Entrepreneurship in a highly regulated industry

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Joining me today is a woman who sold wines in Manhattan. Then she decided to import wine herself. But she ran into a problem. Instead of closing down she figured out how to make things easier for people who wanted to do what she was trying to do.

Alexi Cashen is co-founder of Elenteny Imports which provides logistical and administrative back office services for international importing, national compliance and direct-to-trade distribution sales.

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Alexi Cashen

Alexi Cashen

Elenteny

Alexi Cashen is co-founder of Elenteny Imports which provides logistical and administrative back office services for international importing, national compliance and direct-to-trade distribution sales.

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Full Interview Transcript

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses, and I do it for an audience of real entrepreneurs. Joining me today is a woman who sold wine. And I’m fascinated by the way that she did it. I’m looking forward to asking her about that. And then she decided to import some wine herself and she realized that there’s an issue with it. You’ve got to import a lot of wine in order to make it cost-effective. And she realized she couldn’t do it on her own and that led her to create a business that, among other things, allows people who want smaller . . . Who want to import less things to be able to do it.

I’m not explaining your business right at all, Alexi. I’m going to call myself out. Not only did I have tech issues just connecting with you, I’m having issues even explaining what the product is. Joining me is Alexi Curlee Cashen, She is the founder of Elente . . . How do you pronounce the company name?

Alexi: Elenteny Imports.

Andrew: Elenteny Imports. What does Elenteny mean?

Alexi: Tim Elenteny, he’s my co-founder.

Andrew: Got it. They provide logistical and administrative back-office services for international importing. I promise this interview will go a lot smoother than this intro. And I’ll tell you later on about the two sponsors who are making this interview happen. HostGator for hosting websites. Toptal for hiring developers. Alexi, let’s start off with selling wine. What type of sales did you do when you were a wine rep?

Alexi: So I was a wholesale sales rep in New York City. I worked for a company called Polaner Selections. And I sold to restaurants and retailers. So I think it’s important to understand and I don’t have any qualms with you stumbling over really had to get my business model right because it’s a very dense and complex industry, the alcohol beverage industry in the U.S. It’s extremely regulated. So I think to kind of start to give you a picture of kind of how it works that it’s a three-tier system. And this dates back to prohibition. And a lot of these laws came into place about that time. So, basically, the three tiers are federal, wholesale and retail. So someone has to import the wine, somebody else has to distribute the wine, and then retailers sell to consumers.

Andrew: And all three sections need to be completely different. You can’t have one company doing everything.

Alexi: Well, it depends on which state.

Andrew: Oh, really?

Alexi: But in the city of New York, for example, where I started my business, you can do two of those three tiers. You can import as well as wholesale distribute.

Andrew: Okay. So, when you were doing wholesale to restaurants, were you actually lugging wine from restaurant to restaurant, in the beginning, trying to get somebody to pay attention and buy?

Alexi: I was. I was. It’s very much the kind of old-fashioned model of sales where a salesperson goes door to door to sell knives or vacuum cleaners. That model is alive and well in the wine industry. Changing ever so slightly, but it’s true. We lug wine from door to door. Also because wine is something that people want to taste. It’s experiential. It’s nutritive. And so I think the need or necessity for a restaurant or a retailer to want to taste your wares or try a new vintage, it’s sort of part of the art form. But yes, I was lugging anywhere from six to nine bottles a day through New York City in and out of subways.

Andrew: Really?

Alexi: It’s a labor in addition to . . .

Andrew: How did you get anyone to even pay attention to you let alone buy from you? What was your process?

Alexi: My process was . . . Well, especially being new to this very established company that I was working for, I knew that I wanted to make a big dent. I was given a list of accounts, but kind of the hungrier you are in wine sales and pay attention to new liquor licenses that come up and trying to open new accounts. That’s the way to be successful.

But actually, I started kind of my own marketing campaign because I realized that there was something pretty inefficient about the way that we sold wine to restaurants and retailers. Typically, you just show up with whatever you had in your bag or sometimes one restaurant wants to taste one wine and another restaurant wants to taste two other wines. And so the [purpose 00:04:24] they weren’t necessarily cohesive or the wines didn’t taste well together or that some were from Spain and others from Italy or California. And so there just wasn’t cohesion in the bag of wine that I’d show up with every day.

So I started casting out my own kind of marketing campaign and I called it “What’s in the bag?” And I basically told all my accounts, like, “Here’s what I’m going to have on Monday, Tuesday, Wednesday, Thursday, and on Friday. If you want me to come back with anything, like, I’ll make it happen for you.” So instead of being kind of like the gopher and having me like always bring the things that they wanted to have, I started sort of directing my week and putting together bags of wines that were much more complimentary that were synergistic, that made sense. So I had a lot of success in that.

And just because I was emailing people more and at the time I think people were more responsive to that that they could say, “Great, I want to see you on Tuesday and Thursday,” because they wanted to taste both of those days. So I was able to actually get more momentum and appointments with my customers.

