The Good Society Episode 4: Building a Business

My name is Matt Cudmore; I’m
the founder of Meier Skis. I started Meier Skis out of
Glenwood Springs Colorado; our factory is now
downtown Denver. Currently I’m living up here in
north Idaho with my family. We’re hanging out in my R & D
shop which is Sandpoint, Idaho, just at the base of
Schweitzer Mountain, where we’re skiing today. My neighbor asked me if I
wanted to try to build a pair of skis. At the time I’ve got three
little kids, and a newborn, and that’s kind of the
last thing I’m thinking about. And my grandma
had just passed away and gave each of us kids
a thousand dollars; wanted to put it towards
something special and unique. So I put that towards my first
ski press and a welder, and got after it. It was a very exciting thing to
create my first pair of skis with my own two hands and
to have the kids see me do that. Building the first pair, the
first few pairs, I was just using the
materials that I could. The skis were great,
but people were saying, well, why would I
buy your skis if if I could buy
someone else’s? There’s so many different
brands out there. So I really got to thinking, and we had to do
something special with it. We were having a barbecue
and my brother was over, and he said, Well how cool
would it be to build skis out of a timber
sale I got going on right now. So I started trying to figure
out the best woods locally to use; everybody in Colorado knows
about the pine beetle kills that are chewing up all the
trees and killing them off. So we decided to try to
incorporate those into the skis as well, which
is a hard thing to do. The skis now are about 80
percent Colorado aspen and 20 percent pine beetle kill. All locally harvested. Just the mixture of that
has come out with a really great combination
for a very poppy, lightweight, responsive ski core. All my friends started skiing
on the skis, and their friends started skiing
on the skis, you know. So my orders were getting
bigger every season. And at the beginning, the
direction was keep it local keep it small, build 50
pairs of skis for the locals every year, or something like that. And I quickly learned that the
locals can only buy so many pair of skis
before you have to get out, outside of that market area. It was all that success, and
people loving what I was creating, and
everybody just saying, you should do this;
you should quit your job and do this full time. So my business partner came on, and the first thing that we
were needing to do was to move out
of my garage and get into a real factory. At that point Matt was
still in the garage, he’s probably doing
20, 30 skis a year. But I thought that he was onto something that was truly unique and different,
and that’s not easy to do in an industry like the ski industry,
where skis have been made for many, many years by brands that are mostly European based. We felt like we could take
what he’d done in the garage and turn them into something bigger, where we can add some resources. So that’s when we set up, in
the spring of 2012, set up a factory out in
Glenwood Springs. So I quit my job—lot of risk, but I was still able to
provide for the, for the family. Yeah, so my wife Rosie, she is
an awesome, awesome lady. In fact, the name Meier came
from her maiden name which is
Meier-Grolman. So she’s been behind me
from, from day one, and my biggest supporter. Building a business from scratch, especially a manufacturing business where you’re not producing a
five or twenty dollar widget, but you’re producing
skis that, you know, you’re trying
to sell at a price point from six hundred to a thousand
dollars, is is no easy task. And frankly, it’s probably, was a much greater hurdle
than Matt realized, and a much greater hurdle
than I realized. But, you know,
once you’ve kind of, you’re in deep and committed,
you want to see it through. And it’s taken significantly more hours; it’s taken significantly more money it’s taken significantly
more risk for both of us, I would say both personally and financially, to get it to
where we are. And, hope that you’re
able to somehow push that heavy wagon
up over the hill. And, you know,
Meyer skis is right, right at that point right now. Still a lot of hurdles to get over; we’re still not cash flow positive. But the outlook’s promising
for this year. Either it’s going to fall fast
and crash, or hopefully it catches
flight and soars. And right now, it’s feeling a
little bit more like a more positive outcome than not. Yeah out of this there’s a
little space here that we put together, we think
we can be the largest ski brand that
actually makes their own product here
in North America. Which frankly just doesn’t
really happen in the ski industry. So we’re kind of hoping to
break the mold and bust through. Meier has been a wild ride. But it could all end right now, and I would consider myself the most successful
guy out there. Because one day, I was playing with my kids;
we were riding BMX, and his bike broke. And he said Dad Dad! Hold up!
We need to jump in the car and go to the shop!
