Craftom // making it easy for companies to ship customized gifts, office equipment, and more [UP081]

Caleb Musser 0:00
We went from two people in March ish timeframe to at the end of 2020. We were back up to eight. And we did basically seven figures and gross sales from June through December in six months.

Jay Clouse 0:17
The startup investment landscape is changing. and world class companies are being built outside of Silicon Valley. We find them, talk with them and discuss the upside of investing in them. Welcome to Upside.

Hello, hello, hello and welcome to the Upside podcast, the first podcast finding upside outside of Silicon Valley. I’m your host Jay Clouse, and I’m accompanied by my co host, Mr. Thoughtful engagement gift himself, Eric Hornung.

Eric Hornung 0:58
I don’t know that bubbly is the most thoughtful engage of engagement gift. I think that is like the most traditional of engagement gifts.

Jay Clouse 1:05
But you got to some nice crystal glasses from Sur La Tab.

Eric Hornung 1:10
You like how I baited you in there to you telling the audience that I got you more than just bubbly?

Jay Clouse 1:15
Yes, yes. You got us a Rosé technically, sparkling Rosé .

Eric Hornung 1:20
Champagne, technically.

Jay Clouse 1:22
Okay.

Eric Hornung 1:22
Because it does come from the Champagne region of France, Jay.

Jay Clouse 1:25
Okay.

Eric Hornung 1:26
But as a Rosé variant. So I don’t actually know anything about champagne champagne, so maybe it is technically Rosé. I don’t know.

Jay Clouse 1:32
It was tasty. We didn’t have any of that type of glassware before and now we do which is nice.

Eric Hornung 1:36
You know who that’s all attributed to? It’s not me. I got the nickname but it’s not me.

Jay Clouse 1:41
Friend of the podcast, Colleen.

Eric Hornung 1:43
Of course.

Jay Clouse 1:44
Did she make the the baked goods as well?

Eric Hornung 1:46
She did not. My mom did that. Those are those are mama Hornung baked goods.

Jay Clouse 1:50
Oh my gosh. Well, I loved it. I was very appreciative. We got a couple of engagement gifts. Which begs the question, am I that jerk friend that never sent engagement gifts?

Eric Hornung 1:59
Well, you won’t be anymore.

Jay Clouse 2:02
That’s right. That’s right. I have learned.

Eric Hornung 2:05
And speaking of gifts, not engagement gifts, per se, but today’s guest is on the gift train.

Jay Clouse 2:11
Choo, choo. Today we’re talking to Caleb Musser, the founder and CEO of Craftom. Craftom is a B2B gifting and shipping platform that makes it easy to send hyper designed corporate gifts, products and office equipment to anyone, whether they’re working from home, in the office or somewhere else entirely.

Eric Hornung 2:32
I love when we have a guest on the show. And they send us some corporate swag from their startup or investment company. When we get a little shirt in the mail. Man, I love that.

Jay Clouse 2:43
Yeah, what happened here? We were like being pitched to use the platform, I think and then we just ended up having them on the show like. That that doesn’t happen much with pitches. Usually we’re just like, sorry, not interested. And this was like, wait, I think we’re gonna use your product. And also, do you want to come on the show?

Eric Hornung 2:58
Yeah, I like when that happens. That’s a lot of fun.

Jay Clouse 3:01
So Craftom was founded in 2013. Caleb is based in Charlotte, North Carolina, which is not a region that we spent a lot of time in historically, Eric.

Eric Hornung 3:11
We got to touch American underground a bit. But we never really got to talk to any startup founders there. So excited to talk to Caleb and hear about his company, but also just what it’s like in in Charlotte.

Jay Clouse 3:25
He’s had an interesting collection of customers from fortune 500 CEOs, NFL owners and Presidents of the United States all from Charlotte, North Carolina. Eric it sounds like Caleb is living quite the interesting life.

Eric Hornung 3:41
He’s definitely living an interesting life. And he wanted to live that one interesting life, he has the best way possible, he could check out our friends at Ethos Wealth Management. If you dear listener want to learn more about Ethos, you can check them out at upside.fm/ethos.

Jay Clouse 3:57
Caleb, from what I can see is bootstrap to this point, which is another one of our favorite topics to discuss here on the show. So I’m sure we’ll dig into that a little bit as well.

Eric Hornung 4:07
If you have any thoughts on this episode, you can reach out to us on Twitter @upsideFM, or if you have something a little longer hello@upside.fm and we’ll get to that interview right after this.

Jay Clouse 4:22
Hey, listener, have you ever wanted to get a message in front of the upside audience but weren’t sure how to sponsor the show or weren’t able to do a long term sponsorship? Well, now you can just go to upside.fm/classifieds. And let our audience know anything that’s going on in your world, whether it’s an event, an application, a special coupon or deal, or just letting them know who you are, what your company does, all you have to do is go to upside.fm/classifieds. And you can place an ad on this show. That’s upside.FM/classifieds.

Caleb Musser 5:01
So originally, I’m from Raleigh, North Carolina, grew up the son of a software entrepreneur, one of my earlier memories, I was around, I think five years old, was going to my dad’s warehouse and stickering and shrink wrapping software back in the days when software still came on CDs and in boxes. So just grew up in a very entrepreneurial type environment. I used to get primary I used to get paid a Nicholas sticker that I would put on a jewel case. And my goal was to make 100 bucks in a day. So there’s a lot of stickering, as you imagined, and yeah, so grew up in Raleigh, very competitive and sports in high school, but didn’t really actually think about entrepreneurship as a career path, went to USCW for college, and then decided to move to the other big city in North Carolina after I graduated. So I moved to Charlotte in 2012. And yeah, so that’s just kind of a quick background on kind of how I went from Raleigh to where I am now.

Jay Clouse 5:59
So Eric, I did the math, a nickel per sticker, with a goal of $100 per day is 2000 stickers. How often did you hit that mark?

Caleb Musser 6:07
I did it like three times. And I also couldn’t go, you know, for a full day all the time, because obviously I had school. So it was a lot of hustling.

Eric Hornung 6:14
It’s a lot of stickers per hour.

Caleb Musser 6:16
Yep.

Jay Clouse 6:16
What did you study in college?

Caleb Musser 6:18
I was I was actually an English major.

Jay Clouse 6:19
Why English?

