platforms for continued growth. We're going to look at some accounting and finance lessons and much, much more. And so my guest is Connor Crook. He's the CEO of Diamondback Tools. If you are handy or you like to build on the side, you've probably heard of Diamondback Tools, you've probably seen them online. They're fantastic. It's a fantastic product. Members of my family use this product and rave about it, and so can't wait to dive in and unpack lots of lessons from Diamondback tools and their growth. So with that, Connor, welcome to the show, man, and appreciate you coming on. And how's it going?

Connor Crook:

Thanks. Things are going well. It's a little cloudy today, which I always prefer the sunshine, but things are going well. Things are going really well with the company. We're ramping up for the fourth quarter and getting excited for the holiday season.

Brett Curry:

Yeah, man, it's just been so fun. And full disclosure, Connor and Dieback tools, they are in OMG clients will get an inside look at their business, helping them grow on Google and YouTube and Amazon and other areas. But man, just watching you guys grow and watching what you're doing, it's been very, very impressive. A lot of lessons I want to unpack here. You guys lowered your CACs by 70% not too long ago and improved quality. We'll dig into that a little bit. You've taken this mindset of almost like Apple, where like, Hey, if we can get someone into our ecosystem and we can sell them all kinds of products, and once they're in our ecosystem, it's kind of hard for them to leave and start buying competitive products. We're going to dive into that and talk about accounting and finance lessons and lots of fun stuff. But I want to start with first this little nugget, Connor, you were a trial attorney, and so you were litigating, I think you said you were in the courtroom multiple days a week. How did you go from that to starting and leading and growing one of the top tool belt companies online? How did that happen?

Connor Crook:

Well, it's a twisty turning story. It starts with, I've always been a little bit connected to construction. My dad had a construction company. I worked there growing up. The room that I'm sitting in right now, I actually built this room as an addition on the house by myself. Impressive, impressive. Well, not completely. I had a big polish guy who helped me lift some windows and my dad actually came along to help me put on some roof rafters. So tied into the construction business all my life. And when I was building this room that I'm sitting in, I was contacted by an old friend about buying a tool belt company, which is actually our largest competitor now that I'm at Diamondback. And that kind of got me down the rabbit hole of like, Hey, this is kind of interesting. I'd always, I'd never been comfortable as an attorney.

It wasn't something I really enjoyed at all. So I was looking for a way out. And so the opportunity to be involved with buying an interesting business in a field that I knew a little bit about was appealing. That original deal never came to fruition, but along the way, learned a lot about premium tool belts and found out about this little company called Diamondback, which oddly enough went up for sale about six months later and we jumped on it. And all of a sudden, exactly nine years ago, I mean nine years ago, in four weeks, I think we closed on buying this little tool belt company based in Alaska. I'd never run a company before. I didn't know anything about marketing, product development, nothing. My original partner had been with a big tool company for 20 years or a couple of them. So that gave me a little bit of comfort. Got into it. We got some other projects going on so that my original partner was working on those. He also had another business he was working in, and eventually I found Instagram became sort of Insta-famous and ended up with the reins of a toolbox company and bought out my partner a year or so later. And here I am, as I said, the apple doesn't fall too far for the tree. I grew up working construction and now on a toolbox company with a detour of being a lawyer along the way.

Brett Curry:

And hey, man, valuable lessons. We all come from some background that gives us unique insights into a business. My background is marketing, which really helped me. I wish I had had more legal experience. That'd be super valuable, especially as we're looking at m and a and things like that. So I'm sure that helped in your journey of buying the business. But yeah, super cool to see where you guys are now. And so let's talk a little bit about, you mentioned Insta Famous, so I want to talk about building a platform with your products and open source product developments. We'll talk about that in a minute. But first, how'd you become Insta famous, and what was that all about and how did that help kind of the launch or the growth of Diamondback?

Connor Crook:

Sure. I was doing some writing the other day, and I think one thing I will say time and time again is again, the key to success is not hard work. It's not brilliance, it's absolute luck. There are a lot of people who are smart. There are a lot of people who work hard, but unless you're lucky, you're never going to be successful. I had the lucky serendipity, coincidence, whatever that about the time I got into Diamondback and started running. It was really a time, Instagram was still about building community rather than its modern iteration. Again, this was nine years ago, and the community around the trades was really nascent. You had guys spread around the country and the world who were starting to share pictures of their work, share techniques, talk about different tools, and these are guys who generally, it's funny, a lot of people think that construction workers or carpenters are this silent type.

They're not. They're just on job sites all the time where there's a lot of noise. If you get 'em off the job sites, you can't shut 'em off. And so I started commenting on people's work. I knew enough to be dangerous from my background in construction and say, Hey, that's really cool how you're doing that set of stairs. I never thought about doing that. I'd never seen that, and started making friends. Just started commenting on people's stuff, started to send dms, found out who some of the more important influencers were, and at this time they were still really small, so they were happy to work with a little small brand. Having a couple beers with these guys at trade shows never hurts and really just became a part of the community and friends with a lot of these guys. And that allowed us to, people watch my stories. After about a year, I started letting on that. Yeah, I'm actually a lawyer and I know some things about running a business that I've learned the hard way. And so we actually had our own podcast for a while that people were listening to. They were following us on Instagram. We were trying to make as much engaging content as we could. And it became strange when I would go to a trade show and people wanted to take selfies with me. That was weird.

