Episode #017 - Guest Ryder Fyrwald on his experience with Entrepreneurship Through Acquisition
Transcription of Episode
Chris Battis: On this episode of Intent Topics, we have special guest Ryder Fyrwald from Alros Labels. Today, we'll be talking about his experiences with entrepreneurship through acquisition.
Logan Kelly: Ryder, Thank you for coming on the show.
Ryder Fyrwald: Thanks for having me guys.
Logan Kelly: Absolutely. Absolutely. Ryder, tell us a little bit about your sort of path to where you are today and then we can dive into some of the other interesting pieces here.
Ryder Fyrwald: Absolutely happy to do it. My background, I grew up in Colorado, went to school out in California, went to undergraduate business school at USC. After school got into the world of software and startups. Worked for a couple of different companies between San Francisco and New York, mostly in a sales capacity, so doing account executive type sales work and then eventually moving into more of a management position for a couple of different early stage and middle stage growth companies. All venture backed. After about seven years of doing that, was at a point where I was really ready to just go on and do something on my own. I wasn't sure exactly what that was, but I was about 29 years old and this was about a year and change ago and was really ready to dive into my own business, whatever that meant.
Ryder Fyrwald: I started doing a bunch of research and just looking around at different industries and ideas and things that I was interested in and came across this concept of entrepreneurship through acquisition and came across a couple of books and podcasts all about things that are search funds and entrepreneurship through acquisition and all these different schools of thought that are coming out of a lot of the big business schools these days and realize that as me personally from just what I think I'm good at is more so on the execution side of it. I don't claim to be the ideator. I started looking at different businesses that I could buy, that I can actually go out and acquire, and come in and operate and run and really get that hands on experience.
Ryder Fyrwald: As I went down this rabbit hole of just exploring that whole world, I started to get more and more refined on exactly what I was looking for. I knew I wanted it to be B2B, ideally some sort of recurring revenue business model. It didn't necessarily have to be software, but software or something, some sort of product. Something that was was in the world of business. It was B2B. It was small enough where I could actually raise the capital to buy it. It had a long enough track record where it had been around for awhile and people trusted the brand. I spent about two or three months researching probably between two and 300 different companies, all of different shapes and sizes, and ultimately landed on a handful of companies and eventually acquired about a year ago, this company called Alros Label company.
Ryder Fyrwald: Alros Label company has been around for about 40 plus years and it's just a labeling and packaging business. We make labels that go onto different products. Whether it's cosmetics or food and beverage or stickers and labels that are used to help mock things up, we make that. We manufacturer out of a warehouse in Los Angeles. I got together with a business partner, and we ended up buying the warehouse as well as the business about a year ago. We've been operating it ever since.
Chris Battis: Oh cool.
Logan Kelly: Nice. That is quite the story. You had no previous experience in this industry before you kind of jumped both feet first, huh?
Ryder Fyrwald: I did not know. I had never really worked in any hard product manufacturing like this, didn't have exp in labeling, didn't really know much about the industry until we started looking at this business at all.
Chris Battis: Wow.
Logan Kelly: Interesting. Going into a new business or new industry I think just from a sales perspective is hard enough, right? You know, trying to figure out product knowledge and all that kind of stuff, but you did kind of the the sales side and had to get very well acquainted operationally as well at the same time very quickly. Talk about how you were able to make that transition and were there some hacks that you kind of figured out along the way that made it easier or was it just generally a struggle every day or talk about that?
Ryder Fyrwald: It's definitely been a challenging process. It's by no means impossible I'd say. I don't claim to be an expert at all in labeling and packaging. But in my experience, I think for one, there were a lot of parallels to how you sell labels with how you sell software. It is very much a recurring revenue sales model where companies are buying labels on a monthly, quarterly or annual basis. When you're looking at the sales process and the sales funnel, I just looked at it similar to the sales process and everything that I've learned from my previous jobs and applied that to what we're doing here. The transition from a sales perspective, a lot of the principles carried over.
Ryder Fyrwald: It wasn't such a challenging thing to transition over in the sales. The product knowledge, the knowledge of of labeling is where that was a pretty challenging thing. What I realized pretty quickly is that the knowledge came from two places. One, it was the existing workforce. We had the old owners that stayed on with us for a couple of months that really helped transition and teach my business partner and I about this business. Our existing employees that we still have. We retained all of the employees that were here. We kept them around. They know how to make the product, so I didn't have to learn necessarily how to make the product from day one.
