Crafting a manufacturing empire with Eric Skaar

We got Eric Skaar in the house. We're going to be doing the 40 degree hole punch. Are you ready, buddy?

I am ready.

All right, well, let's get it.

Dude that's ahhh, it's getting cold. That is...oohhh.

Can Eric fit inside the cold plundge? Is it possible for you to get all the way in? Eric's not a small guy by the way, he's six and a half feet tall.

That is oh cold. Best way to get over jetlag. Holy.

That's right, Eric just fresh off a plane from China.

Yeah.

We'll get into that more later.

48 hours into my jetlag. Feels great!

Welcome to Frozen Millionaires, the show where we submerge successful people in ice cold water, then sit them down to talk about how they've achieved success. I'm your host, George McCleary. And I have a pension for ambition for entrepreneurship and for watching my friends suffer in cold water. No tech CEOs or Wall Street Titans here. These are the Self Made Millionaires next door, and they're fresh out of the cold plunge and telling their stories.

Thank you for having me!

I don't have much of an intro prepared for you because I don't know a whole lot about what it is that you do apart from that you're doing a lot of business in Asia. So why don't you give everybody just the elevator pitch of who you are, introduce yourself and what it is that you do?

Sure. My name is Eric Skaar. I'm the Chief Operating Officer and Co-founder of Signal Worldwide. We are an engineering and manufacturing company with factories in China and Vietnam. We work in consumer electronics, accessories, so carrying solutions, protective cases, charging devices.

So, little widgets on Amazon, all the way up through more sophisticated stuff.

Yeah, we try to stay away from the commodity widgets, we do more, our sweet spots, generally things that are highly engineered, and have a mixture of soft materials and plastics or some soft materials and electronics. So like wearable medical devices.

Wearable medical devices, can you give an example of that?

There is a company and they kind of made, they were their LinkedIn cool for a little bit and they were they do a...

LinkedIn cool. That's a variety of cool, I'm not sure I've ever seen those. Right?

It's not actually, it's not actually cool. But they they're device provides a countervailing they had a they have a product where basically when someone has an uncontrollable tremor, like a Parkinson's type thing, electrical impulse that calms that.

Oh?!

and so we don't make the actual CPU of that thing but we make the soft good that has embedded electrodes flexible pcbas wiring.

So a bit more specialized than like an apple air tag keychain or something like that.

That's a, I cannot speak to that. But yeah, I'd say that you can get very specialized in different types of products depending on who's making it and how engaged their engineering teams are and got it specifying everything that goes into a product.

But basically you're making products at scale for as low cost as possible because labor and materials are less expensive in Asia and then you're importing them into America and then are all over the world then.

Yeah all over the world. So we don't have a brand, we're, I'm so unenthusiastic about branding and marketing that I would have no idea where to start. But I really do like engineering and operations and manufacturing.

So you're just b2b?

Yeah, completely b2b. And we work with our client base really has like three core pillars to it. One is like startups, companies that have a new idea and they really leverage our engineering capabilities. And they also like some of the other things that we do, like we, our second pillar from a client bases are like,

Right on.

And we work also with with different brands that you would see in like a Verizon, AT&T, Best Buy, you name it, that run the spectrum from, you know, really large, you know, hundreds of millions of revenue down to like smaller, you know, kind of working their way into to mid size type brands.

Speaking of scale, give me a sense of scale, because my impression of when I hear about, you know, things being printed in China, I think of a massive factory with hundreds of workers scurrying about, but you've got you've got a handful of these give me a sense of scale as to where you are today

Yeah.

in terms of where you at.

So right now we've got four facilities, we've got two in China, and two in Vietnam. The first facility we opened in China, we opened in, we started the process in 2018. And it was fully operational in 2019. And that's a smaller facility. It's like having a metric here, but it's like 4500 square meters. So 45,000 square feet.

Yeah, I've never been able to do that conversion in my head so when I look at international real estate, they'll have square meters and be like, well, this thing's only 30 square meters, how do people even live in that?

Right.

But it's like, few hundred square feet.

Yeah and that one has any usually about 250 or so people is about the operating size of it. And then our new facility in China is meaningfully larger, it's 12,500 square meters. So you know, again, 125,000 square feet.

Jamie, can you pull up, how many square feet that is? Ah wait, I don't have it, I don't have him in here.

Just rough estimates. And that one, we are, it's currently got a couple of 100 workers in it and it's going up to about 750 in the next six to eight weeks. And then in Vietnam, we've got two sites. One is a project specific site in Bock Jiang, which is just north of Hanoi. And that facility currently has about 80 people and is going to around 250 in the next six weeks?

Wow!

And then the last facility is in Haiphong. And that's roughly 5000 square meters and that one will have about 100 workers by early, early to mid December. And then

Oh, whoa. So then all these places like clearly they have a ton of employees and they've got a certain size, but whenever I watch those shows, I love the in q1 towards the end of q1, we'll transition out of the show how it's made. Ever seen that?

Oh, yeah.

I'm always struck by how few people there first factory in Vietnam and bring everything under one roof are actually they're doing the work and how these machines just in Haiphong. automate this entire process. And I swear, there's shows out there where I see maybe two or three people the entire time that this whole thing is being processed and so so it makes it it makes me think that employees might not be maybe the best measure of exactly how much stuff you're putting out.

Sure.

So give me a sense of like output for these things and how dependent is that upon employees doing stuff for you.

