Jason Klug and Product Development and Building a 9 Figure Brand

Transcript:

JARED WARD: Hey guys, Jared here, CEO and founder of Luminous. This is the Ops Unfiltered podcast. I started Ops Unfiltered because I know what it feels like to be in operations in e-commerce. You're handling every single part of the business. It's easy to feel siloed in. It's easy to feel like you have to find a solution for everything. I hope that by bringing raw conversations from other operators in e-commerce, That you can extract some value and not feel alone. Many of the operations leaders in e-commerce are running into the same problems that you're running into. So I hope that maybe their solutions can be your solutions. Maybe you can feel not so alone in the warehouse, in purchasing, in your supply chain. So that's my hope. I hope this can be valuable for all of you. Let's dive in to have some raw conversations. 

 

JARED WARD: Why do you create? 

 

JASON KLUG: Growing up, I was always like a tinkerer. I think it started with how it works and then over time adapted it to like how it's made. I remember when I was a kid, I built a half pipe in my parents basement. I designed like the, the structures and I pitched my dad. I'm like, I want to build this. And I became the president of the fraternity. And it's like, yes, I threw parties and stuff and that was always fun, but I learned a little bit about like leadership. So then I just, like, packed my car and I moved to Utah.

 

JARED WARD: Why Utah? 

 

JASON KLUG: It was a good economy to start businesses. Because I didn't have a degree, I couldn't get, like, an engineering job. So a lot of inbound leads, and they were big names calling in, like, McDonald's and Microsoft and stuff. And I remember one call came in and it was the head of product at IBM. And so I convinced him to give me enough money to buy a computer and then a 3D printer and a SolidWorks license. And he gave that to me and I was then able to go and start my company out of my apartment. 

 

JARED WARD: Are you kidding me? What do you attribute your success to? 

 

JASON KLUG: Mainly probably because like I would say

 

JARED WARD: Today we have an amazing guest, a fellow Utah entrepreneur. Jason! 

 

JASON KLUG: Thank you. Are you gonna overlay applause there? 

 

JARED WARD: Yeah, probably. That's a good point, though. All the content out there. All the gurus and all of the click funnels to buy my class or whatever, or there's not as many focused on what we deal with.

 

JASON KLUG: Yeah. And they're all marketing and, you know, hack away type stuff versus like the actual setting up a proper supply chain and good operations. 

 

JARED WARD: Yeah. Or how about like. Actually developing a product or building a brand like it's the, I feel like what goes viral and what actually what most people cons e on LinkedIn it's all around. It's like I built my Amazon FBA brand from like zero to 2 million. Like here's a screenshot of my results. Like none of his advice typically is relevant and like how to actually build a product 

 

JASON KLUG: And can you get past 2 million or your operations messy and you limit your scale. That's probably the problem.

 

JARED WARD: Jason is from Klugonyx. And that, my understanding of that, it's an end to end product development company that brings your ideas to life. Like, that's the general pitch. He's the co-founder of Dori. I would just describe that as like an innovative, self drying home goods brand with really classy design. That's why I really like it. And he's the host of the Founders Field Notes podcast, which I've been on. It's a blast and co-founder of Omos Golf, right?

 

JASON KLUG: Yep. That's a new one. Very entry level supply chain on that one. It's working, kind of. 

 

JARED WARD: So, that, for, I guess, in layman's terms, Jason has a lot of experience. From product inception and that whole process all the way until like getting the goods into the warehouse and like starting full months. I would, I would definitely say you're an expert there. So, got a lot going on. So I'm super excited to dive into a couple of different topics. I respect you and your career path. And I have a lot of interest in what you do as well. And I think the viewers of this podcast or in these clips are going to find a lot of value, so I want to start by getting behind the psyche of you. So I have a belief that e-commerce and product development in general attract like a certain type of person. They're typically anti corporate, anti dress code. Like every time I see you, it's hoodie, backwards hat, sneakers. 

 

JASON KLUG: Yeah, it's easy. So I don't need to think about it in the morning. Yeah, exactly. If my laundry's clean, you know. It's top down in my drawer, you know what I mean? Goes to the next shirt in line. 

 

JARED WARD: Why do you create? 

 

 JASON KLUG: I mean, probably growing up, I was always like a tinkerer, you know? I think growing up, I'd always get something for Christmas. I would get a Christmas gift. And. I would take it apart and see what's inside. Like, that was something that my parents would get, like, frustrated with me about it. Interesting. But I would always learn so much. And I look back and I think, there are so many things that I would have, like buckets of guts of stuff that I've had over time.

 

JARED WARD: Really? 

 

JASON KLUG: Yeah, and I'm very ADHD, like, very, to a fault, you know, where I have, I have to work on it quite a bit. And I work with therapists and stuff and, you know, to try to figure out how to control and manage my ADHD. But I think it's like, you know, I've gotten a lot of value out of that. 

 

JARED WARD: That's fascinating right there. I don't think that's very common, honestly. I have a brother in law like that. He, one time he literally took apart, took apart a car. 

 

JASON KLUG: Yeah. Oh, I think I got to cars eventually too. And motors and stuff. 

 

JARED WARD: Yeah. So like, what, what about that is fascinating? Is it just like how everything fits together? Is it like the understanding of how it actually works?

 

JASON KLUG: Yeah, it works. You know, I think it started with how it works and then over time, uh, adapted it to like how it's made and I think. Looking back to later in high school and stuff, when that show, like how it's made came out, I remember looking back and being fascinated with that. Also going to college, I had terrible grades in school and. I applied to so many colleges. I was almost like, I'm not going to get into one. Screw it. I got into this school called Southern Polytechnic State University engineering school. It was like 7, 000 students small, you know, honestly is like the best. It worked out so well for me. I feel like it was the best place for me to be in that part of my life in education.

 

JARED WARD: Why was that? 

 

JASON KLUG: I mean, for a few things. So when I got to orientation, I didn't know what major to do. At all I had no idea and I remember sitting in the auditorium  and they started like. You know, announcing like, okay, we're going to start moving into the areas depending on your major and they started listing off majors and I was like listening and they were like mechanical engineering. I was like, oh, yeah, that's it. So you just like, cause I knew I liked to take stuff apart and like build stuff. And, you know, I like as a kid, I always, took things apart, but also like I remember when I was a kid, I built a half pipe in my parents basement. So like I designed like the, the structure, I designed the drawings and I pitched my dad, I'm like, I want to build this, you know, we have this room, it's, it'll fit in this room, the ceilings are this high, I could build it this tall, here's the, the structure, here's my material list, you know, and this is, would have been in eighth grade. We moved down to, uh, Georgia and, yeah, so, I think naturally I just always was drawn towards that. 

 

JARED WARD: It's so fascinating about the education system because, I'm very similar to you. I dropped out of college. 

 

JASON KLUG:  I dropped out later in college. I did. But the thing that was perfect is so like high school and elementary school, middle school, I always remember, you know, feeling like the teachers would be concerned about me and stuff. You know what I mean? Like, oh, he's not doing well. And it's like, well, I'm not a good test taker because `I don't care about the subject matter. 

 

JARED WARD: See, I feel like e-commerce and product development, it attracts these types of minds. Like I'm nowhere near that. Like I'm a little bit different, but it's, it's like these really talented individuals, but it wasn't like, there's no way to cultivate it in school. So you just like get bad grades. Yeah. 

 

JASON KLUG: And you probably, you probably thought you were like, yeah, you feel stupid. But that's why this school was great is because the classes were very hands on. You would like go into a machine shop and then you would go in like one of the classes, I remember it was manufacturing technology and they basically went through all the different manufacturing processes and taught about the machinery and like the applications and all that stuff.

And I was fascinated by it and then the CAD classes, learning CAD and solid works and stuff. And I basically picked and chose all the classes that were interesting to me. And they all were the supporting knowledge around building products and engineering products. 

 

JARED WARD: Okay. When, when did you start monetizing your disability and passion?

 

JASON KLUG: I, I, the first thing I monetized wasn't development. It was, uh, like my entrepreneurial side kicked in when I had this bar. Well, actually, it really started when I was in my fraternity and I became the president of the fraternity when things kind of fell apart and it was small and I was like, Oh, I stepped up at a young age and like, you know, scrap power. And it's like, yes, I threw parties and stuff and that was always fun. But I learned a little bit about like leadership because if I could get a bunch of like frat bros to like do charity events and stuff and like raise money and do this stuff and it's like, well, if I can pay people, then I can, you know, lead people to, you know, make money and do stuff. So with that, I started actually, there's a bar we would always go to and. They had a back room and I would work out deals with the bar owner that I'm like Tuesdays and Thursdays and stuff. I would put together parties for the other fraternities. So the other fraternities were paying me to throw parties. So I was like, Oh, I can make money doing, I don't need a boss, you know? So that was like my first taste of entrepreneurship. And then I like, it was like my fifth year and I had like 18 hours left at my degree and they were, it was all stuff I didn't want to take and I was like sick of, uh, sick of class. Like I was sick of school. I was sick of it. It's like, I mean, I can stay here for like another year and. You know, get a degree, but then I'm going to be engineering HVAC units, you know, or something like that. That's not what I want to do. So then I just packed my car and I moved to Utah. 

