In this episode, the host interviews Kelcey Lehrich, founder of 365 Holdings and co-founder of the HoldCo Conference. Kelcey shares her journey from traditional business to e-commerce, the growth of 365 Holdings, and the challenges of acquiring and integrating multiple brands. He discusses the purpose of the Holdco Conference for multi-business entrepreneurs, strategies for stable acquisitions, and the realities of shared services. The episode offers practical advice on self-awareness, focusing on key business levers, and learning from experience in scaling and managing holding companies.
Chapters:
Introduction to Kelcey Lehrich and Holdco Conference (00:00:00)
Kelsey introduces himself and explains the origin and purpose of the Holdco Conference for multi-business entrepreneurs.
Kelcey’s Journey into E-commerce and 365 Holdings (00:02:22)
Kelcey shares how he and his partner entered e-commerce, acquired their first businesses, and built 365 Holdings.
365 Holdings’ Structure and Focus (00:03:30)
Discussion of 365 Holdings’ current scale, vertical integration, and future focus on food, baby, and consumable brands.
Growth Strategies: Product Launches and Acquisitions (00:04:28)
Comparison of launching new products versus acquiring businesses, and the importance of consistent experimentation.
What to Avoid When Acquiring Businesses (00:05:52)
Kelcey outlines lessons learned and what to avoid when evaluating acquisition opportunities.
365 Holdings’ Core Strengths and Incremental Improvements (00:07:04)
Exploration of the company’s strengths, vertical integration, and focus on small, compounding operational improvements.
The Reality of Shared Services in a Holdco (00:09:54)
Kelcey discusses the challenges and realities of sharing services across multiple brands in a holding company.
Three Actionable Takeaways for Entrepreneurs (00:11:44)
Host summarizes three key lessons: self-awareness, vision and action, and learning through experience in M&A.
Kelcey’s Book Recommendation (00:14:03)
Kelcey recommends “The Hard Thing About Hard Things” by Ben Horowitz for entrepreneurs managing growing teams.
Favorite Productivity Tool (00:14:40)
Kelcey shares Superhuman as his favorite email productivity tool.
Influential Figures in E-commerce (00:15:25)
Kelcey discusses the many people who have influenced him, mentioning Gary Vee, Roland Frazier, and others.
How to Connect with Kelcey and Learn More (00:16:59)
Kelcey provides ways to connect with him and learn more about Holdco Conference and 365 Holdings.
Links and Mentions:
Tools and Resources
Superhuman
Websites
Holdco Conference
365 Holdings
Books
The Hard Thing About Hard Things by Ben Horowitz on Amazon
Influential Figures
Gary Vaynerchuk (Gary Vee)
Roland Frasier
Transcript:
Josh 00:00:00 Today I’m super excited to introduce you to Kelcey Lehrich. Welcome to the podcast, Kelcey.
Kelcey 00:00:05 Thank you for having me. Great to be here.
Josh 00:00:06 Kelcey I attended Holdco conference. You did a fantastic job. That was your first ever Holdco conference. Tell our guests a little bit more about this Holdco conference, because I think it’s really unique. And you’re kind of one of the first to kind of come up with this type of holding company conference.
Kelcey 00:00:24 Yeah. So I appreciate your kind words and glad you could come. And we’ll see you there next year. date’s coming soon. so I have a friend in town named John Wilson. you can find him on the internet. He’s pretty public. he and I met, and we both have, 50 to 100 employees, multiple tens of millions of revenue, and we have multiple businesses. And we knew a few other people that had similar circumstances. And there really was no event, no conference, no, kind of home base or hangout place for people like us.
Kelcey 00:00:56 And one day I’m like, hey, like, why don’t we go ahead and we’ll host the party. and so John and I partnered on that project, and, from January, when it was kind of hatched with the tweet to July, it was a bit of a wild ride, but it was a lot of fun. We’re really proud of the first year. And, yeah, it’s meant to be the place that multi business entrepreneurs called the holding company, meet, learn, scale and grow. But the kind of niche there is that if you’re in software and you’re venture backed, there’s a conference for you. If you are in real estate, there’s a conference for you. If you are in insert any industry, sales, metal stamping, mobile home parks, whatever it is, there’s a conference for you. If you’re a Holdco entrepreneur, there really wasn’t a place to call your own. And our vision for Holdco is to be kind of that home base for people like us.
Josh 00:01:43 Yeah, I love that.