I guess, so, I want to be sure I get the number right. But I think my you know, my business partner likes to keep track of some of this stuff. And this month, I think we ship in our lifetime like our, we've now shipped about $250 million worth of product total or something like that, it was like a

Wow!

decent sized number, but that's in 12 years. But yeah, like we It's a lot of stuff.

Still, that's a lot.

multiply it by whatever it sold to.

That's a lot of stuff. Retail value 250 million or let like sold...

No, no, no from us. So like..

Okay, so the retail value on that's probably like 500 or maybe more.

Yeah, it's gonna be a big number, because we always assume there's a multiple on what we sell to.

Yeah, yeah.

So..

Like, it's got to land somewhere and then they've got a partly mark it up

Everyone marks it up. It's always the funny thing.

It's probably well over a billion.

Yeah, I'd say probably a billion dollars worth of consumer products we've made.

Wow!

So,

Well, that's a milestone I'd say.

Something.

You should have a like a little clipboards,

Yeah.

something like you know.

It's one that comes up, but like, you know, again, how to like measure what we do or how big we are. Because, yeah, there are certain processes that are like, we've got plastic injection machines that are manned by robots. But we also have some really manual processes, and then everything in between with lots of like, semi automated processes where a robot does the work but a human puts a semi finished product in a machine, closes the door, presses a button,

make sure that everything works.

make sure it all works. It comes out looking right, you know.

And then if it doesn't work, there's a guy that can fix that and things like that.

Exactly.

Great. So, cool. All right, now that we've got a little overview of just what your business looks like, today, we love to hear the full story, the full arc of these things, because you didn't wake up 12 years ago, and it was like this, and you've maintained the same. Take me back to the beginning. In fact, take me back further, because I know you went to Middlebury, right?

That's correct!

Yeah and that was that was actually, that was actually how we met each other.

Correct!

We're at Walace, quick, little anecdote, I was at Wallace park and I see a fella that has a Middlebury shirt on or was it a hat?

Hat.

It was a hat. Yeah, it was a hat. And Middlebury is not, you know, the regalia from that school is not something you see a whole lot of out here on the west coast, but it's a great school. My sister went there. I got in there out of high school, and I actually wanted to transfer there but they said, no, they're like, they're like a girl you Shun. They just said, nope, you had

you had your chance.

you had your chance. But and I would have gotten there that was, that was where I wanted to go. I went to Emory instead, things worked out fine. However,

We've been classmates.

Yeah, we were yeah. Well, actually, no, I think, I think you're a few years younger than me I think. But either way, I walk up to the guy and I was like, hey, man, you go to Middlebury, he's like, yeah, like you've heard of it. I'm like, sure have. And so we get to talking. And yeah, and that, you know, yada yada. And that brings us to today.

Sure.

So you so you're at Middlebury and

Yeah.

clueless kid, bring us to from there to today.

Yeah, so it's, it's been an interesting like 20 year process. So essentially, somewhere along the lines while I was at Middlebury, one of my very good friends from high school had gone and done like a summer abroad in China, he was like, you should come check it out. It's pretty it's it's weird. And that was like, you know, I'm okay with weird.

That's a good selling point.

That's a good starting point and you know, I had from a pretty early on not really had any interest in a normal career path. Like, just wasn't

Was because I like coupled with wanderlust a little bit, as well?

for sure. Like, I was someone who didn't have a For sure,

Yeah. passport until I was 17 or 18 years old, and like my first trip out of the country was with my parents to go to London. And I was like, there's a lot out there. I want to see it. Where did you grew up again?

New Jersey.

New Jersey. Okay, so you're on the East Coast?

Yeah.

Okay.

So there was just like, I was like, yeah, I want to go do something outside of the country. I'd like to understand more about you know, what's being billed as, you know, China, the great next big thing.

Sure.

And so between my junior and senior year, I applied to go to Harvard Extension School school, took a class on the Chinese Indian East Asian economies that was taught by a former Indian finance minister.

Oh, wow!

And so that was a pretty good eye opening experience of just like, what the development model looked like there.

So that kind of sparked your interest in like the region and business and stuff.

Yeah, I was an econ major, and I felt like prior to

well, I'd like to know more about that. taking that class, lots of economic theory was being explained to me is like, this is like the neoclassical model bla bla bla, and then the like, last couple of weeks, or last, like two sessions of a macro theory class would be like in China's doing it completely differently and it seems like it's working. And I was like, well,

I want to know more and so

So this fella in the Harvard Extension School dives into that,

what like the economic development model, how it went from Japan, and they're like manufacturing prowess to spreading to Taiwan and South Korea and the East Asian tigers. And then,

and this is like, right around like, 2000, 2003.

Yeah, this is right after China joined the WTO. And so, like, then there's like the conversation of China kind of coming up behind the East Asian tigers and taking all of their manufacturing and development. You know, Mojo essentially I was always jealous of that, my sister told me about that and I

Sure.

consolidating it in Guangdong Province. And so did that. And then was like, Okay, well, I wanna figure out how to get to China. I'll take a, so Middlebury has a J term where basically it's a 4-1-4 schedule where the month of January you take one class and you know, ski or was like, that sounds amazing.

I took, one year I took a class on Lord of the Rings. That was a that was a pretty awesome.

Meanwhile, the rest of us were not skiing, not learning about Lord of the Rings.

Yeah, yeah and probably way more sober.

That's about right.

