The Underwear Expert: 25 Years of DTC Lessons Most Founders Learn Too Late

Michael Kleinmann is the Founder and CEO of Michael Kleinmann Consulting, a bespoke consultancy helping DTC e-commerce and subscription brands grow. He is also the Founder and CEO of Underwear Expert, a men’s underwear platform that evolved from a digital media brand into a leading curated subscription service. As a seasoned e-commerce entrepreneur, Michael spent a decade as the President of Freshpair, where he helped build one of the largest online retailers in the underwear category. With over two decades of experience scaling e-commerce and subscription brands, he focuses on brand building, subscriptions, operations, marketing, technology, and customer experience.

Here’s a glimpse of what you’ll learn:

[1:51] Why many marketing issues are actually foundational business cracks that prevent growth
[6:11] Michael Kleinmann recalls the early “Wild West” days of e-commerce and building software from scratch at Freshpair
[10:16] How Michael increased average order value by 55% at Freshpair through free shipping, international shipping, and offer testing
[13:39] Why founders should focus less on competitors copying them and more on experience and innovation
[19:23] The origin of National Underwear Day and how Michael used PR, models, and media coverage to drive awareness
[24:05] Why Michael started Underwear Expert as a media company before pivoting into a curated underwear subscription business
[38:54] How Michael Kleinmann Consulting helps DTC brands uncover issues that limit growth
[41:57] Common financial reporting mistakes in DTC businesses
[50:48] When DTC brands should consider moving fulfillment to a 3PL
[1:08:22] How walking through warehouses and working on physical projects can spark operational ideas

In this episode…

When growth stalls, most brands immediately reach for a new agency, a better campaign, or a larger ad budget. Before pouring more money into an acquisition, leaders have to ask themselves, is the business actually built to scale?

The answer is to diagnose the foundation before trying to scale what sits on top of it. E-commerce operations and subscription expert Michael Kleinmann advises brands to validate their data, focus on gross profit over ROAS alone, and audit their systems for issues with sizing, product structure, COGS, and inventory forecasting. He suggests fixing low-hanging operational problems first, not training customers to expect deep discounts, using 3PLs when fulfillment distracts from growth, and ensuring subscription models have the right infrastructure before launching. Sustainable growth comes from strengthening the systems that support marketing, not simply spending more on acquisition.

In this episode of the Up Arrow Podcast, William Harris sits down with Michael Kleinmann, Founder and CEO of Michael Kleinmann Consulting and Underwear Expert, to discuss fixing the hidden cracks that stop DTC brands from scaling. Michael shares lessons from early e-commerce, subscription complexity, AI opportunities, inventory forecasting, 3PLs, discounting mistakes, and operational audits.

Resources mentioned in this episode

Quotable Moments

“Brands can go through 100 agencies, and none of them will fix the problem if the foundation is broken.”
“I don't want to bring on a client just because they want to pay… I want to bring on a client because I believe in it.”
“I'm going to double the business in 24 months.”
“I think experience is the most important thing.”
“If the foundation is cracked, anything sitting on top of it is just never going to work.”

Action Steps

Audit foundational systems across your e-commerce stack: Reviewing Shopify setup, apps, and tracking ensures your infrastructure can actually support scaling. Without this, even a strong marketing performance will break down due to hidden operational failures.
Validate financial data across all systems before making decisions: Comparing COGS, revenue, and gross profit across platforms prevents you from acting on inaccurate numbers. This matters because small discrepancies compound into major strategic and profitability errors over time.
Align marketing, inventory, and operations planning: Ensuring ad spend, demand forecasting, and inventory levels are connected prevents growth from outpacing supply. This is critical because scaling marketing without operational alignment leads to stockouts, wasted spend, and lost revenue.
Fix product experience issues like sizing and reviews: Auditing customer feedback, fit accuracy, and product data improves conversion and reduces returns. These details matter because even high-demand products will underperform if customer experience issues erode trust.
Focus on profit-based metrics instead of vanity metrics: Prioritizing gross profit and contribution margin over ROAS gives a more accurate view of business health. This is important because optimizing for surface-level marketing metrics can quietly destroy long-term profitability.

Sponsor for this episode

This episode is brought to you by Elumynt. Elumynt is a performance-driven e-commerce marketing agency focused on finding the best opportunities for you to grow and scale your business.

Our paid search, social, and programmatic services have proven to increase traffic and ROAS, allowing you to make more money efficiently.

To learn more, visit www.elumynt.com.

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Episode Transcript

Intro 0:00

Hi, welcome to the Up Arrow Podcast with William Harris, featuring top business leaders sharing strategies and resources to get to the next level. Now let's get started with the show.

William Harris 0:15

Hey everyone, I'm William Harris, I'm the founder and CEO of Elumynt, and the host of the Up Arrow Podcast, where I feature the best minds in e-commerce to help you scale from 10 million to 100 million and beyond as you up arrow your business and your personal life. Today's guest has spent more than 25 years becoming one of the world's leading experts on underwear. That is not a sentence I expected to say when I started this podcast three years ago. Michael Kleinmann built one of the biggest online underwear retailers in America, created National Underwear Day launched a successful underwear subscription company, and somehow turned men's underwear into an eight-figure business, and now he has a consulting company helping other DTC companies fix the operational cracks to unlock growth. Obviously, we'll talk about underwear, but more importantly, we'll talk about the hidden problems that keep businesses from scaling, the mistakes most founders never see, and why the thing holding your company back is probably not what you think it is. Michael, welcome to the Up Arrow Podcast.

Michael Kleinmann 1:06

Thanks for having me.

William Harris 1:08

I do have one quick announcement, and then we'll jump right into the good stuff here. This episode is brought to you by Elumynt. Elumynt is an award-winning advertising agency optimizing e-commerce campaigns around profit. In fact, we've helped 13 of our customers get acquired with the largest one selling for nearly 800,000,001 that IPOed. You can learn more on our website at Elumynt.com which is spelled e l u m y n t.com Okay, Michael, you said something to me that immediately got my attention. You said brands can go through 100 agencies and none of them will fix the problem if the foundation is broken. What's one of the most expensive, let's say, marketing problems people thought they had a marketing problem that you've ever discovered that absolutely had nothing to do with marketing.

Michael Kleinmann 1:51

I mean, there's so many of them. I'd say one of the one of the most interesting challenges that was not really a marketing challenge, even though they thought it was, was a business that had been operational for many, many years, and, and in the last few years, they were just stagnant, and they just could not figure it out, and they went through tons of marketing agencies, Amazon agencies, etc. couldn't figure it out, because essentially what happened is some things would increase and some things would decrease, but they just were stagnant, and at the end of the day, it was because there were so many foundational cracks in so many different areas that they were just doomed before they even started, like any new project that they started, even if it was successful, something else would break, and it was kind of like playing whack a mall, I think, with, with this, in this situation, so it was, it was, it was also really interesting for me, because I got to fix so many different things.

William Harris 2:49

Yeah, I think that's one of the interesting parts about this, is that there's usually, there's like, not you said, not one crack, it's like there's the crack that comes to the superficial level, the surface, right, that you see, but there's all of these other little tentacles that are kind of like hiding underneath there that you're just not even aware of,

Michael Kleinmann 3:04

for sure. I mean, if, if the foundation is cracked, anything sitting on top of it is just never gonna work.

William Harris 3:11

Yeah, I mean, it's just like in a house, right? So, it's such a good analogy. Yeah. Um, I want to go back in history a little bit, because I like to get to know you, and you as a human being, and kind of help piece that together to understand the thoughts and stuff. I heard that when you were eight years old, you asked for a desk, filing cabinets, and your own phone number. What kind of a kid does that?

Michael Kleinmann 3:36

Well, I was never a kid. I think I was an adult when I was a kid, and now I'm probably more of a kid, but yeah, that's just my problem, I guess.

William Harris 3:46

So, I mean, like, you know, were you carrying around a briefcase at eight? Like, what was this eight-year-old like? Like, why were you this way?

