What would you do if you were a starving actor that just lost his last orange? Start a cookware Company of course.
Dave Young:
Welcome to The Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom-and-pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick in business partner Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.
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Dave Young:
Welcome back to The Empire Builders Podcast. Dave Young here alongside Stephen Semple and we’re talking empires. Empires, businesses that started from scratch and are now, well, as the title suggests, empires, kind of the whole idea. I saw that we were listed in some top lists in Canada as well, like top business podcasts and top reverse engineering podcasts. I thought that was a cool, that’s the list that I’d rather be on anyway.
Stephen Semple:
Well, we were higher ranked on that one, so there you go. I think it was number two or three on that, wasn’t it?
Dave Young:
It didn’t even know it was a thing.
Stephen Semple:
Yeah, pretty exciting.
Dave Young:
So today, you whispered in my ear that we’re talking about the HexClad Corporation.
Stephen Semple:
HexClad.
Dave Young:
These are the pots and pans. People with the, apparently according to ads that I’ve caught glimpses of are now the perfect pans. They think they’ve built a better mousetrap.
Stephen Semple:
Yeah, and it is interesting. If you take a look at them, if you’ve ever seen them, they actually have this pattern in them, and there’s now a bunch of knockoffs, of course. But the whole idea is with the raised surface of stainless steel, you can actually, the pan will brown, because a lot of nonstick pans don’t brown very well. So the whole idea is you can get a nice searing with them. And also the way it’s constructed, the nonstick surface is better protected.
Dave Young:
So you’re not going to scrape the Teflon right off the bottom of your pan with your eggs.
Stephen Semple:
It’ll withstand higher heat. You can put it in a 500-degree oven. So in many ways, one could argue with those things that that is a better nonstick pan.
Dave Young:
Sure. So who, what, when did this happen?
Stephen Semple:
So they were founded in December of 2016 by Danny Winer and Cole McCray. And boy, I’ll tell you very much a bootstrapped backyard business when they started. And in 2024, it’s estimated the business did 500 million in sales, have become $1 billion brand.
Dave Young:
How do you build Teflon pans, nonstick pans as a backyard kind of thing?
Stephen Semple:
Well, that’s what we’re going to learn here. Now, here’s the other interesting thing. They now do cookware and knives and accessories and all that other stuff, but they started basically with pots and pans and Danny’s first business was, he was an actor.
Dave Young:
Oh, okay. Well, that makes perfect sense.
Stephen Semple:
Doesn’t it?
Dave Young:
Sure.
Stephen Semple:
So Danny started off as an actor. That was his goal, and he moved to LA, of course, lots of auditions. And there’s a certain point when you’re doing that, one of the things that starts to creep in is that sense of that feeling of failure. So he’s struggling a little bit with that. And then in 1994, he’s in a really bad car accident, literally shatters his leg and does some damages to the vertebrae. He’s doing lots of rehab, many months with a cane, and there’s no way to act and he has to figure out how to recover and make money, and he’s never felt so poor.
One day he’s coming home, and this is literally his worst moment. He’s coming home. He has this home that’s on the side of a hill and he has no money and he couldn’t work yet. And the movie Braveheart has come out and he had a free pass to the movie. And it’s a hot day and his place isn’t air-conditioned and the movie theater is, so he takes a bus, he sees Braveheart. And coming out of Braveheart, he sees this guy in the side of the road and guy’s selling oranges, bag of oranges for two bucks, and he buys them, it’s his last $2. So he’s walking up this hill with this bag of oranges. He’s trying to use his crutches. The bag breaks.
Dave Young:
Oh, no.
Stephen Semple:
And the oranges all start rolling down the hill and he can’t chase them because he’s on crutches. And it’s this moment of self-pity. And he sits down and he just starts to cry. And then, he starts laughing because he’s like, I can’t believe what I’m going through. And he realizes he needs to do something different. He’s got to do something. And at that time, he has a buddy from NYU who’s selling cookware trade shows. And so, he reaches out to him, he says, could he help him? And his buddy says, “Sure. And I can pay you 500 bucks.” He’s like, “500 bucks? This is freaking awesome.”