Caleb Musser 6:20
Well, my grades weren’t so hot before. And I needed a quick way to kind of bolster my grades. So I was, you know, pretty good writer. And I figured I could get some easy A’s and hopefully get my GPA out of the out of the dumpster. So that was the thought behind it. But it was while I was in school, I actually kind of fell in love with advertising, b2b marketing side of things. I read a book called Ogilvy on advertising that really got me into just the and Madmen was really big around that time to, you know, an HBO back back in those days. So really started. So I got a couple internships working for agencies, as started as copywriter, and then one day, my boss came in handed me a stack of business cards and was like, start cold calling people, you’re now in sales. So that was kind of how I work from English into the, you know, sales and marketing side of b2b.

Jay Clouse 7:10
I’ll get to that point here in a second. But you mentioned that you weren’t thinking about entrepreneurship as a path for you, even though you grew up in an entrepreneurial household. Why was that?

Caleb Musser 7:18
I think part of it is kind of the generation of you guys are millennials as well. being raised and kind of a boomer slash an extra household, every everything’s kind of based on like, what your, what you’re good at, like, if you’re good at math, you’re like, oh, you’re gonna be like finance one day, that kind of thing. And I was really good at like, creative and writing, I guess, I guess no one has ever really suggested, hey, you know, this, this drive that you have in sports, you know, that could be really good in business, kind of, you know, building your own thing. So I had someone mentioned that to me earlier, I think, maybe I would have ended up here sooner. But you know, hindsight is 2020.

Jay Clouse 7:54
Most people when they are, what’s that? What’s the term when you have like a bull, and you have the the flag, like Olé, most people, when they olé from a marketing job into a sales job, are really upset about it, because they think marketing is going to be fun and really creative and sales feels skeevy to them, and they hate it. Talk to me about what that felt like for you.

Caleb Musser 8:14
Yeah, absolutely. So I think I was so young, I didn’t really know any better. I was like, oh, a new challenge. The boss, you know, has given me something cool to work. I don’t think I really thought through it that much. But it turned out I was I was pretty good at it. So it actually wasn’t that bad. But I did always really enjoyed the kind of creative side. And I saw that later in my, I guess big boy jobs. So when I when I moved to Charlotte, my first sales role was selling printers and copiers door to door. So I did that for about a year, which is, you know, definitely a grind. I worked for an agency selling digital ads. And then my last my wife calls it my last real job was I was the director of sales for NASCAR team, which kind of married the grind of sales with that creativity of marketing that I enjoyed. Because for anyone that knows the b2b side of sports, you don’t really there’s no set product or program you kind of create it as you go for each customer like like Lowe’s little on a different activation from Coca Cola, that kind of thing. So yeah, it was it was a good it was a good pathway in retrospect kind of starting on the creative side working my way into sales and then kind of blending both of them in NASCAR before I started my first company which is called Musser & Co., which would eventually led me to start crafting which is our venture that we have now.

Eric Hornung 9:30
When you say sold printers and copiers door to door, are you physically saying you are knocking on doors or.

Caleb Musser 9:37
Yes physically knocking on doors so I wear a suit and tie every day, my territory and what was the the South Charlotte region called South Park which is kind of like the very buggy upscale part of the city and so I would go and knock on doors and try to get to as many as I can. So I would go into like one. This is you know, back in the days when we still went to offices. We go into like a Regis building. And then try to get through as many as I could before security, you know, would inevitably kick you out. So, yeah, that’s, that’s kind of where I cut my teeth here and here in town.

Eric Hornung 10:10
What made you good at sales? I mean, you had all these different positions, it seems that you enjoyed it. What made you good at it?

Caleb Musser 10:17
That’s a great question. I think at first it was it was the just the sheer driving grit that I had, that I developed, you know, from playing sports, and I was just always a very hyper driven person. And I finally found a place where I could channel that drive that, you know, could translate into results. But then also two, I think, I always had just a really insatiable desire to learn and get better. I’m kind of like, I guess, like, competitiveness, and I would want to learn about the accounts and then take, like, if I didn’t do so great on a call, I would go back and think about like, Alright, what didn’t work there? How can I make sure that doesn’t happen again, in the next one? So I think that the drive and then the willingness to learn and get constantly get better is kind of what led to the success early on.

Jay Clouse 11:02
You mentioned you, you went into a sales role for a NASCAR team. And that’s like a highly visible thing. You’re working with big companies you mentioned, you know, like Coke. What does access look like when you’re working with a big organization like that? Do they have the context? So you can talk to these organizations? Or did you have to work your way into the buyer at Coke?

Caleb Musser 11:20
Yeah, great question. So this was like, I don’t even think zoom info was around. This was like back in data.com days, if you guys remember that. And Sales Navigator was not that developed either LinkedIn Sales Navigator, so if I’m trying remember how I did my prospecting back then it was a lot of calls. It was using kind of this sketchy data.com data. But no, there weren’t a lot of existing relationships for me to build. Oh, so background, we were not like racing against like Jimmie Johnson, Jeff Gordon, you know, like, top 10 team, we were like running 37th when we didn’t wreck type team. So our sponsors were not the Cokes It was more like, you know, Jimmy’s Autoparts in Florida, that’s who we were trying to get. But it was still big money, like six figures a race because it was cup. So, you know, I was 25 years old, basically the director of sales for this, you know, Cup team. So we’re competing against the Jeff Gordon’s, and you know, the Stewart Haas and all the big guys. So it was, it was definitely a grind. And it’s it’s one of those kind of like the printer job awesome. I sometimes tell people it’s like navy seal, or boot camp for sales and marketing. It’s like one of the best worst things I’d probably never do again. But I’m really glad I did in retrospect.

Jay Clouse 12:31
We mentioned that around 2013, you started Musser & Co.? Why did you go out on your own? And what were you doing?

Caleb Musser 12:38
Yeah, so and this actually ties into the NASCAR job. So when I was with the team, I started sending these gift boxes to executives, to get them to talk with their team about a sponsorship, and then also to get them to attend a race. So that was a big selling tool for us, we would say, hey, come out to the track, we’ll get you, you know, get you in the garage with sponsors that you want to rub elbows with that kind of thing. And I remember I sent a box to the CMO of a huge nutrition brand, to ask for sponsorship for a driver. And about a week later, I got a call back from their director of advertising. He said, Hey, we you know, we usually we don’t take these calls, because we’ve been called on by the Yankees, The Patriots like everybody. And it just doesn’t make sense for our business model. But this was so unique, we at least wanted to hear what you had to say. And that was kind of the spark, when I realized this isn’t just a gimmick that I can use, you know, to, you know, help Caleb make quota, I can actually turn this into a business and help other people do this. So that was at the end of 2014. So I left the team that December incorporated the company. And in January of 2015. I was in business basically, you know selling this gift box idea as a prospecting tool with Musser & Co..