Michael Kleinmann 3:53

Oh, I just wanted to, like, be CEO of anything when I was eight years old, like, that was the vibe. And then, and then, when I was in college, I started my first business, and yeah, I think I always just wanted to be CEO of something that was just kind of how I was programmed. Some kids like sports, some kids like other things. I mean, I just wanted to work. Did you

William Harris 4:15

see that? Like, is it? Well, there's an inspiration to you that you're like, you know, like your dad, your mom or somebody, it was

Michael Kleinmann 4:22

definitely not my parents. My parents definitely.. my parents definitely like.. we don't speak the same language, which is fine. No, other other relatives were inspiration, and I saw them kind of go from nothing to something like very substantial, and that was, you know, really like cool for me, because I, it was like so different from what I was used to, yeah. No, that's fun. So, you said you started that company, then your first company, when you were in college, what was it, 19 years old? Um, it consulting, if I remember correctly, and you told me that you were wearing three piece suits, so that trend continued. Yeah, what I, when I was 19, my lawyer said no one's gonna take you seriously if you like don't look the part, and so I was like, okay, so yeah, I just went out and bought all these three piece suits, my parents thought I was nuts, and and I was able to start a consulting company and make a lot of money, and it was, and I met, you know, really amazing clients, but yeah, that was I did that for a few years. Then, when I graduated, I decided that I would do something different. So, yeah,

William Harris 5:30

do you think that the three piece suits actually helped? Like, looking back at it now, it's just like, was it necessary, or you're like, yeah, no, I really do think that made a difference.

Michael Kleinmann 5:39

Oh, absolutely. I mean, if you look the part, then you can charge a lot of money, and if you, if you knew what I made in college, I think you would agree that the three-piece suits are worth it.

William Harris 5:48

I love it. All right. Well, I want to go now into Freshpair, and I know that this was a while ago, but the thing that I like about this is that you started this back when Google barely existed, Facebook didn't exist, Shopify wasn't a thing, people were nervous about typing a credit card into a website, like this was not like this is not like what we think of e-commerce today. How insane was e-commerce in 2001

Michael Kleinmann 6:11

I had these two high school kids and working out of their garage, and they were my programmers, and we built like millions of dollars in software with these two kids, and yeah, no, it was wild. I mean, it was like the wild west of the internet. Everything that you wanted to do, either you couldn't do because it didn't exist yet, and you had to figure it out yourself, or there was a company that wanted a million dollars for it, because at that time there were these like super enterprise things for certain functions, so yeah, I basically had to figure out how to do everything myself with no money, and it was one of the best experiences ever. Slightly stressful, but really good for someone in their early 20s to kind of learn how to do everything from scratch and then scale it. So really good experience.

William Harris 7:00

Have you ever heard of Kinder Schmidt?

Michael Kleinmann 7:03

No.

William Harris 7:03

Okay, it's apparently no. It's this, it's this way of teaching kids to swim. It's like this German thing where you take like babies that like can't talk and you just fully submerge them underwater and let them just float them way back up to the.. and it's like, you know, they become comfortable getting underneath the water, whatever it's called Kinder swimming, I feel like that's the best way to become an entrepreneur, to a point like you were just saying, where it's like you almost just have to be like, hey, somebody's just got to push you underwater, you got to figure your own way to swim back out up to the top and breathe.

Michael Kleinmann 7:31

Yeah, I mean, I think, like, and I don't think that's how you learn how to become an entrepreneur, because I think you either are one or you aren't. I don't think it's something you learn, I think it's something you're born with, but yeah, no, I, that, that was how I operated, right? We, I, I knew nothing about what I was doing, most other people knew nothing, and you just had to kind of like figure out, like, what was bullshit and what was real, and kind of like do it yourself, and, and everything was start from scratch, I remember we had to figure out how to ship orders right ourselves, so I got some interns and we got some computers, and I had to, like, think I like install the internet access myself also at that time, and I had to, like, I had to, like, build shelves, and we did like everything, and I, so I had my high school programmers connect like the UPS system to something else, and we were able to scan a barcode and print out a label, right? And, like, for 2001 2002 that was actually very sophisticated. Yeah, and so, yeah, we did really cool things back then. I mean, it was. it was. yeah, I have so many stories. It was such a good, it was so much fun looking back. It was fun,

William Harris 8:46

yeah. Now that you're on the other side of it, right? Like, the stressful.. I remember you said that you almost felt like every day you were on the verge of going out of business, right? Like, there's always something that you're like, oh, this is gonna.. oh, this is gonna.. it's like, what was the closest you ever felt were like, though, this legit might, might put us under.

Michael Kleinmann 9:04

Oh, it was a daily basis, every day we were going out of business like within 30 days, and it was just like it didn't end for years, right. And, and there were several moments in time where I did things, and like, it had I not done that, the company would have died, you know, and like there are a bunch of those things. It was interesting.

William Harris 9:27

Is there one that stands out to you as you like this is probably the one that I enjoy talking about the most?

Michael Kleinmann 9:32

I mean, there were.. I mean, chronologically, one of the most important things I did was move into a three pl because once we started shipping 300 orders a day, like all of my time was spent supervising interns and going to the post office, and like I even at that young age I realized I needed to like delegate, so once we move into a three pl that was important and then you know we had no money so. We couldn't buy inventory at the inventory we needed, right? We needed millions and millions of dollars. So I partnered with one of our competitors, I moved into their warehouse, and then I architected some software that is now called drop shipping, but back then I don't think anyone really used those terms, and we were able to leverage someone else's inventory, we just happened to physically be located in their facility. It was a three pl, so they didn't own it, and, and that's how I really scaled the business to millions of dollars. So we didn't make any money back then, but we got sales to scale so significantly that we ultimately became profitable, so I would say that was the single most important thing I did at Freshpair to make that company work. And then, you know, there are a lot of other stories, I, you know, I remember, you know, free shipping used to be a thing that people would tinker with, and it was like there was a moment where free shipping, like, was like the most popular thing that people were talking about, right, in the early 2000s I guess, mid 2000s and so we wound up coming up with like all these different things that we tested in, and and when I finally figured it out, I got the average order size to increase by 50% five, wow, yeah, and you know, prior to that, you really didn't make any money on any order, right, and then once I figured out how to get the shipping thing and the international shipping and all that stuff kind of orchestrated and working, average order size went up a lot, and that was another transformational moment for a Freshpair, you know, because, as you know, like, without a high AOV, you, you can have problems. So,

William Harris 11:46

I mean, it makes a big difference, like you said, like you're gonna pay a certain amount of CAC to acquire a customer, so if that AOV is too low, like you said, like you're not making any money off of it, it's it's hard to have the cash flow that you even need to be able to continue the business,

Michael Kleinmann 11:58

right? But the advertising back then was different. I mean, when I started, I'm embarrassed to say this, but you know, you didn't bid on keywords on Google, you bought impressions on Google contract. Yeah,

William Harris 12:13

that's, uh, that's the early days. I mean, that's kind of like the early days, right now, of Chat GPT ads. I don't know if you've played around with them at all right now, like there's like three things you can do. It's absolutely.. it's not very good yet. We downloaded.. there's like the bulk editing tool that you can, you know, upload stuff. If you do that for each individual one, it's fine, but if you download it for like multiple clients, whatever, at one time, it's completely blank. It was just.. it's just a blank spreadsheet. You're like, well, that's not very helpful. Like, no headers, nothing, like there's no traction, snow headers. It was like, okay, got it.

Michael Kleinmann 12:45

Yeah, I think we're in the wild west of that right now. Also, and yes, and having lived through, like, you know, the same kind of thing with a lot of other, a lot of other e-commerce trends. I mean, this one's different, obviously. Actually, I think about this based on all that experience that I have, and I think it's going to ultimately make me figure this out, and what to do with it, as opposed to like not having that kind of universe of experience, and kind of just starting from scratch and wasting money.