Andrew: As opposed to just bringing a random collection of wines that different people happen to express interest in, but didn’t necessarily go well together.

Alexi: Exactly.

Andrew: And so you were getting paid commission. How well were you doing?

Alexi: I was doing great. I had a drop for the first six months, but I think I came off of drop in only two or three months. So, in my territory I was selling at least a million dollars and commissions were anywhere between 6% and 10%.

Andrew: And so then what was the impetus for starting this business?

Alexi: Well, I had my first child and I was definitely feeling the aches and pains of carrying that physical nine liters of wine around my body each and every day. And it’s also just a very demanding lifestyle in terms of just seeing accounts, especially restaurants being there around happy hour just dining accounts. I was seeing that becoming a challenge as a new mom.

And so at the time, Tim Elenteny, my current business partner, he said, “I’ve got this great idea. There aren’t that many businesses that are competing in this logistics space. I’m going to build this business and really work to compete in logistics.” And he wanted to initially start out servicing wineries. So he threw that out there and said, “Would you join me?” which was a big leap of faith to quit a very well-paying job with a brand new baby and saying to my husband, like, “Hey, we live in Manhattan and just had a kid and I’m going to quit my job.” It was a bit of a shakeup, but definitely . . . Not the last risk I’ve taken, but definitely one that paid off.

Andrew: Why you? I see that he’s a 25-year veteran, started out here in San Francisco, apparently. What . . . Why did he pick you? You are someone with less experience? What did he see in you?

Alexi: That’s a great question. I would say that what he saw in me was just a tenacity, like, the example I gave you in terms of really recognizing inefficiency in the way that things have always been done and just having the guts to try something new and put myself out there. I think that plus just also being able to look at things differently. I think that my conversations with him were so often about building other businesses. He had been a serial entrepreneur, and I was really drawn to that. I thought that a lot of that energy and just sort of the stories about having that independence and taking an idea at a whole cloth and actually making it come to life just made me feel very excited about the opportunity to try my hand at entrepreneurialship.

Andrew: So what’s the . . . What’s the logistics that you guys were going to tackle?

Alexi: So the main thing that we were going to tackle was that are . . . It kind of comes down to control sort of, who controls the process, who makes the decisions in terms of where a brand is actually going to see success in the U.S. market. And because of that three-tier system, there’s a lot of decision-makers in that process. And so what we were doing was providing a platform to really empower our clients so that they could take that control back that they were able to have more of a decision and consequently more margin in their U.S. sales network by selling direct to trade and kind of cutting out a distributor in a key market or by selling direct to trade, but then allowing us to manage kind of compliance for them. We’re not taking a percentage margin of our clients’ sales, so that’s the upside for the client.

Andrew: Meaning, Alexi, you were going to work with foreign wine producers and say, “Look, we’ll get you into retail”?

Alexi: So that’s where we started out. And that proved to be a lot more challenging.

Andrew: Because?

Alexi: Because those foreign entities are . . . Unless they have already established brand and they have distributors that they know, they visited the U.S. many times, they really understand the nuances of the industry and how it works and what the best markets are and really kind of rely on those older relationships.

Andrew: Yeah.

Alexi: It’s kind of difficult for us to really step in and help them with that back office. Now, lots of brands overseas would love to enlist services like ours, but they can’t necessarily do that without having sort of a physical presence here. So that’s the disconnect we realized. As much as we wanted to sort of start with the foreign winery, the challenge is our model is really just all the back office. It’s all the nitty-gritty stuff between picking that pallet up at a winery, getting it to port, loading it onto a container, paying customs, duties and excise and trucking it to a warehouse and managing inventory and invoicing and compliance and accounting that, like, all the other side of it, which is actually connecting with people, learning markets, figuring out who the right distributor is for your brand. That’s kind of a whole other business.

Andrew: By the way, the part that you mentioned that you did get excited about, why did you get excited about it? What is it about that that gets you so fired up?

Alexi: I’ve often said, like, what I do is the unsexy side of the business. And it gets me fired up because it’s the part people need help with. It’s the part that when you . . . I think it goes back to sort of that superpower of mine of just being able to, like, recognize inefficiencies and say like, “This is so horribly done. There’s got to be a better way or a new reliance on technology, or a way to really connect to people and remove their obstacles.” And I just love that. I loved it when I was a wine salesperson as well. I loved not just showing up at a restaurant and showing them six wines and asking for the sale and kind of cramming wine down their throat. I spent more time asking them like, “What are you struggling with? What’s your wine budget like here? Who actually makes the decisions around here? What do you dream about? What would actually make this wine list pop or really speak to your customers?”