Eric Hornung 13:48
So you were selling a tool, or were you selling advice? Like what was the what was the actual product you’re selling?

Caleb Musser 13:55
Yeah, so we’re actually, I was actually making the boxes at the time on the race team was really kind, they actually let me build it, build them out and continue building them out of the race shop. So an engineer had helped me figure out how to assemble the box. So I had like a table saw and they were made out of wood. And you know, I went to Lowe’s got a drill some, you know, screws and hinges, and I was, you know, basically building them by myself. So it was a tool, it was a tool with some activation. And I would I would say hey, you know, b2b sales team send these to your top prospects and, you know, put these things inside to get them to respond to you.

Jay Clouse 14:28
So what types of things did you try and these boxes that worked? And what things didn’t work didn’t matter what was in the box? Or did just matter that it was a personalized box?

Caleb Musser 14:36
Yeah, great question. So at first I thought it was my creativity of things that would go inside like it would be like I look, you know somebody up on LinkedIn, like, Oh, looks like you went to Clemson I put something Clemson in the box. And retrospect, I think it was more just the three dimensional aspect and nobody was really doing that. So I don’t know if it was as much as my creativity and cleverness as I originally attributed it to. But yeah, I mean, we would try to personalize it. Like if I knew, you know, like For example, somebody went to Clemson and was into golf, I would put, you know, something Clemson related, and you know, like some golf balls in the box for them.

Eric Hornung 15:07
Why did this work?

Caleb Musser 15:08
Yeah, well, so this was kind of 2014, 2015. This was right as direct mail and gifting. I think we’re starting to get big. John Ruhlin, the author of Giftology, I think, had just written his book, and it was starting to come to the forefront of like, you can use tangible gifting as a way to build relationships, I think Sendoso just launched, which was kind of like one of the first gifting and direct mailing platforms. So it was just kind of good timing in general, people are realizing, hey, we need a way to engage people outside of just phone calls and emails. So I think it was it was good timing.

Jay Clouse 15:44
What did it cost to create one of these boxes? Like if you’re if you’re telling people, hey, these gifts things work? How much would they have to budget to build one of these?

Caleb Musser 15:52
Yeah, so I at that time, under the Musser & Co. model, I was selling the boxes for 100 – 250 bucks. And I would justify it by saying, Okay, so this box is somebody you close a, you know, six figure deal. 100 – 150 bucks is pretty, pretty nominal. And then it didn’t, I mean, because they were still being handcrafted, probably cost me $20 – $25 all in to build.

Jay Clouse 16:13
If I’m a sales rep who’s probably commission based, and you’re like, hey, the math makes sense. Six Figure deal. 150 bucks, like, obviously, that’s worthwhile, you got to buy it, you’re not going to get it on every box. So there’s probably like some number of boxes that now you’re running the mental math of like, this is probably coming out of my pocket, right as the sales rep themselves.

Caleb Musser 16:32
Well, so I would try to get organizational buy in. So I would try to get the marketing exec, or the sales executive be like, let’s, you know, let’s arm our team with this. But yeah, usually trying to get individual reps to pay out of pocket was not the best way to revenue.

Jay Clouse 16:47
That makes sense. Yeah, that makes sense to go to the team, because I mean, I’m thinking about my own psychology. The math obviously makes sense. But there’s still that little bit of you. That’s like, Yeah, but I have to do the cash outlay out front.

Caleb Musser 16:58
Right.

Jay Clouse 16:58
What type of what type of conversion do you do you typically see on something like this.

Caleb Musser 17:02
These are and this is some Musser & Co. stats, this was we have updated data now using Craftom, which is, I think, a way more sophisticated tool, we would typically say, you know, depending on there’s there’s a couple of qualifiers, you know what level of person they’re sending the gift to you, if you send it to a C suite, you know, usually the conversion is a bit lower than sending it to say the office manager. So we would typically say you can expect 50% to 75% response rates, sending a gift, we typically saw about 20% to 30%, meeting conversions, and then whatever percentage of deal closing kind of varies customer to customer based on, you know, deal cycles. There’s a lot that goes into that. But we would, we would say you can expect on average, to close to 5%to 10% of these deals.

Jay Clouse 17:48
So talk to us about Craftom and when that came into the picture.

Caleb Musser 17:51
Yeah, absolutely. So at the end of 2019, we kind of talked about this before, I’m a big podcast guy. And I was, I was frankly, a little burnout on the Musser & Co. model. Everything, I suppose would say as a cool business with a not so great business model. Because everything was extremely custom one off projects, we didn’t really have a reoccurring revenue model. And I was just burnout. I mean, we had 40 professional sports teams that we worked with, we did a lot of really cool work on the b2b side. So like, we would help the Patriots send gifts to their sponsors. And so it was awesome. A lot of fun, but it was also extremely draining. Like sometimes we will get a call like I remember one time an NBA team called us and they said, We forgot to order our ticket boxes. And we have all the sweet holders coming. We need them by Thursday. And it was like Monday at that time. So like we worked all night for like three straight days overnight these boxes and I was like, Oh my gosh, this is terrible. So I listened to a podcast by Reed Hoffman Masters of Scale, and it was talking about, you know, founder burnout. And sometimes you have to slash and burn good parts of your business to get to the best. So I really did some soul searching was like what do we do really well. And it was the hyper personalization of the products at scale. One of the reasons why a lot of accounts loved our products was we could put different logos names, images on really anything, kind of like Shutterfly, but more from a b2b angle, if that makes sense. So and this was right around the time, to where platforms like Sendoso, PFL, Alice had just gotten some major funding, like I think Sendoso raised around 40,000,000 in 2019. And just seeing the writing on the wall, like we live in the age of Amazon, right, like people don’t want to log on. And I mean, they don’t want to call you to order widgets, they want to log on click and things show up magically. And so I could see us going the way of the dinosaur. You know, if we did not pivot and develop our own platform to make it easy for our accounts to to send stuff versus having to pick up the phone and call us and say hey, I want you know, 200 widgets, if that makes sense.