William Harris 13:19

Yeah, no, I think that makes sense. Yeah, you talked about how you partnered with one of your competitors, which I think is interesting, because a lot of people, you know, stay as far away from their competitors as possible. Yeah, what's what's something that founders fiercely protect today that you think they should collaborate on instead?

Michael Kleinmann 13:36

I think everyone's worried about, you know, someone doing the same thing better, cheaper, maybe they don't have the, you know, same infrastructure, but maybe they're also not like tied down by the same infrastructure, right. And, and with the technology evolving like so quickly, like quicker than anyone here is really used to someone could start a company doing the same thing cheaper, faster, better, and figure out how to acquire customers and cheaper, faster, better, and then just scale, right? So think everyone's afraid of at least people I talked to those kinds of things, right, but I think experience is the most important thing, and like a lot of these companies that may try to copy you, they, it might just be a fad, right? Because, like, you know your business really well, you know the market really well, and so I don't know if I answered your question, but

William Harris 14:38

yeah, I think that, like you said, there's more opportunity to collaborate on things. Don't be too afraid of the competition. They can't copy you as well as they'd like to, right? Like, you're going to continue to out think, out innovate. At least you should, and if you can't, then maybe you should be a little bit afraid.

Michael Kleinmann 14:53

And I think now is now.. I mean, I think what's happening right now is really going to test founders. Because you know you can't just sit back when you have something that's working and assume it's going to work, you know, into the future, because there are too many like information now is different, right? you can extract so much information using these AI tools and figure out what your competitors are doing and how to do this better, and how to optimize this and that. It's for the last six months I've been scared by AI, and then in the last week I started doing some things on Claude, and I have a totally different opinion of it now. Now I think it's the best thing that ever happened.

William Harris 15:38

So, what changed? What did you do that you're like, okay, I'm not scared anymore.

Michael Kleinmann 15:42

Well, at first I was just like, oh great, this is just another thing I need to figure out, and I already have like more things that I need to figure out than I have time for, and you know, I, I spend a very large percentage of my time on my consulting business, and I spend.. I didn't even talk about it, but I spend less time on my underwear DTC company, so time is just not something that, like, is unlimited for me or for anyone, but in my case there's not a lot of time, so I, I was thinking, okay, what would happen if I had no employees, like, what's like the extreme? What would that look like in terms of Claude? Like, you know, and I definitely want to have humans, because you have to have.. I believe in having humans, right? And I don't want the AI to take over, but I think that there's certain things that I've never figured out in the last 10 years with Underwear Expert, and I actually think that Claude could figure them out. So, what's interesting, and I think we skipped over a bunch of things chronologically, but after a Freshpair, I started Underwear Expert, and under experts, a subscription e-commerce brand, and we can kind of talk about that more, but

William Harris 16:57

I do have some stuff on them too. I'd love to get, yeah, we'll

Michael Kleinmann 17:00

rewind, but basically, Under Expert has, so, because of my experience building technology from scratch, when I started Under Expert, you know, now we're on Shopify and Recharge, but we still have, like, a few million dollars worth of custom software that I architected, which curates this Underwear Club subscription in a way that none of the other software platforms could, so that's our proprietary, you know, tech stack, and I've had the technology for a decade, and we, you know, we've been building it, you know, on and on and on for the last few years, and I think Claude could help us do some of the things we've been trying to do, but we never could really fully do, because they were just too complex, and there are other areas of my businesses that I think cloud could be interesting for, and for my consulting clients. So, I've been just thinking about all the different use cases of all the different things, and trying to figure out what does it look like. And we're doing a lot of R&D internally to look at different processes, and we do a lot of really complex things, and so just trying to sort through them, and see, you know, what could we do better. How does technology help us? I think it's really interesting, and it's going to be really, really beneficial.

William Harris 18:11

I'm with you, and one of my favorite things to do with all of the AI tools that I've used is just, just to continue to ask it, how it can also help me. It's like, what am I not thinking about, or it's like pre-mortems, right? It's like, hey, I went ahead and implemented this. Let's say it doesn't work in five years. What were the things that likely went wrong? And it's like, it helps to punch some of the holes in there, instead of just agreeing with you. So, that's the best idea I've ever heard. It's like, no, okay, got it. But, like, let's assume that it didn't work. Why didn't it work?

Michael Kleinmann 18:35

Yeah, I mean, I spent like, I spent a few hours talking to Claude, and then afterwards I was just like blown away, like I just.. it didn't occur to me, I don't want to talk to my computer, you know, and it occurred to me that if I actually spoke to it, it's more efficient, I get things out of my brain that I wouldn't be able to type it, yeah, the last week has been really interesting with, with Claude, but you know, TBD, that was

William Harris 19:01

fun. I want to go to National Underwear Day real quick, and then I want to get into Underwear Expert, but National Underwear Day, because I think this is very interesting. Let's just say I don't want to call it a gimmick, but like, in a way, it kind of was like this way to like increase things, right? But it's like, what made you wake up and say you're like, ding, ding, this is the winning idea, we're gonna create National Underwear Day.

Michael Kleinmann 19:23

I mean, first of all, I never thought I'd be in the underwear business. It just, like, sure happened, you know? Like, you know, it's like some, some percentage luck, and you know, some percentage intelligence, I guess. But what happened was, in 2002 I'm reading an article about Google SEO, and back then SEO is like brand new, and most people were not really focusing on it, and I just, you know, back then a lot of your traffic was organic, a much larger percentage than now, and I just started, you know, thinking about all the different things that could happen that. Could change this traffic, and the company was only a couple years old, and I was just getting really nervous that there are all these outside factors that were out of my control. So I realized, you know, in 2002 two years in, that I needed inbound links from reputable sources like basic SEO. Right, I was just a little ahead of people, I think, and and then I also realized that, like, one or two links is not going to do anything, and I'm very, you know, my modes of operating are zero or 100 you know, I don't know, I don't know anything in the middle, so I went for the 100, I was like, okay, what do I need? I need major press, I need entertainment press, I need news, I need fashion, I need everything. I need a major event, I need everyone on the planet to talk about it. I need TV coverage, I need radio, I need blah blah blah. And then I hired some models on Craigslist, and I put them on a street in somewhere in Soho in New York, and we took some photos because I couldn't promote National Underwear Day before I had any assets, but I never did it before, so I had to like fake the PR launch thing, so again I didn't know what I was doing. I hired an intern, though, to help me with PR, so, so Mia, so me and the intern, we did this little photo shoot, and then we started sending this press packet out to TV shows, and no one was interested, right? They were so scared of guys standing in their underwear that, like, no one knew what to do. So I called up a TV station, and I said we're gonna, we're gonna be booked on this other show. Do you want to book us? And they said yes. And then I called the other one, and I said we're gonna be on this other show. Do you want to book us? And they said yes. And we weren't booked on anything, but all of a sudden I was booked on two, and then we got booked on a lot. And then I launched National Underwear Day, and the first year it was august 13, 2003 We had 20 models walking around New York in underwear, and I had CNN following me with cameras on the street. I did 20-three live radio interviews that we had all this press, and then the next day, august 14, 2003 was the blackout in New York, like, you know, I don't know, hundreds of millions of impressions, right? And then all of a sudden everything stopped. Oh no, I just remember August 14, 2003 I'm just laying in my bed, no air conditioning, pitch black, I didn't want to talk to anyone, do anything like I was done for like a week.

William Harris 22:44

Oh yeah,

Michael Kleinmann 22:45

but it turned into a huge thing. We used, I, so towards the end of National Underwear Day, at when I, before I sold Freshpair, we would build a 50 foot elevated runway, like three feet off the ground, in the middle of Times Square, and, like, you know, production trailers, television lighting, the whole thing like full on production. They'd start building it at midnight, and then at 6am we would start the morning talk shows. We would go on live TV, and then we did the Today Show one year, and then we would have like multiple runway shows in the middle of Times Square, and then eventually we got so big for Times Square, we had to move it inside.