So I think getting connected to the customers and figuring out what their challenges are is the piece that fires me up. And it turns out that it’s a lot of that nitty-gritty stuff. It’s a lot of the devils in the details. And it’s very dense, it can be boring, it can be monotonous and frustrating. And a lot of my clients, they just want to focus on sourcing great wine and selling it to cool customers. And the fact that we handle everything in between it kind of makes their dreams come true.

Andrew: But you’re saying that smaller wineries weren’t able to work with you because, yes, you could bring their wine into the country, but once it’s here, there’s nobody to take over from there. They still need somebody to go into the restaurant and do the type of things that you were talking about.

Alexi: Exactly.

Andrew: Right. Got it. And so they weren’t the right fit. You told our producer, “We probably should have talked to more of them before we got started.”

Alexi: Yes, we did. We try as we might. And so then I think the thing that sort of snapped into formation that was a little synergistic for us was that we didn’t have enough wine to fill up that first container. So we had one winery that sort of took a chance on us and they were ready to enlist us in this endeavor, but we didn’t have enough volume or critical mass, and so we found another company who was also just getting started and kind of shared the load of that container. And that’s really when . . .

Andrew: Because you have to fill up a whole container in order to get it . . . You have to pay for a whole container whether you fill it up or not in order to get it into the country. Is that right?

Alexi: That’s exactly right. The cost for a container whether you fill it up partially or all the way is the same, which is why a lot of U.S. importers tend to . . . Or they can tend to over-purchase or buy more wine than they actually need because they are economizing that scale and maximizing the cost.

Andrew: Okay. So once you got one company and I guess . . . Was it Indie Wine? Is that the name of the first customer?

Alexi: Indie Wineries, yes.

Andrew: Indie Wineries. And so you got them and then you said, “All right, we need others.” And so you brought in a second company and then that filled up the container?

Alexi: Yeah.

Andrew: Okay.

Alexi: It was a . . . He’s real friends of ours. So being in the wine industry feels like a very small industry. And so just calling up friends, we were able to fill that first container just by sharing that load. And that’s really when the light went off because we realized, “Wow. Everybody needs this.” It was 2010, the economy was really challenged. I mean, even in a challenging economy, people still love to drink is what makes it a great industry, but also the value of the wines or the just in time needs it started to wane, so people needed to buy smaller amounts in more frequent loads. So that’s when we devised the less than container load program so that other importers across the U.S. could share space on our containers.

Andrew: What part did you handle in the beginning? Was it the finding the shipping company, working out an agreement with them, or finding the local . . . finding the wineries?

Alexi: So, actually, at the beginning, it was mostly on the local side. So I was focused more on our local warehouse partners, technology vendors, working with our customers, because once the products got here, then we were reselling it. So compliance, the actual inventory management, the logistics involved in fulfilling their orders, dealing with their myriad of personalities and sales reps under each of their companies. Just . . . And different expectations. So I was much more on the ground on the local side and trying to build up our compliance, our ability to service more markets, and then as we won new customers just being able to stretch and expand our bandwidth to service more.

Andrew: Compliance and being able to service more markets goes back to that three-tiered system that you were telling me about? So you wanted to make sure what?

Alexi: So we have to have licenses in all 50 states in order to legally sell in each of those states. So it took years for us to get that full suite of licenses setup. So it was just kind of tackling one at a time as clients had needs.

Andrew: Okay. And so were you actually selling locally too? I thought you were just bringing the wine in.

Alexi: So we bring the wine in for anyone who needs just freight services. That’s the main and most basic service that we offer. Then if a client needs to hire us to then resell into any given market, we are doing the actual reselling as well to either another wholesaler in, say, Texas, or to a restaurant or a retailer in, say, California, Chicago or New York.

Andrew: So now there are people who do what you did back when you were a sales rep in 2007 who are going door to door and . . . They are? Wow.

Alexi: Exactly. Exactly. And that’s where I really think that both Tim Elenteny and I really were able to succeed because there were businesses that had similar models to us, but they came from logistics backgrounds, whereas we came from a sales background. So our ability to really touch and feel and understand what the day-to-day life cycle is for a sales rep, I think really allowed us to reach them and to service them in a much more dynamic way.

Andrew: How many sales reps do you have now?

Alexi: Oh, my God, hundreds.

Andrew: Really? How many states?

Alexi: We sell in all 50 U.S. states. And again, the sales reps that sell through us are actually employees of our clients, but there sure are a lot of them.

Andrew: So we’re talking about like Indie Winery technically hired someone that you are then managing?

Alexi: Exactly. Exactly.

Andrew: Wow. All right. Let me talk about my first sponsor. It’s a company called HostGator for hosting websites. Do you remember the first website, Alexi, that you ever had?

Alexi: First website. For my company?

Andrew: For yourself ever. Do you remember the first website you ever built for anything?

Alexi: Yes.

Andrew: What was it?

Alexi: It was for T. Elenteny Imports.

Andrew: It was. You actually created the website yourself?

Alexi: Well, we utilized a third-party engineer.

Andrew: Got it.

Alexi: But yes.

