From The Dorm Room To The Inc 5000 - Sell For Millions Show

From The Dorm Room To The Inc 5000

Brian: Welcome to the Sell For Millions Show. I'm here in downtown Chattanooga, Tennessee with Mr. Macco here, Nick Macco. And it's kind of a long story, but I've known nick for several years, the family since she was a little guy. And nick is co-founder of a company called Southtree. And why don't you just tell us about Southtree, what you do, how it got started?

Nick: Great. Yeah, thanks. I'm excited to be here. Southtree takes all these old home movies, pictures, film, everything that's analog and aging in your shoe box and we digitize them. So we provide them back on a DVD, some people still want that, thumb drive and the cloud for digital download. And so we just started this company in college together with my roommate, Adam. Did you know Adam too when we were younger?

Brian:                       No.

Nick:                         No, you didn't? Okay. He's from the same hometown. But yeah, we started that company together and in our college dorm. A simple idea, and we thought, hey, let's make enough money, Apple's coming out with this new thing called the iPhone. Can we sell enough to pay for one of these fancy expensive Apple products? That was our first sales goal.

Brian:                       So that was your motivation?

Nick:                         That was our initial motivation.

Brian:                       And what were they? $600, $700 back in those days?

Nick:                         Yeah. I think it was like, I think it was like $1,000. It was brand new, it was $1,000. I actually spent all of the proceeds we made trying to woo my then girlfriend now my wife.

Brian:                       SO that was a good investment.

Nick:                         Adam actually bought the phone. So he still has the original, the iPhone. But yeah, that's how we started. We've grown now into the national leader in digitizing home movies. We operate in another brand called Legacybox, which a lot of people might have heard about. And we're digitizing 5,000 home movies every day.

Brian:                       Wow. And you've done three million home movies?

Nick:                         Yes. Yeah.

Brian:                       So three million VHSs have been shipped to your offices that you ship back in a DVD or another form.

Nick:                         Or digital form. Yeah.

Brian:                       Okay.

Nick:                         Half a million customers, all national, all targeting customers online so we can reach people from all over the country. They essentially pack them up, we process them and then we send it all back to them.

Brian:                       Well, when I was speaking to your dad about this, I just had to die laughing because he goes, when you told him about, this is how explains it, "Yeah, Nick said there's this thing called AdWords and we're going to start spending $25 a day to attract customers."

Nick:                         Yeah, he was super nervous. In the earlier days, we started taking little ads on Google and we would spend it sort of like we'd place a bet, you know, like let's spend $50, see if we get some customers. And it kept working, so we thought, what if we set it, turned it on and didn't turn it off.

Brian:                       Sure.

Nick:                         That was the scary bet for us. And we're college students and we were like living on ramen, you don't have any money. And so I remember, yeah, we talked to my dad and, I think the math works dad. If we leave it on, we can spend 25 bucks a day, I mean, what college student can spend 25 bucks a day and have a return. And it did.

Brian:                       So what were you showing at that point in time, how did you deliver it? Did people send their stuff to you in a box?

Nick:                         It was mostly VHS tape conversions. And it was to DVD. We started around 10 years ago now. People didn't talk about the cloud so they wanted them on DVD and primarily just VHS tapes mostly because that's all we could afford equipment wise. We just had a few VHS recorders that we could actually pay for. So that was the very limited service we provided in early-

Brian:                       And that was 2011 when that ...

Nick:                         So that would have been earlier than that. It would've been, we've incorporated in 2009. We're kind of goofing around in college I'd say for two years before that. So 2007 we were, that was the, do it as a hobby, get enough money to buy an iPhone or impress my wife.

Brian:                       Now, I'm interested, your family is, you were brought up in a family of entrepreneurs. Your grandfather, your brother-in-law. Let's talk about your family a little bit and the lessons you learned through, you've got generations of job creators.

Nick:                         Right. My grandfather was an entrepreneur, he started a hardware store when he was young. And then that transformed into retail floor covering stores and then he started a bunch of those along with my dad throughout the state of Wisconsin. So yeah, I grew up around entrepreneurs my whole life.

Brian:                       Did you know at an early age that's what you wanted to be?

Nick:                         I was like the creative one of the family, but I think every time I had this idea, my dad would encourage me to figure out how could you sell that, how could you turn that into something, how could you make that a business? So, I mean, one of my first ideas was, you know, I would sketch out shoe designs and like I would draw them. And he's like-

Brian:                       Air Jordans?

Nick:                         Yeah, something like that. Well, it was a cross between basketball shoes and then these like skater shoes. Anyway, it's dumb. But, what was cool is that my dad was like, hey, who's the CEO of Nike? When we found out, we went on line to this database where like it's Phil Knight, and then it gave like the corporate telephone number. And so, as an elementary school student, I'm calling Phil Knight's switch line trying to get him to buy my shoe designs. And of course I talked to a different receptionists every time who was very nice but everyone turned me down.