Ryder Fyrwald: One other thing that we did was we went to all of our suppliers and we basically said, "We want to meet with every single one of you in person, and we'd like for you to come to our office," and then use that as a way to really leverage their knowledge of the industry. Our paper and plastic suppliers, our ink suppliers, the guys who make our machines, we had them all come in and spend an hour with us. Now it's been pretty regularly they come by just teaching us as much as they could about the space.
Logan Kelly: Interesting. Good.
Ryder Fyrwald: Then from there it was a lot of screwing up, a lot of making mistakes. It was a lot of just learn as you go. We're fortunate enough to come into here with an existing customer base and processes that we were able to follow. For those existing customers, we really just did things the way they were doing it. Didn't really change a whole lot. New Customers, we've gone out and really leveraged our network to do that, but it was an adjustment. Fortunately the basics of this industry are not super complicated. The nuance can be once you get really into it and there's still a lot to learn, but that's kind of how we jumped in.
Chris Battis: Cool.
Logan Kelly: Interesting. You were able to grow... I think you told me that you were able to grow the business kind of right out the gates in the first year modestly. I think salespeople run into this a lot where there's the things that... There's the actions that make us money, right? Like prospecting, closing deals, and then there's kind of that bog down, the administrative bog down, right? Whether it's the manager or the paperwork you gotta fill out on that deal you sold two weeks ago. I think that's kind of exacerbated when you're going into to a new business. Talk about how were you able to manage kind of the strategic side of the business and the operational side of the business while also being able to sell and kind of juggling that, which it sounds like you've done a fairly good job at. What are some of the things that you've done to really make that work?
Ryder Fyrwald: Yeah, absolutely. The first thing we did was our main focus was for the first three months when we still have the old ownership in here was not change anything. Do everything the way they were doing it before. Don't try to get fancy and start looking at operational efficiencies and things we want to improve. The business had cashflow. We knew that. We knew that we could pay the loans off using the cashflow. Just maintain the existing business, learn the customers, get comfortable with the industry. We thought that process would take us six months to do. It ended up being a lot quicker than that. We started reading. We Started talking to a lot of different people. In about three months time, I think we were able to get a grasp on the business that we have here and our existing customer base.
Ryder Fyrwald: Once we felt like we were comfortable there, we started first of our network. Having gone to a school like USC, you're afforded with this amazing network, and then both of us had had professional experiences for seven or eight years where we were able to just leverage any and everyone we knew. Anyone that had their own water model company, their own hot sauce company works for our cosmetics brand. We just started reaching out to and saying, "Hey. We're in this space now. We'd love to make these for you. We're confident we can be competitive on quality, timing and price and give us an opportunity." That was really our first foray into going out and doing sales. We started to get some traction that way.
Ryder Fyrwald: We started to just use our network just to make sales and that's how we made our first several months worth of sales were made really through our network. What we were dealing with at the same time is fortunately and un... It's just double-edged sword, but as the owners of the business, right, we don't have a KPI day one that says, "This is your ramp up period. As a sales person, these are the numbers you need to hit in order to keep your job." We just knew we needed to keep the customers and we needed to add customers methodically when we could. Of course, we were running into a lot of operational challenges also on just running the business and learning it. Something would get screwed up or the label. We had a label wouldn't stick on something.
Ryder Fyrwald: It'd lift off a product. It wouldn't be the right color or the machine would break. It's a balance. it's a lot. I think best thing is having a business partner and being able to lean on them and making sure you have different skillsets. My partner's really taken on the procurement and the sourcing side of our business. He goes out and he meets with all of our suppliers. He does all the ordering for all the inks and the papers, all that. I've taken on more of a... I fill out all of our customer information. I handle all of our invoicing. I deal with a lot of our quoting, on a lot of that stuff. We separated the clients out as well, so each of us had a handful of clients. That way it kind of freed up more time to be working on sales.
Ryder Fyrwald: But it's certainly a balance and it's definitely a challenge.
Chris Battis: You both are kind of actively selling?
Ryder Fyrwald: Yes. Now we're at the point where we... The existing customers, we kind of know what to do with those ones. When an order comes in, basically 5% of the time it took me a year ago to profit that. The majority of our focus right now is sales and growth.
Chris Battis: You've perked my interest with the entrepreneurship through acquisition, right? What was the response from folks internally with new ownership and a bunch of new guys coming in? how did that go?
