Editing The Pen Addict 365/transcript (section)

== NotCo Updates ==


'''Myke Hurley:''' Yeah. Like, that was one of the bombs I dropped on him. It's like, I got to talk about this. Like, I've announced it, right? So, and I had to put it in the show, and I kind of felt bad for him. Because that's really not his forte to, like, dig into that. So, I felt a little bit bad. But I did talk about it more on the 1857 podcast, too, which is another reason why you should go listen to that. You can hear more about it. But, yeah, like, the perception could be seen as negative, right, based on just those, like, the headline topics, right? The easy one is the DC show.

'''Brad Dowdy:''' Yeah, that one, honestly, I kind of just, like, brush off. It's just not a pen show you're going to. It's, like, is what it is, right?

'''Myke Hurley:''' Yeah, yeah. And, like, I was planning on going. But, like, I'm just so exhausted already this summer. It was, like, just the specter of that on my calendar was stressing me out. So, even though, like, I'm going to miss seeing a lot of people, and I'm going to miss seeing a lot of our customers, and will obviously miss one of the best sales show that we have during the year, I'm relieved. Like, I'm not even flinching that I'm not going to DC. Like, I hate it for other people who wanted to see me there and Jeff there and see our products. Like, I'm sad about that. But from a personal perspective, I'm just relieved. Like, it's cool. Like, I'm not non-issue for me at all. You know, I'll be going to, if I wasn't going to San Francisco, I'd obviously be going to DC. That all kind of plays in together. Like, these next two months, July and August in combination, have just so much work and travel in there. I needed a break. And if anything was going to give, that was the easiest thing to just kind of, like, let's step away from that one. It'll be fine. And we'll just go on from there. And, you know, there's future shows and future things to do. So that was easy.

'''Brad Dowdy:''' Yeah, like, maybe on a different year, it would have been San Francisco that you might have skipped. But we have big commitments this year.

'''Myke Hurley:''' Yep. Yep, exactly. So, and I've got a bunch of stuff before that. Like, July is just crazy for me. And just the idea of leading into that this particular year was very tough. So hopefully we'll be back next year. And, you know, we'll go from there. But, yeah, shows for me are really hard to plan out, like, six months ahead. Like, you know, people want to know, like, in February, will I be at DC? Well, I mean, it was yes for the longest time. But as you get closer, the schedules change. The schedules get tighter. Things move around. Some things have to give. Like, I can't just fully plan out our show schedule that far in advance just based on other obligations. So retail. So this was a harder decision, I guess, to say out loud. But an easy decision when it comes to our financial stability at Nock. The short version, which I said on last week's show and on 1857, is the margins are bad. Like, it's not sustainable profit margins for Nock to continue absorbing the mass inventory that we have to carry to fulfill retail.

'''Brad Dowdy:''' But, like, I guess the question, because obviously, yes, that makes a lot of sense. But the question is, like, are you making, you know, do you, I don't know if you know if you were making it up in volume, right? Where it's like, it's great if you continue to sell the same amount of cases. Yes. But that's not a guarantee.

'''Myke Hurley:''' Right. So that's the trick, right? So we went into retail and we said we're going to absorb the lower margins for higher volume, right? So that's the general idea. And that works, sort of. But the bigger picture issue was it's hard to manage, right? We only have so much data we can go off of. And we have to order such a huge quantity to be able to fulfill retail orders on retailers' whims and how things are selling. Like, our retailers are spectacular to work with. They took less margins to carry our goods. They've, you know, driven sales of our goods and they've driven awareness of our brand. And I'm forever thankful for them. But the bottom line math was really bad for us and the volume did not make up for it. And when I talk about the volume, it kind of more ties into how Nock was when we started in the first few years where we could change and innovate much more quickly than we're able to do now. Like, our customers want two or three different colorways in our product lines per year.

'''Myke Hurley:''' Based on the volume I had to have to fulfill retail, we couldn't turn that inventory over quick enough.

'''Brad Dowdy:''' I want to dig into that a little bit with you because I want to make sure that I'm completely following. The issue was, like, you guys couldn't sustain enough cash flow to fulfill the orders required in the standard colors that retailers were taking. So you couldn't really take the bets on the other stuff. Is that right? Right.

'''Myke Hurley:''' So we couldn't change up our lineup with the frequency that our customers have been used to.

'''Brad Dowdy:''' Because the company's money was tied up in large orders and large inventory costs of holding retail stuff, which you wouldn't have to do if there were no retailers. But then you would also then have to hope that the demand is still as strong. Right. Like, that's the risk element.

'''Myke Hurley:''' Right, right. And we've come to the conclusion that we're better off with that risk level to where we're... Jeff and I are the happiest when we're making new designs and getting new colors made in our products. Like, when there's change in our lineup. There hasn't been a lot of change, like, in the past 9 or 12 months. And that's not what we've always done in the past. And it just leads to, like, it being static and boring.