But I took a J term class, I'm like teaching English as a second language and explain to the professor of that class this like goal of getting to China. And if you saw any programs that were coming up that were of interest, because I didn't want to just like, show up on a tourist visa.

Yeah.

do like one thing wrong and like get blacklisted for life. So I was like, be good to have a formal program to get me over there.

Yeah, some kind of foothold.

And so ends up, he recommended a course from Concordia University, which used to be in Portland and they had a, they have a campus in Irvine, California. And for 10 or so years, they did a master's in international studies that would take a summer in Irvine, a year in China, another summer in Irvine, and then you work on a thesis. And so I was like, alright, that, that works for

Wow!

First year teaching English at a Chinese public middle school, which was its own...

A Middle School?

Yeah, which was hilarious.

Like the height of childhood asshole era.

Oh totally, totally. And it's, it's, it's, it's global.

And

Yeah.

And meanwhile, you come in a white six foot six, dude, and you're having to, that sounds like a really special form of hell.

It was interesting.

Yeah.

It was unique. But around that time, I convinced my then girlfriend now wife to come visit China.

Oh!

And this is where it actually gets into like career stuff. Because first, when before she came to visit, I was like, I have to be able to speak some Chinese so I kind of double down on my studying. Then during

Yeah, yeah, yeah. Yeah, yeah. her visit with some of my friends, we were hanging out at a bar that was pretty popular with the small expat population of Shenzhen.

And one of my moron buddies, like, starts to harass some Irish dudes. And they started like, like, piss off. And he's like, "what, you won't have a shot of Jameson's with me? You're Irish". And like, my wife and I, Sophia, and I went over, and we're just like, "dude, just get out, like, what are you doing?"

Have you heard that the Irish love to fight?

Yeah, yeah. Yeah. And so, but there's an American with him. And he's like, "you guys are American". And we're like, "yep". Like, "you're American?". He's like, "yep". And so we started talking, and he's like, "What are you doing?" And I explained what I just explained to you. And my, and Sophia was, at the time still at Middlebury. And she's like, "well, I'm, I'm in the middle of my like, winter break. I go to a small liberal arts college in Vermont, you've never heard of

Holy smokes!

And so he ended up having a small manufacturing company. And he was like, "Look, if you're studying Mandarin, and you get your, like Mandarin, good enough that you're employable, like, I'll have a job for you". And so fast forward, my, my wife decided to move to China. I started taking lessons or like four hours a day of Mandarin coursework at the local university and then teaching

Wow, so you're diving in at this point?

Yeah. And then teaching English in the afternoon.

It wasn't it wasn't just that conversation with that with that guy, and but it was all This seems to be kind of like building up inside you, it seems like and so when that conversation had happened in that bar was that was that like your moment, I was just like, this is the opportunity that I've been waiting for. This is like,

Yeah, I was trying to find different opportunities, just you know, you're, it's, it was the world of manufacturing, I've always enjoyed, like, building stuff. And so just trying to poke around at different opportunities that were out there. And this was the one where I was like, Oh, this actually like, could make some sense. Like,

Because there has to be a fire inside you if you are going to study Mandarin, which I hear is really hard.

It's, like so many people wash out after like, the first month, because you're just making sounds you sound like, like bleeding like a lamb.

Yeah.

Because you truly just have to, like, learn how to make the sounds

Yeah.

before you can speak the language. And most people are like, Yo, I just want to learn how to get in a taxi cab and tell them where I'm going.

Right.

And like, you have to trust the process.

During, this time. Are you because you know, are you just following your like interest of like, hey, you know, I like manufacturing, I'm interested in this region, you know, I'm literally going to learn this language, but did you have like an end game in mind where you ended up land? Or was like, just this rung of the ladder was enough to kind of drive you forward?

Yeah, well, I, I knew at some point, I wanted to start my own business. I didn't know at that point, what it was or what it would look like, but like I had a pretty good handle on like, at some point, I want to do this for myself, whatever

And so this day, you're like, are you like, fluent? Or, like,

Yeah, I spent the last couple of weeks like working in Mandarin and in my factory, so like, yeah,

So when you're chopping it up with your flat factory workers, you were doing so in Mandarin?

Correct.

That is awesome.

Yeah. So that's been a funny part of the whole thing, but did that for a couple years. And then a different front from Middlebury again, like middle varies like a lot of the early part of my story.

Sounds like your then girlfriend now wife, the guy you

first boss

met in the bar.

Yeah. First boss, and then as I was like, getting some experience, a friend of mine, you ended up being, you know, very, like, been a very near and dear friend. He's actually the one who had the visa.

Oh cool!

But he, speaking off

That's is Daisy knocking stuff over in the background.

He was working at a slightly larger or meaningfully larger manufacturing company. And he wanted to move from Hong Kong to Shanghai, but he wasn't going to be able to do so until he could backfill his role. And so he put me in for the job. And initially, it was like, random projects and working with the managing director of this company to like, open a sample room in like, some backwater province and just like, started up the new office in Shenzhen

Right, right. Because, but they were all the rage back then, like mid 2000s like.

It was like 2007, 2008 ish. And so they were, they were trying to become the company to make all the holsters

Oh, whoa.

And were

Like, a blackberry in your hip was the height of clothes at the time. Yeah, like they actually had the keyboard on there. That was

Have you seen, they just did a movie on the rise and fall they being some, like young dudes from Canada.

Oh, wow, huh!