Now, it was hard. It’s like 10-hour days. But Danny saw his buddy doing well, and he asked him, “Can I do this again?” And so he does this number of times with his buddy, and then Danny starts to do it with him, not just helping him out. And he gets good at it, and he’s eventually offered to do his own events, and he doesn’t really want to do this, but it makes sense because he can make money and he can still go to auditions because it’s basically a commission-based sales job. And it’s a lot of evenings and weekends and things along that line.
Dave Young:
And you’re at least getting practice. He was talking in front of people and trying different things. Sure.
Stephen Semple:
Absolutely. Then, there’s a day where he suddenly realized his desire for acting changed because there was a day where the alarm goes off and he has to go to an audition and he just stops going. He’s like, “I don’t want to get up.” And now, he’s just basically doing the cookware sales job, and he does really well with it. He becomes a national sales manager, and then he is a VP. And it’s at this point that he meets Cole, his co-founder for HexClad. Now, Cole’s the top sales guy, and Danny’s the VP of sales, and they become friends and they work out together and they hang out together. And then in 2009, the business starts to shrink. And Danny has been looking at companies in e-commerce. And he thought, “Boy, the company should set up a website as a tool to support selling cookware that this would be a really good idea.”
Dave Young:
Instead of just at events, they’re-
Stephen Semple:
Yeah. But remember, 2009, pretty early days of the internet. So Danny goes to his boss and he said, “We should have a website because content’s starting to be consumed online.” And he felt, Danny felt we could create this online community that would lead to sales and all this other stuff. And his boss looks at him and says, “Facebook’s a fad.” And that was the moment Danny realized he needs to start his own company and start looking for ideas.
Now, it turns out the company that Danny was working for at that time in 2017 failed. Danny’s starting to look for things that he can use in the kitchen to start a company around. And Cole’s also interested in doing it. So both Danny and Cole had become really health conscious and basically become these juice fans. And they read about this new technology on cold pressing juice for home because the whole idea is when you blend a juice, you still heat it up a little bit and it’s not quite as good as cold pressing. Cold pressing is healthier than blending, all this other stuff. And so, they find this juicer that they really like from Korea because there’s only one part, you can clean it. It’s called Juicepresso, and it retails for about 400 bucks. And they agree this is what they’re going to do.
They left the company to do this, and they had this exclusive to sell this, and they decided they were going to do direct-to-consumer sales. They’re going to demo it either in person or video because that’s what they knew how to do and could do it really well. And the plan was to do this slow self-funded growth and then add more products as they build consumers. So they’ve got some online stuff they’re doing, they’ve got some trade show stuff they’re doing.
And then in 2015, Whole Foods announces a juice bar with cold-pressed juices, and other companies start making juices, bottling them and all this other thing. And convenience is a big deal. And it really hits Danny one day when he’s in this trendy place in LA that sells cold pressed juices. And there’s a young lady there buying juice, and as he puts it, she had to put her juice purchase on two credit cards because one was maxed out. So she didn’t have much money, but was still willing to buy juice and not make it at home.
Dave Young:
Committed to the juice life.
Stephen Semple:
But not to make it at home. And this is when he realized we may have a problem with this product. So 2015 was a good year, but they started noticing things slowing down, and he realized they may have misjudged the market and they need to get out of the juicer business. So they start searching for new products and they go to these Asian trade shows, and it’s a complete fluke how he finds this nonstick technology that HexClad is. He’s at this trade show and he wanted to go from one section to another, and there was a part that was closed because of some celebrities being there, and it forced him to go downstairs and through this back section of the trade show. He’s literally in the basement, and he comes across this round plate with hexagons on it, and it’s being advertised as nonstick and durable. And the guy tells Danny, “We invented that.” And Danny’s like, “When you go to an Asian trade show, everybody says they invented that.”
Dave Young:
Everybody invented everything, right?