 

JARED WARD: Okay.

 

JASON KLUG:  Why Utah, right? 

 

JARED WARD: Yeah, why Utah?

 

JASON KLUG: It's a good economy to start businesses. And that's what I had read online. And I had a buddy here, a friend of mine moved here, and he was snowboarding and stuff. And I was like…

 

JARED WARD: What year was this? 

 

 JASON KLUG: This would have been 2011. 

 

JARED WARD: Oh, wow. 

 

 JASON KLUG: End of 2011, going into 2012.

 

JARED WARD: Great decision. Hopefully you bought a house back then. 

 

 JASON KLUG: No. No, I was broke. I literally had a Subaru, and I think I had like three grand in my bank account. From just like side hustle stuff, you know. But yeah, that was a good move. I got a job at a ski resort and ski b med it, which is fantastic.

 

JARED WARD: Okay, you ski. What were you trying to build on the side when you first got here? 

 

 JASON KLUG: When I got here, I was thinking I could make a snowboard company. So I engineered, which I never got to build, I engineered a snowboard press. 

 

JARED WARD: You're going to do that one day, aren't you? 

 

JASON KLUG:  I don't know. I felt like there's a market cap and stuff, but the big thing with it was I enjoyed the process of engineering, a homemade press with fire hoses and stuff. So that was cool. But that only lasted so long. After I worked at a ski resort, I got a job with Scott Paul. At Armor Active. 

 

JARED WARD: I know of him. Yeah. 

 

 JASON KLUG: So at that job though, because I didn't have a degree, I couldn't get an engineering job, you know, it'd be hard for me to get a job doing that. So I got a sales job and I would do sales for him. 

 

JARED WARD: Wait, I didn't know that. 

 

 JASON KLUG: Yeah. Cause I could sell. 

 

JARED WARD: At Armor Active, that was a phone case.

 

JASON KLUG: It was, let's see, they make like the tablet enclosures that you see outside of meeting rooms, you know, that, for example, that's like something we would make the one for where you schedule meeting rooms on and they enclose iPads and stuff. So it was a B2B security enclosure for tablets.

 

JARED WARD: Got it. 

 

 JASON KLUG: Yeah. And that was one of the first movers in that space. 

 

JARED WARD: Wait, I didn't know you did sales. 

 

JASON KLUG: Wait, so I did sales for a very short amount of time. I did sales for maybe like a month and a half. And then what started happening is these, you know, and a lot of people were calling in, like it was all inbound leads. Cause he got iPad enclosures. com. So everybody was searching iPad enclosure and he would be the first to pop up. So a lot of inbound leads and there were big names calling in like McDonald's and Microsoft and stuff. And I remember one call came in and it was the head of product at IBM. And he's like, I need this. And I was like, well, we don't have that, but I could probably make it for you. And I went home that night and I still had a student license on solid works and I caught exactly what he asked for. And then the next day I went to Scott in the morning and I was like, Hey, so this dude called in yesterday and we looked him up on LinkedIn and he's like, Oh, he's legit. And I showed him and I pull out my computer. I was like, well, I engineered this last night. This is what he's asking for. Do you think we could sell him it and like to make these for them? And he's like, you did that? I was like, yeah. So then eventually what happened is he realized that it was an opportunity for me to be like an in house engineer. And do custom projects and get bigger customers because of it. 

 

JARED WARD: Oh, that is so sick. 

 

JASON KLUG: So he gave me the opportunity to monetize and be the, like, be the in house engineer and create a department and, and create custom products. It's so awesome that it was 

 

JARED WARD: I don't know Scott personally. He seems like a goofy sort of like very accepting, giving. 

 

 JASON KLUG: Well, he inspired me. So like everybody sees the weird Scott, but I think back to the Scott, he gave me a chance to gave me a sandbox to learn it and get paid doing it. You know what I mean? 

 

JARED WARD: That's invaluable. 

 

 JASON KLUG: Yeah. So I did that for like a few years and then. And then let's see, it would have been 2014, he sold that company and I didn't have any interest in being there after that, or like, really, I had already thinking about like, okay, I kind of want to start a product development and manufacturing sourcing business that is a service.

 

JARED WARD: What year was this again? 

 

JASON KLUG: This is in 2014. So it was like 2014, almost 10 years ago. And that's what I did. So I convinced him to give me enough money to buy a computer and then a 3D printer and a SOLIDWORKS license. And he gave that to me. And I was then able to go and start my company out of my apartment.

 

JARED WARD: Are you kidding me? 

 

JASON KLUG: Yeah. And then I would just do CAD work as a service until I built over time my team. 

 

JARED WARD: Okay. Okay. So you, and this is what is now Klugonyx. What was it called back then? 

 

 JASON KLUG: Klugonyx. 

 

JARED WARD: Oh, nice. 

 

 JASON KLUG: Yeah. Same name. I kind of got stuck with it. It's a weird name, but whatever.

 

JARED WARD: Okay. So you, you take this experience, uh, the sandbox experience of being an engineer, like catting up people. 

 

JASON KLUG: Well, the valuable part is a lot of the stuff we produced was American made. So I spent a lot of face time reviewing engineering files with factories and engineers at factories. So I would get so much free critiquing on my designs and how to design for manufacturing. So it was like a free, like another layer of free education.

 

JARED WARD:  That is so valuable as somebody who has actually developed a product. It's hard. It's easy to just CAD something up like a concept like, Yeah, it's this big and the nubs are this big. And it could be this material, but moving that into production like something that's actually digestible for a factory is a totally different thing.

 

 JASON KLUG: That was, that was a big value part because I, and also I got extremely fast at CAD, like I was extremely fast at SOLIDWORKS and then wrapping my brain around. When, when I have a drawing or an idea of a product wrapping my brain about how I'm going to approach that in the 3D world. So the feature tree is very well organized so I can modify it and tweak it without it exploding and, you know, throwing a bunch of codes and whatnot. So I started to figure out the order of operations of catting something and manufacturability for injection molding, metal fabrication, stuff like that. 

 

JARED WARD: Yeah. I get it. This is a tip that I personally would have for anybody who's trying to launch a product, if you're trying to develop a unique product, if you're not an engineer yourself, or like, have actual background in engineering, or an engineer like Jason who has taken CAD drawings to production lines. Definitely pay somebody to get their advice. Because if you don't, you could be Because the factories, a lot of times they'll just say yes, yes, yes. Or like, or they'll randomly say no. 

 

 JASON KLUG: Yeah, yeah, I would say, yeah, definitely there's, well, there's so many unknowns and challenges that you deal with when you're caddy or like you're creating a product when it comes to engineering and manufacturability. One of the other big things that I learned over time, cause it just, it was at the beginning, it was really just me and engineer. Over time I added another engineer and then I added a designer, you know, and then,  added project management and, you know, kind of scaled outward like that. But one of the challenges that I realized started to come up. Later, as I grew the business and grew the resources and things started going from development into manufacturing, it's like a game of telephone. You go from a designer, industrial designer, and they go through their process and they're setting the user experience, developing for a specific user there, you know, obviously the aesthetic, the color material finish, all that, the ergonomics, whatever details that are important to them and they value it so much. And they care, you know, and then it goes to an engineer, which if they're the right type of engineer, they will do what they can to achieve all those goals that they had as a designer, and then it'll go from that engineer overseas to a manufacturer, and it's extremely probable that you're going to, like, lose a lot of those details, you know, and I knew that, like, you know, from the beginning, I always wanted to add manufacturing and, obviously that was like very difficult to do over time and I'll get into that, but like, but, but one of the reasons why I thought it was important is because I didn't want to lose what, what that, that product that was built with intention down the road when it gets into manufacturing.

 

JARED WARD: I didn't see, I didn't know that was your reason for doing Onyx, Onyx 360. Yeah. 

 

 JASON KLUG: And the reason why that split off is because I had founded that with a partner at the time and in doing so, you know, he was over there, so I had the, the entry, you know, the way to like set up an office over there because he was there and he moved from Utah to China.

So I had the resource there and I had clients that I knew I could do the manufacturing for, so it was like an easy way to get in. 

 

JARED WARD: Did he speak Chinese?

 

 JASON KLUG: No, not at all. 

 

JARED WARD: Yeah, so. I think it's an overrated skill, FYI. 

 

 JASON KLUG: Yeah. And I mean, more and more of the resources in our industry have English speakers too, right? So yeah, I mean, he was over there. This is probably in 2017. So I was like four years, three or four years in I think, since I started. 