Ryder Fyrwald: Yeah, it's interesting because every business we looked at treated a little bit differently. Some of them were super secretive about it and didn't want the employees to know until it closed. Some of them weren't. This company was very open about it. The old ownership, the gentleman who we purchased the business from was late seventies and was ready to retire. You let his employees know about a... Set awhile before they sold the business that this was coming. That helped dramatically I think in just when we walked in here day one, they weren't so shocked by us being there.
Chris Battis: That's interesting. That's interesting. I have a friend that I've recently just ran into who acquired a business himself maybe a year and a half ago. I asked him the same question and they didn't say anything internally until the deal had gone through. That was their way of making sure it was successful and that the rumor mill didn't started going. It's definitely a different approach. I personally probably would have been pretty wide open about it and had a discussion so that people were comfortable.
Ryder Fyrwald: It kind of depends on why you're selling the business, right? It was not surprising I think to them that he being the age and point in his life that he was wanted to sell and with him saying, "Hey. I'm stepping out of this." When we stepped into the business, all the employees here seem to love working here. We got very fortunate. We have incredible employees. A lot of our employees are Hispanic. I speak Spanish, so that helped with them feeling comfortable with me.
Chris Battis: I'm sure.
Ryder Fyrwald: I think another factor was the fact that we didn't change a time when we walked in here day one. Win earned their trust for a three to four month period and then we started implementing changes.
Chris Battis: Oh cool. Nice.
Logan Kelly: That's awesome. Let's talk about kind of strategy in this industry. In the label printing space, I have limited knowledge of it. Did some research before we came here as well. It seems like there's so many different ways that you can slice this industry up and chase opportunities. As you look at your next couple of years, and I think this is similar in a lot of businesses where people sit around a table and there can be a hundred really valid good ideas. But when you talk about executing on them, every single one of them is going to take a lot of nutrients from the company. You being executionally sort of prone and being your mindset, how are you looking at how you're prioritizing your strategy and kind of the opportunities that you're going to be faced with over the next couple of years?
Ryder Fyrwald: Yeah. It's a good question. A couple of things that we're thinking about. The most important thing in this industry, obviously it's similar if you're working in a software company, but our product, you look at the label and you can pretty quickly see whether or not it's a good label. But there are a lot of companies out there that make and sell labels and it's not rocket science. It's definitely an art form. There are a couple of different ways that labels are being made today. There are three or four different methods of printing. Flexographic printing being probably the most well established just work horse way of doing it, which is how we do it. We do flexographic printing here. The biggest change I think that people are seeing in this industry is exactly what we've talked about is technology.
Ryder Fyrwald: There are digital printers that are coming in that are doing things at faster speeds, higher quality, more consistent, allowing you to do other things, so flexible packaging, shrink sleeves, things like that. Our thought process was, well, let's keep it flexographic for as long as we can. Then when we need to, we'll jump to digital. We realized pretty quickly that flexographic printing is very much an art form and it's very much something that it's also a science, but people can spend their entire careers and lives becoming experts at this trade of flexographic printing. I don't claim to be an expert at that, nor do I really think that I ever want to be. My business partner kind of feels the same way that we can spend the next five, 10, 15 years becoming really good at this or we can kinda just leap frog past flexographic and just go digital.
Ryder Fyrwald: We just signed a contract last week actually for like probably one of the newest state of the art digital printers and finishing stations that we're going to buy. We're going to go ahead and order those.
Logan Kelly: Nice.
Ryder Fyrwald: We're just going to take our business and try to bring it to what we're both used to, which is being more of a technology company that makes a product.
Chris Battis: Oh, cool.
Logan Kelly: Nice. That's like game changing. From what I've heard, the digital stuff is it's quickly becoming a big disruptive industry.
Ryder Fyrwald: It is. Yes.
Logan Kelly: Is that correct?
Ryder Fyrwald: It's just there are so many advantages to it. I mean it's just unbelievable.
Logan Kelly: That's awesome. When you talk about becoming a technology company in the label space, what are some of the other things? Like obviously there's the method of printing, but are there other things that you're thinking about in terms of strategically? If you're talking about being a technology company, are there other things that you're changing or thinking about changing? Yeah, I think that's the question
Ryder Fyrwald: There are. There definitely are. We're thinking about how this ties into our go-to market strategy, how this ties into the experience for our customers. Buyers today are trending to be kind of in that millennial generation. When they're going out, they don't... I myself, I'm a millennial. I'm in my thirties. When I'm trying to buy something new or a software, first thing I want to do is I want to go on their website, and I want to learn about it, and I want to get as much information as I can without having to speak to somebody. A lot of people are like that.