Brett Curry:

Wait a minute. Yeah, it's awesome, man. But that happens, right? You become internet famous or famous in your category. I remember hearing this guy, he used to say they're the famous people that nobody knows, right? You're famous at a convention, not airport famous. Right, exactly. And that's kind of probably where most of us want to be. We'd love to be well known in our industry, but let me walk through,

Connor Crook:

I did Avega come up to me at the airport after a trade show once,

Brett Curry:

So that was kind a blending

Connor Crook:

Of the two.

Brett Curry:

Yeah, that's awesome. But I love that strategy where you're like, Hey, let me just be a part of this community. Let me comment and form relationships with top builders. One, because I kind of want to and because this is cool, but two, it's going to allow me to have relationships in the industry, get feedback on my product, find influencers, maybe kind of opens all kinds of doors and things like that. And so I think it's a good reminder that one, every business, whether it's online, offline, or a mix, it's still relationships are at a core of that, especially as you're launching content and storytelling is at a core of that as well. And so how then did you translate those connections into promotional aspects? So how did that help you in the early days of selling that back tool products? And then I want to talk about the product development piece in a second as well.

Connor Crook:

Yeah, so on the promotional side, we developed an ambassador, a formal ambassador program about a year ago. For the first six or seven years, we didn't pay for anybody to do anything. I'd send free product to guys. Once I saw that they were creating good content around my product, I'd send 'em, Hey, we got new stuff. You want to check out the new stuff? And we just built this very friendly relationships, and I always knew that the big boys, the big tool companies could pay for spots. And so as the influencers got larger, I wouldn't be as prominent for them. But the dirty little secret is don't look at what the influencers is talking about. Look at what they're using. And I think that's across a lot of different industries. They might talk about, Hey, I got this great new baseball mi, but if they only use it for a week and then they don't use it anymore, that should tell you something.

It also started to help with, as you were saying, with the product development, starting to understand better the needs of the customer. My experience in construction was a very small construction company, a small town, and we kind of used what we had and got by and were creative. The community that I found on Instagram was really dedicated to the trades. It was a whole different mindset from, yeah, I'm working construction right now until I can move somewhere else or move on to something else. These were guys were passionate about what they did and were really proud of it.

I came to it with the attitude of somewhat, the lawyer thing kind of worked in this way. I'm used to in practicing law in a fairly small town where I live now, when I walk into a men's shop, oh, Ms. Crook, what you want? I got some new ties for you. I got some new ties you might like to check out. I remember that last suit you bought. Would you like to see this one? You're used to that level of service. A carpenter is a guy. The ones that I really keyed in with were guys who, you're in high school, you're a smart kid, but maybe you don't do well in the classroom and your teacher says, you're never going to go anywhere. You should be a carpenter. And the guy says, okay. And then he becomes a carpenter. He starts building these amazing things and somebody says, wow, you're so brilliant. You should have gone to college. And it's like, you can't win for losing. And I just thought if we show the kind of respect that white collar workers get to guys who were literally build the world around us, build our houses, our schools, our libraries, what'll happen, and we found it created amazing brand loyalty. Just meet people where they are, find out what their needs are, find out what their pain points are, and then figure out ways to solve those problems. Because most of the big companies you know of, they're making toys,

Whether it's a cooler, whether it's something for camping, whether it's something for athletics, whatever. These are for the most of us, these are toys. Yep, yep. I'm making the product that literally can add years to your career by helping you work faster and better. And if you really love your career, that's going to be meaningful to you.

Brett Curry:

Yeah, yeah, for sure. Yeah, it's really great, man. And I think actually in some ways the tides are turning a little bit on that you should become, you're not smart enough to do white collar, do blue collar. I've got teens, and so I hang out with teens a decent amount, and I encourage kids like, man, consider the trades. Consider becoming a blue collar millionaire because that's possible. And AI is coming for basically everything else, but it's going to be a while I think on the trades. And so interesting how that's shifting. But would love to then talk about, okay, this idea of open source product development is and how has that shaped your product development and what specific, give us some examples of what products have you developed because of the open source nature of your development cycle?

Connor Crook:

Yeah, so my favorite story around that is always our Nico pouch. So when I bought Diamondback, most of the products were geared around cs. They had one product that was for electricians that wasn't very good. And so being on social media, being on Instagram, I started getting messages from guys who are electricians. It was like, Hey, I've heard about these new tool belts. People are talking about 'em. What do you have for electricians? We'd show 'em. They'd say, eh, no. So I just, what do you want? And I started getting ideas. People would say, well, I want a tool belt that I want to pouch that'll hold these tools and not sag and this and that and the other, and various things around about this time I got this massive industrial sewing machine that ran on three phase power, which thankfully I didn't kill myself trying to wire my shop, run this sewing machine, and I learned how to sew, not well, but enough.

