Drew Green is the CEO of Indochino - the largest bespoke suit retailer in the world. Between 2015 and 2017, Drew increased the market capitalization of Indochino by approximately $200 million. He says focus, dedication and decisiveness are what have led the company to achieving record growth year over year. Execution is everything to Drew. His knowledge on entrepreneurial financing and deal making and how to think about deals is incredible. Get your entrepreneur friends to listen to this podcast, they're not going to get better advice on how to think about raising money and entrepreneurial deal making than here.
Mark: Hi Drew, how are you?
Drew: I’m doing great. How are you?
Mark: Yeah, great. Thank you so much for joining us today. For the listeners just tuning in, we’ve got Drew Green on the line. He’s the CEO of a company called Indochino. I’ve already introduced him at the beginning. He has done some pretty amazing things with the company and really has been an evolution ever since he’s taken over. But Drew, speaking of evolution, let’s talk about you for a second. I mean, you started off at DoubleClick and then Shop.CA and now Indochino. Can you walk us through the evolution of Drew Green and how you got to this point?
Drew: The evolution of Drew Green, yeah you know what, it’s been an amazing journey and I really believe that you have to really focus on the journey versus any type of destination and I’ve been really fortunate. I worked with some really, really great people throughout my entire career and really have enjoyed being entrepreneur. I started as an entrepreneur in university to pay for some of my expenses and really fell in love with the experience in starting your own business and growing a business. There’s always ups and downs that come with that and I was really fortunate to provide myself with the opportunity to start my first business literally at the time of graduation or shortly thereafter.
And from there, I spent some really quality time in Asia and Australia living in both places. When I got back, I was, again, really fortunate that the internet and technology were kind of really the first starting of things. And I had an opportunity to be part of a company that grew quickly and I was one of those largely responsible for some of that growth. And I think the biggest thing I learned in that first experience is just how incredible and how meaningful culture can be in the success to the company. I mean a lot of those people that I worked with and managed or work alongside were and are still very, very good friends and people that I keep in touch with.
So, culture was a very early lesson in terms of building shareholder value. At DoubleClick, I really got in at a very young age, and had some pretty rare experiences, right? I got to manage team and closed big deals and figure out new solutions. We had 32 different marketing automation solutions at one point. And then from there, I was recruited into a very young upstart company called Shop.com and helped build that company out until we sold and founded my own marketplace here in Canada which is still one of the largest marketplaces in Canada, part of a larger conglomerate that I'm Chairman of.
I’ve been with Indochino since 2015 and really was an opportunity to come in, really as a second generation founder and be part of the sort of next phase of growth and really partnered with our shareholders and a team. We’ve done some pretty incredible things, the business has tripled in size for the last three years and these are pretty big numbers. We turned it profitable which is something the company was have the challenge of doing. We’ve raised significant strategic capital and we reformed the culture entirely.
One of the biggest challenges actually wasn’t the actual business but it was the culture. And we brought in some wonderful people. We’ve really invested in the people that we had and have and we brought something like 32 or 35 promotions, about 450 people globally; China, the US and Canada. And I’ve seen firsthand when a company doesn’t have a good culture how it loses their way in terms of culture and leadership and what can happen. And I certainly don’t discount the fact that you need to have a very, very strong culture. And that leads us to here.
I mean, like you said, the journey of Drew, I guess we'll call it for now. I've just been really lucky. With companies that have been sold to DoubleClick, Google, Market America and private equity and now we’re building something really special. I think we are the market leader. If not the largest, certainly one of the largest customer apparel companies in the world and we’ve got an amazing probably ten years ahead of us and so we’re going to enjoy that.
Mark: Absolutely. I think some of the things that you guys have done just in the last three years have really blown the socks off the competition and you talk a lot about execution and making sure you’re delivering on all the right things in terms of culture and getting the right deals in place, getting profitable. What a lot of listeners and readers of my blog have asked me, "Mark, what’s the most important thing when it comes to business negotiation." and the thing that I keep going back to is execution, and being able to just get it done. What does execution mean to you in the scope of Indochino and running a business like Indochino?
Drew: Well, I think it’s everything. You can have the most wonderful strategy in the world. You can have incredible investment strategy and incredible investors. You can have everything in place but unless you’re really committed to executing and unless you’re focused on that, unless you have strong leadership to do that. Again, I’ve seen instances where companies completely go from success to a non-success because of their lack of execution, because of their lack of teamwork, because of their lack of focus.
