"Focus like a laser beam on hiring amazing people." - Drew Greenblatt
Drew Greenblatt bought Marlin Steel in 1998 when it was a small maker of a commodity product. Since then, he's grown revenue nine-fold and, in February 2021, is expanding its factory f...
"Focus like a laser beam on hiring amazing people." - Drew Greenblatt
Drew Greenblatt bought Marlin Steel in 1998 when it was a small maker of a commodity product. Since then, he's grown revenue nine-fold and, in February 2021, is expanding its factory floor space by 56%. Despite COVID headwinds, Marlin grew over 25% in 2020.
Marlin Steel has invested over $5.3 million in robotics in a quest for quality and speed and has recently purchased Baltimore Automatic Wire Forming Corporation and retained 100% of the staff in the face of challenges to the global economy. Marlin Steel imports nothing and exports material handling baskets, wire forms, and sheet metal fabrications to 43 countries.
Marlin's all USA-made products include daily shipments to Mexico and Canada and weekly shipments to India and China. Worker safety is critical. Marlin Steel crossed the 2,688-day safety milestone in April 2016 and has over 1,150 plus days as of today. In addition, Marlin Steel has been recognized as a winner of the Inc 5,000 Fastest Growing Companies in the USA. The Inner City 100 Fastest Growing Companies in the USA. Regional Employer of the Year from Baltimore City and Baltimore County.
Drew Greenblatt has been chosen as an international business leadership award winner from the World Trade Career Institute. Marlin secret sauce is quality engineered quick, or "QEQ."Twenty-five percent of Marlin's employees are mechanical or chemical engineers who innovate to save clients money by improving throughput with engineered wire baskets and custom sheet metal fabrications.
Marlin Steel's engineers provide state-of-the-art computer-driven stress analysis, so clients have comfort knowing that the designs will withstand the rigors of their applications. Marlon has seven patents for aerospace racks, material handling robotic baskets, and medical baskets. In addition, Greenblatt has testified to the US Senate and US Congress on small business, taxation regulations, trade policy, and techniques to grow the economy.
Greenblatt has met with President Clinton, President Bush, President Obama, President Trump, and President Biden to advocate for USA manufacturing and small business, pressing those government officials to create policies that stimulate a robust manufacturing sector. Greenblatt believes that factories provide great jobs and tremendous benefits as a way to grow our middle-class with solid, meaningful jobs.
Drew has a BA from Dickinson College and an MBA in Finance from the AB Freeman School of Business at Tulane University. He lives in Maryland with his wife and three sons.
This podcast is brought to you by Deep Wealth and the 90-day Deep Wealth Experience.
Do you want to capture the best deal instead of any deal when you sell your business?
Up to 90% of liquidity events fail. Think about the time, effort, and money that's wasted.
Oft the "successful" liquidity events, most owners, leave 50% to over 100% of the deal value in the buyer's pocket.
What can you do?
Lock in your financial future and attend the Deep Wealth Experience to:
At the end of the 90-days, you create a blueprint to optimize your business value. You also have the certainty of capturing the maximum value for your liquidity event.
In the words of a business owner who went through the Deep Wealth Experience:
"The Deep Wealth Experience was, hands down, the best program I've ever participated in."
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Your liquidity event is the most important financial transaction of your life. You have one chance to get it right, and you better make it count.
But unfortunately, up to 90% of liquidity events fail. Think about all that time, money and effort wasted. Of the "successful" liquidity events, most business owners leave 50% to over 100% of their deal value in the buyer's pocket and don't even know it.
Our founders said "no" to a 7-figure offer and "yes" to a 9-figure offer less than two years later.
Don't become a statistic and make the fatal mistake of believing that the skills that built your business are the same ones for your liquidity event.
After all, how can you master something you've never done before?
Are you leaving millions on the table?
Learn how the 90-day Deep Wealth Experience and our 9-step roadmap helps you capture the maximum value for your liquidity event.
Enjoy the interview!
[00:00:05] Jeffrey Feldberg: Welcome to the Sell My Business Podcast.
I'm your host Jeffrey Feldberg.
This podcast is brought to you by Deep Wealth and the 90-day Deep Wealth Experience.
Your liquidity event is the largest and most important financial transaction of your life.
But unfortunately, up to 90% of liquidity events fail. Think about all that time, money and effort wasted. Of the quote-unquote successful liquidity events, most business owners leave anywhere from 50% to over 100% of their deal value in the buyer's pocket and don't even know it.
I should know. I said no to a seven-figure offer and yes, to mastering the art and science of a liquidity event. Two years later, I said yes to a different buyer with a nine-figure offer.
Are you thinking about an exit or liquidity event?
If you believe that you either don't have the time or you'll prepare closer to your liquidity event, think again.
Don't become a statistic and make the fatal mistake of believing that the skills that built your business are the same ones for your liquidity event.
After all, how can you master something you've never done before?
Let the 90-day Deep Wealth Experience and our nine-step roadmap of preparation help you capture the maximum value for your liquidity event.
At the end of this episode, take a moment to hear from business owners, just like you, who went through the Deep Wealth Experience.
To learn more about the 90-day Deep Wealth experience and how you can lock in your future, please visit www.deepwealth.com/success.
Drew Greenblatt bought Marlin Steel in 1998 when it was a small maker of a commodity product. Since then he's grown revenue nine-fold and in February 2021 is expanding its factory floor space 56%. Despite COVID headwinds, Marlin grew over 25% in 2020. In the face of challenges to the global economy, Marlin Steel has invested over $5.3 million in robotics in a quest for quality and speed, and has recently purchased Baltimore Automatic Wire Forming Corporation and retained 100% of the staff.