 

JARED WARD:  At this point, you had just been doing CAD drawings. You all do

 

 JASON KLUG: Design, engineering, and like, you know, doing the development portion. And we would do it where either the companies we did it for had their own resources to onboard manufacturers, or I had other relationships with people that were doing the manufacturing portion, and I would pass the project off to them. But  I would immediately lose what that initial value was. You know, without having it under one roof or at least, under one, like, process or, you know, communication standard or whatever, right? 

 

JARED WARD: And you genuinely, genuinely want those products to succeed. 

 

 JASON KLUG: And the founders have a vision and they have, they accept something early on and they get, you know, they get attached to it. They get prototypes and they validate what they're trying to solve with those prototypes and stuff. And then if you get into manufacturing and they, add nasty screws and stuff like that and whatnot, like, and make it, you know, just, just further away from what that original intention was, like that can, that can hurt their feelings and make it difficult for them. They don't, they're not stuck, you know, when they get that first sample, what the hell is this? We're taking steps backwards now. So I try to try to prevent that. So yeah, so I went out to China a few times and we built that office over time and funneling all of our clients when they got. Past the engineering over there, sourcing a factory, onboarding factory, working through DFM, while still trying to be as influential as possible through the DFM process without losing control of the original intended product. yeah, and that grew. Last year. I purchased the, the rest of the business from that partners and I own the rest of that because I also felt …

 

JARED WARD: Sorry. You said last year you did last year.

 

JASON KLUG: We went out for a while and it was, everything was fine and everything, but I just felt like I was once again, like losing. That flow. And then I think what happened is I started to get protective of the relationships that I have with the clients as well. And when we passed it over to the manufacturing team, which was built in a separate entity, I think I was like, and the clients would come back and not be happy with the experience and whatnot and the customer support and all that. And I was like, the only way that it's going to be done to the standard that I have at Klugonyx and development side. If I own that site outright and I need to be set out, right? So I made that big decision to do that. 

 

JARED WARD:  How, how is that one? 

 

 JASON KLUG: It's been fantastic. Yeah. I sleep at night again. Like I'm more confident in what's going to happen down the road and we're continuing to refine and like work on the processes and stuff. Cause it's like. You know, there's so many touch points and there's so many opportunities for that to still happen where you like lose the intention of the design or, you know, other problems at the manufacturing level, the production level with, you know, QC issues, all that kind of stuff, like how that is all handled, how it's communicated to the clients, and how we build solutions to solve the problems that are going to come up because you're making a product. It's unavoidable. You can't really, like, avoid problems, you know, it's like, that's the most important thing. 

 

JARED WARD:  Now, so this is getting closer to one of the questions that I want to ask, about Klugonix and Onyx, but personally I've seen so many like sourcing and product development guys around and like, it's the same general person, like the same archetype or whatever. They speak Chinese. They've been the sourcing guy for a while. And it's just, it's simply because they can interface with the factory in Chinese. So I've seen them launch and fail importing and product development businesses. And, you know, I've also sourced and imported products as well. Why does Klugonix specifically have such a good reputation? And, what do you attribute your success to, despite Utah being such a saturated hub for, sourcing guys? 

 

 JASON KLUG: Well, mainly probably because like, I would say 30 percent of our clientele is in Utah, like I haven't focused on Utah. You know, and I think because it's saturated and I like saw that versus the way we acquire and build relationships with the customers is like we could go to trade shows all over the country and internationally and stuff like that, and service wise, I think because we were built with the development side first versus a lot of people work backwards and add development, there's not as much emphasis on the development. I think that's an advantage as well because usually the developments added as an afterthought, you know. 

 

JARED WARD:  I used to, I had like a fork in the road in my career path where I was doing a lot of sourcing and importing  and my fork was, okay, either I go down this path and go all in, like as I wanted to be like the product development guy, I had all these wacky ideas I wanted to bring to market and I had good sourcing background or I go the software route. I decided to go the software route just because I think I was. I was a lot more passionate about that. Yet, my passion for products and like consumer products and building them stays. What I can say, like knowing that industry, is you have to have somebody like Jason who understands and is genuinely driven by how a product works, how it's created, and then you have to have the structure of a company where it owns both the pre production and the production. And they also care about post production like that. Well, and a lot of people go or they have a industrial designer, they create designs and it goes to an engineer and the engineer and the designer might be disconnected where they're siloed. And that is like that game of telephone. And then it goes to. You know, they find a factor in Alibaba or something, right. And you don't know who it's going to, right. Goes over there and then they have their own perception of it. And they're likely not going to have the original intention from that designer. You know, their thought process of why they did something a certain way and why something's so important, you know, and that stuff will get lost.

 

 JASON KLUG: Yeah, no, 100%. 

 

JARED WARD: And they have to like to care about it too, you know, versus just like, Oh, okay, go for it. It'll be okay. Just do it that way. It's fine. It'll save 2 a unit, you know, or whatever. Cause you know, in something like, you know, on the e-commerce side and the brand side. Like,  in China, culturally, they're like, oh, make it cheaper. Make it for less sell quantity, quantity, quantity. When I see a lot more companies moving towards making something that's going to last a longer amount of time. They're okay paying a little bit more for the better packaging, the better materials, the, you know, all those, the extra steps and whatnot to create that premium product and sell it for a premium and they're also okay with the more steady growth versus just getting something that sells high quantity and likely he's gonna have a like a shorter life cycle. You know what I mean? 

 

 JASON KLUG: That's why I'm so pumped about my brand that's going to be coming out pretty soon. It's called Ergo. It's, I've talked to you about it a little bit. It's like a high end baby pet gate brand. But no, I, I totally agree. 

 

JARED WARD: And actually, I just bought a really crappy baby gate. I'll tell you about it too. 

 

 JASON KLUG: Oh yeah, man. Oh, I can't. Our final sample, or excuse me, final prototype is going to be done next week.. But no, I've lived what you were just describing because, so I do an outsourced engineer, so I outsourced him. I found him from Upwork, actually a really smart guy.  He used to be the engineer for Rustica, Rustica Hardware. Yeah, he's been a really nice guy. I'm really scrappy in how I develop products.

 

JARED WARD: Yeah, well, you know, you know enough about the process to be able to manage it. That's what I was about to say. Like, if I didn't have the sourcing background. I probably would have just gone with Kool Aids. 

 

 JASON KLUG: Yeah, you've done it because carrying it that lasts like 50%, you know, because like when you have a concept and like a prototype, that's like one thing. That last 50 percent is the hard part. And if you could manage it through that, you could solve a lot of those problems I talked about. And if you could communicate and know how to communicate to the factory and know what tools and resources you need to communicate to that factory. Like you can solve those problems and do it that way. But it's just, it does take like, uh, you have to go through it and see all the failures that happen throughout the process many times to be able to do that, you know, and what you've done, obviously. 

 

JARED WARD: Well, also back, back to Kugonix, you guys, at least from me, I've talked to a lot of people in Utah. you guys have a good rep in… 

 

 JASON KLUG: That's good. Utah's good. I hope so. I don't… 

 

JARED WARD: Why, why do you have such good? Because I don't think, 

 

JASON KLUG: Honestly, that's great to hear. I wish I should pay more attention to it. I feel like I stay secluded in my little building, you know what I mean? But that's great to hear.

 

JARED WARD: Yeah. So that's always shocking to me. If somebody in a high pain industry, so for any of you guys who don't know, developing a product, like you constantly miss deadlines, pre production, there's constantly issues. It's that should be the expectation is like, we are going to run into a thousand issues. How can we solve this the most efficient way? How do we pivot? How do we, like, that's product development and that's manufacturing. They're like high pain industries. So to have a good rep. In those industries is, it's really impressive. 

 

 JASON KLUG: Yeah, I appreciate it. Yeah, it's hard to make stuff, dude. 

 

JARED WARD: What do you attribute that to? Because I remember I, so I ran a sourcing agency, or a white glove sourcing division for madeinchina.com. And just always issues. 

 

JASON KLUG: It's fire after fire after fire. Yeah. I think the biggest skill is how you handle fires. You know, and that's even something we still work on today is not just how do you put out the fire, but also how do you communicate and present solutions about the fire to the customers?

 

JARED WARD: Okay, dive into that. 

 

 JASON KLUG: Yeah, because they're so passionate about their brand, their company, their product, their stock. That's very important that this gets here on that time to restock whatever it might be. And when issues come up, you know, and this is something we still work on the team. China, for example, because they're so blunt, like, oh, it's going to be delayed. It's going to be delayed three months and that's it. And that's an email they wake up to and they're freaking out what's going on. Why is it delayed? And they called you. Well, they usually will call, they'll call the U. S. based account manager. So they have a person in their normal time zone to talk to. If that account manager hasn't spent the time with the, you know, purchasing manager, the project manager in China that has already had discussions and figured out the root of the problem with the factory throughout the day before. Yeah, you don't just react with the customer like, so that's one of the things I'd rather do instead of it going directly to the client. You know, I'd rather go through that communication standards. So actually it's David or Rachel or Larry calling the client and going, this is what we ran into last night. Here's the cause of the problem. This material did this, or, you know, uh, the mold ran into this issue, but they fixed it or whatever. And here's three potential solutions. And this is how it can affect your timeline. Worst case scenario, but this is like best case scenario. And this is what we're going to do to make sure that it hits the best case scenario. And it's like, if they hear it like that, they're going to receive that information somewhat different than an email that says, sorry, you're going to be late. You know? So, I think that's like,  , and we, we are always putting effort into making sure that. That's the type of experience they have, but that's difficult, you know, and how many problems come up, but I think that's an important part of our service. And I take that very seriously. 