But so what ended up happening is I got sent to like, it was the project was or projects were just failing miserably. Like, the salespeople did a great job. The operations people were just blowing it.

Oh man. Yeah, yeah.

So like as a Hail Mary, they're like, let's send the white dude to the meeting. And I was like, what would you And finally, I'm just like, I'm not supposed to want me to do? Like just listen to tell us what's going on?

More like a political debate moderator where become the angriest dudes in real time. you just can't get a straight answer. And it's,

It just got, it just got to a point where I was like,

So it sounds like the other guys are kind of You know what, timeout, and I turned. And even though most of the people spoke Cantonese and not Mandarin, in Mandarin, I was being like a little more polite and diplomatic being okay, and like, Yo, what is going on? Like, break it down for me? Give me all the explanations you want. But then let me answer. letting it slide with those shitty answers that they were getting.

They were, I don't,

But you'd interjected and said, like,

No, no, I was just like you like, these guys are Alright, man. about to like, leave this meeting and call their bosses and be like, disconnect these programs like, these guys can't handle it. And so instead, I was just like, just tell me what's going on, like, warts and all, like, tell me all the bad news that you're afraid to tell these guys, right? They just like, unloaded on me. And like I turned in, I just be like, No, the thing you want, ready right

So you're a hero from this meeting, essentially, like

Within like, no joke, six months of that meeting, I'm like, 23 years old, I am now running a $20 million division of a company with like, 18 direct reports

Damn!

like, and like one, I One reached Research In Motion Supplier of the Year within like 18 months of that meeting.

Just by kind of like just sort of being able to read the room and see what was actually happening and just say, Hey, man, just spit it out.

Just distilling also, like, there are these yes or no questions where they just start the responsible by saying like, actually. Actually is not yes or no, just like, but it's just called, like, I could see the cultural difference and how it was creating frustrations,

So you're at a young age, advancing like, they're speaking Mandarin, you're you're getting the operations, you're literally speaking the language in both, you know, business ends the actual language itself. And so, but you still have in the back of your mind, Hey, man, I could probably do this for myself. But the first thing I think of when I think of that, like starting like a factory, I think is this capex has to be awful. Right.

Yeah. So what ended up happening is around that And the company was just going to hell real fast. time, we did a great job for Blackberry, one Supplier of the Year for them, they used to have, like their own award ceremony, it was great, little trophy. And then, then they And at that point, I've gotten to know the CEO, quite well, I peaked. And the backside of that peak was very steep. At the same time, the financial crisis was

And the CEO, is he Chinese or is he American?

No, he's a dude from New York. And so

Oh, there you go.

he was having trouble with the board, they didn't want to do what he thought was necessary to fix the company. So

The board, is this a private company, a publicly...?

Privately held company,

Okay.

private equity at the time. And so he was just like, you know, I'm pretty sure the board is going to want to replace me. And assuming that that happens, then let's start our own thing. And I was like, yes. But like, walk me, like, let's talk about how we do this. And so he and I looked at, like what we were respectively good at, and then where we had gaps, and so we initially started with a grand total of five partners.

Right.

And so for the first seven or eight years, we were really an engineering company that could then manage the supply chain. But the difficulty of that is like, once you've developed the product, the, you know, there's a lot of money in

Is it a race to the to the bottom, every single time on these things exactly?

You know, once the, once the product has been developed, and the processes are mature, and, you know, some, I'd say that some products have more secret sauce than others. And, you know, there's certain simple like processes we call precision die cutting and laminating. So like taking a soft material, and controlling the tolerances and specs of it so that it can be applied to a piece of plastic in a way that like,

Right so that it can slip over like an iPad.

And it looks perfect. Yeah. And that's relatively straightforward.

Right.

Other stuff, you know, taking the same soft material and heating it up and forming it and then cooling it down to a whole shape. And then,

But having like the engineering and like, you know, the innovation portion, I mean, that has to be really kind of the only way that you don't have that commoditized race to

Completely.

the bottom. And so you have that in house, then at that point that you're starting with, with that, with that semi-ousted CEO.

So yeah, he and I was the first people that we brought in as partners, and then our first hire is still our head of engineering to this day. So 12 years later, he's with the company.

Oh, wow. And it's still a you with that same guy?

Yeah. So so his name's Jeff. And Jeff and I

And Jeff still, still still doing this after a few years?

The two of us. The others? So one guy just was not meant for the entrepreneurs lifestyle. And he, you know, we bought him out, I think in like the first six to 12 months. The second, our, you know, the guy who started out as head of quality he, we had a good year, and he decided to retire on that. And so we bought him out. Then a few years later, the head of operations,

Must have been a heck of a year if he wants to retire on that year. Maybe, maybe he was at the end of his career anyway.

Yeah.

He wasn't, he wasn't like 32 and

No, these guys were like, markedly older than me.

Okay.

They were in their 60s.

Okay, okay. But, but at the same time, you're you're really

So they were kind of doing it as like a last piece of the puzzle in their careers. And so yeah, we had another retire, probably six or seven years ago now? And then, what so, what happened in our businesses for the first six or so years of our consolidating your equity existence, every time we'd have a good year, someone would retire and we'd have to use operating cash flows to buy him out instead of reinvesting in the business. And then we'd have to do that that cycle twice. Oh yeah.

and in a business that is expanding.