'''Myke Hurley:''' We've lost a little bit of the stories we're able to tell when we do new things. Right? We can't talk about, you know, the same thing over and over again for 9 months. We want to talk about it every 3 months or every 5 months. Whatever that is. You know, I don't know that there's just a, like, a fixed date. But we know that, you know, like, having the quantities that we have in stock are really good for retail. They're not good for me and Jeff. And they're not good for the long-term health of the company. Like, there's nothing wrong with Nock, like, on a business level or perspective. But we have to change what we're doing to, like, kind of fix, like, the inventory issues that we're having right now. Like, it's just kind of grabbed hold of us and shaken us. Like, we can't innovate as quickly as we want as long as we're carrying this much inventory. So we're going to go back to doing a quicker turnover of products, which is what we've always done in the past. And just selling them directly ourselves, you know, and innovating and creating new products faster. Like, we get stuck in that too, right? Because we can't make, like, a brand new product at scale because we're tied up with all this other inventory. So, you know, it's trying to figure all that out. Like, we're 6 years into it and we're still trying to figure it out. Like, what's the right thing to do? Like, you never know the right thing to do sometimes until you do it. The retail was right in the beginning and it turns out it's not going to work now. Like, it's, you know, it's not a long-term sustainable thing and Nock is set up to be a long-term sustainable company. So we have to make hard decisions like this to just kind of get ourselves back on track.

'''Brad Dowdy:''' Yeah, I, it's interesting to me how much Nock changes. It's changed a lot and quickly. Mm-hmm. And I find that kind of fascinating.

'''Myke Hurley:''' Yeah, I mean, we've gone from making cases in Jeff's bedroom to renting out a, essentially, garage to put our sewing machines in. And so that answer we were trying to solve is, well, how can we make more, right? Because we were getting popular. So we hired people to come. So for us, we had employees at the peak. We had three employees, which is a lot for us, right? And then we still couldn't keep up with the demand. And we had the lure of retail, right? Which is like something like you have to decide on. That's, do you forego the retail experience? Maybe we should have never done it. I don't know. I don't regret it one bit. But those are the questions we have to have. So at one point, we had to find, you know, outside manufacturing, you know, in the U.S. We want to keep everything in the U.S. So that was hard. Like we talked about when we went to outsource manufacturing, how it took us like two years to find a good manufacturer. So that's our great, our manufacturer is great. They make, our products are awesome, awesomely made. But that's another thing, like you can't control their schedules as much as I'd like to control their schedules. We figured that out over the years and years and years. So it's interesting. One of the things that the chat is bringing up as I'm looking at this while we're talking is our international customers. That's the hardest thing for us because we do have international retailers who are absorbing the markup hit and the tax and customs hit to bring our products to our international customers. You know, I talked a little bit about that on 1857 with Stuart because he is one of our retailers at Nero's Notes in the U.K. And our products will be harder for our international customers now. And we have quite a large international following, which is fantastic. So maybe there's some type of distribution thing that can happen, you know, later. That's something that hasn't even crossed our minds right now. We're just trying to kind of get ourselves set on course and start making new stuff here. Probably in like you're not going to see much change with Nock maybe throughout the end of this year. Maybe a little bit. We'll have some new. We have already new cases and new products and new colors coming out and all that stuff. But you probably won't see like the fruits of our labor now until next year.

'''Brad Dowdy:''' Okay. Well, I'm excited. I'm interested to see what comes of all of this. I like it when you guys keep pushing stuff.

'''Myke Hurley:''' Yeah. Like we're at our best when we're creative. Me and Jeff. That's how both of us are. When we can do something cool that gets us excited. So we want to get that feeling back again. Not that we're ever not excited about our products, but it just has to happen more frequently. Right?

'''Brad Dowdy:''' Yeah.

'''Myke Hurley:''' Yeah.

'''Brad Dowdy:''' Yeah.

'''Myke Hurley:''' So before we go on, I can give some kind of updates on what we have in the hopper. Right? So we have some projects going like the Oolala case. I should have hopefully a shipping notification today for the Oolala pen cases, the Seed A5 notebook case that we did a preorder for, which was a cool project to work on. I'm hoping today's the date that I was promised. And I've been checking like every other day for weeks now. And they were still on track. So I'm hoping to have shipping notifications today. After that, as soon as those come off the line, the knock Burton, the pen addict project case goes straight into the line. So hopefully those are done like in the August timeframe we were talking about. That's a much larger scale operation, but I'm hoping they have like all the month of July to get those done for those. So we'll have those in August. And then we're back into like normal production and new cases and new colors for our regular scheduled programming at Knock. So that's where the project stuff is right now.