And so for a couple of weeks I would have my daily store. I did Instagram stores every day, multiple posts and stories every day. And I said, Hey, I just sewed this thing up. What do you guys think? And they said, well, where does this tool fit? And the next day I do a set of stories with the screwdrivers and the pliers. I bought all these tools. They said, oh no, I don't think that's going to work because whatever. And we just kept going back and forth. And finally I noticed these two guys, Adam and Andrew, I'll use their real names rather than their handles. And I said, these guys are commenting every day I should reach out to these guys. I had not talked to Adam in a while. I was texting Andrew about cooking within the last week, and this whole development was six years ago.

And I was just like, okay, these guys know what they're doing. And so we would keep doing sort of the lab stuff, but then there was also, Hey, I'm just going to say let's set up a video call on Instagram and let's go through some stuff. Let's talk through it in depth. And we started doing that. And so when we finally got down to a design, I had my manufacturer makeup, three or four of them send 'em to these two guys and I don't know if we send 'em to anybody else. And they then started using their influence of talking about the product on their page. And what they were able to say was not just, Hey, I got this new tool bag, I got this new pouch. And the guy over at Diamond that actually called me and talked to me and it's really, we went deep to make this thing.

It's awesome. That gave the product a real cache, but it also gave us a Diamondback, a real cache and some real props for being the kind of company that would do that. And so even both of them used it for a while. They made a couple tweaks. When we first released it, we were still small, we bought a couple hundred of the things. They were gone in a week and BA gone because people are like, I want the ones that Adam and Andrew Design. And then it sort of snowballed from there. A month or two later, Adam calls me up and he is like, Hey dude, this thing's great, but I tell you what, sometimes I don't need all that stuff. I actually drew this out for you. Can you just make this?

Speaker 3:

Wow.

Connor Crook:

And so that became another version and it went through the same cycle. And so we were able to do that with a number of things. Just a quick one. Our vest was a real sort of a game changing product in the market. I sewed up one and I just started going to trade shows and every trade show, I'd walk around with this vest and just like, Hey man, try this on. You're a short guy. You're a tall guy, you're a big guy. You're a small guy. Try this thing on. Try this thing on. What do you think? Hey, is that guy with the vest again? But people believed in the product because of that and it was better.

Brett Curry:

It's so good, man. I think sometimes we get the idea whether we're a service-based company like mine, like OMG or we're a product company that we want to design and build and tinker in isolation. We get in our office and we're banging out ideas all independent of the customer and certainly some ideas can come that way, but man, you really strike gold and really create magic when you are building and iterating and getting feedback and working that feedback into the product and really making it tailor made for your audience. And what a cool thing where you were able to design for some influencers too, then led to not only better product designs, but immediate sales as well. And so that totally makes sense. As you were building, how do you make that a part of what you're doing because now you're an eight figure brand. How do you make this an ongoing part of product development at your size and scale now?

Connor Crook:

Yeah, that was always scaling leads to a lot of difficulties of how there's a lot of cool things you can do when you're small. Then as you get bigger, become harder. We had a competitor beat us to the punch on a product that we were working on Instagram, and it was just like, okay, they were bigger, they were faster, they had more money, and they did what we were already working on. So since then it's been a little bit more closed. It's still working with customers because we are on social all the time. Our stable of friends and family has gotten bigger and bigger and bigger. And you really start to categorize the guys who are out in the world. There are guys who can give you the best product feedback in the world, but world, they're kind of dorky, they're not good on camera, they're whatever. And it's like, okay, that guy's not going to be my influencer, but man, he knows his stuff. Then there's an

Brett Curry:

Advisory board member of sorts, but not going to be an influencer.

Connor Crook:

Then you have this massive influencer who you never going to be able to pay for a spotlight product, but he's going to use it because he loves it. And then there are all these iterations in between. They're this nano influencers who make great content and they get really excited when you promote them by reposting their content on your site, so they're going to keep making great content for you. And then there are the guys who are hustlers who want to make money off this whole thing and they're like, Hey man, you give me a coupon code and I'm going to drive this thing. So as you have to constantly be out there in that space, finding the right people who are going to meet these different, and obviously there's overlap and different people can do different things for you, but right now we know, Hey man, we got to make a new product for electricians.

I think we need something kind of in this space. Alright, call this dude, this dude and this dude get their ideas and we'll start working from there. It was a continuum from early days. I had some ideas and I'd set up some really, it was actually really fun. We'd set up an live Instagram chat, a closed chat, and get five or six guys in there who might be all over the United States and Canada. They maybe met a couple times and it sort of becomes in like, Hey man, what have you been up to? Kind of thing. But it was also, Hey, Connor's got some cool ideas. Let's talk about it. Let's hash it out. So as a continuum, as you sort of have to get more closed and not really talk about things, and then there's this whole, when do you show a snake peek? When do you start showing the product, how you've got to build hype around a product before you release it, but you don't want to be too early so that you get jumped.

Brett Curry:

Any insights on that because that's a great point, and as you were talking, I see some similarities to Google. Google's always been open source and let's test and iterate and get feedback from customers and improve, improve, improve, start with an MVP, improve from there. But they also know that as they get bigger, there's lawsuits and there's competitors, and so some things are very, very secretive on other things they're open source on. So totally get that. Any insights then on how you do, how and when you do a sneak peek on a product where it's not too early where you get ripped off or a competitor comes out first? Yeah, any guidance there?