Yeah, exactly. It was,

So your ownership interests will have only grown as the company

Yeah

has gotten gotten bigger. So I mean,

It's good problem to have.

That's, that's not the worst thing in the world. I mean, buying people out sucks away all like, you know, I do a lot of discussion on the show, especially because I have a lot of real estate guys the difference between making money and building wealth, and, you know, cash flow versus, you know, wealth accumulation and everything. And so you're taking money out of one bucket and into another and a lot of cases,

Sure.

It sounds like this is kind of the version of that for, you know, having a big manufacturing company actually.

I would say that, certainly, you're certainly building wealth and building equity. I would say that those were there also hands down the least productive years of the company, because when you're dealing with like partner negotiations, instead of building or improving, like, you get 24 hours in a day.

That would drive me crazy.

It was not great.

Yeah.

It's actually been like one of those things where I'm like, a great lesson learned is, you know, whatever you can do to minimize the amount of time you spend negotiating with your business partners rather than like, focusing on the business...

Mire of those conversations is a massive time suck. I never liked to do.

Total waste of time. But yeah, then we got to the point where, you know, a few years ago it was like we've had good years we can solve this problem of, of, you know the long tail and what's our value add after the engineering by purchasing a factory so we took one of our existing vendors and we're like, you're good, but

next to the equipment? How, like So I still want to hear more about like the, like the the arc but, but when it comes to like buying a factory and getting that going, are you purchasing all of the real estate and then buying all the machines in there? Is it like a one big house plus furniture type of deal? Or you just like leasing and just doing Oh yeah.

So we haven't purchased any land that's you But for now, we've, we've leased in Vietnam, they know, we always wanted to be an asset like company then that call them Ready Built Factories, RBFs, which is essentially like, changed. Purchasing land we go we go on the lease model right now. I think at a certain point we may look into purchasing land

Is it like a tilt up concrete type of thing? and building a factory from the ground up if only because we could capture more depreciation that way. Or

It's a big slab of concrete with a warehouse on top of it, and then you can outfit it internally how you want, drop ceilings, whatever it is you want to do.

Sure.

And in China, it's a little bit different. They go with the vertical factories. So we've got, you know, one of our facilities has five floors. And that's not really the norm in Vietnam.

Oh, wow!

And so,

Yeah.

it's a, we tend to lease and then we purchase equipment and fill, fill the factory with equipment that way.

Gotcha. And purchasing this equipment. So again, with with the capex, do you have some sort of like private equity backing because I mean, imagine kicking not one of these, these factories is, you can't be money just out of your own bank account. You gotta you gotta have some debt and equity

Yeah, we, we've done it. We, you know, what's like how do you...? actually been kind of great. And I last night, fortunate enough to sit with some, some PSU Business School professors at a wine dinner at the Mac.

Nice!

And a..

That's the Multnomah Athletic Club. That's where Eric and I go to work out.

Yeah, needs a cold plunge.

It does.

But we were talking about this on like, I can get local currency loans at like three to 5% right now in China,

Really?

which is

It's like an SBA loan but for China, basically, like?

Yeah, it's, it's great, like, and so we've been able to finance the equipment at like,

like, what kind of LTV?

80% of..

Holy smokes. That's great!

Yeah. So let's say...

You buy a $10 million piece of equipment, it's gonna cost you like 2 million out of pocket.

Right.

And you've got that more or less like, do you have that in the coffers? Or do you have some backing for that?

We also? Yeah, so we also have the ability to finance off of, off of our accounts receivable. So

Oh, okay.

So that's one way to that we've worked with it. And then we do, do, we have also done some private financing. So having those who are outside, usually our we have our initial investor pool, and, you know, we'll go to those individuals and see if they want to provide short term financing for what we consider a favorable return, given the relatively low risk of some of the things.

Yeah, I may have glanced at one of those a while back. It was pretty good. It was like it was like 20% but it's, it was one of those things where I couldn't really understand it,

Right.

It was outside of my last cycle. I was like,

it's a very...

Explain this to me in football terms or explain this to me in real estate terms.

It's, their kind of, it's a niche thing, because generally, we don't need it. But it's really a times when you're scaling the business where you're basically my dad puts it in his terms, like, you're limited by your margins, like, not totally because you could still borrow or if, you know, we were very adverse to like raising around the financing that would require us to give up equity because at this point, like...

because you guys are whole owned by yourself? Jeff?

And then we have outside investors who own less than 30% of the company and then we've got some key employees with equity. So you know, we've got a pretty, we like, where everything is, we like that there aren't any like, outside, you know, quote, Smart Money, investors that are going to sit around and try to smart money asking stupid questions about how we run our business.

Has anybody ever approached you saying like, hey, I can add some gas to this fire? You know, I'll give you 50 million. And you know, we can, going for it.

We've recently started to have some, some more, some more companies start sniffing around about either acquiring or leveraging our engineering capabilities into their own manufacturing. But I kind of, I see, I, my belief is that to a certain degree they're looking at, they know what their, their gap is in capabilities. And they don't know where to start in addressing it. So they'd rather see what we do.

And the gap in capabilities essentially is like the core competency that we were talking before about, like your engineering, which is kind of what it sounds like, the only real way to differentiate yourself in a pretty crowded marketplace.

Yeah, it's, you know, I'd say that our engineering is best in class, I've got some really, you know, we've done some really cool things and variety of materials and a variety of manufacturing processes over the last few years where I can't imagine there are many engineering teams that can can hit the different play the different notes that we play

That's so, it's not just engineering, like the products themselves, but the processes by which they're made.