Marlin Steel imports, nothing and exports, material handling baskets, wire forms, and sheet metal fabrications to 43 countries. Marlin's all USA-made products include daily shipments to Mexico and Canada, as well as weekly shipments to India and China.
Worker safety is critical. Marlin Steel crossed the 2,688-day safety milestone in April 2016 and has over 1,150 plus days as of today.
In addition, Marlin Steel has been recognized as a winner of the Inc 5,000 Fastest Growing Companies in the USA. The Inner City 100 Fastest Growing Companies in the USA. Regional Employer of the Year from Baltimore City and Baltimore County. And Drew Greenblatt has been chosen as an international business leadership award winner from the World Trade Career Institute. Marlin secret sauce is quality engineered quick, or "QEQ."
Twenty-five percent of Marlin's employees are mechanical or chemical engineers who innovate to save clients money by improving throughput with engineered wire baskets and custom sheet metal fabrications. Marlin Steel's engineers provide state-of-the-art computer-driven stress analysis so clients have comfort knowing that the designs will withstand the rigors of their applications.
Marlon has seven patents for aerospace racks, material handling robotic baskets, and medical baskets. Greenblatt has testified to the US Senate and US Congress on topics, including small business, taxation regulations, trade policy, and techniques to grow the economy. Greenblatt has met with President Clinton, President Bush, President Obama, President Trump, and President Biden to advocate for USA manufacturing and small business, pressing those government officials to create policies that stimulate a robust manufacturing sector, Greenblatt believes that factories provide great jobs and superb benefits a way to grow our middle-class with solid meaningful jobs.
Drew has a BA from Dickinson College and an MBA in Finance from the AB Freeman School of Business at Tulane University. He lives in Maryland with his wife and three sons.
Welcome to the Sell My Business Podcast.
And for our listeners, you are in for a real treat today. Our guest Drew Greenblatt has a story of stories that you're going to hear, and we're going to get behind the scenes of how do you be successful in business and how do you become successful, particularly during some challenging times?
But I'm getting ahead of myself. Drew firstly, welcome to the Sell My Business Podcast. Delighted to have you here.
[00:05:25] Drew Greenblatt: Jeffrey. Thank you for inviting me. We're going to have a lot of fun today.
[00:05:29] Jeffrey Feldberg: So, Drew, I always like to start things off with the story behind the story. What's your story behind the story of how you got to where you are today?
[00:05:37] Drew Greenblatt: So, we bought Marlin Steel in 1998. The company was a 30-year-old factory that made wire baskets for bagel shops throughout the New York Metro area. And right before I bought the company, they saw a nice surge in business because bagels started getting eaten by the broader market.
And all of a sudden it wasn't just Jewish people from New York City, but it was people from all over America and bagel shops started flourishing and they needed wire bagel baskets to hold the bagels. I bought the company at this wonderful inflection when things were surging upwards and all kinds of bagel shops were opening.
And I did all kinds of analysis showing that the bagel basket business with grow to the moon and very enthusiastic to take over this business. Soon after I bought the company, we had a terrible challenge because all of a sudden China realized that they could import these baskets for far cheaper than we could make them.
And it was a very awkward, very difficult time. And we had to pivot and we made some changes and because of those changes we've prospered and thrived, and we're now in a much better state. It was a very tumultuous time. Very challenging time, but we pivoted and because of that, we've adapted and the company is much stronger now.
[00:07:00] Jeffrey Feldberg: Wow from bagel baskets. Talk about all kinds of different things that brought you into the business. So, you got into the business. You're making these bagel baskets. Competition comes in and is just demolishing everyone domestically in terms of price. So, Drew, can you share for our audience what did you do to pivot?
And I'm sure you're using that word well before everyone started using that with the pandemic, and we can talk about that, and you have a lot to say about that, but what were some of the strategies that you began to deploy, to pivot the business, to have it become successful?
[00:07:33] Drew Greenblatt: We got a phone call from an engineer at Boeing. And that was the catalyst for the pivot. We were flummoxed because we had no idea what to do. For 30 years. We were very successful with our blinders on. I thought I was going to do bagel baskets for 30 years myself.
We were dumbfounded and didn't know what to do. We were bleeding cash. We were hemorrhaging cash. It was disastrous. We were sliding into the abyss and we got a very wonderful phone call from an engineer at Boeing who needed a basket for a project he was doing. And when I told him, listen, we normally make baskets for 12 bucks a throw. The basket you're looking for, we're going to have to charge 24 bucks. And he said to me, and you could feel his eyes rolling through the phone line. Yeah. Whatever 24 bucks. No problem. And that's when I realized I had to morph, I had to change the business from a company that made a commodity product that could be stolen from China instead to a highly engineered, high-quality product. So, we realized at that moment that our future was QEQ. Quality Engineered Quick, and by morphing the company, pivoting the company to QEQ to quality engineered, quick mindset we would save the company. So, the problem was that moment, we had a half of a quarter of, 1% of our business was this one engineer for Boeing and 98, 99% of our business was the commodity business.
But that was the moment that I realized that would save the company. And now we sell to process engineers, manufacturing engineers, mechanical engineers. in the rear-view mirror is our commodity world.
[00:09:16] Jeffrey Feldberg: Drew that's so interesting in the Deep Wealth Experience in our nine-step roadmap. Our second step, we call it an X-factor to insanely increase the value of your business. And that X-factor is something that you become world-class in. And so you get this phone call from this Boeing engineer who needs some kind of highly specialized basket. But what's interesting is you jumped on that. You saw the opportunity, you started visioning out very quickly. Okay, here’s what we could be doing. Here's what's different than our competition. We're not there today. And so you went down that journey. But that must have been difficult because it sounds like you may not have been set up and tooled and geared and with the right people and the equipment.