Andrew: I think the very first . . . I know the very first website I created was right out of college, I was going to do . . . Oh, you know what it was? I was going to create a magazine that was going to interview successful people and then my plan was, I remember I used to in college call up brokers on Wall Street and traders on Wall Street and I realized, if you had enough hustle in you, they would take your call, and then they would just look for that burst of energy that would come from talking to someone who was younger, who was just getting started and had the hustle, and, yeah, they would . . . I was convinced I could sell them a $20 subscriptions to anything that would like . . . That came from somebody who was motivated.

And so that was what I started out creating, and then I realized I couldn’t write, I could barely speak to them. So writing is a lot harder. And I thought, “Well, what else can I do?” And I created this email newsletter. It was a joke a day, and then I created another one with a motivational quote and another one with a trivia day and I would just write them out. And all I needed was a website for people to subscribe and unsubscribe and I remember putting that up in no time. And that’s the first business that took off.

Well, whether you decide that you’re going to get into the wine space or the content space or anything else, you need a website. If you go to hostgator.com/mixergy, you will get the lowest price available for HostGator’s . . . In fact, HostGator is already super low. But we always make our sponsors give us an even lower price for people who are using our URL to encourage you to use the URL so that they understand where you came from, and also to get you a benefit for being a Mixergy listener.

So, if you go to hostgator.com/mixergy, you will get a deeper price than they offer anywhere else for service that is remarkable. Hostgator.com/mixergy. And I’m grateful to them for sponsoring. At what point did you have other people who were selling local wineries or other wineries? I know it was the first two you got on board yourselves. At what point did you start bringing in more salespeople?

Alexi: So we bring in clients and then with them they bring these sales teams. In the first year, it was like five clients, and then I’d say by year five, we probably were selling to roughly 30 of these businesses, and then doing about maybe 100 or 120 additional customers in addition to that, that were just using the freight consolidation service.

Andrew: And it was largely your friends at the beginning or all your friends at the beginning, right? At some point, you needed to expand beyond. What was the process for getting other producers?

Alexi: I have to say it’s been pretty prehistoric. Our marketing approach it’s been very word of mouth, to be honest. We did build a referral program pretty early on and that certainly paid dividends. We were able to just kind of take on new business from those referrals. Honestly, I quite like that we were able to have that slower start because, I don’t know, especially being that I personally was really focused on a lot of our operations and infrastructure and processes. It was . . . I don’t know. We could have grown any faster beyond that initial speed, but we started hiring our own salespeople about two years in who were selling our service, this B2B partner package, and also the consolidation freight service. So, obviously, that started to make a huge impact as well.

Andrew: I’ve noticed in my interviews that businesses that sell to other businesses tend to hire salespeople that already used to sell to those businesses. And it’s more about, go back to your original clients and see if they’re interested in this, then here’s our process for developing new clients. Is that true for you too?

Alexi: Yeah, definitely. I mean, I think we hired somebody from the industry who had a similar job. He was selling to the same audience, but just under . . . He was selling wine for a South American portfolio, but yeah, very similar. He was able to kind of adopt that footprint and speak to the same audience, but just sell them something different.

Andrew: Then five years into the business something terrible happened. You discovered that one of the people you trusted did what?

Alexi: Yeah. I mean, trusted is an understatement. I guess . . . Imagine your most trusted employee, like, the person that if you lined up at the time all 15 of your employees and said, in this line of people, one of these individuals is stealing from you. I never would have picked her. And lo and behold, there was a woman who stole $1.8 million from our company between 2015 and 2017.

Andrew: How? What was the process for doing that?

Alexi: Well, I guess it makes sense to go back a little and explain kind of who she was in the business and kind of how this evolved. But essentially, in 2015, so, like, five years into the business, we’re growing like gangbusters, more than 50% growth year over year. By that fifth year, we almost hit 10 million in revenue. It felt great. Again, 15 employees, but everybody was wearing lots of different hats. It was totally that roll up your sleeves mentality, everyone is diving in, everyone is . . . Just things are pretty lumpy in terms of accountability. So we needed to sort of really create sections and departments and have an actual accounting team and people that were really only responsible for that.

And so in that process, we also hired an executive assistant, somebody that supported my business partner and me. And that felt like a real luxury hire, but, you know, I don’t know if other business owners experienced this, but, like, the most important parts of the business can be kind of owner-top heavy, and accounting, the finance and controls were definitely one of those things, which is why it’s super ironic that then we had all this money stolen from us because it was the one thing that we were controlling super stringently.

But I think our reluctance to, like, let go of a lot of the financial control and actually give it to this outsourced CPA firm we’d hired or to actually give some of these responsibilities to our accounting team left us to either do it ourselves or rely on our executive assistant because that was the inner circle of trust. And so that’s really how it happened is that we still had a lot of the, like, all the cash flow movements and actions in the business were still very much acted out by my partner and/or me. And so having that executive assistant was just sort of that third person in our trio to really execute those actions. So that’s how it happened. And it’s embarrassing that it happened directly under our nose.