William Harris 23:23

Oh man, that's so good. I have to call it to everybody. Then I, so similar to you, I tend to be like a zero to 100 right? I'm like, not a lot in between. I joined the call today in my underwear, more or less, you know, like this is what I'm gonna do. Michael's like, don't be weird, dude, don't do that. So, thank you for saving me from doing weird things here today.

Michael Kleinmann 23:47

Anytime, anytime.

William Harris 23:49

Okay, now I want to talk a little bit about Underwear Expert, because you went from you already had one successful underwear company, then you're like, hey, I'm gonna start another one. Like, what was your thought? Why do you say, like, yes, this is what I'm going to start now.

Michael Kleinmann 24:05

So, again, I didn't, I didn't really want to be in the underwear business, I just like fell into it. And when I sold Freshpair, we had 30,000 SKUs, so this was a big business and a complex business, right? We sold 150 different men's and women's underwear brands, we were so big that we helped to create demand. We would bring on a brand that, like, barely existed, and by the time they worked with us for a while, it was a multi million dollar brand that probably still exists today. So it was, it was, it was very interesting in a moment where there wasn't a lot of online sales for certain certain brands didn't even have websites, right, Amazon didn't sell underwear, like Freshpair could not exist, Freshpair could not start from scratch today because it's just changed, the market has changed too much, right, so it was a moment for the deck. Eight, I was there. It was extremely successful, and it was so much fun. And then after that, I decided I didn't want to compete with direct, you know, brand selling direct. I don't want to compete with Amazon. I didn't want to compete with anything that I didn't know about in the future that was even similar, remotely connected to that. I always wanted to have some sort of subscription or something with like predictable, you know, revenue. I had ideas about it in the past, but you know, nothing really materialized. So I decided that Underwear Expert was going to be a subscription, but in the time between I sold Freshpair and when I started the Underwear Club subscription at Underwear Expert, Underwear Expert was a media site, because I had a non-compete, and I couldn't sell anything on the internet at all, anywhere, and, and that was okay. So I created a media site. It was called Underwear Expert. We published 1000s of articles, did hundreds of photo shoots and video shoots. Again, I think I was a decade ahead of the time we were getting a million visitors a month, and then I decided to pivot to e-commerce, so I took the existing subscribers for the blog and the, you know, the social media channels, and, and by then we had a, you know, pretty big following on social media, and then we, you know, just moved into e-comm, and so today under our expert is 100% e-commerce. Most of it is subscription, and and so we have a underwear club subscription where we curate it based on your personal preferences. We have custom technology that helps with that. We're using Shopify Plus and Recharge, and yeah, and we've kind of developed a whole bunch of cool features to kind of run that process, and yeah, and so that's that's been focusing on for a while, and then in the last couple years I decided to get back into consulting, and so now I'm helping brands fix the problems that they have.

William Harris 27:01

I think the most genius thing that you just said was that you started this as a media company. You had a non-compete at the time, whether it was your intent to eventually launch this into e-commerce or not. Like the idea behind this of like starting a media company in something that you're already.. I feel like there's a lot of founders, and again, we talked about it's like we've helped 13 of our companies get acquired, and they do. They're in these non-competes, but they're like, but this is what I've poured my heart and soul into for the last decade or two. And so I know this space. What do I do with all of this knowledge that I have? And it's like, look, why not start a media company based around the knowledge that you have? You don't have to necessarily, you know, sell, but you can do something you're like still passionate about, invested in connections that you have, etc.

Michael Kleinmann 27:44

Yeah, I mean, again, like I always seem to be a little ahead of my time, and I think eventually I'll get the timing right. But yeah, you know, we were creating YouTube videos in 2011 right? And yeah, and and my YouTube channel has 300,000 subscribers, and it's mostly from a long time ago, and we used to publish tons and tons of YouTube videos, and, and a lot of them have millions and millions of views. Yeah, it was definitely the blog, and the media, the media stuff we did was interesting, you know. And then that kind of turned into influencer marketing, you know, again, we were ahead a little bit in, in 2016 1718, you know, we had the like 1000s of people in an influencer program, and no one was doing that yet.

William Harris 28:33

Yeah, you were ahead of the game for sure. It sounds like you're continuing, like you said, almost ahead of the game to the point where it's like hard, it's like the uphill climb, right? It is. Yes, you have to build it from up with,

Michael Kleinmann 28:43

I come up with a good idea in the shower, and then I start it that day, and then it works, but it's five years too early. Yeah,

William Harris 28:52

yeah. My wife and I talk about that. We feel like we do a lot of things on hard mode as well, or just like, wouldn't it just be nice to do something on easy mode once in a while?

Michael Kleinmann 29:00

No, easy, I don't have an easy mode. I wish I had an easy

William Harris 29:05

mode. Okay, what's one of the biggest misconceptions founders have about subscription businesses? Their pros, there are cons. Obviously, you started this with the goal of wanting to do this. Like, yeah, yeah,

Michael Kleinmann 29:16

I mean, I think most founders are like, I want a subscription because they know it's easy revenue, but it's really not easy revenue, and you know the subscriptions are an order of magnitude more complicated than a standard DTC business. There's so many other things that you need to do, and and it's just.. it's complicated. You need to have the infrastructure for it, the people for it, the right software. It's very easy to implement a lot of things and spend a lot of money and have it not work, and you can also, you know, you have to be very careful if you're doing both, that you're not cannibalizing one or the other. So, I think if you're going to have a subscription and it's going to work with your other business, you really have to hire experts. It's to help strategize before you do anything, otherwise it's just going to turn into something that's very complicated that doesn't work.

William Harris 30:08

We focus a lot on LTV to CAC ratios for all of our e-commerce businesses, but it's even more important in subscription. One of the things we've always looked at is, you know, what we call like MTB, like months to break even. It's like, what, how many months is it to break even on x amount of things? And that's maybe a good gage. Is there a metric or so that you look at that you're like, look outside of normal DTC? These are a couple of the metrics that we really like to focus in on subscription side.

Michael Kleinmann 30:35

Well, we work with a lot of startup subscriptions and supplements, yeah, and I think it's a little different if it's a startup versus an established business, because you know you have different types of projects you're working on, so at a dealing with startup clients, we're looking at every metric, because we have to influence the metrics, right, and and a lot of what we're doing is projecting, okay, if the ROAS is this and the spend is this and we have these other things like what happens, because I think with a lot of the startups you're modeling out all the scenarios and then you're testing scenarios and then you're trying to get it get it to work, so so we look at everything. I wouldn't say there's one thing, I think if it was a more established client then then obviously it's a lot easier,

William Harris 31:25

yeah, that you have something to work with, yeah. Whenever I think about subscriptions, like you just called out supplements, that's a very, very easy no-brainer, you know, for a subscription business. And then there are some brands that I feel like they just bolt on subscription, they're like, oh, we're gonna do subscriptions right, and it's like you sell Christmas ornaments, nobody needs like a monthly Christmas ornament subscription, like, or whatever it might be, it's like you're gonna get like one to 2% of your absolute best customers that want on this, but this is not like 90% of your customers, is there a way that you look at to kind of help figure out who this makes more sense to, and it's like, where they should draw the line of, like, success for them. So, it's like, hey, Christmas ornaments, 2% you know, penetration into this, it's actually pretty, pretty good, whereas, like, this one, it's like, no, you really need to be at 90% or you're, you're failing.

Michael Kleinmann 32:14

I mean, I think the way I, the way I work through these, you know, projects is sometimes I try to create something that never existed before, right? I mean, Christmas ornaments, not my area of expertise, but maybe there's a really cool Christmas ornament subscription idea that would actually work, but I'll come up with something that is completely out of the box, right? That's that's where my brain goes, if it's an easy, like low hanging fruit thing, I'm sure someone's already come up with that idea. Maybe they haven't done it, but you know, we could help them do it. I think interesting is, you know, like apparel companies where the products are one time purchases, but maybe there are inserts into the products or things that you need to replace, and then it's even though it's mostly one-time purchases, there could be a subscription component. So we recently had a client like that, where there was an opportunity to change how they handled some of the replacement items that they were selling, and and it was the perfect candidate for subscription, you know, but there was a lot of R and D that they needed to do, and we didn't get a chance to finalize it yet with them, but that was the most recent one that I came across.