Connor Crook:

Yeah, it really has developed as we have learned. We're going to talk a little bit about how we saved a bunch of money on CACs down the road, but basically now we have a much better idea of about calendar and our product development lead time. I used to get really excited about products and start talking about 'em, and then it was like, wait a minute, what do you mean we can't have this for six months? You have to know your calendar so that you can start dropping things in there and not jump the gun and say, Hey, we're going to have this in two months when it really is going to be a lot longer than that. But we will talk a little bit about it at one point conceptually, Hey, we've got this cool new designs coming out, we're improving this, we're improving that.

It really comes down to, with our manufacturing right now, it's about a three to four month lead time on manufacturing a product. We know that that's after it's fully designed. So after we get the design, we can start talking about, Hey, we're working on this, that, or the other, and then we can maybe start dropping in a few quick glances at it. It's almost like that old story about the blind men and the elephant. It's like I can show you a little piece of what I'm working on, but maybe not the whole thing. Oh, here's a cool new material that we're using. Here's a cool new whatever that we're using. We're adding this cool new technology, and then eventually we have to get 'em out to influencers so that we can get some B roll and some copy to prepare for our marketing. So we get that out and we're depending on the product, Hey, you can show this.

You can't show this. Maybe you can wear this, but don't talk about it. And then we have two big product releases during the year. One is before Black Friday, and then one is before a big trade show that we do in March. The end of March, we have another trade show that's in February though, so if that February show, we'll usually have the product, even if it's not being released for a month yet, then we're going to start building more hype around it, and then people are going to get their hands on it. That's another opportunity for our influencer friends to come around and start taking videos of it and building the hike so that by the time we're in a show in March with thousands of our end user customers, people are coming up, dude, I've already seen that new belt. You've got that new pouch you've got. So you have to understand the timing for how long it takes to build a product and know I can release this much and nobody can beat me to it.

Brett Curry:

Yep, yep. Totally makes sense. Know your calendar, know your product lifecycle or lead time, all of that. It totally makes sense. This episode is brought to you by ChatAble, the number one feed management and advertising platform for savvy e-commerce marketers. Over 11,000 brands and agencies, including OMG commerce, use channel's, powerful automation engine to sanitize, optimize and advertise product data across the world's biggest channels like Google, Amazon, and many more. So save money, save time by switching to channel's, full service platform and get world-class support. Plus month-to-month pricing as an e-commerce evolution, listener channel is giving you a free feed audit for a channel of your choice, learn how you can improve your feed score and increase the visibility of products. Sign up for free@chatable.com. Mention e-commerce evolution to get started, no strings attached well's. A quick comment on, I love your approach here on the open source product development side.

You're just creating products that people love and the feedback is amazing. The reviews are amazing, and as the agency helping you grow on Google, YouTube, Amazon, and organic, unpaid and stuff like that, it makes our life so much easier when this is an amazing product. And then when you have this influencer content that you can work into the marketing, it feeds the machine and it's really what's at the core of your growth. And so love that you guys are doing that. Let's talk before we get into the CAC savings. I think that's super fun as well. I think this open product source or open product development leads itself into how are you building platforms, what are you thinking about platforms? And we kind of compare it as we're prepping compared this to Apple, right? Apple maybe hasn't had, just as a quick side note, they may have maybe the biggest innovations lately, but iPhone's still solid. I love my MacBook. Once I'm in the system, it's pretty hard to do something else. You're kind of trying to do that with tool belts and your systems as well. So can you explain that a little bit?

Connor Crook:

Sure. Well, the first thing you remember is that Apple did that for its first 20 or so years of existence and almost went bankrupt.

Then it recalibrated started over again with the iPhone and exploded. And of a person of my age. I remember the early days of Apple's closed source versus what Microsoft was doing. I remember Sony Beta versus VHS, and those were some real conversations and ideas that we struggled with early on. Do we want to be compatible with other brands or do we want to be like, if you're Diamondback, you've got to be Diamondback. And so our decision was early on to make our product as open source or open as you want, however you want to describe it, so that you could use my competitor's pouches on my belt. You could use my pouches on a competitor's belt. The suspenders would work cross platforms and everything because we just wanted to get people into the system.

Speaker 3:

Totally

Brett Curry:

Makes sense.

Connor Crook:

We had a major competitor who was, they're still I think probably at least twice our size, but we had this major entrenched competitor. We just had to get people to get a taste, and you're talking about a blue collar guy, a carpenter, and I'm asking him to buy at that time, probably a three 50 tool belt, which now more like four 50, right? Let's get, and people would say, well, if I want to get into down that, what should I buy first? And so it was like, okay, try the belt. That's the real heart and soul of this ergonomic design. And so we started getting more and more people into the system. And so then two years ago, we revamped everything. We revamped the belt, we revamped our vest. Talk about platforms too. We really think in that apple mindset of you can buy a belt and put our pouches on it, maybe as suspenders, or you can buy a vest and you can put all the pouches and different things on it.