Andrew: You know what? I think Mark Cuban had something, if not exactly the same, then really close to it happened to him. Similar amount of money with somebody who was an assistant like this. And so you told our producer there was like this Ponzi type scheme going on whereas the money was going out, it was also being covered up. What happened exactly?

Alexi: So, essentially, and this person she was incredible, like, she was a fast learner. Like, I prayed for more employees like this. Just it was easy to give her more responsibility, she’d work late, she would roll up her sleeves. There was just this really fast learning curve in terms of her ability to take on more responsibilities.

So we had one element of our business which was that we had to pay for wine on behalf of our clients because a lot of the regulation and compliance means that as the selling party we’re purchasing from suppliers, wine suppliers, and then reselling into the various U.S. markets. And so based on some of the licensing on the federal level, we had to also make payments to certain wineries on behalf of clients. So that part of the business it became a little heavy, not just the amount of transactions and wires each day, but just the communication back and forth customers. There’s lots of, “Hey, I need to pay these three wineries today.”

Andrew: Yeah.

Alexi: It goes back and forth, “You have to get this quote to figure out the rate in either euros or Great British pounds,” or whatever the currency is. So just five emails, 13 different wires times five every day because of the various clients that are enlisting us to do this. So it just became a real momentum killer for an owner to be spending time just going back and forth and confirming the wire trades. So we enlisted our assistant to help with this. And basically, she created this scheme or came into it with a very premeditated plan to steal. Basically, after we gave her access to this foreign exchange account, she stole for the first time 16 days later. So it was almost immediate.

Andrew: Wow.

Alexi: Essentially, she would stave off the customers. So they would say, “I need to pay these 10 wineries today. Here’s the rate.” They wire in the USD. We [took 00:27:44] the wires to this FX portal, so we would then transfer the money over and then she was supposed to set up the individual payments. So it wasn’t a bank account. It wasn’t an account that, like, we missed reconciling. It was just this FX portal that allowed you to, like, wire over your USD to then convert into foreign currency and basically perform those trades. So she basically staved off customers and would make 9 of the 10 payments and then steal the 10th, and then she’d wait for tomorrow for more money to come in and then constantly backfill . . .

Andrew: And then pay the 10th the next day, but . . .

Alexi: Exactly.

Andrew: . . . the next person would have to wait even longer. Got it. Until it got to, well over $1 million. I think the number was 1.8 million.

Alexi: 1.8 million, yes.

Andrew: Wow-wee. And then what happened at the end? What happened to her?

Alexi: Well, I think as most Ponzi schemes go, the jig is up at some point. I think it could have gone on a lot longer. Interestingly, I’ve learned that she never took any vacation as she never want anyone to see what she was doing. Even when she did take days off, she would say, “Hey, I got it. There’s not too much activity. I’ll just make a couple of trades in the morning.” So really kind of hiding her tracks.

And so when it all came crashing down, she . . . She came crashing down because she got too greedy. She started stealing a lot in the latter months, the summer of 2017. And it was becoming more and more painful and impossible for her to stave customers off. So there was one customer in particular, they were super pissed. They flew to our office, they . . . They flew their CPA to our office, they wanted a meeting, they demanded that we go through payment by payment and reconcile all this stuff. And she was at that meeting, she was flushed, she was dizzy, short of breath. Obviously, she’s having a complete breakdown.

Andrew: Yeah.

Alexi: And she had to leave that meeting. She feigned that she was sick or whatever it was. And so we said, “Oh my God, you’ve been under so much pressure and you’ve been working overtime. So please . . . ”

Andrew: No vacation.

Alexi: “Take some days off.” And I think we probably liked cut her email just because we were trying to force her hand at relaxing and very concerned for her health. And lo and behold, in those subsequent days, that’s when we discovered.

Andrew: And so what happened to her?

Alexi: So it’s been a real healthy lesson in how the legal system works. It’s been super enlightening and depressing in terms of watching how a civil case and a criminal case how they move differently. We pursued her civilly and didn’t get much from it. So a lot of time, a lot of lawyer legal bills. Criminally she was pursued by the district attorney’s office. We spoke to the FBI, we spoke . . . We worked at the DEA, but at the end of the day, like, their job is to put criminals behind bars, which they did. She was just sentence this spring to nine years in prison.

Andrew: Wow.

Alexi: Yeah. But, yeah, like, their job is not to get our money back. We were not terribly successful in doing that.

Andrew: And so how did you feel personally about that? Did you start to doubt everybody? I feel like that’s the way I would be.