Eric Hornung 19:50
Besides how people ordered what else changed in the or what else was different between Musser & Craftom?

Caleb Musser 19:59
Yeah, so originally, we launched Musser, it’s just a sub venture, I’m sorry, Craftom as a sub venture of Musser to see if it would work. So we did that in in January. And we we built the platform on a kind of a traditional steady model. So it was a web based web based app, where like, Eric, you could log on and say, you know, let’s say you want to send 100 Yeti boxes, and you could customize them in real time, put different logos on them different names, different messages, and then drop ship them to 100 different addresses. And whereas like the Musser model was more, say, like Coke would order 200 boxes from us, and we would ship all 200 boxes to coke HQ. So it was more of a drop ship one to many versus one to one, in addition to the you know, the obviously technology platform we built.

Jay Clouse 20:46
So what did you see that made Craftom grow out of being a sub venture of Musser into being your main venture?

Caleb Musser 20:53
Yeah, so this is where it gets a little crazy. So from January to I’d say March, we had built about 300 pipeline 300 K and pipeline for the new Craftom platform, which I was pretty excited about. And it didn’t, I didn’t really realize it. But during that time, the Musser & Co. pipeline had really started to evaporate because I was focusing my attention on you know, I was the lone sales guy, focusing my attention to building pipeline for Craftom. Musser & Co. started kind of, I guess, drying up a little bit, and then the pandemic hit. So I think it was March 12, or March 14, when most of the companies went remote. And I’d say within two days, all of those deals evaporated. When people realize, wait a minute, how am I going to send stuff to people, if I have no idea where they’re sitting, you know, they could be working from home, they could be working from Aruba, we have no idea. So that was a pretty bad Oh, no moment, because I was like, Oh my gosh, I just spent all this time developing Craftom. It just, you know, deals just evaporated. And The Musser & Co. pipeline is pretty dusty. So my team and I basically over a weekend built a new product as an add on to the Craftom platform that would allow companies to send stuff that people working remotely, I’ve had the idea on like late Friday night, launched at Monday morning. And then within two weeks, we landed a large enterprise account, which was trying to figure out how to how do we send stuff to prospects and customers when we have no idea where they’re sitting.

Jay Clouse 22:19
So it sounds like you’re saying that you added on a technical component of this so that people can identify where their employees were maybe employees could tell you themselves where they were so that they could now send reliably to where they needed to.

Caleb Musser 22:32
Yeah, we so we added a component onto our platform, we call it Pick. So we originally had this tool called send where like Eric or Jay could log on choose customize and send to an address you had on file with Pick, it allowed you to email text message or LinkedIn message somebody a link, where they could pick their own product, personalize it themselves, and then securely enter their shipping address, and then we’d send it to them. So then we had both tools built in which really, it was interesting and well rounded. It made the platform more well rounded, and also gave us a competitive advantage over other platforms that were built it on just a traditional direct mailing model, or people that only there was a couple other platforms and had a similar pic type thing. But they also couldn’t do the traditional mailing as well. And we had both built in.

Eric Hornung 23:21
I want to go back to this idea of Craftom as a sub venture. How big was your team at Musser? When you launched craft them as a sub venture? And how did you decide how to allocate resources between this new potential venture that could have some upside and Musser outside of your your own time?

Caleb Musser 23:37
Yeah, so the Musser team was around, I think five people at the end of 2019. And then by the time that pandemic hit, and we had kind of, you know, slashed a lot of the overhead, the heavy machinery that we didn’t really need anymore for Craftom basically the only thing we kept were our lasers, which would allow us to hyper personalized anything in real time. So the team and dwindled to about I think to two to three folks. And then we landed this big enterprise account. And then through the summer, I was, you know, kind of scrambling to find bodies, because then all of a sudden, you know, we had all this demand and people were coming to us saying how do we send stuff to our prospects and customers. So then I was training, like I hired a college kid to train him on Sales Navigator and Seamless, which is kind of like a zoom info to scrape data and he was, you know, sending me leads and I was closing deals. So then it was kind of this crazy swing. I guess like you know, your typical startup type thing. We went from two people and march ish timeframe to at the end of 2020. We were back up to eight. And something. You know, we did basically seven figures and gross sales from June through December in six months. So it was a pretty accelerated timeline.

Eric Hornung 24:52
How did you think about or go about laying people off?

Caleb Musser 24:57
Yeah, it was. That’s a great question. wasn’t so much laying people off, I gave everybody the opportunity to stay with the new venture. But a lot of people had kind of bought into the Musser & Co. model and they were a little bit more kind of like, I don’t know how else to say it kind of like, you know, your your craftsman type personalities, and they didn’t really want to be involved in a high tech venture. So I still gave everybody the opportunity to kind of pivot their roles and to new, you know, skill sets for the for Craftom, but some of them decided to go you know, work for cabinet companies, that kind of thing. And that was really fun.

Jay Clouse 25:30
As you were building Craftom in this is a tech platform. How did you go about getting the tech belt? Because that’s what I haven’t heard you say is that you know how to develop?

Caleb Musser 25:40
Right? So no, I am not a my dad’s a self software developer, I cannot write a line of code. So we did a lot of research on existing tool, there’s a lot of kind of off the shelf tools that with great API’s that you can build on. And we found a couple that would allow us to capture data extremely securely, we can kind of develop it and customize it to make it look like whatever we want. And I you know, I outsource Dev, so that that’s how we did it.

Jay Clouse 26:06
How big of a competitive advantage was it that you had spent so much time building Musser & Co. and having some of these relationships?

Caleb Musser 26:14
Well, in terms of market, not really at all, because the as you know, the professional sports market kind of got slaughtered with the pandemic. So most of that customer base kind of went away, you know, just because they were obviously laying off all their sales teams, all that. So from that perspective, it wasn’t that much of a like from just having existing customer base that didn’t really help that much. But I think just the, the the grit and determination that we developed over those five years of, I mean, there was other times where cash was, you know, tight. So I think, you know, having your back up against the wall, whereas like, you know, a lot of companies I don’t, you know, sadly, think we’re able to pivot through the pandemic, you know, you hear some of those, you know, sad stories on LinkedIn, it was just kind of our we were already in that mode, and it wasn’t as big of a deal. I mean, it was scary, but it wasn’t like petrifying, if that makes sense. And I think we were able to very quickly keep pivoting, innovating. And thankfully, we could sell you know, that was that was something that, you know, we always had going for us. And I think just the confidence to be able to say we can transition from the b2b side of pro sports and to b2b tech, and start, you know, talking to, you know, these really well known brands in that space, similar model, but obviously very different markets. I think that was huge.