So, you now have this vision, you have your X-factor. How did you go from producing this relatively inexpensive product to something that's now going to be highly tuned, lots of engineering behind it, high quality. How did you do that?
[00:10:12] Drew Greenblatt: You nailed it, Jeffrey. That, that was a challenge because my old market, the commodity bagel basket client retail shop, when they think about tolerances, they're saying to themselves, if it's plus or minus a bagel, it's a success. So, if the bagel doesn't fall out of the basket, I'm happy.
That was their mindset. The basket could be a half-inch or three-quarters of an inch off. They probably didn't own the tape measure. They wouldn't have known that it was a half-inch off. When you're pivoting towards manufacturing engineer at Boeing or process engineering in that world.
They're thinking a millimeter or a half a millimeter that's their brain. So, we had to make an adjustment with our people, with our equipment morphing, from the plus, or minus a bagel basket world to the 0.1-millimeter world. And that's a challenging pivot. So, we spent every penny, we had buying robots, buying technology, buying automation, training our team so that we can be work hand in glove with manufacturing engineers, process engineers, mechanical engineers.
And that was our future. We had to spend every penny we could in that world. And anything to do with the old bagel basket world, we just stopped investing in, stopped looking at because we knew that was how we could be a carcass as opposed to a thriving, prosperous company.
[00:11:40] Jeffrey Feldberg: And for all the listeners, some terrific insights and wisdom and strategies. So, Drew, you're sharing that once you had that vision, you began that process of migrating away from the bagel baskets, because you knew if you did that, you wouldn't be around another day to talk about that.
You mentioned that you bought robots. How were you able to finance that? Were you bootstrapping? Were you raising capital? Were you getting a bank loan? What did that look like to get you from point A to B?
[00:12:06] Drew Greenblatt: Bootstrapping and debt. We borrowed money from banks to buy equipment. And over the years, not in the first year, we bought over $6 million worth of technology. We started heavily upgrading our talent. So, we went from the average factory worker. It was minimum wage.
They walked to work because they didn't own a car. They went on the bus and had no health insurance. Fast forward. We started investing in really great people. High-end people. We started giving them amazing tools, this highly sophisticated equipment.
And all of a sudden, we could make parts that are plus-minus a millimeter plus or minus a half a millimeter. And all of a sudden, we could talk in a language to engineers that they appreciated. We also started hiring our own engineers because I realized that, just a fancy slick salesperson talking about, the Ravens or the Orioles is not going to be as compelling as a mechanical engineer on our end talking to a mechanical engineer on their end.
So, we upgraded our staff, we upgraded our equipment, we upgraded our processes, we added ISO. So, we did a lot of things to up our games, so that we would be a more compelling vendor to a very demanding client. But there's better margin there. And there's also more certainty and you're not relying on China subsidizing steel. Our Chrome costs to put it on a bagel basket is much more than their Chrome cost. Why? Because they just dumped the effluent into the Yangtze. Nobody cares.
In America, we very much care about our environment, which I think is a good thing. But that costs more money to dispose of the affluent. So, for that reason, it costs more to do Chrome plating in America, for example. So, anyway, the point is that we invested in our technology. We invested in talent. Upgraded our skills as a company. We improved our processes and this confluence of things made us more compelling to S&P 100, S&P 500 clients.
[00:14:09] Jeffrey Feldberg: And so Drew what it sounds like when you had that phone call from Boeing. Wow. Talk about just something dropping in your lap and you're running with that and making that happen. It sounds like you use that really as your test case.
Can we do this? What does it look like? Yes, we did this. We can do it. And on a go-forward basis, we're going to be focusing here and then you started to focus on a high-end kind of market where they're willing to pay for quality and you're going to get that certainty and that dependability. And it sounds like your entire foundation is that QEQ, the quality engineered quick kind of philosophy.
What we would call that at Deep Wealth is not only an X-Factor, but that's a Rembrandt that you're putting out for public display. Hey, when you work with us at Marlin, we have the quality engineered quick that we're going to do for you. Here's what that's all about. And here's why you really want to be using that.
So, how did you come up with the quality engineered quick and how did you go on to implement that and now have that really as one of your major brands out there in the marketplace?
[00:15:14] Drew Greenblatt: We're so committed to this mantra, this thought process. We trademarked it. That is our guiding light. That is how we're going to differentiate ourselves. That's how we're going to invest. Is it going to add more quality? Is it going to enable us to ship quicker?
Are we going to be able to differentiate ourselves because we're going to come up with slick ideas that are highly engineered that differentiate ourselves? So, this is how we're creating a moat against cheap imports. I'm paying my guys in excess of $27 an hour.
That does not include benefits. We’re going to get great quality out of them. We're giving them great tools to accomplish it. So, they're going to have to be much more productive than a $2 an hour person in China, or a $3 an hour person in Mexico. And we're going to have to be making a product that blows away the process engineer, the manufacturing engineer, the mechanical engineer at that S&P 500 company in America or Canada.
That is how we're going to differentiate ourselves. That's our moat so that we're not just another cheap commodity.
[00:16:15] Jeffrey Feldberg: So, Drew, let me ask you this. How many times have we heard that the owner of the company, the CEO, the founder comes up with this wonderful idea? So, you can imagine a business owner comes in, hey guys, I thought of QEQ: quality engineered quick. And it's spoken, but only lip service is given to it.
And nothing really happens. It's a flavor of the week, unfortunately, more times than not. That wasn't the case with you. So, how did you embed that within the company and ultimately within your culture? Because it sounds like right up there leading the charge is your culture. That's very unique to you. It's giving you a competitive advantage and that's no accident.