Stephen Semple:
Yeah. So Danny says to him, “Oh no, you haven’t invented this. I’ve seen this all over the fair.” The guy goes, “Nope.” And he shows him pages of patents. They actually had invented this. And the whole idea is you can sear at lower heat and it’s safe to 500 degrees and all those things we talked about earlier in the podcast. And Danny’s asked them, “Have you ever made a frying pan with it?” And they tell them they’re working on it. So Danny and Cole spent 16 months with them in Korea to help develop this product and a lot of this-
Dave Young:
So it was just a flat surface at this point?
Stephen Semple:
It was a round flat surface that hadn’t been turned into anything yet. So Danny and Cole spent all this time with them in Korea to help them develop the product, and much of it was done on a handshake. They didn’t have any real signed agreement, and they wanted to fit into a direct-to-consumer online sales process. And they thought this would work because of the unique design and had a story to sell. Now, everything was bootstrap. So coming back to how do you make this a backyard bootstrap business, they could only afford one container, only had enough money for one container. But the other thing that they decided to do so that they could fill as much as they could into that one container, they had it shipped, not boxed. So just individual-
Dave Young:
So just a container full of pans.
Stephen Semple:
Container full of different size frying pan.
Dave Young:
Okay. No boxing.
Stephen Semple:
They literally spread the product out in Cole’s backyard and box everything.
Dave Young:
All right. When we first started this, in my mind the trajectory was underemployed actor in the backyard invents this technology. He’s like, no, no, no. He’s just putting it in boxes.
Stephen Semple:
He’s just putting in boxes.
Dave Young:
That makes sense.
Stephen Semple:
But still a container full of product, boxed it up themselves.
Dave Young:
Well, you get more product in the container doing that.
Stephen Semple:
Exactly. That was the thinking. So it’s 2016 and we’re starting to see the direct-to-consumer trend happening out there, and they decide they want to raise some money, but they had a couple problems. First of all, people didn’t understand the pan. People did not understand how to get shelf space for it. And they kept saying to them, “No, we’re going to do direct-to-consumer.” And the whole belief at that point, people were not going to buy cookware that way. So they were not able to raise money. So they basically sold everything they could and went massively into debt. And they basically had close to 1 million bucks tied up into this business.
Dave Young:
Wow.
Stephen Semple:
It was sleepless night stuff.
Dave Young:
Grim.
Stephen Semple:
Now, they had spent most of their adult life selling cookware face-to-face. And he saw the vision of the internet, which is turned out now to be right. When we see the explosion of Instagram chefs and things like that that has gone on, they started to sell online, but at the same time they still booked gourmet shows. And this I think is really important. They still booked gourmet shows so that they could interact with people. And the first one they did, the first day they were explaining it and they sold none.
Dave Young:
None.
Stephen Semple:
None. But then the second day, they started to sell.
Dave Young:
Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.
[Empire Builders Ad]
Dave Young:
Let’s pick up our story where we left off. And trust me, you haven’t missed a thing.
Stephen Semple:
They started to sell online, but at the same time, they still booked gourmet shows. And this I think is really important. They still book gourmet shows so that they could interact with people. And the first one they did the first day they were explaining it and they sold none.
Dave Young:
None.
Stephen Semple:
None. But then the second day, they started to sell, they started doing better demoing, they sold 18, and then the next day they sold even more. And what they started to learn was what was resonating with people and what were the benefits. And the other thing that they noticed was there are a couple of disadvantages to these pans in terms of how they clean versus nonstick. So what they started to do was apologizing for what was not great. Leaning into, yep, it’s great at this and it’s not great at this. And that’s what they found resonated with people.
And so, they took that learning and they tweaked their Facebook ads and things started to really rock. Then, they reached out to Costco because they already had connections to Costco because they had with the previous company. So November 2017, they start doing, they’re given a test store to do in-store demos, and they actually relied on one of the old reps that they had knew at the old company. With Costco, there’s no guarantee of success, it’s low-margin, high-volume.
First day, they sold five grand in that one day. They did 10 days of events and sold $40,000 over those 10 days. So proved out on Costco and Costco then offered them more stores, but now they got an inventory problem and stuff’s still coming in unpackaged and they’re hand-packing in the backyard. They would get so many paper cuts that one of the things they talked about, things would come in, they’d get so many paper cuts, they would have to go back over the inventory and clean the blood off the table.