And that is a big learning for I think anybody. You’ve got to get rid of the clutter and really focus in on execution. I sometimes say that the best strategy is execution. And there are so many micro-elements to growing a business that aren’t whiteboard worthy so to speak that aren’t big picture but are absolutely necessary to be successful. And we had for just a quick example; we had one in the last nine days where we looked at a certain KPI in our business. I won’t give the exact numbers but we looked at a certain KPI number that was having some challenges during that time of month and we knew that in order to hit our plan for that year, that KPI really needed some TLC and frankly just execution. And so, in the last nine days, because we looked at the metrics, because we committed ourselves, because we came up with creative new ways to drive that KPI, it’s up 20% versus year to date in that nine days.
So, that’s just a small example of executions daily. I’ve been in retail in some form or another for almost 20 years. You wake up every day and you’re at zero. And that’s just a fact, your clock strikes 12 and a new day comes and you haven't had a customer yet and so you really have to focus. Yes the big picture is important but also just daily execution.
Mark: Right. Yeah, execution means everything I think in every business. But I think also important is making sure you’ve got the right relationships. Recently in 2016, you secured $42 million investment with the Dayang Group and with that you’ve got a five-year alliance. What a lot of people don’t know is that the Dayang Group is the largest suit manufacturer in the world. So, obviously you know how to negotiate with offshore manufacturers, how do offshore negotiations differ from let’s just say negotiations with North American companies?
Drew: Well, I think negotiations differ in every instance, right? I think people are people and they have their different ways of doing things. I think what I was most impressed about our now partners in China is just the decisiveness and the recognition of what can work for them, what can work equally as well for us and the commitment to put something together. I mean frankly the first time, so we created this five-year plan, part of the five-year plan was to attract a strategic investor and align with that investor on the back-end operations of the business.
And so we made that commitment and we only met with three people and we absolutely knew right away which was the right partner and the many reasons why that weren't just financial. I mean the valuation, we presented them, I think that’s a key opportunity for entrepreneurs. I think I’ve seen a lot where they don’t have a very strong view of what their business is worth or what the deal is worth, if you will, if it’s not related to raising money. And you really need to have that and you might not be right, by the way, like there might be something wrong with your logic but you need to have that perspective and that perspective needs to be grounded in some facts, qualitative and quantitative data but also a firm belief. And I will tell you that in that round of financing. We structured it in such a way where it was very hard to say no. There was immediate benefit for our investor in a multitude of ways. The valuation, we believe, was fair. It was quite a bit higher than what the company had previously been valued at, but we also knew what we could do. I was 110% confident that this business would accelerate and grow and would become a market leader and I think that confidence and that ability to outline why and how was really important in closing the deal.
I would say that the consistent thing in negotiations, no matter who you’re negotiating with, is really about the first interaction and is really the most important. And people often think that negotiations, I see this all the time like negotiations, come at the end when you get down to the legal agreements or you’re getting down to the final deal terms, but it really doesn’t man. All the negotiation actually starts from the moment you step in the room, from the moment you get on the call, from the moment you send the information. And if you can have that perspective, and I mean, truly putting a quality win-win-win type of agreement in place. And so it really is important to think that way because otherwise, things can take a lot longer than they need to or they won’t happen.
Mark: Yeah, I 100% agree with you. I mean I keep trying to teach people that negotiation starts from the first moment you have your first interaction which totally aligns with what you’re saying. So presentation, body language, how you talk about something, what you talk about, when you talk about it; all of that counts right away. You don’t get to make that ground up at the back-end. You’ve already basically painted yourself your own picture with that first phone call.
So, understanding that and getting a grasp that that is actually what negotiation is whether it’d be sales or procurement, whatever side of the table you’re on is super important.
Drew: It really is. Yeah. One other quick point to this, I love talking about the deal and negotiation and putting partnerships together. I think the one thing that I see happen all the time, and this is back to the point of like that first interaction is so important, is that people try to negotiate through email, way too much now. And I just have a rule that I just don’t negotiate through email.
If it’s important enough to, and in particular, as it relates to any type of financing or things like that, you’ve got to get in front of that person. You’ve got to, yes a phone call is okay, but as much as possible you need to sit down and you need to really interact with that individual or that organization to make sure things go well.
Mark: I totally agree with you. So, why do you think that face-to-face negotiation or over-the-phone negotiation is superior than email negotiation?
Drew: Look, I think it’s the tenants of communication like if your words are only a small part and important part but are really not the entire form of communication that works most effectively. You mentioned body language. You mentioned little things like enthusiasm. It’s very hard to, in a professional way, show how enthusiastic or committed or how much belief you have in something through an email. And frankly, you can do it but it’s much better - I think it’s much better done in person and that’s kind of my golden rule like yes phone calls can be secondary but if we’re really getting to the point where we’re going to talk about our future, let’s do it face-to-face. Let’s really go through it and really understand each other. So yeah.