 

JARED WARD: So I actually, at Main China, we did the exact same thing as you. So we had a U. S. based account rep that managed accounts, and then we had a, like a China sourcing specialist. 

 

 JASON KLUG: You got to have both, right? And those two teams need to be like locked at the hip, you know, where they're constantly communicating and know both sides because usually the U.S. Based resource really understands the client, their needs and has that relationship. And then the person, the team member in China has the same type of relationship with the factory, right? So it's like you need that. And then those Two people when they're communicating, they need to be tied together.

 

JARED WARD: I cannot wait to dive in here. So I, the communication, when you're sourcing products, the communication between the factory. Your China team, the account manager in the United States, the client himself or herself, that is difficult. Yeah, it's very difficult. In fact, I built a whole custom software around that for MainChina to use. Like, what tech stack do you guys actually use, because for those people listening, like the problems that we ran into was there's, at each layer, not only is it going to be a different language, but the data that you show to the customer could have a rule of markup. Like, okay, you can't, you can't just send this. It's got to be marked up 15 percent for this. There's rules and stuff. Like, so how have you guys solved that problem? 

 

JASON KLUG: I mean, I would say we're still working on it. I mean, WeChat is a very common tool, but there's a lot of problems with WeChat, right? Like, uh, it doesn't have a good data log and like referring back to stuff. It's not what I see as a source of truth, you know, before it was like, okay, Okay. If a decision is made on WeChat, then it needs to be followed up with an email to doc ent the decision to make sure that everybody's on the same page and confirmed, you know, so like, that's one way to solve it. Communication wise, we're actually switching our team in China and the U.S. team to everybody's on Slack, and it's actually been working out pretty well. And we're like, we just push them over. There's no firewall issues in China. No, and we always thought that was a problem. No, it hasn't been. It's fine. I mean, sure, there's a little bit lagging, but it's fine. Like, it's not as bad as we assumed it would be. And we also have, you know, there's VPNs and stuff. There's, like, ways around that. The other thing we're starting to push on implementing is Asana, which will be more of a challenge with the firewall.  But, you know, we've been testing it with our lead PMs and getting them there, because we've used Asana for years on the development. Basically using Asana for resource management, task management, like all the project management, where we're, we're using that software to its fullest. And that gets it to the point where we pass it off to the, the team in China. And now what we've been working on is implementing it from that backend as well. You know, having to be the source of truth. And I think over time, and that takes so long to implement a process, especially in China where culturally. They like spreadsheets and like, you know, Microsoft folders and nothing pisses me off more than when I get an email that has a picture of our folder system with an arrow pointing out what folder I need to find something in. You know what I mean? So, yeah, that's what we've been working on. And then of course, like Dorai, you know, a whole different tech stack. 

 

JARED WARD: Well, now we're using Luminous, right?

 

 JASON KLUG: Yeah, yeah. For Dorai. Yeah, Katie loves it. You know? We're super jazzed. We just started implementation. Yeah, she's very excited. She talks about it in the operations meetings and we're starting this week in Luminous. 

 

JARED WARD: That's awesome. So, do without that SKU vault and stuff. We will get to Dorai. So before you even get into that. Again, just because I have a background in supply chain and sourcing and product development. What is it like? I'll share one of my stories, like failure stories, like super embarrassing or maybe very serious, like a catastrophic event that really impacted you. So I'll share two real fast just to kind of open it up.  I hope you can share a couple too. I'm sure you have so many.

 

 JASON KLUG: Yeah. Like this week, I think I can think of probably. 

 

JARED WARD: I'm just kidding. So there's this, okay, so first one. When I was new to sourcing,  , and interfacing with a factory, and Just all the processes that, you know, more than me needed to happen. Like, you know, a pre-production sample you need and, and, and you have to get one so you can compare it to the production sample, like a third party inspection service. So I bought like 500 blankets for a client. 

 

 JASON KLUG: And were they weighted blankets or …

 

JARED WARD: No, it wasn't weighted blankets, just regular blankets. It was just like a regular blanket.

 

 JASON KLUG: It was a craze for those, you know, so I figured, yeah. 

 

JARED WARD:  I have so much weighted blankets, but they just need the basic printing on it. And they sent the design over, we did it, we sampled it, everything looked good before they started production, we doubled, like they sent us a picture, double check, like, yep, looks good, they produced the units. Now, for most people, there's third party inspection services. There's a zillion of them, and there's also, like, factories that will do their own inspection. I didn't use a third party inspection service, and somehow the factory, not only did they manufacture the completely wrong design, and, but, when the, so, this one had been sent straight to the client. We didn't cross stock or do anything. So, he opened it up. 

 

 JASON KLUG: And it's totally different design after paying, importing, everything, everything had all been paid in months or timeline, all that. 

 

JARED WARD: And I had trusted the fact like the factory's inspection and, uh, never did I do that again. Second story real fast is I got 90, 000 stolen from me from a factory in the PPE craze. That's a totally separate story, but…

 JASON KLUG: Ugh. Thankfully, I didn't even try to get into that, but I had a partner of mine do that and it failed. But yeah, I mean, I remember a very early problem. One of my first big ones. And it was for a company of a client is also a friend, which sucks. We made the cash truck pads. They, they make like the, the tailgate pads and they have like, you fold your tailgate down bikes and stuff. And they have little seats that flip up, you know, and coolers and local companies and they're buddies of mine. So this made it even worse. But we did the first production run and this is when I had, this is before I had a QC team because I have QC QA and house as the third party and we do that now, but this is when I think we had three employees over there in our China office. So like, you know, for example, April would, she would go do the QC and QA and they have this lock that it locks to your tailgate. So people can't steal them. Because a lot of people steal those track paths and they mount the buckle upside down. And, and riveted it to the thing and imported them. So we got them all the way here.

 

JARED WARD: And,  how many? 

 

 JASON KLUG: Oh, it was, I don't know, maybe like 1500 units or something like that. I mean, they're big items. So thankfully they didn't, you know, it wasn't tens of thousands, but to replace a rivet. And these are stainless, like heavy duty rivets. Like, I mean, we were talking, we have to drill them out and all that stuff. So to repair it. We tried two methods. One, I had a 3PL that I was working with that was doing their fulfillment where we would go and do it there and I set up the process where we would bore out the rivets, flip it, and then put it like a binding post and lock it tight and screw it tight. And, and they started doing them and they all failed because they weren't tightening them up. They probably had lower team members. 

 

JARED WARD: And this was your buddy. 

 

 JASON KLUG: Yeah. And so, the first fix failed and of course I'm paying for all the fixes. So I, you know, I think I spent like 14 grand on that first fix and that failed. So that, so we're like, okay, that didn't work. So thankfully we then decided, okay, we're riveting these like they did in production. So we needed to find a riveting machine. We're in Utah. There's like, you know, no riveting machines that are like at that level until we found, uh, a boot manufacturer. Yeah, like making ski boots. So they're doing all the rivets for the buckles and stuff. And this guy, you know, he had a small shop and he did stuff for like, you know, like Burton bindings. And he did like a few ski boots. He was nice enough to let us, he, he did the riveting for and replaced them all, but there was still another, like. Fifteen or so grand that we spent on that. So I lost all that money, but, you know, we fixed the problem, but at the end of the day, too, like the relationship was tarnished.

 

JARED WARD: Oh, oh, the relationship was tarnished. 

 

 JASON KLUG: Yeah, like, you know, I mean, we saved face after that, and we've had other stuff, too, but it's like, no, they didn't want to manufacture with us. We did design work for them afterwards, and part of that relationship was tarnished was not just necessarily me, because we stayed buddies, but also like some things were said by the partners and stuff that might have tarnished it at the end of the day. But like, yeah, it was very painful and I always look back and, you know, hopefully never make a mistake like that again. 

 

JARED WARD: But this is, let me tell you that like, this is why you have a good rep though. Cause most, most companies, like the fact that you did all of that, you actually care about the end result.  Most companies would not do that, especially Chinese companies. I'll see what I can get back from the manufacturer and let you know, oh, you could do this or this. It would be very apologetic, but the fact that you dove in, spent as much money as you needed to fix it. Like that's actually very, very commendable. 