Dave Young:
Oh, man. That’s amazing.
Stephen Semple:
So literally come in, they would box it, and drive it to Costco to sell. 2018, all the money’s being rolled back into inventory and they hit 10 million in sales and they become profitable. 2019, the direct-to-consumer, the online stuff really starts to take off and they double sales. Now, 2020.
Dave Young:
At some point, these pens are being packaged in China or-
Stephen Semple:
Oh, yes. Yes, very much.
Dave Young:
There’s a limit to how many.
Stephen Semple:
But then 2020, COVID hits. Costco shuts down road shows, groceries only, no in-store demos, shut down, and they’re stuck with all this inventory. So they have this huge amount of inventory because they were planning on selling in the Costco and it’s heading into April 1st. And the online selling is doing okay, but they’ve got all this inventory. They also have $1 million in the bank. Now, here’s where I really admire these guys. In a moment like that, what is many businesses’ gut feel is to preserve that cash.
Dave Young:
Sure. You go into preservation mode, right?
Stephen Semple:
Yeah.
Dave Young:
Batten down the hatches. That was the most businesses COVID strategy.
Stephen Semple:
So they’re looking at it going, “People are stuck at home. We’ve got the sales pitch down. The online sales is starting to work. We’ve got $1 million. So what we’re going to do is spend $1 million in a month on Meta online advertising. We are just going to hammer the internet. We are going to spend $1 million in a month.”
Dave Young:
Carpet bomb, everybody on Facebook.
Stephen Semple:
Carpet bomb, everybody on Facebook, and they sell $5 million worth of product. Best month ever. Summer of 2020, Gordon Ramsey notices them and starts to follow them online. Because what’s Gordon Ramsey doing? He’s at home cooking and they discover that Ramsey’s following them online, they sent him some pans as a gift and they ended up getting into a conversation with Gordon about being involved. Could he do a commercial? But Gordon was actually interested in participating. Gordon has ended up becoming partner of theirs, and they put faith in Gordon doing the right thing. They didn’t rely on a contract like they said, they did a minimal contract, because you know what? Got to rely on the contract. It’s not the right thing.
And in fact, Gordon has done things that were over and above. He put them into his TV shows, which he didn’t need to do. He did unplanned events. And Gordon brings eyeballs to the direct-to-consumer is about eyeballs. When Gordon came on board, they were doing 50 million and they grew rapidly to 170 million in sales. And they’ve now got lots of products. They want to own the kitchen and innovate. And last year, they got an outside investor who invested $100 million into the business to really help them-
Dave Young:
Wow, okay.
Stephen Semple:
… grow to that next level. It’s a pretty cool story. The part I love was the guys packaging the stuff in their backyard. I don’t know, there’s just something-
Dave Young:
You do what you have to do, right?
Stephen Semple:
Right. But to me, there’s a couple of things I thought was real lessons that jumped out. And the first was they relied on learning on the face-to-face before they got the online advertising right. And I find so many times people are like, I want to sell this online. And they don’t actually know the customer well enough. These guys were like, and even they thought they knew, whoa, we’ve been in this industry forever. And their first days of demo, their first day of demoing the product, they made zero sales with all their experience. And then the second day was a little bit better, and then the third day was a little bit better. And then it was like, okay, we can now take that idea online. Online does not mean don’t go out and talk to the consumer.
Dave Young:
Sure. When I lived in Tucson, Arizona, I was just fairly involved in the startup scene where they would do competitions. And one of the things that even if you just have an idea, you have to talk to customers or you have to talk to people that you think are going to be customers. You have to actually have conversations with them. You can’t just guess, here’s what I think they want. You actually have to paint a picture in their minds. This is what this product is, this is what it’ll do. And if you don’t have those conversations, you’re just flying blind and you’re going to make bad decisions.
Stephen Semple:
And if you remember back, way, way back when we did Airbnb, God, I can’t even remember how long ago it was that. They flew from California to New York. Back in the early days and met one-on-one with early adapters to the Airbnb platform to learn what do they like and what do they not like and what they improved.