Correct.

That's, those two things are essentially what sounds like your secret sauce.

Yeah, we...

Does that sound about right?

Correct. We do a lot of like, some of the stuff we're working on right now. You know, it's the amount of custom equipment that's being built and custom processes we've got. We're, we've figured out how to make, like, combinations of materials come together in ways that I don't know that anyone's done it before.

Right.

These are cool things that, you know, there's a, there's certainly a cost to it. And the things that we're making are not cheap, but it's also for companies that are looking to innovate and take their products to the next level. You know, we know how to do that.

Take me through a little bit, because because it sounds like we've, we've kind of come more or less to like, what's what's happened today with you know, you basically have gone up, we've built some factories, and things have scaled, things are good. Along the way. I mean, you had to have a fire inside you to learn Mandarin. And then you're doing business in China while living in China for part of that, but then you eventually came back to

Oh man.

almost smooth sailing. And I know as Sophia and Sophia. I don't know how thrilled she was to be there to leave. Take me through a little bit of the personal side of this of this arc.

Well, yeah. So Sophia actually wanted to stay longer than I did, which was, which was kind of funny because she was working in an international company doing advertising for Ford Motors for not just China, but for all of like, their APAC and Africa and India, like they were the, they were the agency that kind of led all of the regions for Ford. And so she was hanging out in a nice office in Shanghai. Well, I was going out to these like, real shithole parts of China to like...

I mean yeah, that's probably where the factories are.

Yeah, to go visit these like

Not on the Beverly Hills of Shanghai.

No and so I was also like, having to travel from like, I'll take a 5am flight on Monday morning and get back to Shanghai like Thursday at some we have no flight is ever on time in China, because the military controls the airspace and closes it down at their whim. And so,

That's good to know, I didn't know that.

so yeah, you truly will be like, get to the airport, and every flight will be delayed for an indefinite period of time, I'll just like sit there and be like, great 7pm flights gonna leave at 2am

Oh my God.

And so that would happen, like three times a month. And so I was just like, this is, this is terrible. And at that point, our business had grown enough where I was actually visiting the states for like, a week a month anyway, just to like, go see clients and make sure...

So you're doing like an international flight across the Pacific Ocean, like twice a month.

Essentially. And like, and that's when I was like, it'd be way better just be on the West Coast. And I can deal with these clients and

I mean, it has to have cross your mind at some point like, this is the juice is great here, but the squeeze is a lot.

That's and that's when I was just like, I need to get out of Asia like I'm ready to go back to the US. And so...

After it had, it had been how long at this

Eight years. point?

Eight years, okay.

So we also want to start a family and like the pollution of Shanghai is disgusting when you're, you know, 20 something but then, like terrifying if you want to start a family,

Right, yeah.

That's the decision that you're making for a small set of lungs that I don't think, you know, is particularly great. So,

So she wants to grab it one day you say, hey, you know, this is this is a lot. I'm flying back and forth like crazy. Pretty sure I can do this from the West Coast of America. What do you think?

Yeah.

And she says, cool or?

It took a little convincing, but the

She's like, I like it here.

Yeah.

Yeah.

And I'm like, I don't. But the I think, you know, we found Portland to be an interesting place to come to. She's got family history here. Her mom's from Portland. And I liked it, because it wasn't like San Francisco or LA, or Seattle, for that matter.

So there's like some time issues like I guess time, timezone, some culture, some pollution, there's some things that are kind of driving you here. And I think but business wise. Tell me a little bit about like, we talked a little bit about the like the gut punches, you know.

Oh man, yeah. So we've had, we've had some real interesting gut punches over the years. And mainly, it's just, you know, we will develop a core interesting product. And one of the things that I guess, to step back and talk about the root cause of most gut punches has been a, we've always been a very customer service focused, like, obviously, the engineering is really important, everything

Yeah, yeah.

And that works really well, but also creates concentration issues. And so we've had a few times in our history where we've gotten overly concentrated into one client, and that client, either something happens, they get sold, they have a new management team come in, like whatever was driving the long term success that we were having, like, doesn't abrupt change?

It just like either like evaporates overnight or something about

Yeah.

shifts radically.

And the nature of consumer electronics is that a new device is coming every 12 months or every 18 months.

Sure.

And so the next vendors are not like the ability to bring in a new vendors, incredibly close behind your most recent success. And so those were some of those, like, really unfortunate moments. And then like going into COVID, we had just purchased the factory. We were working on integrating our teams with the factory teams. All, everything shuts down, obviously.

Yeah.

And now I'm like remote managing a factory from my attic in Portland. And like the key program that we were like, one of the reasons we purchased, this factory was for launching our like one of these key programs that had just come our way.

Yeah, yeah.

And the program then kind of got put on indefinite delay. And we're just like, shoot, we've

Yeah, the a delay in the beginning of COVID is like, oh, it's gonna be like three weeks to slow the curve. And then

Well, we were dealing with China, which was in like, full on, like, we'll shut it down. You know,

Yeah, yeah.

everyone's stuck in their homes, like I was a, I would say that I was like two months ahead of the rest of the world when it came to like, what was going on with COVID? Because like,

Yeah you're include in directly.