William Harris 33:34

That's great, that reminds me of, you know, we've got some that are the hobby space, like fish tanks, and say, well, you buy the tank, then it's like, well, you need all the stuff, the chemicals, whatever, and so it's like, here, just put you on a subscription for all the maintenance and care and stuff like that that you need. It's right. Yeah, that makes sense. You wrote something that I read that I appreciated about overly aggressive discounts attracting terrible customers. What's more dangerous, not acquiring enough customers or acquiring the wrong customers.

Michael Kleinmann 34:04

I think it depends on the business, and it depends on the average order size, maybe both. The challenge is over discounting and turning good customers into discount customers. And at Freshpair, when I first started men's underwear, never went on sale because the industry wasn't that established yet, and I'm probably responsible for a lot of the sales that happen in men's underwear, because I demanded that people put things on sale, you know, x amount of times a year, and then it kind of caught on, and you know, some of the brands, like, you know, did certain sales, but it wasn't anything like what it is now. And even though I advocated for sales a long time ago, you also have to be really careful, because there's certain people that only buy on sale, and the worst thing you could do is take a full price brand that might have, you know, two sales. A year and turn into a discount brand. We had a, we had a client recently that had, you know, a huge amount of fashion inventory from prior seasons that it wasn't selling because they just weren't, they weren't managing it correctly, and you know, prior to us getting involved, and and when, when I discussed it with them, they told me that their solution was to just lower the price and kind of blow it out, so I looked at what they did, they were taking items that retailed for $30 and they were selling them for six, so yeah, and but they did it for a very long period of time, so in addition to losing money on every order that they shipped, they also train their customer to expect, you know, 80% off, right? And it's really hard to walk back from that. So

William Harris 35:56

very much agree, really

Michael Kleinmann 35:57

powerful. Yeah, yeah. I mean,

William Harris 36:00

so how do you fix that? Let's say that you have too much inventory, you got to get rid of it. You're going to move it. Do you have ideas that if you're like, hey, let's not discount it 80%

Michael Kleinmann 36:08

I mean, I think sometimes throwing it in the garbage might be the best solution, like donate it to charity, you know, sell it to an off-price retailer that's not going to put it online, just get it out of there, so it doesn't negatively impact things. You know, I think charity might be the best thing, but depending on what it is, you can also bundle it, and if you bundle it in a way that you're not like, if you can bundle it and sell a $99 bundle that has some things in it, and it's not cannibalizing the rest of the business, then that's fine. Maybe you could use it for, like, a gift with purchase, you know, spend a certain amount, get this thing, but you know, depends, like, a lot of times people have things with sizes and colors, and they have broken sizes and colors, and it's hard to do that, so it depends on the depends on the type of product, it comes back to forecasting correctly, and handling sales correctly, and clearance correctly. But if you really are stuck with a lot of stuff, you really have to be careful that you don't ruin the entire business. And then, like, it doesn't matter that you got rid of that stuff, you know.

William Harris 37:18

I love those ideas. Those are probably easier than the one that I had, which is why I don't do that part. So, I had somebody on the podcast, Jonathan Sorkin, with, I believe, is Evergreen Trading. They will actually buy out your stale inventory of things as well, and then, in exchange for you getting media spend, and so it's like they buy a bunch of this media spend, and they will buy your inventory, and they will do other stuff with the inventory, and then give you the media spend, and so you actually still get like a decent amount for it, but to your point, I think I think the idea that you gave is probably a little bit less complicated, but it is another interesting idea and avenue for certain brands,

Michael Kleinmann 37:53

but also that it's like the brand, the brand reputation becomes part of that, so if I was going to sell a lot of inventory to someone else, I'd want to know exactly where it's going, because you don't want to damage your brand's reputation. Yeah,

William Harris 38:04

yeah. No, that's it's a good call. I don't know if you remember this on Meta, Facebook - it was Facebook at the time, Facebook ads. One of the targeting options you had was people who like coupons. It was like I remember going into this all the time, into people's accounts, and being like, yeah, we're getting rid of that. We are not targeting people who like coupons. I don't want those as your customers, you know. We can acquire people with a discount, whatever, that's fine. But I'm not intentionally going after people who want coupons. No,

Michael Kleinmann 38:32

no, I mean, coupons are, you know, it's like it's necessary evil.

William Harris 38:36

Yeah, I want to start digging into fixing the cracks in the foundation, then, like you said, like this is the meat, this is what you're doing now, and it is just aptly named Michael Kleiman Consulting, if I remember correctly. Like, if people want to work with you, that's it, right? Is it? Is your name

Michael Kleinmann 38:51

William Harris 38:53

Michael Kleinmann 38:54

Michael Kleinmann Strategic Consulting. Yeah, I mean, essentially, like, you can hire all the best marketing people in the world, and spend as much as you want, but if you have foundational cracks, it just isn't going to be efficient, and a lot of marketing agencies get fired for things that are completely out of their control, because they run the media, they might have some input on creative and other things, but you know, if your Shopify is not set up correctly, there's nothing that they may not even know, and there's nothing they can do about it, and if, if there are issues with your theme, or your apps, or whatever configuration things like processes, warehouse, you know, there's only so much that you can do, so yeah, we, we get, we basically take my 25 years of experience and kind of distill it into, you know, expert level investigation. So, when a client comes to us with what they think the problem is, you know, we look at that, we look at everything around that, we look at everything, and we try to figure out what is the actual issue, what. Or what are the multiple issues, and then you know, we kind of, we rank them in terms of, you know, how do you prioritize them? How do you get, you know, I always like to get the client some amount of revenue immediately to cover our cost. Yeah, and then we kind of work on the things that take months and months to fix.

William Harris 40:20

We do the same when we talk about, you know, starting up ads versus SEO. I'm like, SEO is gonna take six months, like, let's actually just fix your ads, we can generate enough EBITDA there that we can end up basically offsetting the cost it's going to cost for these months for that,

Michael Kleinmann 40:33

for sure.

William Harris 40:34

If I handed you a $50 million DC business tomorrow, what are the first three things you're likely going to look at? The like, I feel like these are the areas that I'm going to see the most opportunity in general.

Michael Kleinmann 40:49

First thing I would do is talk to, you know, the top people to understand what they think the problems are, and then I would try to validate those, and I always look at the financials first, because I need to know what's your gross profit. Where's everything going? Do you even understand where things are going, right? Because a lot of things get grouped together, and that doesn't mean that they're actually like supposed to be in those categories. So, like returns, you can put a lot of things in returns, but sometimes returns is not the issue, customer service is the issue, or size charts are the issues. So I really like to look at the financials to understand where we are, and also, as I start to fix things, I need to see the improvement, and, and really, it's usually part of the gross profit, right? So I mean, it could be expenses too, but it, and it's really hard to dissect that, because everyone does accounting differently, and most people don't do it correctly.

William Harris 41:50

What, what are the, what are the.. let's just say, like, the top one to three things that you see people doing incorrectly on their finances.

Michael Kleinmann 41:58

Oh, I mean, we could have an episode just about that,

William Harris 42:01

okay? Just the top one or two things you like these mean things.

Michael Kleinmann 42:05

If you know, it depends, like they have multiple systems, but they're not talking to each other, and there's a bunch of manual stuff that's happening, and it's wrong. Cogs is the biggest thing. A lot of times, they just don't have an accurate way of doing cogs. They don't have, they don't follow like FIFO or anything, it's just that's a some sort of manufactured, artificially manufactured COGS amount. There also could be, I mean, there could be a lot of different, lot of different things in the financials. I look at the balance sheet to see, you know, are there things on there that don't make any sense, like, you know, I had a client that the bookkeeper didn't know what they were doing, and every time they didn't know what they were doing, they would put on the balance sheet, and then it just accumulate over years. So, when I some of this thing, I was like, this is a lot, what is this? And turns out it was just things they didn't know it. depends, it depends on it depends on the business, but most of the time they don't know how to reconcile revenue and gross it up, and then pull all the things out, and then as Shopify or Amazon change things, they don't know how they're not aware of those changes, you know, so the, and maybe the numbers are only off by 1% or 2% but they're just not correct. So we look at all different things. I mean, hopefully the larger clients have these things sorted out, because they have different systems, better systems, right? The smaller clients, it's always the same thing. Financials are totally wrong.