Brian:                       Of course.

Nick:                         And then finally, this one day, and I was so excited, I ran out to my mailbox, again, I was like in elementary school. And I got a letter and it had an orange Nike swoosh in the corner at my house in Wisconsin. And it was from the Office of Phil Knight. And it was like, dear Nick, thank you for submitting your ideas. Unfortunately, we can't look at these unless you trademark them and, you know, it had all these specific requirements that you'd have to go through. But that was enough that it got me excited and turned on to the idea that you could make things and you could sell them to people and you could start a business and sort of be your own boss. That was always very intriguingly ingrained into me throughout my childhood.

Nick:                         What's funny about my business partner, Adam, is his family isn't necessarily all entrepreneurs, but they taught him a lot of these great disciplines that a good entrepreneur needs to have as far as just, you know, he has a tendency to do everything himself. They're DIY, they're thrifty, they're making sure that the bottom line looks good. There's like all these different key things. So that creativity and in his operational practicality sort of came together really well in our partnership.

Brian:                       So you learned obviously persistence, you learned about, to have a business, you need to sell something to somebody. What are some other lessons just that part of your DNA? I mean your, your mother's self employed as well, a warrior, overcame cancer. So obviously you guys have this, we're going to go ready charge, you know, we're going to make things happen.

Nick:                         I think one of the ways I was fortunate is that I had examples of people who didn't feel like if you had a dream or an idea, you could try to go and execute on it. Like it wasn't, that wasn't considered a pipe dream or unrealistic. That was always very realistic because look, you have generations of people who did this, you can do that. So no matter what, however outrageous it seemed, my family was always really encouraging that we could do it.

Nick:                         You talk about selling, I mean, I just remember my grandpa always saying, nothing happens until somebody sells something. Which is totally true. You and I were talking a little bit before this about how business is pretty simple. And I think that's actually true. Like I was just talking to some college students and I was like, look, it's not any different than a lemonade stand. If you can make a product and hopefully you make it for less than what you can sell it for and you find a customer and they want to buy it and there's a little bit leftover, you're in business.

Nick:                         And so, there's all this other sophistication around it but I think those are some of the lessons that I learned.

Nick:                         I'm trying to think of some other things that, I'm sure I have other things, voices of my parents in my head.

Brian:                       One thing that when I spoke with your father, John, he said that your grandfather always told him, you got to be thinking what's next. What's next? Was that passed on to you too?

Nick:                         All the time. I mean, even in chores. We're outside raking leaves and we'd always wonder, when are we going to be done? And he's like, well, when you're finished with the leaves, come to me and we'll think about what's next. You never had an answer to that question. But it was good because you're always thinking of the next hurdle to climb, which is something you always have to be thinking of in business. You have to be doing what you're already doing while thinking of whatever that next step-

Brian:                       Like in your case, you went from transferring VHSs, did you do audio also, cassette tapes?

Nick:                         Not in the early days. We do them all now, but we didn't in the early days.

Brian:                       And typically it was going to DVDs. And then now, do you deliver it, and then thumb drives, I'd imagine a lot of people are doing that. Are you using, do people want it on Google Drive, do people want it in the cloud as well?

Nick:                         Yeah. And I think that's where that mindset comes in. Me and Adam are sort of addicted to that. We'd like to say that we're lifelong learners, like we're always trying to, we're intrigued by as always learning with the business. So, in order to learn, there has to be new things to learn. So you got to be thinking what's next. And so, we're always looking ahead, almost to a fault. Our teams sometimes jokes because we don't celebrate enough in the moment of our like, of the things we've accomplished, but that's just because as soon as we've tackled that challenge, we're onto the next one. But I think that's great because you're always pushing forward and growing.

Brian:                       You are but I have the same problem. There's a nice little boom where you get one project done, you climb to the top of the mountain and there's another mountain waiting for you.

Nick:                         Oh right. There's always another mountain.

Brian:                       There's always another mountain to scale and go after. But, I think what you're saying here, like even with your team though, learning to enjoy the journey number one and number two, celebrating the victories along the way.

Nick:                         Oh, of course.

Brian:                       And, you know, you started from your dorm room, today, tell us a little about where you are. I mean, you've won some really prestigious awards. I know you don't probably like to talk about them, pound on your chest, but you have.

Nick:                         yeah, I mean we were in the Inc 500 not too long ago, so that means we're one of the fastest growing companies in the country. We were seventh I think in consumer products for that year, which is cool. We're amongst like Dollar Shave Club and some other really great brands. We were number two fastest growing in the state of Tennessee, which kind of bugged us because that means there was one guy that slipped in ahead of us. So yeah, we were on that list. We've been in tons of great press. Actually in the next couple of weeks, we should be on the Today Show, which is pretty cool, have Legacybox on there.

Nick:                         So yeah, we've been fortunate to be recognized in a lot of cool ways. Small Business Award from the Chamber of Commerce.