Money can buy lots of things. I can copy my competition with the technology that they're using. I can copy their marketing. I can copy almost everything that they're doing, but I can't copy culture. Culture is so unique. So, what are you doing from the early days in your culture to build it up and to make this rich thriving culture that you have today?
[00:17:13] Drew Greenblatt: Regarding engineering, we went from zero engineers, literally zero to 20% of our employees are degreed mechanical engineers or chemical engineers. So, when we're talking with our clients, the pedigree of the person that's talking with our client is so high-end. That the client knows they're talking to somebody that's superior.
And in terms of intellect, in terms of training, in terms of education, and that they could grapple with this at a very high level to resolve their engineering anxieties and solve their problems, solve their dilemmas. We bought fancy robots. A lot of dollars were spent on them.
Then we sent our upgraded team to school for a week. And then they would go to follow-up training, master's training in that, it's advanced training. They would fly to vendors and they would spend time learning how to operate the equipment.
So, not only is it good quality equipment, but we train the employees how to operate it. We spend 5% of our annual direct labor budget on training. We're so devoted to having a smart workforce. An educated workforce. How can you tell them, listen, I want less scrap if they don't know how to work the machine?
You get them a fancy machine, but it's amazing how many people don't spend the time or money to then train their employees to get to optimize the new machine. So, we spend 5% a year in direct labor, the overall budget just on training, and that idea is that they'll have less scrap.
Because they'll know how to utilize and optimize the machine so that there's less scrap. That scrap savings is so much. It more than covers the 5%, but they'll figure out how to maintain it better because they go to maintenance classes on the various new robots and technology, so they maintain it better.
So, there's less downtime. Easily covering the 5% investment every year. That's the kind of focus we have on this culture. And the business about quick is by giving the guys really fancy technology. And then thinking through really slick, fixturing, and tooling, we could come up with ways to propel our products through the system quickly.
And by shipping quickly, we can beat China because they can't ship quickly. They have the water, they have ports, they have container shortages. They have customs agents there are strikes at the ports, so there are all kinds of handicaps that they have that we can circumvent by focusing on quality engineered quick. You can't do that with the cheap commodity imported product.
[00:19:38] Jeffrey Feldberg: It sounds like part of your platform is you took a look at the global landscape, in this case, China being your major competitor and possibly other offshore countries as well. And you said, okay, as good as they may be in some areas, where aren't they as good, and can I excel in those areas? And you took that and you use that to your natural advantage.
So, Drew, are you doing this on your own, or do you have a management team that's running the company for you day in, day out? How does that fit with what you're doing as a business owner?
[00:20:07] Drew Greenblatt: So, you're correct. To scroll back to your beginning part. Those three elements, quality engineered quick are huge deficiencies for China and our inexpensive import competition. So, we are focused on the areas they're weak and we're exploiting that weakness and that's how we're growing.
And that is our niche and our focus. We're never going to compete with them on having the lowest price because they get subsidized by their government. They get credits and tax benefits and all kinds of things that are behind the scenes that we can't even fathom. So, for those reasons, we're going to focus on the three elements they can never beat us on: quality engineered quick. Regarding the team and my management structure. We've been upgrading our staff and I have a fabulous management team. That's very dedicated. We give them very large bonuses from the very top of the organization to the very bottom of the organization.
So, they have skin in the game and they don't get bonuses if there are quality errors. Again, to emphasize the cultural imperative of having high quality. Our management team and our line workers are all fixated on delivering a high-quality part very quickly. I do have a deep management team. We've hired talent and we've filled positions and we have a remarkable team. I'm very blessed. They're extraordinary.
[00:21:27] Jeffrey Feldberg: How did you know Drew when it was time to start bringing in people to ultimately replace you? When was the day that you realized, you know what, I need to fire myself? I need to find other people who can be doing whatever they're going to do with their strengths in these specific areas because I'm stronger in these other areas.
And I shouldn't be working in the business. I need to be working on the business with my vision, with my strengths, with my passion.
[00:21:52] Drew Greenblatt: I have strong personality traits and some things I'm weak on. So, I need the yins to my yang. And I'm weak in many areas. So, I hire talent that it's a one plus one equals three things. Where they're very good in this. I'm better at that.
And by hiring talent and giving them bonuses and giving them a clearly defined path award to accomplish we get farther together. We have wonderful people that are better than me on many things. And I give them a tremendous amount of opportunity to thrive and grow and do it.
The best example was in 2018 we decided that the best thing to do was to revamp the factory because over the years we would buy a robot and then buy another robot and we'd shoehorn them in right next to each other one after another. And it wasn't flowing well, wasn't clearly designed. So, I laid out a plan of how we're going to do it and how we're going to move around all the machines so they have a better flow. Improve our ergonomics improve our material handling, and I showed it to my team and they said, no, that's not the way we would do it.
And then they showed me their plan and I was like, dear God, their way is so much better than my way. Take mine, throw it out. It's terrible compared to your idea, we're going with your idea. And to this day, you could see the plan. It's brilliant. When you walk through my factory and it's all because they are so smart and they're fabulous. And we ran with their plan. Thank God we ran with their plan. We're a much better factory. The layout is brilliant. It flows so nicely and it's all because of their smart ideas. That's just a recent example of a big impact. We literally moved over 95% of our equipment and some of this equipment with more than 35,000 pounds, by the way. We moved multiple football fields to optimize the flow. And it was all because of their smart ideas.
