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Lisa Ryan: Hey, it's Lisa Ryan. Welcome to this episode of the Manufacturers' Network Podcast. I'm excited to introduce our guest today, Jordan Erskine. Jordan is an innovative founder with 20 years of experience in the cosmetic contract manufacturing industry. Jordan co-founded Dynamic Blending. Since then, Dynamic Blending has seen over a 12,500% growth in less than five years. Jordan talks about breathing new life into a stale industry and how you can innovate within your industries. Jordan, welcome to the show.
Jordan Erskine: Thank you, Lisa. It's a pleasure to be here.
Lisa Ryan: Please share a bit about your background and what got you started in manufacturing and the cosmetic contract manufacturing industry.
Jordan Erskine: It's a crazy story. I graduated from high school when I was 18 years old. I didn't know what I wanted to do with myself. In my neighborhood, there was a guy who started a contract manufacturing company. I didn't know what that was. When I graduated high school, he said, hey do you want to work with me? At the time, there were ten employees or fewer. It was small. I said sure because at 18 years old, I didn't have any prospects for college. I enjoyed it.
I was learning how to develop cosmetics and skincare products from scratch. I learned a lot of that is chemistry and that knowledge, but it's an art form too. It was fantastic to see how some of these higher-end skincare products come to be. So I stuck with it and got my undergrad in finance. I left that company and went to another company, where we are contract manufacturing toothpaste for a large Fortune 50 global consumer goods company. We manufactured four to 5 million tubes a month of toothpaste, so it was a very fast-paced operation.
I worked there for about nine years and had a lot of student loan debt. I got my MBA in international business while working there at the time. I had about $140,000 in student loan debt between my wife and me. The panic started to set in that we would never pay this off. I got this weird bug, and a light bulb went off that I just needed to start my own company. I knew how to do everything on the contract manufacturing side - from development to production to package sourcing, just everything, so that's what I did. I started putting the pieces together and met up with an old colleague who worked with the first contract manufacturer.
His name is Gavin, and he went on to be an attorney. After not talking about it for about 9-10 years, we met back up. One thing led to another, and his law firm invested a little bit into Dynamic Blending, and the rest is history. We only took on about $170,000 angel investment at the beginning. To this day, we are still privately owned by Gavin and me. It's wild.
Lisa Ryan: So, when you're talking about a 12,500% growth in less than five years, I'm sure that people are listening to this podcast with their ears perking up, saying, I would like to have a small percentage of that. What were some things that you did that set you apart in such a short time?
Jordan Erskine: I learned from the other contract manufacturers I worked for and knowing that this is my company, I want to build it my way. One thing that was important to me was the team. I started recruiting people. I got a couple of key people who couldn't afford higher salaries because we couldn't afford them. They were subject matter experts, so we gave them equity. We gave them a percentage of equity in Dynamic Blending. That sparked an interest. Some of them worked for us for a while for free until we could start affording that. The first thing is that I knew I needed the team in place in every single area to help us grow to where we needed to be. Our chemist, our R&D director, developed the ancestry DNA solution, so he has pharmaceutical drug development and chemical development. He's our director of R&D and then our director of quality. He worked for he helped Johnson & Johnson get out of FDA issues with Tylenol.
We've got people in place that are subject matter experts, so I can focus on what I need to focus on. Gavin can focus on what he needs to focus on. Many of your listeners or other manufacturers will be like, " Yeah, that's exactly right. We've learned the hard way not to put the right people in the right seats on the bus.
Lisa Ryan: A couple of things come to mind. Number one, you're starting a brand-new company, and to grow it, you're giving parts of it away. That had to be a little scary but finding those right people and ensuring that you got the right people on the bus right away. So what was that process? What did you think I would have to give them a piece of my company to get these people on board?
Jordan Erskine: It's common with startups. Many of these tech companies go public or get bought out. You hear 50 employees became overnight millionaires. That's also the motivation. It depends on the industry, but we didn't have the technical expertise in our specific situation. We knew we couldn't pay $150,000 a year, plus salaries for some people. We had to get creative and take a step back.
I'd rather have a small piece of the biggest possible pie than own 100% of a company barely doing a million dollars. You have to realize that it's not always this situation where you do have to give up equity, but in many instances, you can also have it vested overtime right, so you're not worried about how you will perform for me.
You can give them a tiny, small point of 2.25% year over year to ensure they stay with you and work toward the business. In doing so, you give them more of an ownership mentality. It is hard. I'm a serial entrepreneur mindset, so I'd rather have a lot of little pieces and help, and knowing that there are other teams within those groups helping build that company, it all falls on my shoulder, right. So that's another risk on the other end.