Josh 00:01:44 I love what you guys have started there. And I think we’ll dive into that a little bit in more detail later in this podcast. But Kelcey, you’ve got a vast experience in e-commerce. Obviously you have a holding company that has multiple brands. You’ve acquired multiple e-commerce brands, you’ve grown them, you’ve scaled them. So you have a wealth of knowledge. And for our listeners that have established businesses, they’re looking to take things to the next level. I think they’re going to be able to learn a lot from you. So why don’t we rewind the tapes a little bit? Kelcey? And why don’t you tell us a little bit about how you got into the e-commerce world to begin with, and then what led to the formation of 365 holdings?
Kelcey 00:02:22 So six years ago, my partner and I, his name is Justin. I’m kind of the ideas guy, and he’s kind of the executor. She’s familiar with iOS. I’ve got the kind of visionary CEO role and he’s kind of the integrator or CFO, and he and I have worked there for a long time.
Kelcey 00:02:37 And prior to e-commerce, it was kind of like, the same idea. However, instead of ideas and strategy and like execution, it was like I was the sales guy and he was like the ops guy and all of our prior businesses, but we weren’t online. We’ve never, never run ads, never shipped products. But we had sold a business for just enough money to make a down payment on an SBA loan. We had sold a business for $100,000, which was a lot of money. We did not hold any of it aside for taxes. We put all 100 grand down on the $900,000 loan to buy the million dollar first business. That was how we got started. 60 days later, we drained the checking account and maxed out the line of credit and bought another one. And thus begins the compounding. So, Yeah, six years ago. by by two that that, spring and summer, we had always had a vision of back to the old topic, wanting to run many businesses. We wanted to have diversity.
Kelcey 00:03:30 I guess that’s like, hey, what if you focused? What if you just did one thing? Could it be bigger? And my answer is like, I don’t know, probably. But this is the business I want to have. I want to do many things. one of the things financially from a diversification perspective. two, I think it’s fun. It’s like what I want. So like, yes, this is what I’m doing. I’m sure it’s like slightly less optimal than, I don’t know. but six years have elapsed and today we’ve got 80 some employees. Six brands. we’re in Akron, Ohio, and heavily vertically integrated. So we do in-house customer service, in-house pick back and ship. We have a 60,000 square foot warehouse. We have our own supply chain, content creation, marketing, media, buying, all those kind of traditional go to market items for e-commerce. We also do a little bit of in-house manufacturing. Two of our food businesses, we have part of that value chain under our roof.
Kelcey 00:04:17 And the future for us is focused on food, baby and consumable. So we’re going to focus in, our e-commerce practice into those three verticals and continue to find brands we can acquire and grow.
Josh 00:04:28 I think it’s similar for our own business where we have 1300 different SKUs. My wife’s a graphic designer. We can put designs on multiple products. And so for us, it’s the same thing. I was telling my team, hey, like, even if this, this particular product that we’re going to come out with is just going to hit a single, like, that’s okay. Because if we’re still always striving to launch new product after new product after new product. Some of those are going to hit home runs. Some of those might be triples or doubles and that’s okay. But like at the end of the day and some of them I might strike out on, which is all good. But you’ve got to keep being consistent, showing up, swinging at the plate. I love the whole baseball analogy here, but it’s vital.
Josh 00:05:10 And so whether your growth strategy is you have unlimited, you know, future products that you can launch, then it’s kind of the same thing. Keep launching those products, testing stuff out, see what sticks. But also on the flip side, it sounds like with mergers and acquisitions, sometimes it’s going to be about the same thing. Sometimes you’re going to win some, sometimes you’re going to lose some. But I think obviously, Kelcey, with your experience, I’m sure that as you look at deals on the marketplace, right, because you’re you’re going through brokers most of the time, like you said, they’re there live, you know, public listings. You know, what? What have you learned from that experience of things to avoid.
Kelcey 00:05:52 yeah. Things to avoid. Lots. There’s lots to avoid. we really look for businesses that are, diverse, stable and established. That’s just what we’re good at. we’re not incredibly. I’m. I’m missing the word here. We’re not incredibly talented growth marketers.
Kelcey 00:06:12 We’re not going to take something that’s muddling along and just send it to the moon. That’s not to say that we don’t know how to grow a business. Of course we do. Like, we’re running marketing all day long, every day. I don’t think that I’m going to find something for sale and presume I can just annex it. we’re much more likely to look for things that are very diverse, very established, very repeatable, and then just try to make a bunch of incremental improvements along the way and let those compound. That’s really our playbook. And so when I look at all the things that I see, to get back to your question, I’m looking for many, many, many little things that all of which together have a compounding effect through time.
Josh 00:06:50 It makes sense. So you’re looking for something that’s more stable. You’re not looking for an innovative product that you’re like, oh my gosh, if I just employ my TikTok strategy, we’re going to take this thing to the moon, right? Correct.