Mark: Totally. There was a book actually written in 1970s. I can’t remember the author’s name, but a lot of people cite it very frequently basically the data that this social scientist came up with which was the credibility of someone’s pitch whether they’re in sales or on the procurement side is 93% related to body language and the tone of the voice that the person uses. And only 7% of credibility is weighted towards the actual words that are used. So, getting face-to-face with someone, hearing their voice, is so critical to any kind of communication because it establishes that credibility that you need. And if you can’t do that, then you need to practice it. I tell people all the time, practice your body language, practice the tone of your voice. You can’t expect to get better at sales or at closing deals if you don’t actually practice. Practice something as simple as your handshake to make sure that it’s on point because first impressions count, like you said.
Drew: Yeah, they really do and remember it’s impossible to sell something without value. I think I see that way too much for the last three or four years where we became automated in terms of CRM. I can’t even tell you how many emails I get from salespeople asking to do a call or wanting to meet or whatever. You've really got to go quality versus quantity and the relationship part of that we could probably get into later in the call but you have to establish in your mind whatever it is that you are committed to providing this organization, this person, this deal, value. Because without that, you’re really not selling anything. You’re forcing a situation.
And so, I’ve always had success in through one keyword which is empathy. Like if you really think about what the other person need and wants and is going to benefit their business or their life, it’s really going to be a lot easier to get something done that that’s going to do that. But if you don’t, I mean you’re going to run into problems.
Mark: Totally agree. There’s a sales guy based out of the States, his name is Anthony Iannarino and he talks a lot in his books about salespeople approaching deals with the attitude of caring. You have to care about the other party because that’s the only way that you’re going to be able to put together a deal that makes sense for everyone. So, you have to care about the value that you’re giving to the other party. You have to care about the value that you’re creating. You have to care about the value that you’re dividing up amongst both parties. And without that ability to care about the other party, you’re right; you’re going to run into roadblocks all over the place. I think gone are the days where the tactical salesperson can just keep trying to close and close and close without providing that value.
Drew: 100%. And there is such a thing as a bad deal, right? And I’ve led different sales organizations throughout my career. The thing that can really hamper a business or hamper a career or hamper performance is a bad deal. And I’ve seen it time and time again. I had to learn this myself at an early age, which is you can actually, you can go too far. You can go too far in term negotiations where - you could create a bad deal for that partner or that person and you’ve got to stay away from that because that’s not sustainable. It doesn’t last.
It might feel good because you closed the deal, maybe you hit your number, maybe the company is growing but it’s not sustainable so it’s a mirage. It’s fantasy. So, it’s really got to work for all people and there are times where you’ve got to give in, not just numbers wise but you’ve got to really give in to make sure that it’s a win-win-win, a triple win.
Mark: Yeah, totally agree with you. So, I mean working in company like Indochino and leading a company like Indochino has a lot of unique challenges because you’re dealing with a lot of supply chain issues that a lot of other companies don’t have to deal with. What are the unique supply chain challenges that Indochino faces?
Drew: Well, I think first of all, every challenge is an opportunity. So, I really take that approach in business and life and it’s no different here at Indochino. Our opportunity is the fact that we are virtual inventory so that’s actually an amazing thing. We don’t hold any inventory. We hold fabric but that fabric is the only inventory we have. So, we’re very different than what I would call traditional retailer or inventory-based e-commerce company. And so we really leverage that to the advantage of the consumer. We pass on some of the savings. We pass on this incredible experience. So we moved away from selling the product to really providing an experience. And look, we definitely don’t get it right every time but we've come so far and we basically re-engineered our entire back-end for the past two or three years. Imagine it,
like every day, we create thousands of garments that will never be created again perhaps in that form. Every garment is made for a customer one-to-one. Every suit is a one-of-a-kind experience and piece of art and it’s created by the consumer. And so there’s a litany of challenges that come with doing that at scale. And don’t forget, this business, bespoke, made to measure, custom, it’s hundreds and hundreds and hundreds of years old. It’s been around, since people were wearing clothing, but to do it out of mass scale, I don’t think it’s ever been done quite like we’re doing. And we’ll sell, produce and ship somewhere in the neighborhood of 500,000 unique garments this year and that’s challenging.
And so I can go into the lists of challenges but really for us they're opportunities. I think one of the most important things about what we’ve done and I truly believe is core to our success is the speed in which we get product to our customers. And in large part we have Dayang to thank for that and we also have an incredible team in China that’s also working with me alongside them. 80% of our garments right now are getting delivered in close to two-and-a-half weeks which is phenomenal.
Mark: So from time to order to time to receipt it’s two-and-a-half weeks?
Drew: For a large percentage of our orders, yeah. Just a quick anecdote. My son is a boy scout at school and I did his uniforms this year in Indichino and he outgrew his pants in the first month by a couple of inches but I’ll get those new pants delivered to me sometime later this week and that’s not just because I’m the CEO. It’s what’s happening within our supply chain right now.