Alexi: Strangely, no. I mean, like, the first feeling I felt was extreme denial, like, I just couldn’t believe it. I felt like, surely there’s an answer or she’s got some response to it. And then quickly after that betrayal, like, it just . . . I felt so incredibly betrayed by somebody that I felt so close to, somebody that I shared a lot personally with that she shared a lot about herself. In those subsequent days after the fallout just watching how she forged documentation, she would email people pretending to be me, pretending to be the CEO of our company. Just that, like, just brazenness with which she conducted her scheme and, like, just the way in which we gave to her and supported her both, like, financially and emotionally. Even, like, on the same day where we give her, like, bonuses on the same day, same day she’d steal like five times that much. It just was extraordinary to feel so deeply betrayed.

Andrew: Guilt. I would feel like . . . If somebody just gave me a bonus, I would question what I was doing on the side, “They’re being so nice. How could I do this to them?” No?

Alexi: No. No.

Andrew: But you didn’t have a period of where you were doubting yourself, doubting your ability, doubting insight into people.

Alexi: Oh, yeah. So I doubted myself. I didn’t doubt others. I didn’t think like, “Oh, now I can’t trust anybody.” I guess I had the good sense or maybe my parents raised me differently to know that, like, this is the human experience and there’s so many nut bags out there and, like, the odds of encountering them . . . As it turns out, one in seven employees are stealing from us, but maybe that’s just toilet paper, but it’s out there and you can’t stop it. The statistics are there and to be a strong business owner and somebody who is still driven and wants success, like, I don’t know how to just curl up in a ball and, like, think to never trust other people.

But doubting myself, oh my gosh, I . . . Like doubt and shame, like, I just felt so ashamed that I had let this happen to my business. Like I felt ashamed that I hadn’t clued in on certain warning signs. I had this interaction with her, we were in a team outing and we were bowling and she was like bragging to me about this quarter of a million dollars she had spent on landscaping and these horses and she got a Harley Davidson and, like, it just . . . I should have clued in to this [stuff 00:33:54].

Andrew: Right. Where did you get that money?

Alexi: I know what you make.

Andrew: Yeah.

Alexi: And she kept saying, like, “Oh, you got to come out to the house and we should go for a horseback ride.” It was like she was asking to be found out or something.

Andrew: Did you ever get to confront her afterwards about any of this or to have a conversation?

Alexi: No. No, I didn’t.

Andrew: No.

Alexi: Yeah. No. I mean, there were plenty of conversations throughout our civil pursuit, but I’m not at liberty to speak about those. And honestly, like, that was the hard . . . That was a hard lesson. And the civil matters is that . . . Truth be told, like, the less you say, the better off you are in these types of scenarios. And so . . .

Andrew: You mean, you as the person who was wronged, the less you say, the better off you are.

Alexi: Yeah.

Andrew: Yeah. And meanwhile, internally you must want to say something.

Alexi: I want to scream. Scream there at the step position across the conference table for eight hours on end with this . . .

Andrew: Right.

Alexi: But I want to like climb across the table and . . . I was even in the bathroom with her at one point during a break and, like . . . And her in the mirror and just like, I can’t say anything.

Andrew: Do you think she’s got it now somewhere that she might be, yes, nine years in prison, but also has something to come back to when she’s out?

Alexi: I feel afraid for the world because . . . And this is only one example. But just she will get out, she’s young, she’ll hurt somebody else again, and just can’t control that. And it just makes me . . .

Andrew: Yeah.

Alexi: It makes me feel so deeply sad. Must be this close and up close and personal with a true criminal and know that, like, it’s not enough. I tell people, “Oh, she’s in prison for nine years.” And like, “Oh, damn, that’s such a long time.” And I feel like it’s just never enough because her intent to hurt others it’s so vivid and clearly repeatable, like, she had a history of theft and yet I can’t control that.

Andrew: The place where I start getting my frustrations out is in my runs. I go out for long runs, 5, 10 miles and in my head, I’ll have playing all the things I wish I’d done, like, go back in time, recognize this, do that. And what I’ve taken away from Mark Cuban’s story in his book, he had something so similar happened was, he had to come to a place where he accepted that this happened to him and be okay with it instead of fighting it. The instinct that we have to fight and to create is wasted on this even if it’s in our own heads. And when I saw that he got past it by letting it go, I realized, “All right. I should let some of this stuff go to.” All right. Let me take a . . . Actually, before I take a moment. You mentioned your parents. Why did you call your parents by their first names grown up? I heard that’s what you did.

Alexi: Yeah. Your production assistant asked me, “Did I always want to be an entrepreneur?” And I said, “No.” I don’t think I wanted to always be a business owner, but I definitely always wanted to be in charge as evidenced by the fact that I call my parents by their first names and I told them, “Hey, I got to start calling you Pam and Paul because I just can’t subjugate myself to anybody.”

Andrew: Literally, you said it just that way?

Alexi: I did. I did.

Andrew: And how long did you continue with that?

Alexi: Probably two or three years.

Andrew: Okay. And they went along with it?

Alexi: They went along with it.

Andrew: Because?

