In this episode, Josh interviews Yoni Kozminski, co-founder of South Col, Escala and Multiply Mii, about building scalable businesses to increase valuation multiples at exit. Yoni shares strategies for developing strong operating systems, clear organizational structures, and empowering leadership teams. They discuss the org chart of a $20 million e-commerce business, incremental team building, and the importance of structured meetings like EOS Level 10. Yoni also highlights the role of project management tools such as ClickUp for SOPs and workflow management, offering actionable insights for entrepreneurs aiming to scale and maximize business value.

Chapters:

The Value of Operating Systems and Organizational Structure (00:00:00)
Yoni explains why strong systems and structure increase business value and exit multiples.

Building Leverage and Empowering Leadership (00:00:36)
Discussion on creating leverage by empowering teams and implementing clear systems for business growth.

Incremental Team Building and Org Chart Planning (00:02:23)
Advice on hiring incrementally based on KPIs and performance, with an example org chart for a growing business.

Top-Down vs. Bottom-Up Hiring Approaches (00:04:24)
Comparison of hiring strategies and the importance of hiring subject matter experts to build out teams.

Org Chart Walkthrough: Roles and Reporting Lines (00:05:28)
Detailed breakdown of a $20M e-commerce business org chart, including management structure and reporting lines.

Creative and Siloed Team Structures (00:06:36)
How to structure creative teams for efficiency, and the pros and cons of siloed versus shared resources.

Management Cadence and Preventing Silos (00:07:46)
Importance of management reporting cadence and strategies to avoid siloed functions within teams.

Level 10 Meetings and EOS Traction (00:08:47)
Introduction to the Level 10 meeting from EOS, its value for alignment, and how it supports scaling.

Operations, Launch, Brand Management, and Supply Chain (00:10:59)
Breakdown of operations function, including launch, brand management, supply chain, and their respective team structures.

Shopify/DTC vs. Amazon Team Distinctions (00:13:17)
Explanation of separate teams for Shopify/DTC and Amazon, and the use of external resources for specialized tasks.

HR and Admin Functions in Scaling (00:14:26)
The growing importance of HR and admin roles as the business scales.

Technology for Scalability: Project Management Tools (00:15:18)
Emphasis on the critical role of project management tools like ClickUp for SOPs, training, and workflow management.

Less is More: Focusing on Essential Tech (00:16:46)
Advice to focus on essential technology that moves the needle, rather than adopting every available tool.

Links and Mentions:

Tools and Websites
“YouTube“: “00:03:32”
“EOS Traction“: “00:08:47”
“ClickUp“: “00:15:41”

Concepts
“Standard Operating Procedures (SOPs)”: “00:01:08”
“The 80/20 Principle (Pareto Principle)”: “00:02:09”
“Level 10 Meeting“: “00:09:08”

Transcript:

Josh 00:00:00  Today I am super excited to introduce you all to Yoni Kozminski. Yoni is the co-founder of South Col, Escala and Multiply Mii. Yoni, you talked about seeing an opportunity to, increase the multiple when it comes time for exit because of the processes and team that you’ve built into a business. So why is it so important to focus on the operating system and organizational structure of a business in order to increase? And how does that increase the multiple that you will get? Yeah. Great question.

Yoni 00:00:36  Josh. So the way I would approach this, the way that I look at it, taking a step back before we get into the nitty gritty details here, is that what any potential acquirer is looking for or what all of us really are looking for in life, when when you really strip it back is more time, more money and more freedom. And if you can build leverage where you are not a critical part in the delivery and execution of what is happening inside of your business, and then that is a high value form of leverage.

Yoni 00:01:08  And so when you sort of bring that back into what SOPs, standard operating procedures, and I would say like more importantly, systems are inside of the business. If you can effectively achieve that in in a meaningful way, then ultimately, you know, I would say like, I’m not the poster child, but but I’m a I’m a product of what I preach in that I’m able to, you know, be involved in three businesses that are each growing at different rates with very different business models attached to them. And that’s because we have really empowered the leadership team. We have real clear systems. And so coming back to it for an e-commerce business, the only way for you to grow is to get out of your own way. And so the reality is building systems, building processes, and empowering people to make the decisions. Most of the decisions. You know the predator principle. 80-20. And getting you out of your own way becomes fundamental in your ability to grow your business.

Josh 00:02:09  Here’s what some different businesses in their organizational or their yeah, their or charts kind of look like for the audience just to spark some ideas.

Josh 00:02:18  And as they start to plan out, hey, how do I build up my team and and really scale?

Yoni 00:02:23  Yeah, absolutely. Well, actually, before we even dive into that and I’ll share as much as I can, you know, there’s only a certain number of slides, decks that I have where we’ve wiped out, like any client references and, and things like that. So I’ll share gladly what I can. But you brought up a really important point, Josh, and I think this is where people get things are often really wrong, and I’m guilty of it myself. probably more times than I would care to admit. But you don’t want to hire everyone at once, and you want to build incrementally based on the performance and the KPIs. And, you know, you really you keep that up perfectly, because what we’re looking at right now on the screen is an org chart back in 2020 of a business that was looking to grow over the course of 2021 into a whole number of proposed roles here.