Ryder Fyrwald: One is just making it so you can go onto our website and find out everything you need to know about our business, creating more content so you can learn more about what is the difference between a polypropylene material versus a clear film or a paper and what are the different purposes and use cases for each of those. Also, making it really easy to just submit your artwork and your labels and your orders through that system and have kind of like a content management system for our customers so they can really easily just log in and access an account, submit reorders, all that type of stuff. Have a checkout element as well.
Ryder Fyrwald: If you don't want to talk to anybody and you want to come to our website and you want to buy a couple hundred stickers, you can go on there, you can upload it, and it's going to be automated. It'll come right into our system and then we'll ship that out. It's really about investing into new websites, investing into E-marketing and doing as much as we can that's web-based so that we can reduce the amount that people have to call and talk to us and we go through this whole process. Additionally, it's offering like the ability to print any sort of shape. We're buying a laser die cut machine so you can print... If you want to print a star or a heart and you want it to be a through cut sticker, you can do that.
Ryder Fyrwald: There are ways to do that with flexographic printing, but it's a lot more costly and it's just not quite as easy. Those are the types of things that we're doing to really try to take ourselves into being much more of a technology company.
Chris Battis: Awesome. Very cool.
Logan Kelly: Nice. Nice. What are the next five, 10 years look like for you and your partner in the company?
Ryder Fyrwald: The next five years. Well, the next couple months we're going to continue to operate as is. These machines take a while to get built and installed. Once we have that digital printer, it really changes our business for us. It gives us the opportunity to expand into... I can't mentioned this earlier, but you know, flexible packaging. It could be cardboard boxes at some point, shrink sleeves. A lot of the trends in beverages in particular are those sleeves that go around the can or the bottle that aren't labels necessarily. Expanding and broadening our capabilities, going from being a labeling company, we want to be a packaging company. We don't want to corner ourselves into be just labeling. We'd like to expand our offering to be packaging.
Ryder Fyrwald: That's one. Transitioning this business into being a digital business, mainly a digital print house, is going to be a big undertaking, but it'll help us just to speed up our delivery, to improve our quality, our consistency, how on time it is. It'll allow us to I think attract much different types of talent. I don't think, you know, some of the new best sales people around want to necessarily go and be selling this old school flexographic printing. They want to sell the latest and greatest digital technology. From a brand perspective, there's that first cup next, next. To answer your question directly, next five years, you know, I'd say the next year or two is basically a transition into being a digital business.
Ryder Fyrwald: Essentially it's going to mean we're an entirely new company is how it's going to feel I think to a lot of people around here. We're going to invest in a couple of new landing pages and websites and this new software to be able to access everything. Eventually what we'd like to do is continue to invest in more of these digital printers and spread them out geographically. Have a plant on the east coast eventually. Hopefully get to a place where we have a plant in Europe and make it so we can provide packaging for people across the world. I want somebody to be able to... My long term vision of what I'd like to have is somebody comes to our website with an idea for a product and we can help them handle everything.
Ryder Fyrwald: Maybe except if it's cosmetics or something. We don't help them do the actual like physical product, but you need a label, you need a tincture, a bottle. You need a cap. You need colors. We want to have design services. We do have some design services now, but I want to really formalize and make that more sophisticated so you can kind of get all of your end to end packaging needs done in one place.
Chris Battis: Cool.
Logan Kelly: That's awesome. That's awesome. It's an interesting marketplace. It's pretty fragmented. It seems like there's a lot of experts in their, you know, kind of their domain. I think it'd be really cool to have a one stop digitally enabled service and in a pretty... It can be a fairly archaic world. That's fantastic. Cool. Well, I think that about wraps it up. Are there any other big points that you want to make, Ryder?
Ryder Fyrwald: I think we pretty much covered it. my last point would be that it's definitely been... I mean it's been an incredible journey and anyone looking to take a slightly different approach to starting a company, that maybe doesn't have some appetite for risks, but maybe isn't ready to go and start their own business off off the ground, it's a lot harder to do that. I would certainly recommend looking at this as an option because it's been very fulfilling and it's been a ton of fun going through it. Certainly challenging, but well worth the challenge so far.
Chris Battis: All right. Well, this concludes this week's episode of Intent Topics. Thanks for joining, Ryder. Folks listening, please give us a five star rating on whichever platform you're listening on. Take care.