Lisa Ryan: Well, those two words to that you said that that ownership mentality is a key. When you have people who are owners of the company, they will look at it differently because everything they do, they can potentially have a piece of it. So, for people listening to the show, maybe that looks like some profit-sharing, perhaps that looks like opening up the books. But, it is a different level of mentality because otherwise, employees think you are just shoveling dollar bills into the back of pickup trucks. So, having that ownership mentality, they can see the company's numbers and play a significant role in that.
Jordan Erskine: On top of that, it looks good for the company when things get tough for the owners. We've had to do this a little bit where we might drop back our salaries by 20% for a little while to help with cash flow or onboarding some of these large clients. Like I told you, they want a net 90 net 120, so that's after delivery. When you're talking about those terms with some of our clients, and maybe similar industries, and things like that, you're fronting their whole production project for six months plus. By the time you order bottles and materials, it's 12 weeks. It comes to your facility. Then you got a manufacturer, and then it's another net 80 or net 120 payments on top of that delivery. So you're stretching out like six-eight months on some of this stuff. We can't do that with every client for small and medium-sized manufacturers. So we have to get creative. Having an ownership mentality helps.
Lisa Ryan: When you're getting creative with things like bankrolling your customers and working with them to create that, what are some examples or other ideas you have brought into working with your customers?
Jordan Erskine: I think I think one thing is forecasting. For the most part, it doesn't exist. A lot of these big brands we talked to have zero forecasts. But the ones that do have good predictions, it's easy for us. We've gone to the suppliers, which was never done in the past because we've never been put in these situations. Now we're trying to create longer-term like 12 to 24 months supply agreements, working through the brands, and then working with the suppliers. Often, they don't require us to put any deposit down. That helps solidify those products for that brand, and it sounds crazy. Still, again in this industry, only the big dogs have that figured out, like the Unilever's, the Johnson & Johnsons - because their teams are so big and multinational. But many of the big brands don't have good forecasting; they're flying by the seat of their pants. It sounds crazy, but if you can get them reined in then, then the supplier wants to know. They don't know. We don't know, so we're placing orders with the suppliers.
They placed an order with us. We got a panic versus, hey, here are six months, here's what we can commit to. Here's what the supplier committed to that we have agreements with the client, if, maybe it's a personal guarantee or company guarantee or something like that, but there are ways that you can. It might take a little bit of risk, but you have to step outside the bounds to keep your customers happy in this day and age. To keep that supply ship flowing - you have to look at everything.
Lisa Ryan: Right, well, and even taking that step back and planning what that looks like, you're almost setting a goal that when you have that in your mind, your subconscious starts to figure out how you're going to make it happen. So it's excellent from the standpoint of being able to finance it, and get it out there, that you have the numbers that are at least close, not just throwing stuff against the wall and seeing what sticks.
How do you change that mentality when working with somebody who may not have ever thought about forecasting before? What are the steps to start that process?
Jordan Erskine: yeah, I mean we send them like some templates, and some guides, and things like that, like what to look for. It depends on where they're selling. Some of our clients sell on Amazon, which will have a completely different product sale cycle than something sold in like Ulta, Sephora, or even Target. They're all different cycles where they are ordered. We help them. We determine where they're selling based on our knowledge and trends, and we've got a good team of project managers, supply chain professionals, and planners. That's what makes Dynamic so unique too. We didn't get into it, but we indeed are like a turnkey and beyond. We can consult all of our subject matter experts on projects that we don't even manufacture, or our quality team has consulted with some of the biggest brands that were manufactured for that you would think they've got their stuff figured out. However, they still need us to consult with them. That shows you the level of expertise we have that we're helping some of these larger pharmaceutical companies get through some of these drug processes.
Lisa Ryan: Well, it sounds like you're adding a lot of value to your customers. So what do you think are some of the ways that manufacturers listening to this podcast can start to reconsider the value they're adding and add additional value to what they're doing.
Jordan Erskine: A couple of things that come to mind if you dive into your customer experience, for the most part, manufacturing is pretty stale. Most manufacturing industries are contract manufacturing for cosmetics. It's pretty stiff, always done the same way. Most of our competitors want large orders. They want million unit orders. They don't care about anything else. We care; we want to build the brand. We want to help the brand succeed and be a part of it - be a partner. Diving into what your customer experience looks like will go a long way. Because when people are shopping around and researching, there are so many companies that still don't have good websites or good web presences for information. When companies are shopping around, they're doing their due diligence per se. They see a website that looks like it hasn't been updated since 1990, and then they look at this other website that may cost $20,000 to build like that difference. In many industries, many brands and companies would be like, Oh well, these people look bigger, just that whole consumer perception somehow. We've established a good web presence so that everybody can find us were a resource. We're just continually building out like education materials.
Lisa Ryan: People are shopping around a lot of times. It's going to come down to price, and it's like where can I get the best price, and that's all they care about. But if they find somebody adding value who's taking the time to send them templates to create forecasts, they're working with them. They're making an actual customer experience because he had the market. It's not like the massive margins and manufacturing, so the price is undoubtedly a big part.