Yeah, I was in China in January of 2020. And then, like, left, and like two weeks later, or maybe even less, you know, all the flights were stopped out of China. And then I'm spending like, over Chinese New Year trying to figure out where all my team members were like, they'd be on the visit their families. Could they get back to like, could they get back to where our factory and office are? like, are they stuck at their hometowns? Like are

Wow!

And we were like, wow. Well, we got paid in advance on some of this stuff.

Like, oh, man.

This would have been..

I mean, just for a while there was nothing more important for us to have is a million masks.

Filtration masks.

Yeah, yeah.

And so that was that ended up like, you know, being a pretty important employee. to some point in terms of like, we got through COVID, because we were building so many masks, we then had this key program launch. And it was the most for one of our clients, that's a billion dollar company, it was their most successful launch in this type of product category. And...

I'm smelling NDAs around here this is why we can't get into details?

And we, the product that we made, like the statistics on it, were insane of how quickly it also sold out. And then we had to essentially 7x our output and four weeks to catch up with demand. And...

So these are the late nights. And your, your partner is this, Jeff? He's, is he East Coast based? So he's East Coast based, your West Coast based, you're dealing with people in China, you need to do something really grand within a very short period of time to, to make to capitalize on a big opportunity. You're burning the candle.

Oh, yeah, like, it's completely insane. Like, just basically, you know, China's 8am is our 5pm. And going from 5pm until they're 3, 4pm, you know, just working. You know, it's,

That's, that's...

Getting into the night, and then waking up the next morning talking to the customer about what got done. And you know, it's...

Dude, I salute you, because that's something I've just been able to tolerate less and less and less as I've gotten older, like if you're in residential real estate, you're kind of always on calls. That's why but then the more you gravitate towards development and commercial, the more you just at Bankers hours, and somebody rings my phone at 7:30, it's probably going into the round file. Whereas in your world,

it's the norm, it's you know, we've had a project that's been going on, and I was talking to some of the engineers on the client side, and I'm like, hats off to you guys. We've been having a standing conference call from 5:30 to

30pm, five to six nights a week for a full year right now.

But that's just the little world that you live Like, in. It's normal. It's normalized.

Yeah, it's, it's normalized. And I also said this when, you know, I was like, 28 years old when I started my business. And you know, I'd be the youngest person in a room of, you know, depending on the company, some pretty heavy hitters.

Sure.

And, you know, I'd always be like, I've done X years in Asia. And I promise you, I work two days for every one that someone in North America works because I work the full Asia day. And then I'm up at night until God knows what our, like, working with the US team so they understand what just happened in Asia over the course of the business day.

So...

And so then now I'm in the US has flipped, but...

So dude, that's that's a lot. That takes a lot of desire. That takes a lot of passion. Where do you where do you draw that from? Where is your fire come from inside you? Because at a young age, we talked a little bit about that. But then the years were on, you know, you hit it's, it seems to me that it could be easy at some point for you to just kind of go on cruise control, but it doesn't seem like that's happened at all. What, what is driving Eric's car at this point?

Yeah, I you know, right now, like, I just came back from the longest like Asia trip, not like in terms of number of days, is about three weeks, but like, I was putting in easy, like 14, 16 hour days, like I could see based on like having my phone in my pocket that I walked like eight to nine miles a day inside of my factory. Why? Yeah, it's, I have a unique opportunity right

Why? now to, like, build something really cool, which is like, not there aren't that many people who can be like, I own an international business and multiple countries employ 1500 people and, you know, work with some of the like, the biggest, most innovative companies in the world. So there's an opportunity in front of you.

Oh, there's certainly an opportunity. And it's also just the like, you know, I was explaining this to, to my oldest son because you know, I've been away a lot this year, this year has been insane. I'll be I'm pretty sure I'm gonna get secret status with United on my next trip

Nice!

in like two weeks. And it's like, you know, I started out 20 years ago with this idea of like, I want to go see, like, I want to learn about China, decide if I want to go visit there. And if I want to go visit there, it's because I want to, like, get involved with this growing economy and, like, do something for myself that I can be super proud of. And at this point, like, I'm certainly proud of what I've done to date. But the next step of this thing creates a whole new floor for the business.

And that's what you're excited about.

Yeah.

Which brings us to what are you excited about?

Yeah, I'm excited. about, you know, having $100 million business like it's, it's right around the corner, if we can stick the landing all the things we're working on right now.

Dude, that's fucking awesome. I love it.

That's a pretty like, crazy thing. And like for the longest time, my business partner and I have always been like, if we could sell this thing for 100 million bucks, that'd be incredible. That would be like job well done pat on the back, like, you know, What hobby do you want to do for the rest of your life? And like, as we're looking at it now we're just like, god damn, like, we're, we might blow past that valuation before we have time to sell the thing, which is insane. And that's like,

Which wouldn't actually surprise me. Because if you have the drive behind you, that's actually pushing you to like capitalize on these opportunities, and to really take advantage of things that are five feet in front of your face, then yeah, yeah, momentum is a hell of a thing.

It's also like, the other thing that drives is like, why, like, why go and work 16 hours a day walking around the factory, and part of it's just like, I enjoy it. It's like, it's fun. Like, this is like, the you're in the world of building stuff, like building stuff, it's cool,

It is.

When you like get to see like, immediate change or development to something that you're personally responsible for, is way different than just being like, I pushed a piece of paper across my desk to somebody else.