William Harris 43:39

Yeah, I love that you go straight to financials. The whole reason why we talk about optimizing around EBITDA, because there's so many times that I see I see brands optimizing around other things, ROAS, whatever it's like. You need to understand what the ROAS is, you need, but you can make that ROAS look better by, let's just say, going back to a discount, you give a discount, your ROAS goes up, but your profit went down, and so if you're talking to the CFO, they're like, this wasn't happy, but the marketing teams patting themselves on the back, because they're like, look at how good we did, we sold all this extra stuff at this, you know, high

Michael Kleinmann 44:17

ROAS, it's a lot of different things, I mean, like, you can optimize for different things depending on what the goal is, right? So, but, like, if you're, if you guys are looking for, you know, income, you're optimizing for income, net income, and I'm optimizing for gross profit. Those are two totally different things. As a marketing agency, you don't necessarily control the staff, the insurance, like some of these other, you know, the rent, like those things, so you may be able to influence the net income of a client, but only to a certain extent, right? Correct. And so I, while, while I can optimize some of those things, and you know, make them more efficient. And that is secondary, I think, to gross profit, right, because gross profit is going to be their discount strategy, how they handle returns, obviously top line sales, right, any channels that are feeding into there that are more profitable or less profitable, really understanding it, and then fulfillment, and fulfillment could be a lot of different things, depending on how complex the company is, packaging, you know, anything going into the Cogs number,

William Harris 45:31

yeah, all of these things talk to each other. I remember another client of ours where I want to say we're spending like, you know, $500,000 a month on ads, and we were crushing it for them. One of those moments where it's like, okay, great, we have - we've been stuck at this for a while. Thankfully, you guys have unlocked it. Our budget for next month is a million dollars. Sweet, we're excited about that. We're like, ready to double it. How much inventory did you guys order? Well, I don't know, 20% more. It's like, well, that's not going to work, then. Like, we can't double budget if you only have 20% more inventory, because they were already going out of stock, as it was, and so it's like this isn't going to work, and so the marketing team wasn't talking to the finance team, the financing was talking to the inventory team, and it's like, wait a minute, guys, we all have to get on the same page and understand what is the unified goal here. How do we make sure that we move forward in a way that's actually beneficial? Otherwise, we're just simply spending a lot more money to acquire the same amount of purchases, or 20% more,

Michael Kleinmann 46:21

right? And a lot of companies are doing this manually, and they're, and it's not correct. And if you're growing quickly, that's a great problem to have, but that's a huge problem, because you, if you're growing really fast, you don't need to double your inventory, you probably need to triple your inventory, you need to figure out what's working, what's not working, and really get ahead of it. Last thing you want is to be chasing inventory in this age of very expensive acquisition costs, right? But you know, and you have to, you have to time it and factor in all sorts of buffers for different things. I had a client that was forecasting inventory manually, but the person that did it wasn't very sophisticated, and it was so wrong that the CEO of the company just like guessed what numbers he should order, just that's how they ordered inventory, and when I got involved, you know, I wanted, I wanted to understand inventory forecasting, and we wound up, and it was a very complex, like multiple warehouses, multiple multiples of different things, and we wound up helping them forecast inventory better. And when I told them how much they needed to order, they didn't believe it, like they were shocked, and they're like, we, but they're like, we really need this much. I was like, no, you need that, you're gonna run out of this, like, you, you're gonna place the largest order you've ever placed in the history of the company, and if you don't, you're just leaving money on the table, because the demand is there, the ad spend is there, the ROAS is there, everything's there, the website, I improved the website conversion by like a large double digit percentage. Now you just need the goods sitting in the warehouse.

William Harris 48:05

What are a couple of things people could do to do a better job at inventory forecasting?

Michael Kleinmann 48:11

Find a piece of software that does it, and just like let the software do it.

William Harris 48:16

I mean, is there one you recommend?

Michael Kleinmann 48:17

No, because you know we don't get involved in inventory forecasting, the most of the time I think the one where we did it was a very complex situation. I mean, that I mean we had to get involved because it was multiple countries, multiple warehouses, multiple factors that were kind of some legacy things, and it was very complex. So we normally wouldn't do that, but I mean, there should be some system for forecasting, you know, tracking, planning, purchase orders, financials, cogs, and most companies will have things like this, and I, I just, I don't usually get into that side of things, but you know, I'm sure I'll have to at some point.

William Harris 49:06

There was another lady on the podcast, Brandi Dugal, with The Fidget Game, and she said that I think they were on Shark Tank, and then the girl who was doing the inventory forecasting for whatever that month was year over year didn't take that into account, and so ordered like 10x more than what they did during Shark Tank, and she was like, "I'm sitting on five years worth of inventory. My company sunk it, but it actually ended up being the moment that she was able. You talked about shower thoughts, she was like, "I'm in the shower, just like this is it. This was the day that my company died, but it was the kind of like those pivotal moments where it's like you're you're kind of forced into this situation, you have to figure it out. She figured something out, like in the company grew significantly as a result of that. I would say that it kind of reminds me like the whole check your work thing, right? Like back when you're in like, you know, elementary math, it's like, does that answer make. Sense, and it's like, to your point, there should be systems in there. You still need that human check of, like, does this answer make sense? No. Okay. Well, then, where's the system broken?

Michael Kleinmann 50:08

But there are a lot of companies that you know, they do things the way they do things, because that's how they always did things, and like, it served them for a certain period of time. But then, you know, now when people bring me in, they're like, okay, how do we, how do we save money? Well, you have, like, your largest department is accounting, or, or, you know, things like that, and, and, and I think with all these AI tools now, you can actually solve some of these problems that previously may not have been solvable.

William Harris 50:35

You talked about three PLs, how you moved to a three PL, and that being the thing that really set Freshpair on a trajectory of, like, okay, now we're actually a real business. Do you still recommend three PLs for most brands? Well,

Michael Kleinmann 50:49

the advantage of doing it then is it took me out of the warehouse business, because I was, you know, overseeing all these logistical things every day, and it took so much time, and I had to go to the post office every day, and just the amount of time I was spending on it needed to be spent on marketing, right? I need to grow the business, not operate the operate the warehouse. So, so that was very successful. I think you know, if you're doing 1000 orders a month by yourself, depending on what the product is, you know, you should think about a warehouse at, you know, after 1000 orders a month. The, the, the type of product is very, very important, because you know, if you have one SKU, you could probably do it yourself, right? And, but depends on the size of the products, and a lot of other things. I think one of the main, one of the main reasons to go to a warehouse is the freight rates, because they're going to have freight rates that are significantly lower than what you would have, and they also have the ability to scale very quickly. If you have a really large day, or your business starts growing really quickly, you wind up being in the people business, and you have to find people, and a warehouse can react much faster, and just, you know, they have the systems in place. So, yeah, I think three pills are a really good idea. I think when you get really, really big, then you bring it in house again, but I think there's this, you know, there's this phase between, you know, like a million dollars a year, and $150 million a year, where, or maybe more, where a three pl makes a lot of sense.

William Harris 52:30

Yeah, I think the key that you said that I really appreciate is it gets you out of the logistics part of the business. Yeah, so you can focus on like what is it that makes, unless that is your thing, you happen to just be good because you're good at logistics, but most brands, most companies who founded something had a solution to an idea, and you're going to be the one who needs to be out there creating content and coming up with new ideas to scale and grow the bit, like what is the next product, staying ahead of the market, not figuring out how do we ship this better, that's a salt, that's a solved problem, just work with the solutions for it,

Michael Kleinmann 53:01

and you get sucked into it, because you know warehouses are, you know, extremely problematic and difficult to run, and you just don't want to do that, unless, like, unless that's your business, there's no reason to do that. All that time could be spent growing the business, and building partnerships, and doing all sorts of other things that, you know generate significantly more benefit.