Drew: Not every time, just for all your listeners, it’s not happening every time. It’s almost improved the production and delivery time has almost been improved 50%, which again I think is incredible. And for our business, it’s really important because we don’t just view ourselves as custom or made-to-measure. We view ourselves as a replacement of ready-to-wear but to be replacement of ready-to-wear, you need to really improve upon the back-end logistics and supply chain.
Mark: Yeah, I totally agree with you. And for the listeners out there, I think people need to appreciate how fast that really is. So, if you were to go buy a suit in a store today and you had to take it to their in-store tailor or their in-store seamstress and they will have to take it in for you, I guarantee you it’s going to take longer than two-and-a-half weeks. And if it takes shorter than that then you need to give me the number for that store because there’s no way you’re going to get it done faster than that. So to get a made to order suit in two-and-a-half weeks is incredible speed.
I mean with the growth and the expansion of Indochino, obviously you guys have had your successes but you've definitely had your failures as well. What a lot of listeners like to hear about are some of the negotiation failures that you may have had because we learn a lot more from our failures I think than we do from our successes. Maybe you could expand on a failure that you think other people could learn from.
Drew: Specific to Indochino or throughout my career?
Mark: Throughout your career for sure.
Drew: I think there's been so many lessons and it’s really hard to learn from success. I think the old adage of you need to learn from your failures or from some of your mistakes is really an important one. And sometimes you face that more than once, right? But I really, really try to pay attention to what. And so some of the things that I talked about early on are really from tactical experience, it’s not from, you know, I don’t read many sales books or negotiations books. I’m more of an auditory learner like I like to listen and I like to observe to learn.
I think it goes back to the point of making sure that it is truly a win-three and win-three is something that I probably coined about ten years ago and in any business, everybody is sort of worried about okay what’s win-win like what’s a win for me and what’s a win for you. I always think of the customer. Whether you’re in a B2B company or B2C or selling widgets or suits, what’s going to provide a win for the customer. And I can tell you that in terms of our partnerships and in terms of the deals that we’ve got done here at Indochino to grow the company like we’ve grown it, we’ve always put the customer first.
We always say “Okay, is this partnership, is this deal, is this new funding, does this firm or organization, is going to be a benefit to our customer?” We truly ask that. I ask that. And I know I’m giving you success versus failures but I think that is what I’ve learned, again, going back to some of the not-so-great deals that we put together.
We’ve been very fortunate. I kind of want to knock wood here but I don’t have any wood. I can’t think of a particular deal or negotiation that didn’t have a good impact on the business. There’s good and there’s better and there’s great and we’re certainly not a 100% on the great side but we really haven't had, whether it’s a lease with a landlord or whether manufacturing side or other. We haven’t really run into a huge mishap and we will. There’s no doubt about it, that’s part of life but I think also that a lot of that comes through experience. I’ve seen where I have challenges in deals is where parties become so obsessed with what they need and what’s best for them and you can try to bring people back and really collaborate on what’s the big picture and what’s best for everyone but sometimes that’s hard and sometimes you just have to let it go.
And that’s another lesson that I’ve learned particularly in the last five years. Sometimes you just got to walk away and move on. And somebody once told me sometimes the best deals you've had are the ones you don’t do. I never really understood that until I had to walk away from a pretty big deal but everything has come back around and it’s actually worked out better because I walked away.
Mark: Right. Yeah, I totally agree with you. Knowing when to walk away is a big key to success. Listen, I know you’re short on time so one last question for you; what advice would you give to your 30-year-old self on negotiation?
Drew: My 30-year-old self was really, really competitive. Like I played sports at a pretty high level and that was fun and probably was a little bit too competitive. I would just say go slower to my 30-year-old self. I used to have the adage of going to make every day work five and now I’m kind of down to make every day work two. Like sometimes you really need to slow yourself down and as much as you can achieve in a day or an hour or a week or a month, I definitely would advise my 30-year-old self which is 13 years ago, to really take it a bit slower. And that’s something I had to learn.
Mark: Good advice. Drew, listen, I really appreciate you sparing the time for me. It’s been a great conversation. I’d love to have you on again but if people want to find out more about you and what you’re up to, how do people follow you online?
Drew: You know what? I mean I’d love to keep in touch with your listeners, if they have any questions about the company in particular, my email is Drew@Indochino.com and I’ll do my best to respond as quickly as possible. You can search for me on LinkedIn or Twitter and I interact in those forms quite a bit. Yeah, I just really appreciate having us on. It’s been a real pleasure to talk to you and we’re really grateful so thank you very much.
Mark: No problem. The pleasure is all mine. Listen, have a great day. Thanks again and I’m sure we’ll touch base soon.
Drew: Okay, you take care yourself.
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