And we also offer some bags and they also have compatibility so that you can sort of modularize them. And so that was all this idea of here's the software that I use on my MacBook, and I put the same thing on my phone or whatever. So trying to create that brand language across all the things. And so about two years ago we started this process of redoing the belt, redoing the suspenders, redoing the pouches, and we're doing a vest for next year. And we've been able to now at a certain distance, what is the brand language that we want rather than me doing a lot of it working with different outside manufacturers and outside different designers. Now that we have our own design team that's focused on this, we can create a unified brand that's everything from the appearance of our website to the functionality of our product, which sounds a little weird, but trust me, for instance, there's the diagonal on our, we have a diagonal on our logo. If you look at my belt, the way that there's certain components of it, the same angle is where the different materials come together and it's actually functional. So now we're to a point where we think we're large enough, Hey, you know what? Let's kind of start closing the system. So if you use my newest belt, most of my competitors pouches don't fit on it, and we're moving more in that direction so that we are really creating a full ecosystem around down and back and the brand.

Brett Curry:

Love that. Have you gotten any feedback positive or negative on that, or is that not really an issue? I don't think it's really been much of

Connor Crook:

An issue now because people, the brand has become strong enough that if you're going to go buy Diamondback tool Belt, which means four or five different components, belt touches everything, you kind of want it all to be the same really focus. There is a look to it that is beside the functionality that it all really looks good together.

Brett Curry:

Totally. Totally. And it makes sense, man. We're as creatures, we like to collect. We like some things to be uniform. And I'm sure in the contractor world that's especially true. And so yeah, it's super, super smart. And any insights on how this has impacted repeat purchases, LTV, things like that? And feel free to speak in generalities, but as you've done this, what has that done to your repeat business and to the business overall?

Speaker 3:

Yeah,

Connor Crook:

We've talked about Apple a bit, and I think I told you this story earlier off camera that we were at that trade show I mentioned in the February one, about two years ago when we were first rolling out this new belt, and it was a real mindblower when some people came up and some dude I'd never got before. He's like, Hey man, I got two Diamondback tool belts. They're all tricked out. What you got this's new? He's like, yeah, basically I want more.

And I was like, well, we got this new belt. And I showed it to him and he is like, holy crap, I got to get that now. And this was a huge paradigm shift for us because for years it was trying to get people to go from a cheap product to a real premium product and say, Hey dude, just spend the money. This thing will last you forever. Thank me for it later to somebody saying, wow, I've already spent a ton of money on this product, but now I actually like it so much that if you have something new and better, I want to

Speaker 3:

Upgrade.

Connor Crook:

And once we had hit that upgrade point, that was when we said, wow, this is huge. We've now unlocked this thing such that we make a great product. And then we hear the, I won't say complaints, but I'll say people saying, wow, I wish it did this, I wish it did that. And what people also don't realize, a tool belt does need to change over time

Because the tool companies are constantly making new tools. Tools. And so we have to, it's like you can throw everything in a bucket and carry it around, or you can throw it into an organized system and the organized system has to be made. Everybody's bought one of those drawer organizers that doesn't do you any good because your stuff doesn't fit in it. So to make those upgrades that people had asked for and see the changes in the tools that the best people are using, we were able to hit this upgrade level. And that then takes the guy who said, oh, I've already bought two year tool belts. I've spent a thousand dollars with you to now like, oh wow, I'm going to replace both of those tool belts, so I'm going to spend another thousand dollars with you. And so you can grow your revenue in a number of ways. You can grow your geographic base, you can grow your product base, your sort of product lines, but man, if you can just continue to improve the same product you got, that's probably the easiest way to build your lifetime value with your customer.

Brett Curry:

Totally makes sense. And I experienced, I think you mentioned cameras a minute ago. I'm kind into photography and I've got several friends that are too. And then of course we work with videographers and stuff for YouTube ads and whatnot. And there's a guy locally who I've worked with forever and his name's Nick. And every time I see him, he's like, oh, I got a new camera. I got this new thing, I got this new piece. I'm like, there's no way you actually needed that, but you like it, right? And I'm sure it is creating some improvement. And actually what's funny is Nick is editing this video, so I love you Nick, but that's just the way it works. This is our craft, and if we care about this, we want to upgrade and we want to get the new stuff, I want to see if we can push the envelope.

I want to see if we can improve and whatnot. And I think I see this a lot too, again, with kind of videographers or photographers, they also kind of gravitate towards a platform. Are you a cannon type of photographer? Are you into the Sony platform? Are you a Nikon person? I think that's more rare, but yeah, it just all plays together. And man, if you can continually innovate and extend the line, you can grow with your existing base. And that is a beautiful thing. Well, we've kept the people waiting long enough. Connor, let's talk about how did you drop your CACs by 70% and improve quality? Walk us through that. Alright, Brett, we're going tread very carefully into

Connor Crook:

Some very hot political waters here.

Brett Curry:

Yeah, anything we say related to this is maybe going to change 15 times in the next couple of months. Who knows?

Connor Crook:

Yeah, so the company we were scaling, and I knew all along that the problem I had with Diamondback was that I had a luxury product that had a luxury cost. And what I mean by that is, look, a Louis Vuitton bag doesn't cost any more than the bag to make than the bag you buy at Walmart. It's the same thing. It's just that one of them has a different logo on it. Unfortunately with my product versus the product you can buy at the big box store is it really does cost. The price is four times as much and the cost is four times as much because we were making it in the United States, which was a huge brand color for us, made in the usa, the term made in USA is actually a legal term and there's certain requirements around it. And the FTC came after us and said, Hey, you're not made in USA because you're using too much foreign content. And they asked us to prove where every material that we used in the product came from and whether or not we had the right percentage and blah, blah, blah, blah, blah. And I mean we're talking 10, 15% was of the cost, labor materials, everything was coming from outside the United States. And they said that wasn't good enough.