Eric Hornung 27:26
Your sales experience all existed, mostly existed in a pre pandemic world where you could talk to people on the phone, you could travel, you could see them. How is that changed? Not I mean, the pandemic hit you. You said pivot through the pandemic, you guys have a boom, you have enterprise client, how is selling changed for you guys in the last eight months?

Caleb Musser 27:49
Yes. So thankfully, before the pandemic, we had already started to adopt kind of modern sales tools like SalesLoft, so sales engagement platform, so doing cross cross channel sales across email, phone, LinkedIn, using video, that was stuff we were already doing. And then with our pick product that we developed, it made it very easy to set meetings. So we used our product for everything. So we would send people a pic, gifting link, they could personalize a gift, they could take a meeting with us, and we could track opens and clicks through sales loft. So that actually worked really well. And I’m glad we made that transition early.

Jay Clouse 28:25
So these are the six months of hyper growth where you did six or seven figures in in sales through the end of 2020. How much of that was outbound on your part versus inbound? Because people are looking for a solution.

Caleb Musser 28:38
100% outbound so it was the you know, training the college kids to use Sales Navigator, Seamless and Sales Loft, they were driving me leads and I was I was closing the business. So by the I think by the time we it was August we had landed some pretty good size, I’d say mid market customers kind of like MongoDB, Proofpoint, Z Scalar accounts like that. And then we had a couple enterprise accounts as well, like Hitachi and NetApp and those were all developed through cold outbound.

Jay Clouse 29:07
What is the key to doing cold outbound well because that is so impressive to me and that’s going to help so many businesses that they know how to do cold outbound.

Caleb Musser 29:15
Yeah, I think the cross channel thing is huge. You can’t just you know, email blast people anymore, you have to be hitting them on phone, email, LinkedIn, where even testing text right now so there’s you know, obviously tools like Zoom info and Seamless that let’s you pull cell phone numbers. So we’re starting to test you know, sending people our gift link through text and so I’ll get back to you guys on how that works. You know, it’s kind of a new new frontier but I think so yeah, the cross channel thing is big. And then also just the the copy because so much of it is digitally. I think it has and this is where my you know, copywriting experience, I think helps a lot is the copy has to be good. It can’t. I’m sure you guys have all gotten, you know, bad cold emails or bad LinkedIn messages if you’re not adding value, and if it’s not creative differentiated and also short and concise, you know, you’re just not going to break through. So I think, yeah, those are the two big things just cross channel and then the creativity of of the messaging and content.

Jay Clouse 30:14
Is it direct in the beginning? Do you go? Do you make it apparent early on that like, Hey, this is a prospecting type of message?

Caleb Musser 30:21
Yeah, I mean, we’re, we’re we. So we, I think it’s called Spin Selling, we’re really big on asking questions. So every campaign we run is, is tailored to a specific demographic. So our target audience, so let’s say we’re targeting b2b field marketers, every single campaign we’re running to them is hyper personalized to their pain points their needs. So we usually start off with a question like, you know, hey, Mrs. Field marketer, are you struggling to connect with remote decision makers and, you know, getting them to attend virtual events? And so we usually lead with a question and then kind of go into, by the way, you know, Craftom’s built this really cool gifting and shipping tool that can help you increase engagement with your with your decision makers.

Eric Hornung 31:02
You mentioned with with Musser, a lot of times it was, hey, we want to close an account, therefore, we’ll send a gift box. And then you said when the pandemic hit that, you know, employers don’t know where their employees are. So they don’t know how to send who anybody can be wherever. What are the various use cases for Craftom. Why are customers hiring you?

Caleb Musser 31:22
Yeah, absolutely. So for I say, the majority of 2020, we were working with revenue teams, so marketing, sales, customer success, and they were hiring us to help them send cool engaging packages to prospects and customers make it really simple. One of the things that was interesting was, and this was, you know, through our customers is, like, our, our champions within marketing would say, hey, this would be a really cool, you know, our friends in HR having the same problem, how do we send stuff to our 2000 employees are now working remotely, you know, could Craftom be used for HR. And then so then we got into some big, you know, HR council like business insiders and account now, they use this for, you know, holiday type, gifting. And we started, one of the things I realized as a founder was this system that we built could kind of be used for anything, it doesn’t really matter whether I’m sending somebody a Yeti, or a MacBook or a webcam, the way we’ve built it, it makes it really easy to send widgets to wherever people were working from, with both the sender and the pic built in. So now we are working across the entire organization, revenue teams HR as well as it and ops who their challenges is how do we send like laptops and stuff like that to, you know, people who are working remotely. There’s some crazy stories we’ve heard of, you know, IT folks who, you know, the garage is full of laptops, and they’re driving to FedEx on the weekends. And, you know, they’re printing shipping labels, it’s just a logistical nightmare. And so there’s, I think there’s an experience element that we’re solving for our customers, you know, helping them send really cool stuff. And, you know, everything’s hyper personalized, where like, you know, if we send you a pair of air pods, Eric is going to have your logo or your name on it. But then there’s also the logistical side that’s equally if not more important. And yeah, I think that’s why people are working with us.

Eric Hornung 33:09
How does pricing compare between the two models? We talked about 100 to 150 per gift box at Musser? What’s pricing look like for Craftom?

Caleb Musser 33:17
Yeah, it’s really all over the spectrum. So if you think for business like so the the front facing is kind of the b2b software platform. On the back end, we’ve built out this marketplace. And this was this started, actually in the Musser days where we would go to brands and get wholesale from them to put their products in our boxes. So we had already started this, I guess, like five years ago, now, we have hundreds of relationships built out with distributors and brands direct where we get wholesale pricing from them. And we’ve got, you know, we can basically work with any budget, whether somebody wants to send, you know, a $10 widget or $1,000. You know, we have relationships built off of that.

Eric Hornung 33:58
So is this a Is this a markup model, then? Or how does how does that work? From a business model perspective?