And I’m like, Why? Well my
bike broke. I need to go build another one. And he grew up knowing that you build something, and
that is by far the biggest accomplishment,
is showing, showing my kids that
you can work hard and it pays off, and
you can accomplish anything you want to. And you can build something. Meier skis is an example of how
a business gets built: someone has an idea, or
sees a problem and comes up with a solution. Sometimes it’s in the form of a
charity or nonprofit. But more often than not it
takes the form of a company. Take for example two friends;
let’s call them Joe and Tom. They have an idea for a new product and want to start a business. They talk it over with their families and decide to pursue their dream. They pool together their savings, take some money from
their retirement funds, and come up with fifty
thousand dollars to start working on their idea. They put together a business
plan, and convince two
investors in town, Bill and Deborah, to invest another fifty
thousand. With one hundred thousand
dollars in the bank, Joe and Tom rent some
space on Second Street, buy some machinery, and start
making backpacks. The first year is all about
setup, and finding some customers willing to try their
product. In year two they sell nearly
1000 units, and are able to hire two
employees and start growing. Years three, four, and five see
steady increases in sales, and Joe and Tom are
able to hire more employees. The company’s cash flow
is still negative; they are still spending
more than they make. But revenue is increasing. They take small salaries for
themselves so they can invest what’s
left into the business. But they are enjoying the work, and beginning to see the light
at the end of the tunnel. In Year 6, Joe and Tom saw a
big opportunity to grow. So they took a loan
from the local bank to buy more equipment
and hire eight new people. Their risk paid off, and sales
more than tripled. Over the next four years the
business grows, as do the costs. There is still no positive cash flow, and Joe and Tom
are still getting paid less than their employees. Things are tight at home. Luckily, they have
understanding families willing to forgo vacations and house
remodeling projects. The investors, Deborah and Bill,
are anxious about their money. Over the next several years,
Joe, Tom, and their team work hard, and by year 10 the company
has 30 employees and is finally making
some real money. They paid off the bank loan,
and were able to distribute a small return to themselves
and their investors. Finally, in year 15, after
five more years of hard work and
breakthroughs, the company has over one hundred
employees, and is becoming a recognized innovator in the
industry. Joe and Tom, and Bill and Debra all made several million dollars in return on their original investments. Of course this simple story
leaves a lot out. Real companies are messy, and four out of seven
new businesses fail. And not everyone makes it big
like Joe and Tom. Yet all companies start small, and require entrepreneurs
and investors willing to take risks to
accomplish their dreams. There is rarely such a thing as
an overnight success. We can focus on the
monetary success of entrepreneurs and investors like Joe, Tom,
Bill, and Deborah. We can wonder why Joe and Tom made so much more than their employees. But just as economics is more
than math, business is about much more than money. First, a business only makes money if it provides goods and services
that people want and need. And perhaps most important,
yet often forgotten: entrepreneurs and investors
help create social cohesion by bearing risk. For over a decade and a half,
as Joe and Tom’s business was not only selling products
and paying salaries, it was playing an essential
role in the community by creating stability and
opportunity. For years, while Joe and Tom
had many sleepless nights worrying whether their
risk would pay off, their employees had stable incomes, were able to buy homes, pay for their
children’s education, participate in the local
community, and donate to their churches
and other civic groups. The creation of business is not
a solitary activity, but a series of personal, social, political, and cultural relationships. In the next episodes, we’ll see
how small businesses contribute to their local
communities and the common good, just by being a business. We’ll also see how they
interact with others in a global network of cooperation, competition, and exchange.

1 thought on “The Good Society Episode 4: Building a Business

  1. Why would a business be at negative cashflow for 15 years? We understand there are arterial motives to creating a business besides financial rewards, but if your business is not going to be profitable then you have created a charity and worse yet you have the stress and pressure of being on the hook to your creditors and investors. Why not create a product that people want to buy, sell it at a profit, and use your profit margin as the expansion barometer?

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