Josh 00:07:04 What are some of the core strengths that you feel like you guys have in, you know, 365 holdings, then that as you look at acquiring businesses, you see as opportunities for yourself that you’re like, hey, you know what? If we do this, if we acquire this brand because of our specialty and X, y, z, we’ll be able to make more efficiencies, those 1% incremental improvements, what are those.
Kelcey 00:07:26 So really we had that spectrum of of things is kind of a similar spectrum to answer this question. about like how many ideas we can take from another business that we already own and implement and how much we should just leave alone, kind of like, hey, it’s a good business. We should just buy it and run it the way it’s run. we’ve gone back and forth on that spectrum of change and innovation, and we’re trying to refine that model. The answer to your question is we’re a vertically integrated big team. So we’re usually going to find a business where the founders are going to say, well, I never had time to do X, or I wish we would have had more investment into Y, or I didn’t understand this where I look in their account and I’m like, that’s not right.
Kelcey 00:08:04 That’s not right. Nobody’s got to do this in a long time, like Clay or whatever it is. we want to see a lot of those things that there’s opportunities where we have made mistakes is presuming too much about a different business that we have, that we can just copy paste this and work great. It’s a really fine line, a really tough balance to strike there from decision making of what to leave alone and what’s it going through. So we’re trying to get better at that through time, but we’re looking for lots of those little compounding things that are throughout the org. So for us that’s like postage and back internally our cost versus theirs. media buying and creative and what their costs are currently versus what our team is going to do with it. supply chain, how, what they’re doing for purchasing and makes and financing and how we’re going to do it. So we’re looking at all of those things because we have a full team.
Josh 00:08:54 Interesting. Yeah, I think that’s that’s very smart. I was speaking with another, gentleman that also acquires, you know, Amazon FBA businesses.
Josh 00:09:03 And one of the things that he had talked about is that so many people come up with this new idea or they have a product, but one of the things they don’t pay attention to is like the size of the product and how that’s going to impact your Amazon fulfillment fees. And he’s like, I can go into a like, if I see an Amazon listing and through a quick check, I can see that I can add an extra half $1 million to the bottom line just by tweaking the packaging or reducing the product size by one inch or something like that. He’s like, that’s where I dive in. And I was like, that is that’s a fascinating strategy. And it sounds like, you know, for yourself it’s similar. It’s like, what’s my zone of genius? We’ve got, you know, finance, you know, POS negotiating with suppliers. You have your own internal pick and pack and warehousing. So I think you have a lot of strengths there. it leads me to my next question.
Josh 00:09:54 I think a lot of people have this kind of preconceived notion that, hey, I’m going to have this holding company and I’m going to be able to share all of these services. you know, I have one accounting team, or I have one warehouse. And then look at this. I can have as many brands as I want and share those services across the board. What has been your experience with that? Is that true or false and why?
Kelcey 00:10:16 It’s definitely that easy. 100%. I’m being facetious. yes, it sounds really good. I’m usually the one that puts together those stories and tells everybody how great it’s going to be. the reality for us, I would say, is mixed. I think for every one of those efficiencies, at least at the get, you know, we have an offsetting, dis efficiency or problem or challenge through split attention in different systems and processes. Over time we accumulate more and more efficient. It is not instantaneous, and it’s definitely not easy. And it’s a whole mountain of work to get there.
Kelcey 00:10:50 In the long run, I think we’ll broadly be more efficient. I still think even with six brands and 80 something people and the scale that we’re at today, we’re still way too subscale to realize what that is. Is that another 1 or 2 points of EBITDA? Like maybe if we double, possibly. But right now, it’s likely a wash. All really good ideas, all fundamentally sound, but like there’s a lot of assumptions baked into that conversation and a lot of things change. You might go back to your Amazon example, like you might buy the business predicated on changing the packaging, and then it takes six months to get the new packaging in. And your financial model had it baked in from day zero. And the supplier delays it. And this happens and Amazon changes their prices anyways, and suddenly it never materializes like those types of things happen.
Josh 00:11:37 That’s very true. Looks good on paper. Right. And then sometimes when it gets to the practical application of things, gets a little bit more challenging.
Josh 00:11:44 I love to leave the audience with three actionable takeaways from each episode. So here are the three takeaways that I noted. Kelcey, let me know if you think I’m missing something here. But number one, I think entrepreneurs need to do a little bit of self introspection and they need to understand where their zone of genius is right as they look at the vision for the business that they have as they try to determine, hey, is it better for me to try to exit this business and go start a new one from scratch? Or is it better to try to keep growing my existing business, and even potentially get into mergers and acquisitions as a way to grow and take it to the next level? You first got to identify like, where’s your skill set at? Are you the guy? That’s just the ideas and you get the thrill going from 0 to 1. Or are you the guy that gets the thrill from adding systems and processes and scale and team building to go from one to end? Right. So I think that’s number one.