[00:23:42] Jeffrey Feldberg: Congratulations to you because you've created a culture where people aren't afraid to speak up and say, hey, Drew, yeah. I see your plan. But you know what? I think this is something that we should look at. Maybe it's even a better plan. And congratulations to you for embracing that and accepting that.
[00:23:57] Drew Greenblatt: They don't say it in such a sweet and deferential way. I love that.
And I'm like, oh my gosh, you're right. Anyway. So, they're fabulous. I have great people. We give them a lot of latitude and we don't micromanage them. And we let them run with it and they're doing extraordinary things. I'm so blessed that they are in my life.
[00:24:19] Jeffrey Feldberg: So, what's interesting. Drew is you're doing at home in the US what many people would say is impossible. Maybe Drew's the exception with what he's doing with Marlin Steel and manufacturing and he's profitable and he's growing and he's dominating his area, that's just an anomaly. We can't compete with China or other countries here in the US.
It's just, why even bother let's stop before we even try because it's too much is against us. What advice would you give to all the business owners that are in business, thinking about going into the business of why we need to get manufacturing back here in the US? How we can grow upon that and how we can be successful once again, and just have a high growth manufacturing sector and be successful no matter how competitive it is.
[00:25:06] Drew Greenblatt: So, what I recommend is to identify niches, where you could slay the competition, identifying zones, where you could be different. And because of those differences, you could crush the market
And you should, quickly exit out of the zones that are commoditized because you have no hope there and stop reinvesting your time, your energy, your efforts your capital and instead impose all of that force where you can have outsize benefits. When the smoke settles, your employer is going to thrive and your company's going to prosper more likely if you're focusing on niches and zones where you could expand.
You should think about ways where you can really help your clients. How can your clients go 10% faster, 20% better with your products, as opposed to just coming up with clever ways to cut your own costs so that you could save yourself another day against China one day?
[00:26:13] Jeffrey Feldberg: And for our listeners, what you heard Drew say right now from the trenches he's living it, he's breathing it, it's absolutely working. In the nine-step roadmap at Deep Wealth, Drew, one of the things that we talk about is finding a painful problem that your customers are having and solve it.
Let it be so painful of a problem that they're only too happy to pay you to take that pain away. But you didn't stop there Drew because the second thing that you said is find a blue ocean in a market where it's not so crowded. Right now, the bagel basket market, that's a red ocean.
You're fighting it out with these low-cost manufacturers in China, but you found a blue ocean with products that you can charge a premium for. You're one of the few that's in there. You can dominate that you're crushing it, and that's your blue ocean solving a painful problem, built upon your culture and your strategy.
And that's such a powerful way of dominating and winning in business today. But we tend to forget that from time to time when we read the media or we're just getting crushed by our own problems.
[00:27:17] Drew Greenblatt: I agree completely the red ocean for Marlin, the shark-infested nasty place we had to get out of was the bagel basket market. We were selling bagel baskets for $12. I was paying $7 for the steel. And the other $5 was for the chrome plating, the labor, the Christmas party, and the rent, and the secretary and the front and the 401k. So, we were living on the five bucks. China came in, delivering bagel baskets into Manhattan for less than $6. So, I'm buying the steel for $7 and I'm trying to make it work on the $5 and is delivering freight included for $6
I was toast. That's red ocean shark-infested. What am I going to do? I'm going to charge$5.85? This is crazy. It was cheaper than steel cost. That's the red ocean. You're a hundred percent correct Jeffrey. The blue ocean. Let me give you an example of the blue ocean. So, we have a Japanese client that makes components for breaks for Lexus and some of these other large Japanese automakers.
And they have thousands of people in this factory in America. The conveyor belt to go into ovens and washing machines and all kinds of actions. We figured out a way, again, this is my engineers, rather than putting four of their brake components into the basket, put in eight. What's the benefit?
All of a sudden the $2 million washing machine that every one of these baskets went in was doing two times as many parts per cycle. So, all of a sudden, they didn't need to run the night shift. It didn't need all the chemicals and all the washing. And all of a sudden, all the employees were two times more effective because they were going through this machine that much quicker.
So, the baskets, by the way, were 20% more expensive than if they were to buy it from China. So, by coming up with again, quality engineer quick, we were able to make a high-quality part where they could double their throughput. The baskets cost a little more, but it's, diminimous, it pays for itself in a week because all of a sudden, the second shift could make more baskets and they save a lot of money in chemicals and washing and all kinds of ancillary benefits. The way the parts are held in the machine, they came out cleaner. So, they had less inspectors at the end because they would have to, in the old days, they'd have to run it through a second time.
So, that every part meets the standards of Lexus, which is very high because they didn't want to put dirty brake components inside of Lexus. So, they would run it through twice in many cases. So, now all that silliness is gone because we could articulate the brake component just right. Why? Because my engineers are so smart, they came up with the way to angle the brake just right so the water cannons would hit it just right inside the washing machine. Blue ocean is the clients saying to themselves only 20% more for those baskets? The return on investment is days or weeks I'm there. Here's your check and we've gotten multiple reorders and we're building a moat. Yeah, we're a little more expensive, but I can pay now for the engineers because we're charging a little bit more and we have a client that's really into us.
That's the blue ocean you should join. Get the heck out of the red ocean where it's shark-infested waters, and you can never touch selling something for cheaper than steel costs, which is what I had to do to try to maintain that crazy market.
[00:30:37] Jeffrey Feldberg: It's brilliant. And that 20% premium, it's a rounding error. It's a rounding error, like you're saying relative to the savings, both in time and cost and materials. So, Drew, let's talk about this because you have a very unique culture, but you're walking the talk. You're not just talking it. And one of the things that I know you pride yourself on is safety in the plant.
So, can you talk to us about what that has meant for you as a business?