Yeah, no, the building of an empire takes on a ton of different forms. And whether it's real estate developments, or building factories, building widgets, manufacturing microphones, there's a million different forms that can take on. And there's always somebody there's always a guy behind it, who has a passion to actually continue growth continue as a growth

Yeah.

and it feels good, like walking around that factory floor. Like it's, it feels great because that's, it's a small, like, it's a small part of a large of a large organism that's growing, it feels fabulous.

It's a you know, to use some some great Middleberian reasoning, it's the Thoreauvian approach versus the Emersonian, which is

You're gonna have to explain that to me.

So process versus product, like, you know, what I mentioned, you know, my partner talking about exit at a certain dollar amount, that's a very product based approach. And it actually like, like always, like, okay, sure, whatever, but like, how do we actually do that? Like, what's the process to get there? And in Walden, Thoreau talks about what can I learn from broad beans from growing broad beans? Like from the act of farming, It's not like, how do I get you know, a

Right. process that, you know, if you feel like you've got your process dialed in, and you're doing things the right way, every single day, and your attention to detail is there, and like, you're waking up knowing like, what you need to do and how you need to do it. The result? Like that product, we'll we'll get there. Oh, yeah.

You'll probably overshoot what you could have thought the product was if you just focus on like, how do I get to this, like tangible result, but instead it's like, now I'm gonna like, it's also the Jacob Riis quote. Like the Stonebreaker like it's not the you know, the Stonebreaker breaks a stone on the 100th hit, but it doesn't discount the value of his 99,98,97...

Yeah, the man who enjoys walking will gold trod tread the longest distance and comparisons the man who just needs to finish

Yeah.

from one point to the other.

Totally. And so I like when I...

I messed up that quote, but that's, that's,

No, I get it, so like, when I was over in China, that's the juice to it. and it was like it was a it was a tough is it we were not we had stuff that was like, we're trying to level up a whole lot of stuff at once. And certain things weren't leveling up fast enough. So I got to like, roll up my sleeves and be like, No, truly like, you follow me around the factory floor with a roll of tape because we're going to be like taping off like how...

Like blue taping? Yeah,

If we're gonna put different areas of...

tape whalther. Shout out to the developers out there.

Yeah.

Did the blade to blue tape Walther.

But like we like went through and like did that and like lining up like where certain material staging areas should be or where we're like the right place for inspection area and like getting everything set up. And then, like,

Ever read the goal?

Yeah, yeah. The story of Jonas and fixing the next thing that's broken.

Yeah. No, it's that the process you're describing kind of reminds me of the goal. It's like, where are the bottlenecks?

Yeah, and no, that's exactly what we were doing. And

Yeah, yeah. what's been fun is like ever since working with like BlackBerry is at 23, 22, 23 year old and like, seeing how their manufacturing people approached it at the time. They were best in class like,

they were the world leader in mobile devices. Like I learned a lot from that and And the funny thing has been that the there's a cost of doing things like perfect. And there are only so many companies that are willing to, like, pay that cost to get to perfect.

Right?

And there's always a feeling out process of like, okay, so we're going to develop products for you. Like, what let's talk about, like, what you want, and how quickly you can like discern like, are they really after perfect? Are they just saying they want great product, but they're not like, engaged on the process to get there?

But this is the process that gets your motor running essensially,

Totally.

from the from the, from the jump all the way through the end of it through product landing somebody's enjoying it, that whole process that keeps you going.

Totally and like so now I've got clients that want perfect, and I'm like, Yes, I can unlock that side of my brain, like I can show you like,

Yeah.

we get it.

That's harnessing like the full range of your capabilities.

Totally.

Not everybody can do that. And that feels amazing. I'm guessing.

Oh, totally, like walking through and just being like, now we're setting up this.

See, that's why I had you on the podcast is because you because you get that that actually and so that sort of mindset is really kind of what I'm trying to foster with these conversations.

Yeah. Right.

And so I love

Correct.

That is the best fucking mindset that you know I've heard today and I love it man.

It's, that's it like I just enjoyed the building process and especially as you said, like finding the right client base where it's like, oh, no, we we want perfect. We see that you can deliver on on like, perfect.

And that's why we called you.

Yeah, let's do this.

Perfect. Yeah, yeah.

Let's make it happen.

Dude, I love it, man. We'll do this has been a great conversation.

Yeah.

I love it, man.

Thank you for having me in for the plunge. This is the best, the best antidote to jet lag that I've found so far.

I know, it wakes you up. It's peak awakeness.

Yeah, really good.

Ya know, then plus like the like the the leg soreness, the jetlag, it's in.

It hit a lot of, play the right notes.

And also just getting getting in touch with deep down what's you know, whether you need or not what's what's your driving force behind your business? Why we get up early? Why we stay late, and why we do what we do?

Yeah.

So man, dude, how do people find you?

Yeah. So you can check out our website, www.sigmaworldwide.com. And, yeah, give us a look and see what we do.

Awesome, man. All right. We got International. What are we calling you International? Our business manufacturer?

Yeah, International Manufacturing and Engineering.

There you go. All right, Eric Skaar, everybody. Thanks so much for coming, man.

Thanks for having me.

All right!

Cool!

So that's the story of Eric scar and his company sigma worldwide. And dang, what a cool thing the guy has built and doing it across the globe is really something I can play in what I have to deal with properties that I own that are out of state. So when your business is on the other side of the globe, and they speak another language, it makes my problem seem much less significant. Another thing I want to emphasize is the concept of becoming one with your business. I've known Eric for a