Then when we asked what would be good enough, they wouldn't give us an accurate, got to be this percent. And we said this is ridiculous. And so we made a flying leap, which was we can go to Asia and we can make this product a lot less expensively and I'm sure we can make it just as good. And the reason we're getting in trouble here is because we're bringing materials in from Asia that aren't sourced from the United States because we don't make them here. The cut and sew industry in the United States is basically the military and some small brands and just the whole base is just not there. And besides the people who are willing to do that kind of work, oddly enough, the people who are doing all work from us were either Vietnamese or Mexican, depending upon which American factory we had in the United States.

So we started this long process of moving to Vietnam and it quickly became apparent that we could drop CACs 60, 70% by moving to Vietnam. And then the book of materials that we could use of just like fabrics went from like, oh, you can pick one of these three, so you can pick one of this 3000 when it comes to zippers, buttons, buckles, all this stuff. Here's a little book that's the size of your kid's high school notebook, or here's a binder set like the encyclopedia you had as a kid. I mean it was radically different. Oh, you don't like any of the fabrics that we have now? Well, tell us what you want and we'll make it for you. You got a custom color, no problem. How much do you want? So we were actually able to go out and find all this great stuff and we found there's some stuff that it's proprietary about some of these large companies. We can say, Hey, we want something like this, but we want it better. We want it thicker, stronger, whatever. And they say, okay, fine. We can figure out how to do that. So it took us about two years to make the shift just from a cashflow perspective, because when you're making stuff in the United States, it's like every week you've got stuff coming in, you're paying for it every week versus in Asia, and we were in Vietnam, we did make a very strong, I was like, I'm not working with China, which I guess was a good thing politically

Brett Curry:

That worked in your favor for sure.

Connor Crook:

And we also found that China, it's like a red flag for people. They're like, I don't care where he goes as long. This is not China. Like, dude, we're going to Vietnam. They're like great people and they are the nicest people in the world ever have opportunity to go over there to visit. And so it took a long time and it took a change of our story. But the thing that kept rattling around in my brain, there's a book called Blue Ocean Strategy, I think I had it home and I took it back to the office and it's all about when you make a product that's got too many bells and whistles, when you make a product that has too many bells and whistles, the value proposition doesn't align with your customer. We kept adding features to the product like, oh, you can put this product in, you can put this drill bit here, you do this. But we never could get all the features that people wanted because it was too expensive. But what we realized was the blocking feature was that made in the USA label. So when we took that away, we were able to add all these other features that people wanted and able to keep the price the same, turn the company from basically just cash pouring out the door. And literally we were selling all the inventory down to try to keep the company going while we made this transition because we just could not scale with a product that costs that much while also paying OMG to run our ads. And that does not mean we're more

Brett Curry:

Expensive than other agencies. You want to

Connor Crook:

Call that? No, it doesn't. No. What it does mean, Brett, is that you can grow a certain level by just organic Instagram power, just dedication of being on Instagram all day every day. And you can get to a certain level, but once you have to start running ad campaigns and reaching people who aren't on Instagram,

Brett Curry:

Man, it

Connor Crook:

Takes money.

Brett Curry:

It takes money, it does. And that requires cashflow. Not just profits, not just sales, but cashflow.

Connor Crook:

And so we got to a point where we were able to make a product that is definitively better. It has a much better feature set, the quality of construction. This is no slight to the folks who are making products in the United States and the manufacturers we had, we had some wonderful manufacturing partners in the United States, but the first time we got stuff from Vietnam, we got a letter from this third party inspector saying it all failed. And we were like, oh my God, what have we done? And they started sending us pictures of the failures and we just started rolling on the floor laughing. We were like, are you kidding? This looks better than anything we've ever had. It's just the level of perfectionism from those manufacturers and they had better machines, bigger, stronger machines, more experienced workers. That's what they do day in and day out. And man, I went over there and visited those factories and man, they are amazing, the efficiency, just attention to detail. And so we were just like, failure, that thing looks better than anything. Just put that thing on a boat and get it over here, man.

So it's a better product as far as the feature set, better product in terms of the construction, better product because of the materials that we're able to source. And our goal was to do that for our customer and keep the price the same. And that's what we did. At the same time, we were able to take the products we had been making and start to create this bifurcation system that we have a better and best line. And our best line is light years ahead of anything else out there in the market. And our better is very comparable to our closest competitor in terms of the look, feel, everything. It was started by a guy who left the employment of Diamondback before I owned Diamondback. There's a long weird story about that, but I'm able to make a product just the same as theirs. But you know what? It's less expensive. So we've been talking a lot about Apple. They're not in main in Wisconsin totally at some point in time. And also for Diamondback, half of our business is global. In the US is important. Manufacturing jobs in America, American jobs, I'm from South Carolina, man, nobody wants those jobs working in those cotton mills

Brett Curry:

Jobs. Not the same kind. Those are not the jobs.