 

 JASON KLUG: And sometimes, you know, and, and the thing about getting factory credits and stuff like that is a lot of times can't be a good solution. You know, but it's like, it only matters if the customer's like ordering consistently and cause you got to think of the factories and they're like, they've only placed one order with us, you know? And a lot of times we'll get them to like giving credit and it only benefits them later. Yeah. You know what I mean? Yeah, that's always like a hard conversation, but we go and push on it and we'll do the whole dance with the, you know, I'll send Patrick and he's my GM over there that I've run in it and like send Patrick and the PM's the QC team purchasing team. And we go in and do the whole push. And like, this is what we need. This is how you're going to give it to us and blah, blah, blah, blah, blah. But that only goes so far, you know, but…

 

JARED WARD: So for people listening where some actual takeaways on the nuts and bolts of manufacturing, like a common things that I'm hearing here are like your lessons a lot of time were in pre production and like the intersection of engineering and manufacturing, like giving CAD drawings to a manufacturer, making sure… 

 

 JASON KLUG: The problem with that one with that pad is that it was the second production run.

 

JARED WARD:  Oh. Yeah, they didn't make that problem the same, the first one. What, what do you think could have prevented it?  .

 

 JASON KLUG: Having more QCI, because if it's just April, they're doing the test. Like, I mean, she's got a lot of other stuff to test, like seams and, you know, things can be messed up. You wouldn't think the factory would mount something completely upside down. You know what I mean? So yeah, that was tough. I remember we FaceTimed with the factory. When we were going through the problem with them and they were showing how they did it and they literally pulled one up, mounted the buckle and they mounted it upside down when they were showing us how they did it. And I was like, you did that one wrong. And the guy's laughing. I'm like, you should not be laughing right now. Yeah, it cost me 30k. But, but, but the good thing is nowadays, like, because like I've hired. a very experienced QC leader and then his team, like their attention to detail is incredible. So really the goal is to catch it before it leaves the factory floor. And that's also why we keep the balance payment where the client doesn't pay the balance payment until we go and inspect it. Because our goal is always to catch things before, but also if we pay the balance payment too early to the factory. Then they have no reason to fix it and we can hold that balance payment over their head. Right. Repair the issues. So like if we reject it,  which happens, you know, here and there, then they, one, they fix it fast because they need that balance payment. And two, we could solve the problem quickly. And we, it's so much easier for them to solve it if they just get it back in line and fix one's item or whatever, depending on what the problem is. But that's a big portion of why we don't see that as often anymore. 

 

JARED WARD: Interesting. Yeah, and some problems are much bigger than others, and the perception of problems are smaller and bigger than others. You know what I mean? Like, a cost a client that's new, that's maybe never made something, and they have like a 1 percent defect rate, like, that's incredible, right? Yep. Especially on a first or second or third production run, like That's amazing. That's amazing, right? But to them, they have a customer complain about an issue, and they freak out. 

 

JARED WARD: Jason, I thought we were supposed to get this. 

 

 JASON KLUG: And it's like, you know, I don't wanna be harsh, but that's like really good, you know? Now we know that problem existed. Mm-Hmm. it was only 1%, and that's gonna go onto our QC doc in the future. So that standard is now part of your normal process moving forward. 

 

JARED WARD: Yeah, you're, you're, these are all new things and like, especially if you're doing a complex product like , the, the things that are uncovered and especially like, be grateful it's a low defect rate for that one thing you uncovered.Like it could have been 5%. 

 

 JASON KLUG: Yeah, yeah. Or more. Or a 100 percent like those truck bags. 

 

JARED WARD: So I, I really liked it that you, you take full responsibility and you want to, from the start to the finish. And like, for example, when I got that 90, 000 stolen from me, that was in like the PPE craze cause we were doing like a distribution company at the time 

 

 JASON KLUG: David Willis You're doing like masks and stuff. Mike Santos 

 

JARED WARD: Uh, so we did nitrile gloves. ASD certified. 

 

 JASON KLUG:  It got picked up in Europe through customs and taken away. 

 

JARED WARD: It was insane. Like, that's, we could do a full podcast on that, but like, long story short,  , got 90, 000 stolen from me from a factory that I had already done business with. It was in Vietnam, actually. So we won a $300, 000 contract with a hospital and they sent the deposit over to us and then we wired it straight, straight there, like a contract set up and everything. Then like crickets, 

 

 JASON KLUG:  They went dark. 

 

JARED WARD: They went dark. And he also said, Oh, because he was in on this deal. He was kind of like a trading factory or excuse me, a trading company where he was just like going and doing business with the factory directly. And if you know, like at that time, that actually happened to a lot of people. Oh, yeah. Especially in Vietnam. 

 

 JASON KLUG: Yeah, they had barriers. They were afraid. 

 

JARED WARD: And it was like, there was a time where ASTM certified nitrile gloves for hospitals was literally like gold. And so that $90, 000, I can relate to that responsibility because I saw so many people with, in that PPE craze, like the people who didn't take responsibility, just sort of like declaring bankruptcy. And it was my life's mission the next couple of months, like, we're going to figure this out. Like, that's gone. It's stolen. Guess I gotta make $90, 000 as an entrepreneur. 

 

 JASON KLUG: You can't say, sorry, I lost the deposit. 

 

JARED WARD: No. There were people, like, declaring bankruptcy and saying, sorry, like, I don't know what you want me to do. We Like I just hunkered down and actually went to 3 million in sales in three months and we made the 90, 000 back and more and we were able to pay them back.

 

 JASON KLUG: Selling PPE? 

 

JARED WARD: Yes. So we, figured out a way to actually get a hold of nitro gloves, not overseas. Overseas was the biggest ridiculous trial. 

 

 JASON KLUG: Yeah, but there's chaos over there. 

 

JARED WARD: If you could actually in California, there were legitimate suppliers that were getting their hands on legitimate ASTM certified gloves. The problem is they're really expensive. They were selling them for, you know, 16 a box. And then, but the factory pricing at that time was 11, 9 a box. So, you know, We got into billion dollar hospitals, and it was just through being honest, like, Hey, I know you're getting pitched about this box of gloves that they're selling for $11 a box. I have something tangible sitting here in the United States and I can give it to you for 21. Like, and we weren't, we weren't even price gouging. It was like, yeah, that's reasonable. Markup was, it was a reasonable markup. Like typically it was like 10 percent at most 20 percent and like that one in the end.

 

 JASON KLUG:  I think that wins. 

 

JARED WARD: I relate to that responsibility. And another question I have for you is one of the reasons why I got out of the product development sourcing game for clients is like I would take that on so much. How do you deal with the stress? 

 

JASON KLUG:  I honestly, the biggest thing I do is I just have to, I trust my team and just like, they know if a fire is big enough they need me, they'll come to me about it, but Like, I can't let that all get to me too much. The most important thing to me is like, if a client is in a really bad shape and needs some time with me, then that's what I would focus on. But, yeah, I can't let all the little problems get to me. 

 

JARED WARD: Got it. So you've, you've kind of put up some barriers. 

 

 JASON KLUG:  Yeah, I have a barrier. Yeah, like for me, even with the clients that I've been working with for like six years, seven years, it's like, the relationship I have with them is like, we're just friends and have a great relationship. They work with my team, but when we're together, we're not talking about the work stuff so much, you know? We'll talk about strategy and stuff like that and the e-commerce side with Dorai. So I have that experience and whatnot, but like, yeah, I think really I just, I've learned to, to delegate and remove it from my mind and trust that it's going to be okay. Cause if I. Don't. Yeah. Like that little fires come up and it's just what it is. And when a big fire comes up, I'll step in, you know, but it's not as it's not as often. I think my team does a good job of preventing massive fires all the time. 

 

JARED WARD: Well, that's awesome. I'm glad you've been able to, like, graduate to that level.

 

 JASON KLUG:  I, you know, I'd say that was definitely something that. You know, people I've worked with in the past, they would get all in on everything, all the time, and they were just a ball of stress. And I just couldn't let it, I just never let it get to me. Yeah, it's, it's hard, but yeah, I just let it go.

 

JARED WARD:  I just remember carrying around so much anxiety around all the little things that can happen between manufacturing and then like, 

 

 JASON KLUG:  I mean, when you're manufacturing a thousand SKUs, you can't do that. You know what I mean? Like, I don't even know how many SKUs. I know we're like, probably over that, but still it's like, yeah, you can't, I would explode.

 

JARED WARD: It's, you know, it's funny. I brought the same, like that same issue into Luminous at the beginning. And it's like,  I was, uh, I needed to be handling all the counts at the beginning. I needed to be front line. 

 

 JASON KLUG: Sure. Well, you're learning and building based on what you're learning. Exactly. So I get that. 

 

JARED WARD: So that was the, that was a good thing. In fact, that's like my secret weapon to understanding the market better than my competitors.  Cause I was so in the weeds of all different types of warehouses. 

 

 JASON KLUG:  Yeah, especially while you're literally in that build phase. It's important. 