Caleb Musser 34:04
Yeah. So on we’ll call it like the widget side. It’s, it’s, it’s a markup model. So we get wholesale from our vendors, we are decorating those products in real time, which we can attach a pretty hefty, healthy market on that on the products. So yeah, from a revenue model, we charge for our software. And then we also make money on the widgets as well.

Eric Hornung 34:27
If I want to get something branded today, I might take it into a screen printing shop. Let’s say it’s a shirt, right? Let’s use shirts, for example. And they might charge me or I buy the shirt there and they charge me whatever percent that is. How does Craftom compare, like from a pricing standpoint? Is it cheaper than going to the local print shop? Or is it like, I guess I just don’t really know what the percentages would be or how that would fit in?

Caleb Musser 34:50
Yeah, so what I would say is, is work close to the promotional market, which is typically like a 40% to 50% markup. And one of the things that we tell accounts is because we run into that a lot like so let’s say we’re talking to a marketing department. And they’ve got six vendors they use, they use timmies t shirt shop, they may use for imprint and they’ve got all these different vendors that you use. And we’ll say, Okay, how much time are you spending? You know, going down to timmies t shirt shop? Like, Eric, your time is valuable? How much? Do you build your time at that kind of thing? What if you had a single login, where you could do all that and just log on point, click, boom, you’re done? Yeah, you might pay a little bit more for us. But it’s, it’s the ease of use. And, you know, you can plug us into, you know, basically your entire organization, which as far as I know, I don’t think any of our competitors have products that can kind of span, you know, the revenue teams, the HR as well as the it and Ops, everybody’s kind of siloed, like, even in the platform side. So we have platforms we compete against on the revenue side. And I guess which you might call brick and mortar type vendors, they they’re typically aren’t as sophisticated on the tech side to be able to drop ship to many different locations.

Eric Hornung 35:59
How does this integrate with current business operations? So on the HR side, obviously, they have a HR roster, do you guys keep that on file? Or do they have to enter that every time on the marketing side? They have a Salesforce portal? Does that is that something they need to enter every time or is this more automated.

Caleb Musser 36:17
It’s more automated, so we can integrate into CRM on the revenue side. And then on the HR side, they can either give us their list of folks before answer a lot, like a lot of times, we’ll send out surveys for the for the account close with, for example, we may need to gather t shirt sizes, that kind of thing. So we try to automate it as much as possible.

Jay Clouse 36:37
So it sounds like there’s a lot of opportunity, you had a lot of growth. Sounds like timing is good for what you’re trying to do. And you’ve already built out this marketplace in the back end because of what you’ve been doing for years. So it sounds like there’s a lot of opportunity here for Craftom, where do you feel like you are limited from capturing as much opportunity as you want, right now.

Caleb Musser 36:54
We’ve gotten to the point now, where we’re not losing deals, because we’re getting beat, it’s more so like, sometimes we’ll lose an account, because we just don’t have the manpower. We’ve done everything, bootstrap, you know, basically out of my pocket, so we haven’t taken any fnf or, you know, seed money yet. And we’re trying to build out our sales, CSX and marketing teams to kind of capture that demand. The the operation side has been scaled pretty, pretty well, you know, we could, you know, always have a bigger warehouse, that kind of thing. But that after five years of Musser & Co., I think that that’s the side that is built out really well. You know that it’s interesting. It’s like sometimes people will say like, you know, is Amazon a tech company or a logistics company? Same sort of question here. I think the logistics side, we’ve been doing it for a long time. And we’re really good at that. We’re also really good at the sales side, we just need more bodies to handle demand.

Jay Clouse 37:49
You mentioned that you’ve been completely bootstrapped to this point. Have you thought about just like a commercial loan? It seems like you have a lot of collateral? does this fit into what’s available for just like a loan?

Caleb Musser 37:59
Yeah, that’s a great question. So at first, we were going to VCs and just pitching and then we were getting a lot of interest, but we hadn’t gotten any term sheets by the end of last year. So it made me go back and think like, I wonder if I should go and ask them instead, if they think this is a VC bankable venture first. So I then started reaching back out to the VCs and said, Maybe I got a little bit too far ahead of myself, you know, what, what are your thoughts? Like? Is this a VC bankable venture? Or? Or do you think we could probably accomplish the same thing going the debt route, and I got some really good feedback. You know, like, with most things, when you’re not trying to sell people, you’re just trying to get feedback, it goes a lot, a lot better. And they still came back and said, Yeah, actually, we do think that this is a VC bankable venture, you’re just going to need to find a kind of a contrarian investor because they have to be comfortable with enterprise SAS, but they also have to become comfortable with logistics. And usually it’s one or the other. Like when you’re talking with investors, you know, a lot of investors like you know, just straight SAS plays enterprise SAS, well, we’ve got a you know, logistics component with overhead. So, yeah, we’ve we’ve looked at the debt side is still something we’re considering. But for now, we’re still taking game probably, you know, like, Angel group or early stage VC, is the way we’re gonna go.

Eric Hornung 39:17
It’s funny that venture capitalists who are supposed to be contrarians told you that you need to find someone contrarian to become an investor.

Caleb Musser 39:25
Yeah, I know. Ironic, right?

Eric Hornung 39:27
One last question. For me. We’ve talked about your business model and generally talked about customers. I’m curious how sticky this revenue is. So once you get in, what’s the chances that someone reorders? What’s the chances they come back?

Caleb Musser 39:39
Yeah, that’s the that’s the beauty of it is once we get the system embedded into their org, the spend on the widgets is reoccurring and it usually accelerates very quickly. So give you some examples. So we had one account that started with about 30,000 and spend in June. By December, they had spent close to, I think 350,000 in just widgets. And that was across two teams CSM marketing. So yeah, it’s very sticky. And once they get familiar with their platform, they start to use it and then they also, you know, will say, you know, hey, person in HR, you should check this out. And then HR usually is working with the IT and it kind of steamrolls from there.

Jay Clouse 40:21
We’ll kill this has been awesome. If people want to learn more about you or try out Craftom, where should they go?

Caleb Musser 40:27
Yes, our website is www.Craftom.io. And Craftom is spelled you mix craft with custom. And yeah, you can check out our website and we’d love to hear from you.

Jay Clouse 40:42
All right here. We just spoke with Caleb Musser, the CEO of Craftom, what do you want to start our debrief?