[00:31:01] Drew Greenblatt: We're nuts about safety. The most important thing we do every day is to make sure that every single employee comes on with the same number of fingers and toes and eyes that they started the day with. When I first bought Marlin, we didn't have that culture. The company that I bought, we had two employees without eyes, and we had two employees without fingers.
It was a Charles Dickens novel. And we've come a long way. Our prior record was 2,800 days without a safety incident. And our most recent record is over 1,230 days without a safety incident. We have a safety committee they're very empowered. We encourage them to look for problems and issues.
A hundred percent of the time when they say, hey, we should spend this money to improve this element we say yes because we want our employees to be very safe. We require safety glasses, steel-toed shoes. And if you don't follow safety procedures, we discuss it with you.
We write you up and ultimately, we may separate from you if you don't follow our very stringent safety guidelines. Anytime we bring in a new piece of machinery, we have our safety committee sit down with all the people that will be operating the machinery. And they say before we turn that on, we're going to go through every element of this machine to make sure we understand what are ways somebody could hurt themselves.
And then what steps should we put in so you cannot hurt yourself with that machine? We're fixated on near misses are the number one way to predict what will ultimately become a terrible tragedy. So, we spend a lot of time and money analyzing near misses, trying to figure out ways that we won't have them.
We've received multiple honors for our safety record and our commitment to safety. We've had two Governors come out and give us the safety awards we've even had the United States, Secretary of Labor come out to Marlin to give us an award. Safety culture permeates our company and we're dedicated and devoted to making sure we never have any incidents.
[00:33:03] Jeffrey Feldberg: That is tremendous. And congratulations on that. And for our listeners, what's really interesting here. Drew is achieving all these goals and these milestones. But when you listen to him talk, it's not coming from him because he's put in place the systems, the people, the management team, like the safety committee, as one example, the business is running without Drew.
And yes, Drew is involved in the business more, I would say from a strategic side, but from a day in day out operational side, he has all the right people doing what they do best and you're knocking it out of the park and you're achieving these wonderful benchmarks and milestones to really make a difference out there, both inside the plant also outside in the marketplace. Now Drew speaking of the marketplace. It's been interesting with this whole pandemic. And I know you have some strong feelings about that and the opportunities and the challenges that it's brought. So, when the pandemic first hit and we started going through the initial stages of understanding what this really meant, and things began to shut down.
What did you do and how did you respond?
[00:34:05] Drew Greenblatt: So, If you would've asked me what this year is going to be like 2020? I would have said, oh, this is going to be a great year. And particularly with aerospace, because we had just gotten a couple of patents for aerospace applications. We make racks and baskets.
When a jet engine from an airplane is being maintained, they take it apart and they inspect every element of it. In the past, they did it in ways that was not optimal. And we came up with a couple of clever new ways. Hold and constrain the parts. And we got patents for it. So, I would have told you, this is going to be the year of aerospace because of all these patents we're lining ourselves up for an extraordinary year.
We got all these orders in January and February from these large maintenance companies that were focused on maintaining jet engines for large aircraft companies. We all know what happened. It was a debacle, all of a sudden, the entire airline industry cratered in mid-March, everybody stopped flying.
And it was a very challenging experience because a big element of it was, catering to this new market. And that's one of, a couple of other markets that we had incredible excitement for. So, in March and April, it was another one of these moments back similar to the bagel basket experience were like all of a sudden that market implodes, what the heck am I going to do?
I have this amazing team, wonderful people, all this equipment. What the heck are we going to do with everybody? They ain't going to be buying airplane maintenance baskets anytime soon. We pivoted again and we first started making CDC test tube racks, so they could test vaccines and confirm and make sure things are going, with the right way to do it.
So, we started getting CDC test tube rack orders. The next thing that we pursued was sanitizers stand racks, so you could dispense sanitizer in your hand. So, we started making those, it was sorta like toilet paper in July. All of a sudden, all the sanitizer stands disappeared.
And the volumes went way up, but all the supply went away. So, we started filling that vacuum, that void. The third thing we started making a lot of IV poles. Our biggest order ever was IV polls for COVID patients. So, these are three examples of the pivot. So, all these wonderful people that I thought were going to be making airplane baskets and airplane chat cards and airplane material handling racks in April, May, June, July.
We're not going to be doing that. So, we found new markets for them to focus on and they did extraordinary. And we actually had our best year ever in 2020. We had to expand we rented space then, in February we just took on some new space 56% more new space adjacent to our facility because we're so optimistic about the future.
[00:37:03] Jeffrey Feldberg: Wow. So, I hope everyone was listening. And 2020 was the best year ever for Marlin Steel because Drew thanks to your vision and the team's vision you pivoted. So, you shared with us the end result and that you've grown and it was a terrific year and how you're really helped on the home front, in these very important areas. But how did you get to those realizations? Can you share with us some strategies that you and the team had to either stop doing or start doing to begin that process of pivoting in the right areas?
[00:37:37] Drew Greenblatt: The first thing was to realize that our current plan was out the window. Not try to pine away in hopes of trying to save that market because one of our biggest clients went from handing out two month bonus checks because 2019 was so extraordinary to four weeks later asking for federal government handouts.
First thing is to realize, wait, that business is terrible. I got to get out. Or at least temporarily terrible. I think the airplane business is going to come back. Not so soon, but it's coming back. But the first thing to do is in February, March realized, wait a second, that thing's going to heck in a handbasket, we got to go figure something else at.
The next thing to do is start listening carefully to client inquiries so that when different clients start knocking on your door, you're open to listening to new places that you haven't thought of in the past. And quickly size up, whether or not that's going to be a viable market, is this something that we should explore?