 

JARED WARD: Yeah. But I've had to learn how to put up those barriers. Like, no, we have a customer service team for these things. And this is how it filters. And like, that's, that's why, that's why Luminous has an amazing, incredible CTO. Like you have to trust people eventually. And 

 

 JASON KLUG:  Yeah, and they make their own mistakes and learn to, and you have to like, let them do that as well.

 

JARED WARD: And they'll also do things way better, some things way better than you. 

 

 JASON KLUG: Oh, totally. 

 

JARED WARD: Okay, now I, I do want to change topics a little bit now that I feel like we've covered Klugonyx pretty well, like your engineering background, the type of person you are, like, you're like a gunslinging engineer product guy with tons of experience. We've talked through some of the failures, some of the hard stuff. I want to talk about Dorai.  You guys are crushing it. I love your brand. 

 

 JASON KLUG:  Okay, yeah. There's a lot to that. That was the piece I was always missing. Cause it's like, I uh, my, my, the back end side of building products I could do all day.

I always wanted to start a brand cause I saw the service and stuff, like I could do that for the rest of my life. Like I like it and I enjoy it. The building a brand I saw as a way to build something that I could like sell one day and stuff like that, right? So there, in, in, you know, that's part, a big part of the goal, but I never had an idea that stuck until Dorai, and this is in 2017 that I found the material.

 

JARED WARD: So do you attribute that, like the, the first one that really stuck, do you attribute that to Kelsey or? 

 

 JASON KLUG:  Well, she was the reason why it was able to stick, you know, I found the material, but what I would have done with it would have been like a Kickstarter and made some money and then probably lost money at the end of the day, you know what I mean? Versus Kelsey, when I showed her the material and she did some research on the diet to make her background is in, you know, brand strategy, UX design, you know, and I showed her the material. She did some research. She was like, well, this is natural. It's healthy. You know, it contributes to a healthy home. That's important to me. And she's like a big marathon triathlete type, you know, very health conscious and all that stuff. So it's like, yeah. And she had quit her day job and started doing the agency thing. So we saw like, okay, let's, let's start this thing and do a Kickstarter and see what happens. With some convincing, but at the end of the day, she came around when she did the research and believed in the product and the material and what we can do with it and saw the opportunity that I did. But she's the anal, like build this perfect brand that communicates to our specific customer, keeps everything consistent and tight. And she takes that very seriously. Even today and today she's not involved in the day by day. She stepped back and took a day job at Google. 

 

JARED WARD: Well, yeah, it's Alicia and Katie.

 

 JASON KLUG: Yeah. So, so that, and. What happened is like when Dorai started to really grow, I think because she, it's so important for her to be perfect every time and like building a business is just not perfect. Every time they wear it on her a lot, the operations. All of it. Yeah. And, but she was like, I just want, and we were also talking about having a baby and stuff. You know, she's like, well, I'm just going to take a day job. And she got one at Google, you know, okay, that's it. Yeah, I'm just casually like, I'll just go and she didn't go to Google. She enjoys it, you know,  but she still acts like this advisor. But at the very beginning, like I wouldn't have been able to do the brand. And, and I learned following along Billy and Dariah, what it means to build a brand. 

 

JARED WARD: Okay. This, this, this is so cool right here because I feel like a lot of the entrepreneurs watching, even if you have an existing brand. Like understanding your strengths and weaknesses. So I just highlight, for example, like I have to outsource engineering. I might not have to outsource something for the sourcing manufacturing side. And then what Jason was just talking about, like, you know, dry without Kelsey and without y'all's, your crop cooperation could have just been like a. Freaking stone. You like trying to sell B2B or something? 

 

 JASON KLUG: And it would have been fine, you know, but it would never have been the, what it's become today and what it's growing towards, you know? And then once it got to the point where it was like, You know, like 10 plus million, like really growing in revenue and stuff like that. Then it was like, okay, I need to hire a CEO because Kelsey stepped back. I can't be the CEO of both. I shouldn't be the CEO of an e-commerce brand. That's not my skill set. You know, like I'm good at this. I'll focus on this. And I, I found. Alicia on a LinkedIn job posting for a CEO, I got really lucky, you know, and also at the same time, well, before Alicia came on, I hired Katie as director of operations, who she worked for me at Onyx 360. Yeah. And then a job opening opened up.

 

JARED WARD: I love Kate. I love both of them. I've interacted more with Katie 

 

 JASON KLUG:  She is learning at such a rapid rate. She's like the gun slinging operator. And that's what I've learned. I have to surround myself with because I'm not that like, I'm a, I'm like the leader, uh, set vision type. You know, like, I can't, I don't, I can't sit down and do the operations and keep it organized. I'm too messy.

 

JARED WARD: I can't wait to have Katie on the podcast. She'll be like, we're good. Her and I are gonna dive into like the nuts and bolts of like, well she, 

 

 JASON KLUG: She'll have a lot of valuable information, like what she's learned over the, because the, the amount she's learned from when she started working with me at Onyx 360. That job opened up and she goes, I want that job. I was like, you got that job. 

 

JARED WARD: Oh, that's sick. I'm so glad she spoke up.

 

 JASON KLUG: It was a touchy subject because she was leaving one company to the other. And at the time it was like, you know, someone wasn't stoked on that. But at the same time, she was like, I love dry. I want to make that my job. And then her learning really accelerated because she got to like, focus on one company, one supply chain, one product line and stuff like that. So bringing on Katie and then hiring on Alicia, you know, she's ex Amazon, ex Walmart. She was at Walker Edison before she came to me. So she had home goods experience in e-commerce, like the serious e-commerce growth that company did. And so she had all the boxes checked and also personality wise, she's a leader. She's very positive. She's very people focused and she's like, just great to work with. It comes across. It was really easy, you know, to make that so I can really like to trust them and I'm like, not as involved in the thing I stay involved with is like the very top line stuff. You know, when it comes to like financials and whatnot and like very high level strategy, and usually a lot of that is more Alicia and I collaborating, Katie and I collaborating versus me saying like, this is how it needs to be done, you know, I could really lean on them to also be a big part of those conversations. and I just focus on like, they're like our tightest and biggest client. You know what I mean? Yeah. They go through Onyx 360, like the clue Onyx. It's hard. They are a client to me. They pay, it's so cool. They pay my service business. You know what I mean? That's cool. Even though I own the majority of both of 'em, but at the end of the day, it's like I can't run. You know, dry, which has now become this monster that would drain it's it's all it has to pay. And it's like a client, you know what I mean? So, but what that does is one, I get to sit on the same side of the table as my clients that are growing like e-commerce. 

 

JARED WARD: so valuable. 

 

 JASON KLUG: And they're telling us what they learned. And we're bouncing ideas. And we have really rewarding conversations.  But also  , it's sitting down with Katie and Alicia and be like, well, what went wrong? What did we do bad? You know, we could like to have real and direct conversations about what our service is doing wrong. And that's like a huge advantage that I have over a lot of my competitors. Because I get to like literally have a relationship with a client like no one 

 

JARED WARD: I hope this is okay to bring up. Something that I learned through you guys very recently, talking to Katie. So apparently you've got some mother effing copycats on Amazon. And it was, because you didn't file for a patent in China in addition to the United States. 

 

 JASON KLUG: Yeah, really, it's the sync caddies, the big one. That's like just one of the SKUs, you know, and it still sells well and stuff. So I'm glad that we've protected all of our other products at the level we did.

 

JARED WARD: And look at, can you, can you dive into that a little bit? Like, how, how do you, how would you recommend somebody launching a product if they're very serious about it and the good work they do? 

 

 JASON KLUG: Well, I mean, like the patent fortress that I focus on for dry is not only. Super important to me. And like, we try to get utility design patents. We get them internationally. We get them in China. But also I will fight them and that's what people do not do. They invest in IP and they're like, oh, it's patented. But as soon as someone knocks it off, they're like, oh, it's too expensive. Like you got to go after them. And I will go after them. You know what I mean? And that's like, as mean as that sounds, I need to protect what we built and I will fight a patent and get out of it what I deserve. 

 

JARED WARD: But my belief on software versus consumer products is very different on those things because consumer products, if you got a design patent, because you were the first person to come up with it, or a utility cotton that has like an actual claim and somebody is clearly copying you and monetizing off it.

 

 JASON KLUG: Yeah. Yes, that's why it exists. We don't skimp on design processes. And we have a new scene caddy coming out that will have a patent that will be more unique and it'll be, we've added some value to the original design because we've learned from the amount of customers we had what we need to fix on it. And we have a new version that'll come out that'll be protected. So if they knock that one off, then I'll just go. Take them out like flies, you know what I mean? They can have the old one. I feel, I feel great that we designed that and that was our design and, and people are not confident. It's almost flattering, you know, but they can have that.

 

JARED WARD: You'll stay ahead of the curve. 

