Sramana Mitra: How much business are you doing in China? What percentage of your revenue comes from China right now?
Peter Mann: This year, we’re planning to do $10 million. I would say 40% would be in China this year.
Sramana Mitra: Probably significantly higher percentage of revenue over the next couple of years will come from China.
Peter Mann: Yes. The market is 20 times bigger.
Sramana Mitra: That’s very interesting, because it’s one of the stories that the American audience wants to hear about where American-made product is being sold abroad.
Peter Mann: Yes, we had to learn how to do exporting because not many people export into China.
Sramana Mitra: You have so far self-financed the company right?
Peter Mann: Yes.
Sramana Mitra: What about the team? You started the company yourself. How have you fleshed out the team to support the kind of revenue that you’re generating now?
Peter Mann: We have a very lean organization. We do a lot of outsourcing. The manufacturing is outsourced. Warehousing is also outsourced. These are companies that are really extensions to our business because we couldn’t get here without their expertise. We focus on core competencies which is designing and developing new products, and customer support. We’re not going to outsource customer service to another company. We want to hear, firsthand, from customers what’s happening. You really can’t outsource sales. Outside of that, we’ve been leveraging other companies’ expertise in certain areas. It’s really been good because we can’t afford a higher level person in a broader range of skill sets. We can work with engineers at the factory to help with designing the products. Although they are different companies, we really treat them as an extension to our business. We have weekly conference calls and meetings.
Sramana Mitra: Except that you get to use expertise across a broader portfolio.
Peter Mann: Yes, we get a lot of expertise that a company of our size can’t afford.
Sramana Mitra: I talk to many entrepreneurs who are doing these e-commerce companies that have heavy logistics and other processes that are not necessarily easy so easy to build up internally. What they do is trade-off margin, to some extent, to keep the logistics of the business relatively simple. I think you’re doing the same thing.
Peter Mann: Yes. I’m in Austin. There’s an organization called the Incubation Station. It’s their third year and they are working with consumer goods companies. That’s the model that most of these companies follow – to outsource particularly manufacturing, co-packing, and fulfillment. In China, that’s not the standard. When we’re talking to distributors and they see our model, we have to explain to them that’s how we do business in America. It’s not the traditional huge companies with a thousand employees.
Sramana Mitra: I think that infrastructure is not as well-built in many of the other countries – whether it’s China or India. I think the logistics infrastructure in China is better than India though. The logistics infrastructure in India is quite poor. You can do business like that in the US much more easily than you can do business that way in a lot of other places.
Peter Mann: Right.
Sramana Mitra: I think I’ve got your story. Is there anything else you want to share?
Peter Mann: I’m good. I appreciate your time.
Sramana Mitra: Excellent. Very nice talking to you Peter. Good luck!