Alexi: Well, because maybe they recognize that under that kind of, like, prickly adolescent teenage energy was really a true leader.

Andrew: And there’s something aching to come out, and even if it might look a little embarrassing in front of our friends or seem weird to us, we’re supporting whatever there is inside of her that’s coming out.

Alexi: Definitely.

Andrew: And were they like that a lot growing up?

Alexi: They were. They were. It was great. It was feeling just very supported and nurtured and just . . . That I could be an individual, I think, has been one of the healthiest and most influential things for me.

Andrew: You know what? I just interviewed this guy, Gil Shwed. He is a self-made billionaire in Israel. The whole time we’re talking remotely, Alexi, I swear, he nearly fell out of his seat like four or five times. I’ve got it edit that out. I go, “Are you okay? You can . . . I feel worried about you.” Because he’s leaning back. He’s like this. One time he had to catch himself with the table to get . . . And he says, “You know, Andrew, I’m not comfortable sitting still for a conversation. Usually, I would just walk around. I don’t do this.”

And it reminded me about how when I was a kid I couldn’t sit still in my classroom. He said he had the same experience. My dad had to go to the school and say, “What if he sat in the back row so that he could at least stand up but he’s not blocking anyone’s view?” The teacher said it was okay and that went on for a few years. And that’s how my parents were supportive. Little things like that.

I’d love to hear one more way that your parents were supportive. Let me take a moment to talk about my sponsor. If you can think of something go for it. Don’t feel on the spot. If you can’t think of anything, it’s okay. I’ll talk about my second sponsor is a company called Toptal. Alexi, I’ve got to tell you. Internally, you guys are probably creating lots of tools for . . . Actually, are you creating tools for yourself? Do you have developers internally?

Alexi: Not internally, but we have developed tools with outsource team.

Andrew: Outsource team is creating tools internally so that . . . Because . . . Like what? What’s an example? This is perfect for Toptal.

Alexi: So we have a proprietary software that we created for compliance, for example, because there’s just a lot that I have to collect from my customers. I don’t have a crystal ball to know what they want me to do, but they need to tell me and I need that to cope out like 50 different systems.

Andrew: Perfect. I feel like a lot of people hear me talk about Toptal as the place to hire phenomenal developers inexpensively very quickly and they think, “Well, I’m not in a software company. Why would I want to do it?” But the truth is, a lot of companies need software internally for things that they’re probably doing in spreadsheets right now or with software that’s poorly made. If they went to Toptal, if they hired developers and did what you did, which is create your own internal tools, it allows your company to grow better, allows you to be more agile, and then creates, frankly, a part of your business that gives you a leg up on the competition, and that maybe is one of the reasons why years down the road somebody ends up buying from you, buying your company.

So, for whatever reason, if you’re out there and you’re looking to hire developers, I urge you to go check out Toptal. One of the beauties about them is they already have a network of great developers. You talk to them and often within days you can get started with great developers. So it’s top as in top of your head, tal as in talent. And if you go to toptal.com/mixergy, they’ll give you 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no-risk trial period, really. You’ll talk to them, if you’re happy, you can hire. If you’re unhappy even after hiring, you won’t have to pay. Toptal.com/mixergy. Did I put you on the spot with the parent story?

Alexi: No. I’ve got another one.

Andrew: Oh, good. What is it?

Alexi: My parents taught me how to meditate when I was five years old. Both of them were TM, Transcendental Meditation practitioners. And actually both of them were teachers of TM. The ’70s, like, the drugs and rock and roll just kind of missed them and they just got, like, super into meditation. And so my mom, actually, when she was pregnant with me she went in the teacher training, and then I learned when I was five. So I’m 40, but I’d say cumulatively, I’ve been meditating for 35 years plus gestational period.

Andrew: Wow. And so what is knowing how to meditate give you? What does it allow you to do now?

Alexi: So it’s a practice that stayed with me lifelong. And studies show that the cumulative effects of meditation year over year, the more you do it, the longer you do it, just it really makes quite a difference. And in terms of my recent stress, I definitely have had my super low moments, but I also feel like that’s the one thing that nobody can take from me, nobody can steal from me is this gift that my parents gave me that was something we practice as a family, it’s kind of dorky . . .

Andrew: You would sit down on the floor?

Alexi: Yeah.

Andrew: How? How would you do it?

Alexi: Well, so, as a kid you could just sort of play and sort of we were given a mantra and then sort of while you’re playing my mom would say, “Okay. It’s time to meditate play. So I’ll time you in, like, 15 minutes, just pray, but just start to think about your mantra. And then when you forget thinking about it, like, think about it again.” And then when I was 10 I think I actually started sitting down with my mom and dad and sister and meditating as a family.

Andrew: Wow. And I remember I did this event here in San Francisco about meditation, Tim Ferriss came out. And he said that he tried transcendental meditation and they gave him a mantra [inaudible 00:42:29] I think and he wasn’t allowed to tell us.