Brian:                       And you've done it self-funded.

Nick:                         Yes.

Brian:                       Correct? I mean, everything has been, not investor money, not private equity.

Nick:                         The earliest days, that was kind of necessity, like no bank would have been interested in us as two kind of dopey kids in college. We didn't have any assets. What did we have? We had ...

Brian:                       A couple of VHS recorders.

Nick:                         A couple VHS recorders, our computer, and a high mileage jeep. And so, it was necessity in the early days. We like to say, people are like, when were you profitable? We were like from the first day because if we weren't we'd have to close our doors. But that took a lot of sacrifice early on. Bootstrapping like that meant for the first, I don't know, three years we barely paid ourselves. And then even a couple of years after that, we were the lowest paid people in the company.

Brian:                       Delayed gratification. The thing I find really great about the entrepreneurial journey is you're underpaid for several years and then you're going to be overpaid, you build it right and you do it, like you were just skiing a little while ago.

Nick:                         I was. Took my family to Park City.

Brian:                       Were you worried about your company?

Nick:                         Nope.

Brian:                       You're just kind of having fun, right?

Nick:                         Yes.

Brian:                       So, that delayed gratification paid off.

Nick:                         Did get to reap some rewards. Yeah. Yeah, it pays off. Bootstrapped it, never took any sort of external funding. The other good benefit is it made us hone how we use resources. And so, we always made sure that when we were trying to grow the company, that performed in return on the investment that we were making. Because if it didn't, we only had so many bets we could place per year and it meant we just had to sit and wait. So we really wanted those things to work.

Nick:                         And then operationally, we became excellent because if we could create some efficiency in the way that we're providing a product or a service, it meant, we had that much more resources that we had created to fuel the next growth in the next stage of the company. So, I feel really fortunate that we had that kind of education. So we knew how to grow the business in a good way.

Brian:                       Excellent. Well thank you for this great interview talking about your family, about where you started, where you are today. We talked a little bit, you've got many great plans going forward. I'd like to have you on a couple of other episodes as well talking about it. But thank you, and you guys can leave comments below. Any questions you have about Southtree, or how Sell For Millions can help you or any of these things.

Brian:                       I'm also going to find a few other families, and I'm actually going to interview other Maccos because of legacy that, I mean, there just aren't that many three generational families that are independently creating other companies that are creating jobs and following their dream. There's a lot of transition from one to the other, but in your family it's been, like your case started right from scratch and made your own, and you probably could have been back selling carpet if you wanted, right?

Nick:                         Could've joined several family businesses.

Brian:                       Exactly. So you started your own. What I got out of this is just that mentality of, when you have an idea and what I think is great too, you didn't listen to your dad.

Nick:                         That's true.

Brian:                       I tell my kids, you know what, don't listen to me. And then of course that comes back once you decide what to do, but you didn't. You had enough conviction, and I'm sure that was difficult. Your Dad's a pretty strong opinionated guy. And then had to be like, oh, am I doing the right thing, but you kept going.

Nick:                         Yeah. I think we had enough, we had enough good, you know, that confidence grows. And I think if you just, so we always looked at, it's funny, in the earliest times, we just looked at it, do we have enough confidence to take the next step? So, I wasn't completely saying no to my dad, I was just saying, yeah, let me just see what else is here. And so I had enough confidence to take the next step. And then we go, well, that worked, let's take the next step. And so you grow in that confidence over time. I wouldn't want to be too cocky to say, oh yeah, I knew it was going to all work and I had that from the get go. I didn't but I had enough confidence to go, hey, you know what, there's enough good things here. I think we're right here.

Nick:                         I still called them, I still called them, hey, this is what we're thinking of doing. And so, anyway, yeah, I think it's just about having that conviction to say, well, I'm going to try this idea out and keep taking those next logical steps.

Brian:                       And the baby steps from the testing. Again, when we talked earlier, it sounds like you do an awful lot of testing and a lot of baby steps along the way. Prove the concept and then move forward.

Nick:                         Once we get good indicators, once the math works, I mean, by all means, we like to say we don't push on closed doors, but if there's an open door, we're running through it. You know what I mean? And I think, and so you'll see that over and over. It's not as if, some people think, they'll hear our strategy and they'll think, oh, that's one small fry. You just want to be incremental and you don't care about, you're not betting the farm or something. You're like, no, no, no, we're just trying to get enough good indicators so that we mitigate the downside risk. But once we've gotten those indicators, we'll run them. So yeah, that's kind of the methodology that we go through with everything.

Brian:                       Well thank you. And again, leave comments below. Reach out if there's any other questions you have, and thank you for your time, and this is very valuable. We will be having Nick on other  episodes. We're going talk about leadership and we're also going to talk about a process that he went through that really helped transform them into making that Inc, and some of those things as well. Thank you very much.

Nick:                         Great. Thank you, appreciate it, Brian.

Brian:                       Talk to you soon.