But by the same token, if you can have reliability and trust, you can build those relationships and stop all the turnover. So from a vendor and customer standpoint, that's undoubtedly going to have a substantial bottom-line impact.
Jordan Erskine: Yeah, and where's everybody up? Where's everybody at now that had the soul mentality of I has to find the cheapest I'll bet you 90% of those companies are more are scrambling right now. We even see price increases of 20 to 25% on raw materials daily. We're getting notices. We can't just take that, and add 20% on our clients' projects without them, knowing hey, my unit costs went up 75 cents. What the hell's going on. We have to explain, " Oh well, your chemical from Bulgaria that you process once a year. That mentality is starting to change with the current supply chain state. Companies like Dynamic can show that value. We can be more of an extension, so when your team is scrambling with marketing or artwork, our marketing agency can help you. That's the mentality you need to have. It's just where your customer pain points are. Maybe you have a big client that runs another product and another manufacturer with problems. You don't have that machinery, but perhaps that machine is a $250,000 investment. Well, is that worth that risk? Maybe, if you can get multi-year manufacturing agreements out of this client to switch over. You've got to get creative. You got to get innovative, and sometimes that takes a bit of risk. If you build it, you have to have the "they will come" mentality.
Lisa Ryan: Exactly. If you have that type of trust, and relationship, the price increases. But we realized that right now with the craziness of the supply chain. Something happened last night that we saw this like in action. We went to a restaurant for my birthday. They gave us the menu, and we were starting to look at it, and then they came back, and they're like, oh wait, we just got a new menu, and they switched the menu, and my husband said the prices just all went up.
Jordan Erskine: wow. While you're sitting there?
Lisa Ryan: We were sitting there. It's a restaurant that we both love. We've been going there for years. We have a trusted relationship, and we also know that restaurants have to raise their prices to survive. So it's a good enough experience we know we're going to the food's excellent. We knew we would have a fabulous time, so it didn't matter.
Going right back to what you said, when you are upfront with your vendors, when you have that trust built with them, you can, hopefully, watch the prices go up as you're sitting there. But yeah, it's a lot more understandable when it does that.
Jordan Erskine: I think one other thing too is just transparency. I mean, people love transparency. It sounds crazy, but I mean not to keep beating a dead horse. Still, we just talked to probably one of the biggest brands worldwide. In terms of like consumer goods, and the comment from them to us as we like you guys call us back we're like what they've been talking to other manufacturers don't even call them back, and this is a multibillion-dollar company. We're like, and this is crazy. Just call them back. So the look of that level of transparency, I think, is lost on a lot of manufacturers. That's why the contract manufacturing game has such that bad reputation for always keeping people in the dark or not being truthful. We're trying to change just by being we have nothing to lose. You're either going to want to work with us or not.
We feel like we can prove to you that we are the best, and most people don't come through our facility, they would agree, so that's that mentality that you have to build towards, and have it, 24 seven year facility company.
Lisa Ryan: For goodness sake, call people back. We're often making judgments about what that person wants, what that company wants. We have this massive company calling us right now, and we don't even have enough inventory, so we don't want to turn them down. Whatever those thoughts are, it's like stop thinking those thoughts and make the darn call. You've built those relationships with these large companies because you're calling them back. It's an unfortunate sentence.
Jordan Erskine: It's humbling, but hopefully, we can be an example. Nobody wants to do business with anyone who feels like that. That was like the dark, or someone's something shady going on behind the back door, or something like that, and just unnecessary.
Lisa Ryan: So what do you think are some of the other ways that manufacturers today can innovate in what they're doing even if they've been doing things the same way for years and years. There are some ideas that they can get started with.
Jordan Erskine: One thing that people think is very expensive is robotics. There are quite a few good robotics companies that have lease options. We're going to be adding some robotics to our manufacturing lines too. Training them on different things will increase our efficiencies, obviously decrease Labor a little bit. Given the markets you're in, obviously, like California has issues with labor markets and manufacturing York-New Jersey, that will help you tell we haven't seen much. In terms of that, we're more adding it for efficiency, and some of these larger clients want to see automation. There are many ways to automate and not spend a million dollars. You can do a lease on some of these robotics. Companies will charge you per hour, like an employee. They're not even charging you if it's off during the weekend if it's running. That helps you when you're working out your piece, your colleagues, and your cost accounting would be like, Oh well, this is easy because the robot only ran for three and a half hours with this shampoo. Going back to the customer experience side, weirdly, is what many people don't have that we're building out is a custom backend. Everything doesn't have to be through text, phone, email, and things get lost in email. We have a central dashboard location where clients can log in. They can see all their invoices. They might we're going to link it to their inventory, so they can see their real-time list whenever they want. They can pay invoices and like approvals for artwork within the system. So it'll be like a full circle of quality management for the client. Things like that will simplify