William Harris 53:24

Yeah, you've worked with a lot of brands, like you said, emerging brands, small brands that are just about to pop off. Do you feel like there's something that you can sense now about them, that it's like they're they are moments away from this this next level of being unlocked, like that's all they're right around the corner from this.

Michael Kleinmann 53:46

I wouldn't say not necessarily. I think for me it's more about like if I believe in the product and I think it makes sense, then I want to work with them. Sure, you know, I don't want, I don't want to bring on a client just because they want to pay, right? That I don't want that client. I want to bring on a client because I believe in it. And then it comes, and then I want the, you know, the CEO to be impressive, you know, because I want interesting things with good people, where they're respectful of us, and they understand the value, and like what I do is different, and so I'm looking for the right relationships with the right people. You know, it's like when you, when you hire a therapist, you have to be open to therapy, right? If you don't want therapy, you shouldn't hire a therapist. So, so I kind of come at it from that angle.

William Harris 54:49

That's so funny. I still, I have, I share everything, right? Like, I have nothing to hold back. I've gone to therapy. I think almost every entrepreneur probably needs to. Yes, at some point in time, and I do remember this is maybe six years ago, or so. You know, I had all these ideas, and it's like, I was like, 'Do you have a whiteboard? It's like I'm at the therapist's office, I'm whiteboarding out all of my ideas about, like, what's going on with me, and like, what I need to do in these.. like, I remember just being.. it's like, you know, do you want me to help you, or do you want to figure it out, kind of thing, but to your point, it's like if you're going there, you know, listen to the advice and let them give some, some ideas there,

Michael Kleinmann 55:27

for sure. And you know, I love whiteboards. I haven't had one in a long time, but I love whiteboards, and I remember when I was at Freshpair, I called my assistant one day, and I was like, I want a whiteboard in my shower. I come up with all these really good ideas, but I can't remember that, yeah. So, but it turns out you can't put a whiteboard in a shower, it doesn't work. But I tried.

William Harris 55:50

Well, okay. So, what about like an iPad in the shower? Like, you could have it, like, mounted there, and maybe I mean, it's not as big of a screen, but

Michael Kleinmann 55:56

yeah. But then, at the same time, like, I don't want to be bothered with computers when I'm, yeah,

William Harris 56:01

that's fair, that's fair.

Michael Kleinmann 56:03

I want, like, a low-tech shower.

William Harris 56:05

Yeah, no, I agree with that. We have, we have my wife's really good about this. We have, like, the eucalyptus, like, dangling from it too, so it's like you've got, like, the steam coming up, and it does, like, gives a little bit of the eucalyptus, and you're like, ah, this is just so relaxing, but we like the fresh eucalyptus just dangling there. Okay, I want to talk about the fractional founder framework. Tell me about a company that hired you expecting marketing advice, and you ended up fixing something that was not marketing related. You're like, nope, it's not a marketing thing, it's actually something else.

Michael Kleinmann 56:36

Yeah, I have a very good one in mind.

William Harris 56:38

Okay,

Michael Kleinmann 56:39

yeah, so I had a client that had been around for more than a decade, and you know, established business and whatnot, you know, decent size team, you know, warehouses in a few countries, kind of thing, and and the business had been stagnant. I think there's a lot of businesses probably are very similar, story business was stagnant, and, and I knew the guy for a long time, I, I had actually done some consulting for this person, maybe 10 or more years ago, so, so he had me back, you know, a decade or so later, and, and he, and basically, you know, the business was stagnant, and he just did not know what to do, and he told me the whole history of everything, and I think, like, a lot of clients, you know, they're, you know, some of these founder-run companies, there's like a whole cast of characters, and there's a whole, like, there are different episodes, right, there was this guy that did this thing, and then there was that guy that did that thing, and, or, you know this person that did this thing, and, and so you have like all the episodes of the show, right, and then you kind of wind up with this mess, and the founder is typically the creative person, not the business person, because they came up with the idea, and the different business people that they head in for different reasons, just maybe they move the company forward a little bit and back a little bit, and the net is that it's just been stagnant. So, so this was a client where I was to come in to fix the problems, but the main goal was to grow the business, right, because you can't - it's very hard to sell someone on consulting where you're not going to generate revenue,

William Harris 58:24

for sure, right? Yeah, so,

Michael Kleinmann 58:26

and that's my challenge, but so I, you know, I looked at everything, and I, you know, without talking to anyone other than the CEO, I said, okay, I'm gonna double the business in 24 months, that's why you're going to hire me. I'm not a marketing agency, I'm going to manage your marketing agency, but I'm going to fix all the other things, because no one could be successful the way the business is run right now, and I doubled their revenue in 15 months, and I tripled their Amazon revenue in 15 months.

William Harris 59:03

How, what was the thing that was missing?

Michael Kleinmann 59:06

The thing that was missing was everything. Seriously, that's where a marketing agency and we differ, right? So a marketing agency is kind of limited, right? You're constrained, right? I'm not constrained. I go in as if I'm the CEO of the business, that's how my thinking is, right? And nothing's nailed down, and I could do anything. So, what's the best thing to do, right? If you had to start all over again, what would you do differently? So, I look at it from the perspective, you know, I'm not emotional about it, like the founder, because most founders are emotional about something, right? It's their thing, so there's no emotion. I'm looking at it, you know, logically, and I'm trying to put things in, you know, priority order in my mind. And then I'm trying to figure out, you know, what's the low hanging fruit, what's the long term stuff, and, and, and a lot of times it touches on a lot of different topics, so. You know the low hanging fruit is okay, their Shopify theme is not set up correctly, so you put a new one in, or they have 900 apps and Shopify, but they use four, or the apps that they are using are not the right app, like that's the easy stuff anyone can do, that we do that, you know, like that's no brainer, but then the more complex things, like maybe none of your products are structured correctly in Shopify, and no one's going to tell you that because you've been doing it like that since day one, and no matter what you do on top of it, it's still based on this, you know, incorrect product structure, or maybe your, you know, review software was never configured correctly, and like your Klaviyo, like someone forgot to click on a few boxes, but you know, like no one's checking that stuff, right? There's like just a lot of stuff. I've had clients where you know they for like there's some DNS settings for the domain that no one knew about, and no one ever set, and no one ever asked the question, and these are questions I ask because I'm a nerd and I love these kinds of things, so you know, as, as I learn more about the business, and I'm, I might be managing, you know, or I might be part of the phone call with the marketing agency, and then when we start talking about email, I'll start asking questions, and sometimes I'll discover things that no one thought of in 10 years, because no one's looking at it. So, I get involved in everything, and you know, when we work with clients on different topics, whether I'm on the call or whether my team's on the call, we uncover things that no one thought of.

William Harris 1:01:36

It reminds me of a study that I don't remember who did it or where, so don't quote me on it. It might have been even wrong, but in my mind, what I remember was there was something along the lines of, like, salmon, good for you, broccoli, good for you. When you eat them together, there's 37 times the benefit of something that was in them, right? Some compound, and it is just that idea where it's like, hey, you can fix your cro, you could fix this other thing, but if you fix this, this, this, this at the same time, then it's actually 37 times better, right? And so, versus like, ah, we tested that, didn't really work, we tested that, didn't really work well. Did you test them together? No, test them at the same time, maybe that's the thing that needs to happen,

Michael Kleinmann 1:02:16

and like everyone's into testing, and I'm like, I mean, the biggest fan of testing and conversion rate optimization, but there are certain things in Shopify that you cannot test, and if they're not set up correctly, it doesn't matter how many people you hire and how much money you spend, it's never going to work. Yeah,

William Harris 1:02:35

I totally agree with that.