And so, we had very open ears in February and March because we were like, whoa, something's going on, bad out there. So, we're going to have to figure out really quickly something new to do with this wonderful pool of talent with this wonderful compliment of equipment and having wide open ears to say, wait a second, we're going to have to find something new.
And then when you have client inquiries, you listen to them carefully and you cherry-pick the ones that have the best opportunity. What's the best lane? What's the best avenue to point all your forces and attack?
[00:39:08] Jeffrey Feldberg: So, Drew, what's interesting with what you're sharing is the first part of the strategy. And kudos to you and the team for doing that is to, hey, stop the presses. Don't pass go. Don't collect your $200. We're staying in jail because our plan is not going to work. And for a lot of business owners, they just couldn't do that.
They had these delusions, oh, we'll get through it. It'll be okay.
We'll just give it another week or two. Let's see what can happen. And next thing it's not happening and possibly they're out of business. So, you recognize, okay, it's not happening. And the second part to that was really, you were nimble.
You check the ego at the door. We don't know what we don't know. All of these other people are speaking to us, never perhaps heard from them before or knew what they were about, but they're asking us these questions and these things. Can we do it? Yes, we can. And from just being nimble and checking the ego at the door, you're able to respond to a market need and you had a banner year. So, congratulations. That's absolutely wonderful.
And for our listeners, so many lessons in what Drew is sharing with us in terms of always keeping your eyes and ears open in terms of what's happening. Drew, was that because everyone was focused in the right areas?
So, in other words, if you didn't have the management team that you had, and you were still running that business day in, day out and operationally, you were there and perhaps in the areas that you shouldn't be doing in the first one. How do you think that would have turned out? And why I'm asking that just before you answer that question, too many business owners don't have that team.
Not because they can't afford to, they just choose not to, and that they are the business and the businesses them. Or they have the team and they have such an iron fist on that team that businesses don't have that agility. So, how did that play a role in terms of, from your culture, the management team, that you have, the processes that you said just say, hey, this plan isn't working, let's pivot?
[00:40:58] Drew Greenblatt: So, I think it's just being honest with yourself. Yeah, we got this business plan that says we're going to do a gang of work for aerospace this year. But realizing it's out of our control. There's nothing we're going to do about this. They're grounding the fleet.
They're not flying overseas, they're not flying, and it's not changing anytime soon. So, we got to redirect all those efforts and just stop doing any activity on those fronts and reposition the forces. And then the second question is where do you reposition the forces?
So, we have engineering, employees that are leading our sales team. And those engineering employees are fielding phone calls every day and emails every day from clients and prospects. And they had a keen ear for, what was going on and what client inquiries were coming in.
We were having meetings discussing what could we do next? What is the next hot thing that's going to be needed in these turbulent times? And everybody jumped on to a couple of things that our team and our equipment could do well. To give you an example, the CDC test tube rack, the first order we got for this COVID item we started talking with them on Thursday, and on Friday afternoon at 5:30 we received the formal purchase order.
Our team was aware this was going on. They started making fixtures Friday evening. The team that worked four tens Monday through Thursday came in on Friday, started working on the fixtures. They finished them Friday night at six in the morning our entire team that was there Monday to Friday, for 10 hours came in on Saturday worked all day, Saturday and into 10 o'clock at night on Saturday night. They came back in on Sunday, worked until two o'clock and we completed the first order. We had a company that was going to pick up all these CDC test tube racks, deliver it to BWI airport, to fly it out to the Midwest, which is where they were going to ship to.
And they couldn't get the airplane to commit to, the space. So, we rented a truck and they drove it to the Midwest and it was there before 9:30 AM Monday morning in the Midwest. It was two guys. They tag teamed and they got it. So, when they opened up their doors, that the truck was there in the morning on Monday morning.
So, they gave us the order of Friday at 5:30, and Monday morning it was on their loading dock.
[00:43:32] Jeffrey Feldberg: Wow. Unheard of. Unheard of that's brilliant.
[00:43:36] Drew Greenblatt: We have an amazing team. When you were talking about nimble agility, dedicated they're phenomenal. Now you tell me if you're that client, you need to reorder some more test tube racks, where are you going?
[00:43:47] Jeffrey Feldberg: Hey Drew, this is the stuff of myths and legends you're creating in real-time during a crisis. And you're absolutely right when you can come through for a client like that. Why would they go anywhere else? Because you've earned their trust and their respect, and you've delivered in a way that you just don't get anywhere else.
That is absolutely incredible. That is a terrific slogan of what you're all about and the culture and everything that went into that over the years was this pinnacle is one story Friday afternoon to Monday morning, delivered.
[00:44:21] Drew Greenblatt: When you ask the question what are you going to do when you're in this morass of aerospace, but you got to go find somebody else and you gotta make that a really happy client. That's going to keep on coming back to you. So, we made a happy client. It’s stories like this, that's how we saved all of our employees. And that's why we actually had more employees at the end of 2020 than we had at the start. 2020. Okay. So, that's what it's all about because we made a really happy client. And we did the same thing with the sanitizer stands and we did the same thing with the IV poles.
They gave us an absurd deadline. This is an entity that buys a lot of IV poles and they were buying a lot more now why, well because of COVID and they ordered from China. And China shipped late. So, they had to pay $125,000 to fly the IV poles from China to New England where our client is.
So, they went to China and they said, listen, we're going to order some more because our orders are through the roof, but you can't be late again. And China said no worries. Give us the order. No problem. Lo and behold, the same exact thing happened. They had to spend another $125,000 to fly another airplane.