Connor Crook:

Those jobs left South Carolina when I was a kid. And those same families are now making BMWs. Lemme tell you which one pays better.

Brett Curry:

Yeah, yeah, for sure, for sure. No, it totally makes sense, man. I love this because this is one of those things where as we look at how as a D two C brand or an omnichannel brand, how do you improve profits? How do you improve cashflow? How do you convert and cash to sales, sales to cash, cash, inver cycle, all that. It really does start with CACs. You've got to get CACs at a certain point. You got to continually be optimizing and maximizing that. And when your CACs are at, I'm just going to make up a number, this is not reflective of yours, but if your CACs are at 20% of your retail price versus 50% of your retail price, that's a completely different business. And so being able to reduce that is huge, especially while improving quality and consistency and innovation and all those things. And so goes to you guys on that.

Connor Crook:

It opens up so many more opportunities. And a lot of people think, well, Connie, you're just making money off of this hands and fist because half of a bunch of your sales are online. Well, I tell people all the time, there's Amazon, there's online, there's dealers, there's wholesalers that trickle down to dealers. You're giving up certain things with each one of those. There are a lot of costs to go into each one of those hundred percent. You're doing FBA, Amazon, you're paying Amazon a ton of money, managing a lot of your stuff. If I sell to a wholesaler, I'm going to give them a lot of margin, but they're also going to have to go out and find dealers for me and do all it's partnership. If I'm selling online, I've got to get customers there because people don't just walk down the street and stumble across a website. I have to get eyes to that website, which costs a lot of money.

Brett Curry:

You're paying Google, you're paying YouTube, you're paying me, you're paying. It's all expensive. So you got to factor that in. And if you don't have the right margins, you are immediately behind. And so love that kind of, and we're getting a little bit tight on time. It's probably just a couple more topics here. I know you're passionate about financial success and even I think spoke at was University of Virginia maybe recently talking about this? And it's been one of the trends in DC eCom that I've loved where there was a period of time early pandemic and mid pandemic where people were just like, grow, grow, grow. Who cares? We'll figure out money later. So now everybody's obsessing over, let's create profitable growth and let's treat this a real business and understand that. And so that's where we want to see get insights and all of our clients is this profitable growth is, it's not profitable growth, things like that. But what financial lessons have you learned? What insights can you share with us?

Connor Crook:

Yeah, I mean I was definitely in that same era. We were hitting our biggest growth during COVID. COVID was a fantastic time for us financially. We just grew and grew and grew and grew. And yeah, our idea was we'll figure out the cost play. Well, we figured it out a little bit too late, but not too late. We were able to correct things. But yeah, for me, I don't have a finance background. I took one accounting class in community college 30, 25 years ago, something like that. I know enough to be dangerous. But the main lesson that I learned was don't give too much authority to any one person in your organization. I had a COO for a while, and that was a total disaster. I tried to kind of say, okay, well he's got this under control. I'm going to go do some other stuff.

You've really got to get down and understand the financial aspects of your business. And what I told those folks in this class was that comes down to understanding cash. Cash is king. You've heard it before. Guess what? No matter what you try to do to get around that, no matter how smart you think you're cash is still king. So for me, I have a daily process. My daily process is I've got this wonderful tool, my cell phone, and I can see how much I sold online yesterday. I know how much I sold on Amazon yesterday. I know how many deal orders I got yesterday. I know the cash cycle for each one of those. I that if I sell stuff on Friday on Shopify, I don't see that money till Tuesday. I know when I pull money from PayPal, how long it takes to get there.

So I know all that. I know how much money I have in my bank account. I know where all my credit cards limits are. I know where all my lots of credit are. I know all of those things on a daily basis. I know those things. One of the first things I do in the mornings check, all of those things. When I get to my office in the morning, I sit down with my staff accountant who tells me all of those things and I happily say, you know what, Sheila? I was off by about 5% of the number that you just told me was what was our available cash. There's always some things that she knows that I don't know. Sometimes I know some things she doesn't know. But then knowing that, and then we can go through the AR report together, we can go through the AP report together, and then she has old school paper calendar and we look at, okay, we got to pay this bill this week, this week, this week, this week. We know monthly run rates and all of that. Now I know all of those things because I had to learn those things when the company was about to go under.

Speaker 3:

Yeah, yeah.

Connor Crook:

We are now in a very healthy financial position, but I still look at those things every day.

Brett Curry:

Got

Connor Crook:

You. And from there, when the month closes, it's the 10th of the month right now. 10th of September. We're recording this. I don't have my financials for my outside accounting firm yet, but I can tell you what they're going to look like. Yeah. Because I can look at the trends. I know how much percentage of revenue I spend on marketing. I know what my product margins are, CACs, I can just go through and I can look on my different revenue cycles, say, this is how much money I made, and then I can just trickle down from there and I can figure it out. It comes in, there's some variances, there's some things that pop up month to month, but I know that and because I know it that well, that means I can build a forecast.

Speaker 3:

Yeah,

Connor Crook:

Monthly accounting. It's nice, but it's looking back, if you're the owner of the company ceo, his,

Brett Curry:

It's what happened.