Eric Hornung 40:49
Grit, I just want to start with grit. Selling copiers, door to door feels like 1952. I didn’t know people still did that.

Jay Clouse 40:59
I had this mental image of him like hoisting the copiers down the street and like, you want to buy this thing? I mean, that would be exhausting.

Eric Hornung 41:07
Yeah, I just got like death of the salesman, Willy Loman vibes. That’s the main character and write in that book, right?

Jay Clouse 41:14
I don’t know.

Eric Hornung 41:15
You’re an English guy. He’s an English major, we should have asked.

Jay Clouse 41:17
Never learn how to read. I love stories like this. I love people who just embrace sales and love sales and understand that sales isn’t necessarily a bad thing. It’s It’s It’s just about how you message to the customer, that you have a solution to their problem. And Kaleb certainly got creative in getting his message in front of customers to show them that he has a solution to their problem.

Eric Hornung 41:40
If you can sell, you can figure out the rest on the back end, I feel like and that’s I think what he was showing with this kind of Craftom and pivot this Musser pivot. If you can sell if you have a product that works and you a lot of founders will go out there and they’ll build the best solution possible. And they’ll create all these features, and they’ll test it with customers. And then they for some reason or another, they cannot close. And I feel like Caleb has the opposite scenario.

Jay Clouse 42:07
Totally candidly, and sorry, Caleb, if you’re listening to this, I almost wasn’t about to have him on the show, because I thought the website was not good, or not as good as you’d expect for a company that was telling us some of the numbers that they had. But then you look and you see that Oh, wow. They’re working with these huge brands. And the client roster is really impressive. And then Caleb tells us well, we did about a million dollars in top line sales to close out 2020. And you’re thinking how did you do that? And it’s exactly what you’re saying? It’s because he focused on what mattered. He focused on getting customers and getting clients on selling. And he overcame, you know, what might not be the most pretty front end marketing website out there. Because it doesn’t matter. He was getting decision makers on the phone. He understood their pain point and he was solving it for him.

Eric Hornung 42:54
Send them an email, send him a text. Find him on call them. It didn’t matter. Yeah, I love that multi prong approach. We talked a lot about sales in this episode, we talked a lot about conversion and what the boxes do and how they do it. I think it I mean, this had to be like a bread and butter Jay Clouse sales moment here.

Jay Clouse 43:14
Love it. I mean, I was, you know, when I asked him is that inbound or outbound? He said, almost 100% outbound, love that. Are you kidding me that is such an amazing place to start from if you are willing and able and having success and doing outbound sales. Now imagine what happens when you get someone on his team that says, You know, I understand how we can start to generate some inbound sales here. Or I understand how we can turn this customer story into multiple customers. That’s going to be just magic, and lightning in a bottle for these guys. And the other stuff he’s doing on the back end that he’s talking about that got me really excited was because this was built out of Musser & Co. from seven years ago. He has this mature wholesale marketplace of products that he can tap into that even somebody coming to the market today that says, hey, I think I can turn on inbound faster. And I like this idea. Let me try to compete. There’s just there’s there’s more of a moat to this business than I think Caleb realizes or it was really speaking to.

Eric Hornung 44:08
I would agree with that. We have this phrase on Upside called starting on second base. And because of the call of services style business that Musser was, he has this moat in place. I mean, 100 how many products Did he say he had hundreds or 1000s of products that they have direct access to through their distributor network. That alone, that alone would be a full year project for a new startup venture, you’d have to hire an outreach team that goes out, establishes the partnerships pitches, each of the partners gets their correct terms, gets it on the website uploads everything that way. So there’s definitely a start on second base component here.

Jay Clouse 44:49
And because he has bootstrapped this company and build it from the profits of Musser & Co., he’s already outlaid the cash and gotten the equipment. That’s used to do a lot of the stuff, he was talking about the lasers that they still have to engrave the stuff and customize the stuff. That’s a significant capital expense that someone had to come in and make also, and to have that already in the business to be bootstrapped at this point to be profitable at this point with pretty high profit margins. He’s just in a good spot. I just love businesses like that.

Eric Hornung 45:21
The business itself exists in a weird kind of place. Like it’s not subscription software, it’s not Software as a Service, maybe you can make the case it’s like logistics as a service. It doesn’t have the same recurring revenue, but it has recurring revenue, because once your organization’s on it, then people are more likely to order their gifts every year. But it’s not like an annual or a monthly fee. So the business model isn’t super simple to understand in terms of all these new venture models that are out there, the industry itself, is it tech, isn’t a marketplace? Is it logistics? Is it corporate gifts? isn’t super clear cut either it kind of exists in one of these intersections?

Jay Clouse 46:03
Yeah. How do you think about that? Do you think that that is? Is there anything about it? That’s actually scary to you from a business perspective? Or do you think it’s only potentially frightening to an investor who is looking for something very specific, and this doesn’t quite fit their mold.

Eric Hornung 46:18
I think if you’re a professional investor, and your job is to pattern match, this becomes harder for you. Because this doesn’t fit a perfect pattern of anything else. But if you’re looking at this independently, and you think, Hey, this company is doing 50%, I don’t know he said something like 40 to 50% gross margins, that’s for an e commerce business, that’s great for software as a service business. That’s low, it’s kind of playing in the middle, but they don’t have any assets. So it looks much more like a drop shipping style model than it does a traditional e commerce warehouse business. So it has a lot of the competitive advantages that you would want from an asset light business with a lot of the volume benefits of an e commerce business.

Jay Clouse 47:04
Something that stood out to me as a positive was that because Caleb is so in touch with his customers and the problems that they have, when they started just talking about, hey, it’s actually just hard for IT companies to even get equipment out to our team. Like we have people with full garages, full of laptops, and they’re going to FedEx on the weekends. And he says, oh, our solution actually solves that. So to me, that’s, that’s phenomenal awareness of a problem that he can solve with the existing business model. But someone else might look at that and say, Well, that’s a distraction from the core business. How do you how do you think about that.

Eric Hornung 47:38
Seems like a distraction to me from Craftom doesn’t seem like it needs to be if it really is a one to one solve, where you don’t need to do any new technology, license it to a new company, and let them have their own brand and focus on that and make it a preferred partner. But my initial thought is, you’re now serving two different customers, and you have different entry points. And it’s not as clear cut as we help get gifts to either your employees or prospective clients. I can see how marketing and HR can talk to each other. But I think it’s a different pitch on the other side, because you’re going from Yeah, I mean, maybe not, maybe I’m wrong here. But my my first instinct says distraction.