The third time they had to rush order. They came to me and they said, hey this just happened to us twice. We can't have this happen again. Can you give me a price to get those IV poles I said, sure, it's the $X. And they said, that's too much money, that's more than China. I said, but I'm going to be on time.
And they said that's too much money. We're going to go to China. Are you sure? I said, yeah, I'm sure because I'm never going to commit to a date I can't make and a price I can't afford. So, we'd rather lose and I'm going to keep my integrity. He said, you're going to lose a big order. I said, okay.
I'm just not going to lie to you and tell you a date I can't do. So, he said to me, okay, you lost the order. I shrugged my shoulders. Lo and behold, six weeks later, I got a phone call. He said you know what? I just bought another $125,000 plane. That's the third one. They lied to me three times about this.
I'm not doing that again. What's your price? I told them the price. We shipped on time. That was in July. It was the biggest order in company history. And we shipped on time and we got to reorder and I'm hoping we're going to get a third reorder. We haven't gotten it yet. Hopefully, it's come soon. But my point is that's quality engineered quick.
We were quick and we didn't lie about what dates we were going to do. We were high integrity as opposed to our competition. And this is how we had our best year ever.
[00:46:56] Jeffrey Feldberg: And, Drew, I want to go back to something I said earlier, I said, money can buy lots of things. It can't buy culture and it cannot buy integrity. And so, for our listeners out there Drew knows what he does really well and he sticks by it. He'd rather walk away from a large order than loses integrity and have to lie and not be able to come through.
And so many lessons coming out of that. And ultimately, you're rewarded for sticking to your guns and saying, hey, this is what it is not a penny less, but I'm not going to be a minute later either. And ultimately it came back to you.
[00:47:30] Drew Greenblatt: And we're really proud we got the reorder and back to your question before I think the supply chain in America and in Canada, they have to understand that, it makes sense to have a partner in America and you can't have all your eggs in the Chinese basket or in the Mexican basket because stuff happens.
And you have to protect your business and the prudent and intelligent thing is not to look for the lowest price, but to look for the most consistent, honorable vendor, that's going to be your partner and is going to have your back. And I'm not myopic to think that look, we're going to get a hundred percent of all the stuff that went to China and Mexico.
But maybe purchasing managers will be told by their CEOs look, always give 20% to your Canadian and or your American vendors. Because if you do that, we're going to have a safer supply chain. Don't have a hundred percent of your eggs in the Chinese basket. If you do that, we're leading ourselves to disaster.
The new England company had to spend three times $125,000. $375,000. And it still came late all three times. So, CEOs have to connect those dots so that they have a healthier supply chain and they make their end client much happier.
[00:48:47] Jeffrey Feldberg: There are always two sides to every coin. And hopefully what's coming out of this pandemic Drew is what you're sharing that we build up our manufacturing and our infrastructure in America. And for all you business owners out there that are looking to have a liquidity event. If you have all your eggs in one basket, vis-a-vis China that's a problem for you and it's going to lower the value of your business.
So, do what's right for your business, do what's right for America. Start bringing manufacturing back and good things start to happen from there. You're now diversified. Should something happen overseas you still have the ability to deliver and perform. And it's just a good news story all the way around.
[00:49:23] Drew Greenblatt: Crazy things happen. The last couple of weeks we had the Suez Canal get stuck. Literally, a boat gets stuck. In Mexico, the government shut down the factories because of COVID.
You have to have a diversified supply chain and the prudent CEO is going to tell his purchasing team don't only go for the lowest price, keep 20 or 30% of your action, your vendor supply base in America, even if it's more expensive because, in the long run, it's actually a lot cheaper.
[00:49:54] Jeffrey Feldberg: Words to the wise. So, drew, as we begin to wrap up the interview, there's one question that I like to ask every guest. I want you to remember the movie Back to the Future and in the movie, you had the magical DeLorean car that could take you back to any point in time. So, Drew, imagine it's tomorrow morning, you look out your window and the DeLorean car is there.
The door is open and it's waiting for you. And you can go back to any point in your life. It could be Drew as a young child or as a teenager or a young adult or to wherever it would be. What kind of lessons learned or wisdom would you be telling your younger self?
[00:50:33] Drew Greenblatt: Buy Amazon stock right now. No, seriously. I would say in the beginning focus like a laser beam on hiring great people, amazing people to help flesh out your management team. I should have been more aggressive on that at the very get-go I brought in good people but I should have done it earlier. And I should have done it bigger in the beginning. I hired people probably for more money than my predecessor could have ever conceived of, but I should have gone much bigger. And I should have brought on the engineers earlier.
I should have brought on the higher talent earlier and if I would have done that at an earlier stage, I would have attracted more Bowings earlier and I would have grown much faster. So, I think the answer is to hire better people. They're quote-unquote more expensive, but they're so much cheaper in the long run because they save you so much money and they find you so many opportunities. They pay for themselves so quickly.
[00:51:33] Jeffrey Feldberg: Terrific insights and strategies. So, Drew, as we begin to wrap up the interview now if somebody wanted to find you online, where would be the best place for that?
[00:51:43] Drew Greenblatt: My email address DGreenblatt[at]marlinwire[dot]com. And I would be interested to discuss growth and opportunities and help them get to the next level.
[00:51:58] Jeffrey Feldberg: Terrific. Drew once again, thank you so much for taking part of your day to be with us on the, Sell My Business Podcast. And as we wrap this up, please continue to say healthy and safe and do all those amazing things that you're doing for the made in America and bringing all the manufacturing back here.
So, Thank you so much and all the very best.
[00:52:16] Drew Greenblatt: Thank you had a lot of fun today.
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[00:54:48] Jeffrey Feldberg: Are you leaving millions on the table?
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