 

 JASON KLUG: Yeah, we can. We're going to try to be two years ahead on what we have out, and there's a lot of the products that we have that no one will be able to knock off because of the utility patents and the design patents and the international IP work that we've done. 

 

JARED WARD: Okay. So some advice for somebody who's launching somebody, something in a very similar industry, like similar price point., I struggle with even, do I want to sell on Amazon? 

 

 JASON KLUG: You know, so we did way later in the life cycle. We got to the point where we started selling on Amazon for brand protection. Because people were going on Amazon and the search volume for Dorai was so high, we knew that if we weren't the ones at the top of the page collecting on that, then they're going to buy a competitor.

 

JARED WARD:  Okay, so it was literally just because like, oh, our brand was getting in. 

 

 JASON KLUG: And, and, well, that's the thing, like. So I wouldn't say start on Amazon. I would say go to Amazon when you need to go on Amazon. And we felt, we held out as long as we could. And it didn't kill our bottom line at all. Or like our, our, our cannibalize our Shopify sales.

 

JARED WARD: Well, what's your pricing on Amazon versus Shopify? Oh, it's the same? 

 

 JASON KLUG: Yep. We, we, we keep sales the same pace. Everything follows each other. 

 

JARED WARD: So how is your contribution margin on Amazon versus Shopify? Qualtree. Like the Amazon contribution margin was horrible. 

 

 JASON KLUG: It's not because the shipping is so much more efficient these days.The shipping's a little bit lower on Amazon. 

 

JARED WARD: Also, do you advertise on Amazon? Yep. 

 

 JASON KLUG: Okay. Yep. So the customer acquisition cost is lower. But it's hard, the amount of data you get out of it, it's hard to know if they knew us from somewhere else and they came through an ad on Dorai or whatever. Did they find us on a meta ad? Yeah. You know, so. Yeah. The amount of data you get out of Amazon is different. I don't think I hate Amazon businesses, you know, but we're a business that got to the point where we need to get on Amazon and we're missing an opportunity and got it. Yeah. And we knew that when we got on and off, our shop by sales stayed where they're at and continue to grow steadily. Right. And then Amazon still just bolted on top of that. Interesting. It didn't cannibalize our sales. Okay, it was the rollover traffic because people that are like serial Amazon shoppers and they see a brand on like a meta ad or whatever, they go straight to Amazon. Yeah, they'll go look and if it's not on Amazon, they'll find something similar. But the thing is too, because we differentiate as much as we can, you know, I think that gives us an advantage that people, if they go on Amazon because they feel safe buying with Prime and stuff like that, they'll do that. There's trade secrets and advantages that we could apply to protect ourselves in other ways at the manufacturing level. Like if a factory in China finds something difficult to do for a specific product and you say, No, we want to do it and you're willing to pay for the extra. That is another barrier to why they wouldn't want to knock you off and do that for someone else. They would rather find the easier, cheaper way to do it for someone else and they can have it. So, like, I think innovation and engineering can also help protect a product. 

 

JARED WARD: Yeah, absolutely. Yeah. So, before we move on from Dorai, as you know, as a client of Luminous, Like, Luminous is, our thesis is the modern e-commerce brand, Which I, I think dry is a great example of that. They hit complexity markers really fast.

And my stance is the evolution of e-commerce company, it's a relatively new thing. Like, how you go omni channel, when you go omni channel, when you start selling wholesale, when you start, if you're handling the whole process, etc, etc. My whole stance is always, You don't have to go to NetSuite, Dynamics 365, like these massive systems, what are specifically some of the complexity markers that Dorai hit from the first time it hit  , the goods hit the warehouse and you started doing fulfillment.Like, when, when did things start to break where you're like, Oh, man, God, I need ship station. Wow, now I need SKUvault. 

 

 JASON KLUG:  I think, we started with a 3PL when we launched, you know, and we did that for  , let's see, maybe the first year, two years of the company. We would see a lot of issues and stuff like that, but then also we'd notice how much it affects our bottom line with the extra fees and stuff like that. Yeah you know, I took the leap of, of getting to getting our own warehouse, which is the one that you see that so, so we took that leap and I was like, I really think this is gonna add to the bottom line. I would say it didn't take us. We didn't really figure out the warehouse. efficiently until about eight months, like a year in or so. I think we figured it out by the time we hit our first Black Friday in the warehouse. 

 

JARED WARD: What, uh, what, what software did you use? 

 

 JASON KLUG: So that was the thing that we knew ship station because my buddy Chandler, he's kind of like a jack of all trades. He always helped like even back in armor active is when I met him, he worked there. He would work with the shipping and stuff. He worked at Wolfgang, the collar company. They make leashes and stuff. And he dealt with shipping and stuff there. So he came in to help me. which is helpful because he knew like, ship station, you know, at the time we were using a combination of ship station and Shopify for inventory, which, you know, is bad, you know, so it was, that was messy, then Katie started.  And so when Katie came in, that was one of the first problems she was able to tackle. She worked with Chandler and at the time, the warehouse manager we had then, and they shopped around for various softwares for warehouse management.  , and yeah, I think really we just ended up with SKU Vault because out of the options we had, and we didn't even want to, but it was like really, we didn't have many options. The pickings were slim and it just made the most sense. For us, but, you know, later we, you know, the challenges we ran into, like, we're like bundles. It's always a big problem. 

 

JARED WARD:  Right here. This is actually, so Luminous, I'm so curious with the complexity markers that brands run into. We have a whole thesis.We fundraise on this. Like join Luminous. com. So what the, the biggest thing that I noticed with Dorai is. What a lot of e-commerce companies don't understand is the intersection between your inventory management system. and your order management system. Matters big time. ShipStation doesn't handle bundles or they don't do well?

 

 JASON KLUG: No, not well. And also SKU vault, they have bundling.  , but they also, they don't have like a data auditing tool and the way they do kids, it's buggy. And we've had to fix a lot of things, like we'll have a big sale and there'll be like a bundle and this goes out of stock during that sale and then like it screws all this up in the bundle, but the bundle keeps going and it over sells and all this stuff., yeah, yeah, over time we've figured it out. Like Katie's figured it out. She, she's, and honestly it's to the point now where I don't even know what our full tech stack is. You probably know more than me. 

 

JARED WARD: That's the thing, like operators like Katie that, Oh, this is. Like it's these conversations where it's like she was using SKUvault and ship station. They're supposed to be doing X, this, like, but she knew what she had to do, she just had to hack everything together to make it work. 

 

 JASON KLUG: Yeah, the connection of all the platforms were not seamless now and they weren't fluid. And I feel like there was a lot of one way communication between the platforms versus. You know, everything's syncing together properly. And, oh, they figured out ways to like, okay, this is going to happen. We need to flip this off at this time. And we have this many units setting, uh, plenty of excess stock to prevent, you know, stock outs and whatnot for like. Unnecessary stock outs. Like all those things that they've figured out, they've figured out over time and a lot of it had to be manually done, you know? And I know they, in the marketing and the sales in the, the operations meetings that we'll have, like, you know, those are the things that Katie. And, you know, Maddie, our VP of marketing and stuff like that, they'll, they'll sync up about that type of stuff on the fly and know, like, we're getting close on this. Let me know when this happens and then I'll do this. And they have to do these things and actively do it. Yes. Yeah. 

 

JARED WARD: Yeah. It shouldn't be that way. It's a really common problem. And 

 

 JASON KLUG: Say I can't wait to have Katie on like, cause we can dive into like the nuts and bolts of that and she can blast and her experience is like round up where we started with the bare bones of a Shopify. And then, you know, yeah, 

 

JARED WARD:  Dude, I'm actually doing this, I'm, with the launch of Ergo, my brand, my BabyGate brand,  I'm going to do a series, like, with where basically I'm documenting from the standpoint of a back end system. Like, here's what I did, scrappy entrepreneur, to build a product. And like, all the phases from Project management to purchasing to like, I'm especially trying to identify the points where you make a technology decision. And I, and I want to lay out all of the competitors, break them down when it's relevant. And then obviously the end goal is like. Use luminous. Like use luminous for all this. 

 

 JASON KLUG: Well, and like going through the demo process and the questions you're asking and all that type of stuff, like, do you solve this problem and prioritizing problem solving? 'cause not, like, not, yeah, like NetSuite's like, oh, we could fix everything. It's like exactly. Yeah. Whatever. Okay. But at the end of the day, it's like you, you have to prioritize your problems that you're solving for and know that, and that's what we had to do with SKU Vault. It's like, I know that it's not gonna solve everything. But like the problems it does solve for now outweigh the smaller problems, and we can adapt to the small problems for now until a better solution comes in, 

 

JARED WARD: Like with the system. It's so funny, like bringing it all back at the end, like just like you said, in your product development process, you just need to be curious and put out fire as well and like actually listen. So it's the same thing in software, and especially I would say in luminous, With the clients that we service, it's, it's the same thing. It's most software companies, a fire comes up and they don't really listen to your feedback. Like. Just, Oh yeah, well, yeah, you could do this or this if you want, or, you know, maybe they'll eventually fix it. But like with Luminous, we have that genuine curiosity on how can we be the most flexible, easy to use system on the market for, for the modern e commerce brand? Yeah. 