Yoni 00:03:16  So on the screen you can see existing roles, outsource roles, proposed roles and shared existing resources. So geez, I mean, I’d have to like sit here and list out every single person. I would just say, check out the YouTube and you can actually see.

Josh 00:03:32  Let’s yeah, let’s go through just yeah, high level. I mean, even just talking through the org chart, I think that the listeners would find this very, very valuable because again, that was the number one question at Camp Comm is what is your team look like? What is your team look like? so let’s let’s dive in and spend the time here. Yoni.

Yoni 00:03:51  Okay. I’m happy to do that. What I’ll also say, and, you know, putting my multiply me hiring hat on, I turn so many people away from working with us as a business. And, you know, while that’s not great for our business revenue and profitability growth, I think it’s a smart move because if you haven’t done this before, if you don’t have the right experience, exposure, mentors the right people around you that you can turn to, you’re likely going to get it wrong.

Yoni 00:04:24  So if you’re building out a function or a team for the first time and you don’t hire, you know, I like to hire a top down, whereby I’m looking to bring in a subject matter expert that can build out that team and I can guide them on what are the expectations. And we can work together and they can focus on actually bring those next levels. A lot of people like to build bottom up where they’ll bring in sort of the people that are doing the the nitty gritty legwork and delivering, but it requires an added degree of focus and attention. And there’s pros and cons to both things. Can’t get out of control as quickly. but coming back to this, on this chart. on this org chart that we’re looking at. You can actually see here that the you know for four odd proposed roles here, they actually have when what quarter. We would recommend that these roles should be hired. And also what the trigger would be to actually dictate why you would hire this person. So if we’re looking at this org chart, we’re looking at obviously the CEO sitting across the top.

Yoni 00:05:28  And then we have the CEO sitting just below with a dotted line to the CFO. so for us in our language, like dotted lines is typically, a shared management or resource. So in this company, the CEO and CEO work very closely and work with this CFO. You can see it’s part time. So that would likely indicate that they’re fractional I would imagine in nature. So moving down they have five core, high level managers that sit across the business. So they have their product Development and Design manager and below them since their product researcher and their sourcing associate. So they’ve coupled together like we were showing you the other side. everything that’s product research and development into one reporting line that comes back into the CEO sitting below the CEO. And the CFO is a little bit less, connected. But I would say, you know, holds a lot of the critical answers here. The next function, they’ve they’ve isolated their design function. So you have a vacant role where they’re looking to bring on a creative director.

Yoni 00:06:36  And then below that there’s a designer and a copywriter. So I’m historically a digital marketer. And I’d say like some of the things that will work for you or I have seen work most effectively is when you actually bring together let’s, let’s use sort of a very heavy DTC brand, you know, having that designer, copywriter and web developer and creative director sitting together in a silo where they can really focus and produce work quickly, as opposed to having every single resource filtered in across all of the different businesses. So let’s say you’re Amazon and you’re also e-commerce or DTC focus, potentially considering splitting those teams so that there’s a faster turnaround time and delivery. That’s one way that you can approach it. The other way you can approach it is to actually bring in a project or traffic manager to actually build out, you know, for two, 4 or 6 weeks, however long your sprint cycles will look and actually go in, build out all of the time allocation and deliveries and start to funnel that into a single delivery mechanic.

Yoni 00:07:46  So there’s there’s like like I was saying before, there’s different ways that you can build this and there’s no one that is 100% correct. I’d say how effective your processes and your systems are internally, and how you want to share resources becomes also one of the considerations, you know, you might be able to get more done with less people and not hire, you know, three designers because you’re using, you know, DTC, retail and e-commerce and you’re building these silo teams. So just things to consider. I’ll keep I’ll keep making my way through it. But like I just continue to reiterate, I want to give you guys options and just more. So get your head in the right place to think through, like what is actually going to work for me from an org chart. And, and I would say at a management level, you know, what is my cadence of reporting? How do I prevent these siloed functions from being siloed. So internally we love iOS traction. as a as a business operating system.

Yoni 00:08:47  And it is an incredible thing to have what’s called the L10 meeting to level ten meeting once a week, sitting with all of senior management and getting a pulse of what’s happening in the business based on the KPIs, expectations and talking through any of the challenges that actually come up. So just a few additional things to consider, so let’s keep moving 100%.

Josh 00:09:08  Just second, that statement there, that level ten meeting has become like gold for our business. We implemented it over a year ago, and that is a meeting that we do not miss, that that thing will never move off the books. We don’t skip it. We don’t reschedule it like there is so much value that comes from that meeting. So just echo 100% what you said there, Yoni. And for our listeners that don’t know what we’re talking about, go check out iOS Traction level ten meeting. Simply Google it, watch the YouTube videos on it. It will become a fundamental piece of your operating system for your business, because everything that Yoni is talking about, if you don’t have a reporting structure and a way to actually coordinate the work that’s going on, you don’t need these team members.

Josh 00:09:57  It’s all just going to be complete chaos to begin with. So having that organizational, that operating system in place, even at an early stage, is what’s going to prime you to be able to scale and hire these these team members that we’re referring to. So, Yoni, let’s keep going.