Jay Clouse 48:19
Yeah, I could see it either way, because two different use cases. But if you’re going out from the standpoint of is the same customer, the same organization, then it kind of just seems like you’re unlocking new revenue. If someone else is doing the explanation for you by saying, Hey, we were working with these guys over here in marketing, HR, I think you should work with them to because they can solve your problem or it I think you should work with them too, because they can solve your problem. But I do also see your your point about well, why not just licensed this as a new Co. and have kind of like shared resources. But now you can staff up that new Co. and go to this very specific pain point. That seems like an opportunity too, but as a whole, as a potential investor, I think that could be exciting to say, there’s multiple problems, we can solve the same technology here.

Eric Hornung 49:04
I think that all comes back to what you just discussed, which is expansion, revenue, but also customer integration. I mean, the fact that they can integrate into the CRM, they can integrate into HR if they need to. I think that was we only talked about it for about one sentence in that interview. But that is a huge thing. When we talked to script drop way back, way back way, way back in Episode Four of Upside. We talked about this concept of in workflow, and if this solution is in workflow, that’s incredible. Just to put that in context, my fiance friend of the podcast Colleen works for a large CPG company. I don’t know how many employees they have has to be over a quarter of a million. But when they all went remote, all of the office workers for the first like three months, got a little gift bag from her company. In just send a box once a month to the house that had like a bunch of their products in it. And I know that they’re had, they had to either have hired someone or someone internally sat there and like, went through the corporate store and pulled all of this stuff and put it in boxes and send it out. Think about how much time that takes. Even if there’s only 10,000 people you send that to.

Jay Clouse 50:15
It’s like Chipotle

, when instead of having one person manage the ordering of a bunch of people’s food, it’s like, hey, submit your order here. It’s a fantastic experience that makes the whole thing smoother. And everybody else feels like they have more control over their thing. And they’re going to actually get what they wanted.

Eric Hornung 50:29
So what shadows do you have here?

Jay Clouse 50:31
I don’t know if this is a trend for all these things. My gut says no, if we focus on the on the gift side, first, I think that’s still a pretty nascent experience for a lot of people. And I don’t know at what point you get tired of receiving a thoughtful gift in the mail that’s customized to you. I don’t know that you do. So I think that that’s good. On the logistics and just like shipping side, it feels like you could get some entrants into that market that take that away, potentially, you know, we talked a little bit about Amazon, but like, Are there other logistics types companies or even drop shipping companies that say we want in on that and they start to pinch the margins on some of this, those the shadows to me, but what what stood out to you.

Eric Hornung 51:13
I don’t see a Amazon or like a large competitor kind of niching down could happen. But I think that just generally in venture that seems to be a fear that everybody has, it almost never comes to fruition. So the end of twitch was Microsoft launching mixer. And then Microsoft has got a mixer because it was a billion dollar company to them. But that doesn’t mean anything because office is $100 billion company. So it’s like we’re wasting too many resources on this. So I always find that kind of critique of large player wants to launch a feature. Therefore, no startups can exist in that space to be a bit myopic. The shadow that I have is his discussion around, or your their biggest issue right now is lack of manpower. And if this was a business where there was high inventory, and there was high, just like throughput of things that needed to get done, I can understand manpower being a issue. What I’m struggling with, with that answer is, we need more people is almost never the right solution to just about anything. Not saying that not hiring people is not the right thing, right? You need to hire people. But if your biggest barrier is we need more people. That means everything else is working perfectly. So that’s just a shout out to me that maybe there’s some creative solutions that can be had to reduce the need for more manpower. Or maybe they’re not being honest with themselves that there are some things that aren’t working perfectly.

Jay Clouse 52:44
What do you think about this as a venture bankable business or not?

Eric Hornung 52:47
I think if I was in Caleb shoes, I would continue to demonstrate the growth he’s been showing then think about venture. I think that a lot of it comes down to is this venture. So answering your question directly, is this venture bankable? Yes, I do think you can create a billion dollar company out of this. I think that the space is large enough. If you just look at take out the IT side, you just look at the two use cases for employee gifts at large fortune 1000 companies and gifts for business development purposes. So that can be gifts at conferences, which you didn’t really talk about as a potential lead source, gifts at national sales meetings, customer meetings, all of those things that happen that literally prop up the hospitality industry. There’s a ton of money there. So yes, I do think this is venture bankable. But is it venture right now? I’d want to see it grow a little bit first.

Jay Clouse 53:47
Yeah. And bigger question. If I’m Caleb, do I want venture as my financing model for this? Because there are potentially other ways that you can get financing without it being pure venture capital, which is a discussion worth having for any founder.

Eric Hornung 54:02
It’s not often that we have a founder on who is doing a million dollars of top line in the last year and really in the last six months, with 50 plus percent margins. And I believe you mentioned they’re profitable, that optionality definitely lends itself to your point there.

Jay Clouse 54:19
Good. Well, we’d love to hear your thoughts here on Craftom. You can tweet at us @upsideFM or email us hello@upside.fm. It’s fun to get into the Carolinas if you are a founder or you know, a founder in the Carolinas. We should dip our toes back into that market here soon. You can email us Hello@upside.FM or tweet at us @upsideFM. Thanks for listening, and we’ll talk to you next week. That’s all for this week. Thanks for listening. We’d love to hear your thoughts on today’s guest. So shoot us an email at hello@upside.fm or find us on Twitter @upsideFM. We’ll be back here next week at the same time talking to another founder and our quest to find upside outside of Silicon Valley. If you are someone You know and make a good guest for our show, please email us or find us on Twitter and let us know. And if you love our show, please leave us a review on iTunes. That goes a long way in helping us spread the word and continue to help bring high quality guests to the show. Eric and I decided there are a couple things we wanted to share with you at the end of the podcast. And so here we go. Eric Hornung and Jay Clouse are the founding parties of the upside podcast. At the time of this recording. We do not own equity or other financial interest in the companies which appear on this show. All opinions expressed by podcast participants are solely their own opinion and do not reflect the opinions of Duffin Phelps LLC and its affiliates under a collective LLC and its affiliates or any entity which employ us. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. We have not considered your specific financial situation nor provided any investment advice on this show. Thanks for listening and we’ll talk to you next week.