 

 JASON KLUG:  That's the advantage of software, too, that I've always seen. Like, I've, like, I'm not a software guy whatsoever, you know, and I think, you know, that's probably why I'm stuck in the hardware, right? Like, software is, I'm just not good with it. But  the advantage of being fluid and taking advantage of it in that sense is what makes good software. So, 

 

JARED WARD: Well, actually, a good example, this will be real fast, a good example is like KD we're, we're in the welcome call, like, discovery process before we get, like, everything going.

She highlighted something,  as we were just auditing a process that SKUVault actually did well, you know, that she really liked. It was the way that they handled inventory deductions directly from Amazon. And it was something that actually we didn't have, and like We took that immediately. It's in our next sprint. So like before this event goes live for you guys, like those are the types of things, like I'm curious with the whole market, like we want to create something that has the least amount of friction possible. 

 

JASON KLUG: Yeah. Where anybody can jump in and use it. Yeah. Cause there are a lot of, I mean, when an e-commerce brand starts, they have to be extremely scrappy, right? Like, there's not many e-commerce brands that are, like, funded, like, you know, tens of millions of dollars or whatever. Like, most of them are scrappy like Dorai had to be. Because, like, Dorai still has only raised 120 grand in funding. Like, I've never taken on funding. And that was in 2019, right? So we've stretched that until now, right? And with that we've always been scrappy, right? And a lot of times with that, the team members you're bringing on, like Katie, she's never dealt with any of those problems, and she's had to figure it all out herself, and if the software, like, there's no way she could have taken on NetSuite. You know what I mean? 

 

JARED WARD: And this, that's why I'm so anti NetSuite is because it, like, honestly, it pisses me off that they're going down market so hard because 

 

 JASON KLUG: Oh, they hit me up on LinkedIn all the time. 

 

JARED WARD: Dude, even just, so I'm, I'm in, in Utah. I'm decently well connected among the brands and every brand that's gone to NetSuite, they're either in a lawsuit with them or they have the same story. 

 

 JASON KLUG: Man, we ended up paying $300, 000 extra and it's still not worth it. It's alike a, literally the, in the thing that would have been hard for Katie, I'm, she would have figured it out obviously, but the problem was that she would not have been able to do anything else we needed to do. And those are the types of hires that these e-commerce brands are bringing on. They're bringing, you know, people with operational experience, but it's not like, you know, I'm not hiring someone that's, you know, 300k a year, have been operating e commerce for 15 years, you know, like you're, you're bringing people on and you know, that they're going to come in and have to learn with the growth of the brand and the software needs to be able to work for that customer in that that person in that role. 

 

JARED WARD: And NetSuite doesn't build with this concept of like what you just described, like we're a young company, like it's just Katie and me and like this one gunslinging guy that's helping, like Dude, NetSuite doesn't build with the idea of the modern e commerce brand in mind and they don't build with this idea of friction. So, for example, like, oh, I need to fill this order. Well, guess what? NetSuite, you gotta, like, there's like 16 steps you need to take.

 

 JASON KLUG:  I've never even seen NetSuite. I don't even want to see it. 

 

JARED WARD: Oh, man. It can do whatever you want. But, like, the point of Luminous is, like, removing the friction. So, like, so instead of 16 steps in NetSuite, where you have to custom code and pay an engineer 15, 000 for your picking process. In Luminous, it's like, how can you take that 16 step process, remove the friction, but still give high level visibility to Jason? 

 

 JASON KLUG: Dashboards are great. That's all I can look at. I can only look at dashboards. 

 

JARED WARD: Dashboards and PNLs. So by the way, we're running out of time. this is my last question for you. I'm, I'm really curious, actually, something that, I know you and your wife went into business together.  How has that been doing business with her?  What have you learned?

 

 JASON KLUG: It definitely, we learned a lot about each other. It's definitely been easier as she's taken a day job. I think now that she's more removed. And I'm still pretty, like, heavily involved. It's, you know, the conversations we have now are more productive, where she'll be like, okay, I saw this. And then I'm able to, like, understand what she sees and what she sees as being something that needs to be fixed or whatever, like, from a brand perspective or whatever, right? And, and then I can go in and then help. you know, advocate and whatnot.  And I think she's seen me do that and that helps with everything. But yeah, there's definitely challenges, but there are some good things about what we learned. You know, just like we built a business together and now we're building a family together. I feel like we understand each other's working styles and that's been helpful. And we know each other's strengths and weaknesses. So yeah, I mean, it's definitely challenging, but what marriage isn't. And also it's, there's this sense of like, I have a, It's like this sense of like attraction with her because I've, I watched her get scrappy with me and do that, you know, and I mean, she went from making like San Francisco money to like, you know, quitting a day job and starting this brand with me.

 

JARED WARD: No, that's love. 

 

 JASON KLUG: Yeah. And she, you know, really grinded it out and, and was so passionate about it. And I love that about it. And one day, you know, we can, You know, sell that brand or liquidate it. And, and, you know, like, we'll always look back to what we built together. And I think that'll be special, you know, 

 

JARED WARD: I also want to say, I think it's probably y'all superpowers that you can, you're out of it where you can give like very high level product and engineering advice, like, and especially your, your V2 and V3, and then your, your wife can also, you know, Like she can give high level marketing advice and you have competent CEO and operators like, 

 

 JASON KLUG: I do like, well, so the things that Kelsey pays and gets involved with from an advisory standpoint now is like the, you know, helping, you know, Maddie and Kelsey on like websites and stuff and then in, like brand vision and stuff like that. And then she gets involved in the product strategy as well. And she's good at that because she's really good at research and with our UX background, she really thinks through the user experience product and the brand, you know, like is represented by its product. So, you know, she's, we're, we're still, it's often that the two of us are in a product discussion meeting and then I'll bring samples home and it's like fun to go home and chat about the product that I got, the prototype or whatever. And yeah, I would say the amount of time that she and I spend talking about dry on a weekly basis is like no more than like two hours a week now. So it's not like overtaking our relationship. It definitely used to, you know, which was a problem. And I think over time as she stepped away and we've figured out a new flow, like two hours of. It's like, now it's more positive and fun than being like a stressful startup that we're trying to build together. This has got to succeed. I think it's naturally evolved and, and strengthened us. And then there's definitely like hard times emotionally, but at the same time, like, yeah, like it's been amazing at the same time.

 

JARED WARD: I like how you said at the beginning, like. You guys are building a family together, like you're, you guys are co CEOs of a family, like, so, as difficult as that is, like, a business can't be as difficult.

 

 JASON KLUG:  I don't know, yeah. I mean, she, well, the thing is too, is that, like, we're both very like she's very type A and has a strong personality like myself. So you can imagine like two, I'm not type A though. Like, you know, she's very 110 percent all the way. And I'm like, Oh, they'll figure it out. That's one of the next things.  But that's also an advantage because I counterbalance that. And then she counterbalances that. So I think there's a good balance there but yeah, I don't know what would be harder, building a family or a business. I don't know yet. Yeah, I guess our son Wells is like 10 months old now. So it's like, we still have a lot, we only have one kid, right? Yeah. I have friends with two and it's like, geez, 

 

JARED WARD: I have a seven and a three year old. Yeah. 

 

 JASON KLUG: So that's different at that point.

 

JARED WARD: Right. Yeah. Yeah, so here's, actually, this really is my last question. So I think you have really pretty eyelashes. Thanks. Has there ever been a time where they've been chopped off or something? Yeah. 

 

 JASON KLUG:  Who told you that one? This is a funny story. It's actually Katie. Oh, when I was really little. I always got comments on the length of my eyelashes and I think I was like, maybe in like third grade. Yeah, maybe like third grade. And, yeah, I trimmed them. Because my mom, like my mom's friends and stuff, they'd always be like, look at your pretty eyelashes. You look fucking insane. I mean, I trimmed them and they grew back longer. So, yeah, yeah, so they grew back longer. Females listening. Isn't that funny? I've been noticing my son, Wells, his eyelashes are really long. He must have gotten that from me. So I'll make sure he doesn't trim them. But like a little third grader with scissors, you know, that could have been dangerous.

 

JARED WARD: Uh, so they said that your mom, like, was the babysitter at the time. She was bawling her eyes out like, I'm so sorry. And she freaked out. 

 

 JASON KLUG:  I remember the night when I showed them. Cause I just casually was like, look, look what I did. I, you know, and I remember like the doctor, they were like, well, they either might not grow back or they'll grow back longer. And they grew back longer. So it was like, well, a lesson learned. 

 

JARED WARD: Yeah. Well, I think that's, uh, we're kind of running out of time. So, yeah, that's basically, this was unfiltered ops. Thanks for stopping by.