Josh 00:12:36 Number two. Once you understand that, then you got to dive in and actually start taking action, whatever those goals are. You need to identify and create the vision first of where your brand is going to be or your business. If you’re creating a holding company, create that vision and then identify your levers. What are the big levers in the business that are going to actually move the needle? Because you can’t do everything. You’ve got to identify those big rocks. Then from those big rocks, you could take further actions. And I think finally is if somebody is interested in getting into mergers and acquisitions, I think there’s no better way to learn it than by experience. Like you mentioned, Kelcey. You’ve got to just get as many At-Bats as possible. You know, as you begin, you know, maybe there’s a few strikeouts. Kelcey, you talked about that early on with, you know, 365 holdings. You started acquiring a lot of small guys and you’re like, oh, maybe that wasn’t the best decision, but you only learned that by experiencing the mistake.
Josh 00:13:39 It’s only a big failure or a mistake if you don’t learn from that mistake. And it sounds like you learned from those mistakes. Those are kind of my three actionable takeaways for our guests. Would you add anything to that, Kelcey? Anything I missed?
Kelcey 00:13:53 I love it. Great summary.
Josh 00:13:54 Awesome. All right, so as we wrap up here, a couple quick, quick questions for you. What has been the most influential book that you’ve read and why?
Kelcey 00:14:03 Oh, man. my bookshelf is in the video behind me. If anybody’s watching this.
Josh 00:14:07 You just you just have a few.
Kelcey 00:14:09 In the format. Yeah. the one that most recently stands out to me for a number of reasons. is Ben Horowitz hard thing about hard things? once you’re out of the startup phase and you’re running like a real team of, like, six, five, eight, ten, 12 people or more, like, give that book a read. If you’re worried about the recession next year, give that book a read.
Josh 00:14:31 Awesome. That’s a great recommendation. I’ve heard of that book before. I have to dive into that one. next, what is your favorite productivity tool or resource that you use?
Kelcey 00:14:40 Superhuman. I use it for email. And it was started by the guy who did the original, Gmail extension that brought in, like, social contacts on the right hand side of the screen. So you got, like, a LinkedIn profile and some other stuff. they built an email app that was really built around, like, keyboard power user, very fast interface. I’m a big fan of superhuman.
Josh 00:15:03 That’s cool. That is one I have not. I think I’ve heard of it before, but one I haven’t really looked into much, but my emails. My email inbox only continues to grow and I think many people can relate with that. And I think it sounds like there’s some amazing features there. Thanks for sharing that tip. All right. Last question here. Who is some someone you admire or respect most in the e-commerce space and why?
Kelcey 00:15:25 Oh man, I remember you gave me these prep questions and I was like, oh, who am I going to call out for this.
Kelcey 00:15:30 There’s so many people that I think have influenced my thinking. I, said earlier that like, we didn’t come from marketing or e-commerce or anything when we got into this and we’ve learned from like a lot of people. I don’t know that I’m gonna I’m gonna miss out and not give you one. but I’ll say that if you go to our website, I’ve got some articles that are kind of, some of our, like, essays on things we believe about how and why we run the business that we, we run and, different employees and new hires. It’s part of our content marketing. The bottom of each one of those, though, I call out people that influence that particular, thought that I had because none of it was original. I’ve copied all of those things, but distilled them in a way that I think is probably unique. and so like in marketing and e-commerce, names like Gary Vee, names like Roland Frazier, are certainly, frequent. there’s some, like, really modern thinkers in DC, people like, Terrell Holliday at CTC.
Kelcey 00:16:30 this is there’s a lot of people who go like, look at those articles and scroll down to the bottom and just read the credits because, yeah, many, many, many people have influenced, the business we have today.
Josh 00:16:42 I love it, I think there’s, there’s a wealth of knowledge out there. And I think you shared some, some great names. So another ad to go have people go check out the 365 Holdings website there and the content they’re sharing. Kelcey, where would you like people to come reach out to you if they want to learn more and keep following what you’re doing.
Kelcey 00:16:59 You’re interested in the conference. Go to hold kickoff comm if you want to chat with me. I DMs are open on Twitter. You can find me on LinkedIn. My email address is not hard to guess. if you know how to spell my name, I’m always happy to hear from people and just kind of chat and talk shop, so feel free to reach out if you want to see the 365 stuff, that is three 65-holdings.com.
Josh 00:17:21 Awesome. Kelcey, it’s been a pleasure having you on the podcast today. Thanks for joining us.
Kelcey 00:17:25 Thanks for having me. Appreciate it.