Michael Kleinmann 1:02:37

Yeah,

William Harris 1:02:37

you told me about a company that had some poor product reviews because of a sizing issue.

Michael Kleinmann 1:02:43

Yes, yes, yeah. So, like, one of the rabbit holes I got into one day with, with a client had to do with Amazon, and you know, I remember, I mean, I've done a lot of business on Amazon from companies I've owned, and I've advised a lot of our clients, and kind of helped them manage their agencies. So I look at Amazon a little differently, because I don't want to be like tactical in there, like that's not what we do. We look at it and we figure out, like, what are the major projects that are going to require a huge amount of time that are going to really move the needle, right. And then we work with the agency and the client to, like, do it. So we had a client that they were on Amazon for a long time, and nothing was set up correctly, and they wanted, and it was stagnant, right? They just, they couldn't figure it out, and they had a lot of SKUs, and it was a few different Amazon, you know, few different Amazons in different countries, including the US. So we, we brought in the agency that we like, that you know has, we brought in a really great agency that I partner with on Amazon stuff. I'd recommend them to anyone. You're welcome to

William Harris 1:04:01

give them a shout out if you want, and but you don't have to either. We,

Michael Kleinmann 1:04:06

we, I mean, if someone needs help with Amazon, you know, call me and call you, that's fair. I like that, but so, so we brought in a phenomenal agency, and, and we, you know, we did the auditing and all that kind of stuff, and and it turns out that the company-wide product rating was in the high threes, right, or maybe somewhere around 4.0 but the top selling products had ratings in the threes. How do you have a top selling product with a rating in the three? And I knew the product, I knew the company, and like I knew the quality, I knew the craftsmanship, I knew everything that went into it, and it just like it, it was in a, it was a math equation that didn't add up for me, and long story short, the sizing was wrong, the size charts were wrong, the actual. Actual, like, all of the sizing was just wrong in a lot of different places, and the net result was the customers weren't happy with the sizing, and we analyzed, you know, more than 10,000 customer reviews. We, I mean, it was a huge.. it took three months. Okay, I hired a lot of models, and we pulled hundreds and hundreds of products from that company's warehouse, and we wound up having models in different sizes and shapes, right? All the sizes, trying all these things. It took weeks, and and we had the entire team there, and we resized almost, I don't know, maybe two thirds of what they were selling, and you know, it's it's apparel, so you need samples, you need to have multiple samples, you have to manufacture it, so some of the inventory started to come in, but I think it's probably 12 months before they really see like a major impact, but I will bet that that 4.0 goes to 4.5 once they start, you know, selling enough things, and it'll be a cumulative effect, and and the impact of doing that project will be 10s of millions of dollars in revenue, just on Amazon, because you know, if you're competing with other people and it comes down to the rating and yours is really low, no one's buying it, so I think, yeah, it was interesting because I never got involved in that kind of sizing situation, I mean this is a super, super complex, and and I came up with other ideas to kind of extend the sizing project, like, and make it much like I wanted to do it in, I wanted to do a lot more of it, and in other ways, because I figured out other ways to optimize, but haven't started that yet.

William Harris 1:06:57

I love the way your brain works, because that's not the thing that people are going to naturally gravitate to. Oh, our reviews are down. It must be because of this. Maybe, like, a lot of times we're like, we're reaching the wrong people on Facebook, right? Or whatever. It's like, they're just like, okay, it's just, we're just reaching the wrong audience, or it's like, no, no, there's an actual sizing problem. It's a very obscure thing to be able to find, and I love that you're able to, like, dig through the data to be able to find that.

Michael Kleinmann 1:07:20

But you know what, it is. I just don't believe any numbers until I validate them, or my team goes through them. Like, I, I've since day one, for the last 25 years, I've been teaching people. Just because you see a number doesn't mean it's true. You need to corroborate that number in a different system, a different way, and then come to me and tell me what the number is, because I don't trust any numbers, maybe it's because I'm a New Yorker, I don't know, but it works because when, if you, if there's a sizing issue, and this is the size chart, or whatever, I don't care what your competitors are doing, I don't care, get me a model, put the item on them, and I want to see, and then I want everyone in the company to see, because this is really an object lesson, like I had to retrain the entire company how to fit products on models, and that was what I needed to do, right? So, yeah, sizing, yeah, anyone has a sizing project, I don't know if I want it, but that's the non-obvious answer. It's fun. It's actually fun, you know. It's really fun to like.. it's like when I go to a warehouse. I love going to a warehouse, because you're not sitting at a desk, you're not on a Zoom, you're not.. you know, there's no lap.. like, you're not.. you're not in that digital world, you're in the physical world. And when you walk through the warehouse, you come up with ideas you never had before, and when you do these physical projects with different clients, I think they're fun.

William Harris 1:08:47

We're getting towards the end, so I've got just a couple of fun questions to end the podcast with. I know that you like The Godfather. What is your favorite Godfather quote?

Michael Kleinmann 1:08:55

I'm gonna make him an offer he can't refuse.

William Harris 1:08:57

I mean, that's the classic, right? You gotta go with that. All right, what's the best meal you've ever cooked?

Michael Kleinmann 1:09:04

Oh, barbecue a lobster. Trust me,

William Harris 1:09:08

really, that sounds very okay. Wait a minute, what was the occasion that you're cooking this for?

Michael Kleinmann 1:09:14

At any occasion, Tuesday.

William Harris 1:09:16

I love it. Okay, you'll get a kick out of this, my I got a group of friends. When, for the fourth of July, we always do something kind of crazy, and we like to make our own food as well. And so we had, like, I forget what the theme was, but it was like opulent. And so we, you know, weg, you steak and lobster, whatever, that we are out cooking ourselves. Yeah, and that's what my daughter was like, why can't we just have this every day? Because it's not. I wish we could, like, it's not a Tuesday meal, but I wish I could make that a Tuesday meal. What's something that founders spend too much money on?

Michael Kleinmann 1:09:54

What is a.. I mean, I think a lot of. Sometimes people look to other people to find answers when they already have the answers, you know, and you just need someone to help, like, draw the answer out of you.

William Harris 1:10:11

Yeah,

Michael Kleinmann 1:10:12

I mean, I think you know, obviously I'm a consultant, right, but I think a lot of people spend a lot of money on consultants, and most of them are not great, and then a lot of founders get burned on the idea of asking for help, because whoever helped them, you know, didn't help them, maybe even cause problems. But again, it's like finding a therapist, right? You could go through 10 therapists before you find the right one, doesn't mean therapy is bad, and I think consultants are the same way. You really, it's about finding someone that has experience and that you can, you know, build trust with.

William Harris 1:10:49

What is something that AI will never replace?

Michael Kleinmann 1:10:54

I mean, I think in many ways it's not going to replace, you know, experiencing creativity and you know, those ideas that you come up with in the shower. I mean, I don't know, they're too random. A shower agent, you know,

William Harris 1:11:13

shower GPT. Okay, and I have to go here. Shout out to the old Michael Jordan commercial, boxers briefs, something else in between.

Michael Kleinmann 1:11:25

So I created a YouTube series on Underwear Expert called Boxers or Briefs. We have like millions and millions of views on those videos, but yeah, I like trunks because they're shorter than a boxer brief, they're longer than a brief, they're good for the gym, they're good for every day, and that's my vibe.

William Harris 1:11:46

No, versatile. I like it, Michael. It has been a lot of fun to learn from you, learn about you. If people wanted to work with you, what's the best way for them to do that?

Michael Kleinmann 1:11:55

Two ways: go to our website, mkinc.com or find me on LinkedIn, and let's have a chat.

William Harris 1:12:03

It's awesome. Well, thank you again for sharing your time and your wisdom with us today.

Michael Kleinmann 1:12:06

Thank you.

William Harris 1:12:08

Yeah, thank you everyone for listening. Enjoy the rest of your day.

Outro 1:12:11

Thanks for listening to The Up Arrow Podcast with William Harris. We'll see you again next time, and be sure to click subscribe to get future episodes.

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