Dave Young:
I’ve gone away from Airbnb lately just because, here’s my beef with Airbnb, same thing. Most people get into Airbnbs and they buy some just cheap furniture and do some bare minimum decor. And they never spend the night in their own Airbnb, so they don’t know how usable it is. So I’ve been in some that, “Oh, this is pretty, it’s got no side table on the bed. It’s got a sofa that’s got no place to set a mug of coffee down.” Those kinds of things. And so, for these guys to actually spend a day at a trade show talking to people, that’s so important.
Stephen Semple:
Yes. So to me, anybody looking to do an online business, still get out there and have those interactions. But the other place where I just, hats off, it’s almost hard to remember. It’s almost like we don’t want to remember what 2020 was like in terms of the fear and the uncertainty, the guts to take that million dollars you’ve got in the bank and spend it in a single month. Wow, I mean, hats off.
Dave Young:
That’s one of those things, like the cautionary tale about that is you better have a decent enough margin.
Stephen Semple:
Their margin was not great in the Costco stuff, but their margin was really good in the direct-to-consumer.
Dave Young:
Yeah, that makes sense. But to gamble it all like that, it takes guts. I got nothing else. That’s amazing.
Stephen Semple:
Now, the other thing too that I also liked that they figured out in their demos was this whole idea of leaning into the flaw. Like, okay, it’s not as good as this. And they leaned into that. And it’s amazing how companies are so hesitant to do that. I remember when we first got working with our used RV dealer, Noble RV out west. One of the very first things when we did a one day with Rick was this whole idea of Rick, you should highlight the weaknesses. And for a long time, he was hesitant to do that because you don’t do that. And I finally said to him, “Bring us one that you’re having a hard time selling.” And we wrote a thing where we leaned right into all the weaknesses on it, and it sold in 24 hours. And since then, he now trains the salespeople. Look, there’s a ding here, there’s a scuff here, there’s a problem here. But when you do that, your claims now have more honesty.
Dave Young:
At Wizard Academy, we call it address and dismiss. It’s like if you’re standing in front of a crowd of people and you’ve got a big mustard stain on your shirt. Rather than have people focus on the mustard stain and think, oh my God, he doesn’t know he is got a big stupid mustard stain on, you just point it out and you say, “Hey, look, I got a mustard stain on my shirt. You probably see that, right? I didn’t have a spare shirt and I didn’t want to not talk to you guys. So let’s just all address the mustard stain and now dismiss it. Okay, it’s there. Let’s not dwell on it. I know about it.” And then, people are fine. [inaudible 00:23:41. So if you call out your own flaws, you actually take it out of the people’s hands to give you a bad review because of it.
Stephen Semple:
Correct.
Dave Young:
Right. Well, no, you knew that going in. You knew that maybe it doesn’t clean as easily. Maybe it doesn’t, I don’t know what the flaw was that they were pointing out.
Stephen Semple:
Well, the flaw was it doesn’t clean quite as well. You’ve got to actually work because I have one. They’re doing the research, they’re like, “Well, that’s really cool. I would’ve bought one.” And then, I’m getting a second one. I like them so much. But yes, they don’t clean quite as well. But the trade-off is they sear amazing. To me, that was the guts to do that spend was incredible. But also just the whole, even though they had spent their adult life selling cookware, they still, because this was a new product, they still needed to perfect the pitch in front of people before they could get it right online. And I think that’s an amazing, people took one thing away, take that away.
Dave Young:
Well, what a great story. And so, if you’re trying to make it as an actor, the lesson here is get in a car accident and buy a bag of oranges.
Stephen Semple:
There you go. And your life will change.
Dave Young:
Thanks for bringing us the HexClad story, Stephen.
Stephen Semple:
Well, I always like how you find a new lesson in everything, David.
Dave Young:
You’ve got to circle back around to the start. That’s the other big thing. You know what they say to actors? Break a leg. Break a leg. That’s it. Oh, no. On that note, goodbye.
Stephen Semple:
Bye.
Dave Young:
Thanks for listening to the podcast. Please share us, Subscribe on your favorite podcast app and leave us a big fat juicy five star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute Empire Building session, you can do it at empirebuildingprogram.com.