Yoni 00:10:15  Absolutely. Yeah. we knew we were talking to our people. when we, when we started this conversation. So. Yeah, I’m not surprised. I’m not surprised you’re also on it. And yeah, we’ve been running it for years now. And it takes time just on that. It takes time to get it right. But when it does, when you do get to that level of, you know, internal trust and confidence and understanding around that meeting, it’s just invaluable. So continuing to move through guys. So we talked about the product development, function, the creative function inside of this business. Now let’s move into the operation. The operations manager now sits on top of what can only be described as the largest function inside of this business.

Yoni 00:10:59  So like we were talking about before, it actually breaks down in here into these three different functions from launch to brand management and then supply chain. So for launch they have a launch manager. Under that there’s an analyst and then followed by a marketing associate. and then also they’re looking to bring in a PPC specialist that’s focused on launch and brand. So again we went through a lot of this in, in the last slide that I pulled up. But, you know, they’re they’re bringing these clear reporting structures that align with launch. And the strategy that it takes attaches to that. And then they move over to that brand management and the ongoing nurture and management of anything that’s live. So you have a brand manager now that sits under that operations manager. You have an analyst as well that’s specialized in everything that’s managing the ongoing. And then you have a marketing assistant. So the team structures actually look at actually that they look exactly the same because they are the same. One is focused on brand management versus launch.

Yoni 00:12:05  But you have analysts dedicated and you have marketing associates dedicated, and that’s following that same pod structure where you’re able to turn things around really quickly. You get those feedback loops that you’re looking for. And, you know, I think it’s it’s one way that you can approach it that when you are this large makes sense. I’d say if you’re smaller, then you’re going to probably likely have shared resources. So it’s about really having the right KPIs and building the right structures that will enable you to achieve more with less. But we’re talking about a $20 million business here. so then the next function we’re talking about supply chain. So they have a vacant supply chain manager. And then under that they have a customer service rep, another customer service rep they’re looking to bring in. And then a data encoder, which I’m not exactly sure.

Josh 00:13:03  How.

Yoni 00:13:03  Interesting fits in. Yeah, I’m not exactly sure, but, you know, I wasn’t the one working on the project. Far smarter people than I was. And again, this comes back to this business and how they’re uniquely set up.

Yoni 00:13:17  And so without those insights, it becomes a tough to to make any sort of judgment call here. And then under that supply chain manager, you have the logistics coordinator. And then the last two areas, we have a Shopify marketing manager, which is sitting outside of anything that relates to the Amazon functions here in the launch manager and brand manager, and just shows that clear distinction of how they are focused on Shopify in a silo. And, you know, obviously when we talk about Shopify, Shopify marketing manager, or really, you know, a DTC marketing manager here, there’s a whole lot of other things that are going to come on the back of that. And, you know, we can’t see on this slide. But I could only assume that there’s likely external resources that are handling things like email marketing and SEO and PPC, Google AdWords, PPC management and and things like that. because it’s a totally different beast, as we all know. And then the last function we have here is the HR and admin, where, you know, at this, at this size and this level, you know, it starts to become a pretty important function inside of the business.

Josh 00:14:26  Yoni, this this is amazing. And I know we could probably spend the next hour continuing to share example after example, but I think that this is painted not only for myself, but especially for our listeners, just another way and open up our minds, hopefully to creative ways as to how other people a $20 million FBA business has structured their team. And again, like we’ve said multiple times, it needs to be unique to your business. So don’t see this as like this is the cookie cutter approach. I have to follow this. Frankly, my org chart looks a little bit different. A lot of the same type of roles, but sitting under different, you know, management roles. but it’s important to just understand that fact. So, Yoni, as we start to wrap up here, let’s dive into that technology portion.

Yoni 00:15:18  I’ll, I’ll hang on that last point and that’s, that allows it to scale because it’s above my pay grade when it comes to giving you all the insights around what are the tactical execution softwares from the helium tens to Jungle Scouts to, you know, day to dive and beyond.

Yoni 00:15:41  I don’t have those answers for you. Not anymore anyway. But what I can say when it comes to scale, having a very clear project management tool is critical. So, you know, I didn’t pull it up on the screen. But we are huge. We’re evangelists effectively, for click up. for us, it is just such a high value tool, not just because it’s really reasonably priced, but because the ability to integrate all of your company wiki, SOPs, training, videos, documentation, which is funny, you know, it’s probably the largest amount of work that we do is actually building out our formatted SOPs and training videos and documentation. We haven’t talked about it today. You know, for most people, what I’ve shown versus what you would anticipate as an SOP is very different. The last levels of four and five is when you start to get into those working instructions and all of the activities perform. And so coming back to it from a technology standpoint, having a project management tool that allows you to both run the flows and also houses all of the information.

Yoni 00:16:46  You know, less is more. And rather than trying to have every piece of technology under the sun really getting clear on the things that will move the needle for your business. And from a scalability standpoint, there is not going to be a single thing better than having the right project management tool in place.

Josh 00:17:04  Well, Yoni, thank you so much for your time today. This was super valuable.