Connor Crook:

Yeah. You got to be looking forward. And your accountant cannot do that. Your accountant doesn't have the skillset to do that, and they don't know what new products you got coming out. They don't know your product release schedule. So you need to know those things, but you got to build your own forecast. It takes a few months of revenue so that you can start to see those trends, what's related to what. But if you can do that and then build your forecast every month when the books do close, you look back and say, where does that match up in my forecast? Where was I off? Hopefully you were off because you made more money than you thought you were going to. But that doesn't affect the percentages and the relationships between all those categories. And once you're to the point where you can start doing that, then you understand your business.

Brett Curry:

Yeah. It's so good, man. So good. Understanding the history, understanding all of those things you talked about. And there are profitable businesses that go out of business all the time. They're turning a profit on paper, but the cash conversion cycle is not healthy. They do not have the appropriate amounts of cash, and so they go out of business. And it's one of those things where in order to forecast properly, you've got to obsess over what's happening and what happened. And the best operators, I know their numbers like you were just talking about, we're teaching and training our team as best as it fits for particular clients. Let's know their numbers like they do. So that can help us influence those as well. And I compare it to people that I know that are really, really healthy and I try to be consistent with hitting the gym and running and watch what I eat and things like that I cheat to, but those things are pretty healthy. And the healthiest people I know they're using an Apple Watch or whoop or an AA ring and they're tracking their data, they're tracking their inputs, they've got a schedule, they hit their workouts on an ongoing basis. People that are unhealthy that dunno any of that, right? They're not looking at it. And so I think the same is true with your business. You've got to know the numbers and then opt Well,

Connor Crook:

A great place where you can come in to help on these things with a business is sometimes you overbuy inventory. Sometimes you've got a big inventory purchase coming up and it's like, okay, we need cash. And one of the things we've learned over the last few years is where those levers are. It's like, is there a holiday coming up? Sure. What is it? President's Day. Okay, we're having a President day sale baby. I don't care what the holiday is, but it's a reason to put on a sale and so we can generate some quick cash. And that's where you come in and you say, Hey, I got this great idea for a campaign. We can throw some cash at some ads, we can create some cash for you and a multiple of that cash spin. And it's like, okay, we smooth that out. Everything's good. And unfortunately people now so much expect Black Friday sales that October for an online company is a terrible month because nobody wants to buy in October. It's like, Hey, it's going on sale next month. Wait,

Brett Curry:

Let's just wait. Totally. Yeah.

Connor Crook:

So you have to start to learn that cycle of through the year of when people are buying, when they don't, and then you got to figure out, hey, let's make a new product to throw out there that time of year. Let's a sale going to be. How do we get eyes on our website in those slow times?

Brett Curry:

Right? Right. It's the Amazon developing prime day and what's historically the slowest month of the year, July. And then now they have a fall prime day in October like you're talking about. Yeah. What can you do for product release or some kind of special thing in those slow months to try to level that out? This has been brilliant. We are out of time I do want to leave just a minute though. For those that are watching or listing and they are handy and they're like, dang, these products sound amazing. Where can they check them? But then also, how can people follow you? I know you're starting to put out some content, you're doing this, you're a seasoned operator, you're crushing it. So how can they find your tool belts? How can they connect with you? Best way to find a tool belt is@toolbelts.com,

Connor Crook:

One of the founders of Diamond url. Moments of Brilliant early in the nineties to buy that URL. For me, probably the best way to reach out to me is on LinkedIn, Connor Crook. I think I'm one of the only Connor Crooks on LinkedIn. If you see Connor Crook and Diamondback, that's the best way to get ahold of me. And I check it all the time. I love LinkedIn, so I'm always happy to meet new people there and connect.

Brett Curry:

That's amazing, man. And then any sneak peeks of things that are coming in the future for Diamondback or for you as an e-comm influencer? Any teasers there? And totally okay if not.

Connor Crook:

No. The big things we have coming up, I mentioned the vast, we've got a big re-release on that next year, which we've been working on for years. Some really great new technology that we're putting into that. And then we've got some ideas to move into the B2B space, moving towards sales to large contracting firms instead of just the smaller firms and the individual, which will be open in another big sales channel for us. So

Brett Curry:

That's where we're headed. Check it all out. Diamondback tools tool bells.com, and Connor Crook on LinkedIn. Connor has been amazing, man. Thank you so much for the time and really, really enjoyed it.

Connor Crook:

Thanks, Brett, appreciate it.

Brett Curry:

Absolutely. And as always, thank you for tuning in. Let us know what you'd like to hear more of on the pod. You found this helpful, share it with somebody who would benefit from it as well. And with that, until next time, thank you for listening. I want to take a minute and tell you about Loop Subscriptions. Now. What if one platform transition could transform your subscription business overnight? Well, that's exactly what happened to longtime OMG Commerce client Nutri. They switched to Loop and grew subscription revenue from 4% of total revenue to 20% of total revenue. OC reduced subscription churn by 50%. Lumen achieved 12.6% additional revenue from the payment recovery feature alone. Unlike other platforms, loop includes dedicated success managers on Slack and costs about 40% less than the competition. Plus E-Commerce Evolution listeners get an additional 50% off the Pro plan that's nearly 70% in total savings compared to other subscription apps. So if you're ready to join almost 1100 brands who've made the switch to Loop, visit Loop work co to book your demo.

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