Alexi: Oh, my God. I begged my parents my entire life, like, “Please tell me. Come on. Tell me yours. Tell me . . . ” My sister was like . . .

Andrew: They never did.

Alexi: They never would. They never would. They said that that’s the one thing that it remains to be sacred and that’s your gift to you is that it’s sacred to you, it’s your gift.

Andrew: And yours is now still sacred to you and it’s still the same one that you had at five?

Alexi: Correct.

Andrew: Wow. I think my older son could use it. He’s only five, it’s kind of early, but I feel . . . I’ve got the sense that he could use it. Do you . . .

Alexi: Basically, they say that if you . . . Because I have three kids, 10, 7, and 3. And basically they say like, once your child is, a), interested in learning, and b), they can keep a secret, then it’s time.

Andrew: Then you give it to them and you start training them. And have you done it?

Alexi: So my 10-year-old I keep saying like, “When you’re interested or . . . ” That interest has to be there. You can’t force it.

Andrew: Hasn’t come up yet.

Alexi: Yes.

Andrew: I’m kind of thinking I just want to take him out there and tell them, “Let’s do it. Sit down here and let’s both learn how to do it.” I’ve never done TM. I grew up in New York where everybody was listening to Howard Stern. And he was huge on like he’d go off for like two hours on transcendental meditation and why it was so important to him, how he will meditate in his car on the way in, how it helps him stay in flow when he’s doing his comedy on the radio. And I was curious, but never even know where to start with it.

Alexi: I think it’s a great energy booster for somebody who works a lot of hours. Like for me, it’s just that like zap where you just, like, shut your eyes for 20 minutes and then all of a sudden you can just get the second wind.

Andrew: Do you think I can learn? How long do you think it would take me to learn it now if I want to do that?

Alexi: Usually, TM starts on a Friday and you’re meditating on Friday, and then you come back in on Saturday and Sunday just for, like, a check-in, so it’s like [inaudible 00:44:15].

Andrew: Wow. All right. Going back then to teams, you mentioned that you were at one point doing everything, wore many hats, I think is a phrase you use. And then at some point, the company had to evolve beyond that. How did you do that? That evolution seems like it’s a difficult one for companies.

Alexi: Yeah. So we had to make hard decisions. We had to . . . We had to let certain people go that . . . Like honestly, it was like an ego meltdown, like this culture ship where kind of everything we thought we were as this startup was changing and we were kind of no longer a startup. So a lot of the egos and then just the energy and the stories we pulled about ourselves were starting to feel untrue. So we actually involved the employees at the time in kind of this great exercise and coming up with our why and a mission and hired a facilitator. And we’ve actually hired facilitators every year since then. So our employees know, like, we’re continue to invest in you and we definitely want to have you a part of this process. It’s not necessarily just top-down. But yeah, like, the same people that got us from, like, year one to year five are definitely not the same people that got us from year five to year seven and we’re coming up on our 10th anniversary as a business. And I noticed shift again.

Andrew: You noticed what? Sorry.

Alexi: That shift again in terms of just the same kind of . . .

Andrew: Now you’re evolving again and you need to recreate the company again now.

Alexi: Exactly. Like, we’re right at 40 employees, 17 million in revenue, like, it’s starting to kind of shift again where it just needs this different dynamic awareness.

Andrew: What did the facilitator help you do?

Alexi: We’ve hired a bunch of different great facilitators and each one of them I’ve just really held on to and treasured the experiences. We’ve done a big focus on customer service, and we hired a company called ZingTrain. They are actually based in Ann Arbor, Michigan. Actually, a deli and a restaurant like a candy shop and a bakery. They have the most, like, lights out customer service. Anyone who goes to any of these businesses walk away and you’re just like, “That place has great customer service.” So they’ve kind of bottled it up and they now teach businesses how to implement these same great customer service skills. So we use them. We brought in an outside coach to just help with some of the mission and values stuff. We brought in [inaudible 00:46:46]. He’s based here in the Bay Area.

Andrew: Sorry. We just lost you.

Alexi: I’m sorry. We brought in Karim Bishay and his company is called Living Orgs, because we were looking at lean startup and EOS like the traction platform and opted with Living Orgs which was a great company workshop that we did to really get clear on accountabilities. Like, who’s accountability is it? Is it okay that as long as that employee has that accountability that, like, they don’t have to ask for permission, they don’t need to . . . There doesn’t need to be this, like, crazy hierarchy, everyone is clear, they know what they’re doing, we’re all paddling in the same direction. We had a lot of time working on the principles of getting things done, David Allen’s work. So yeah, we’ve tried lots of different tools.

Andrew: What did you learn about customer service? What are you using?

Alexi: So the main takeaway with the ZingTrain was this concept called the universal language, which basically, we all we did as a group in terms of kind of really defining like, what are the principles of our language as a company? And we teach those to new employees so that everyone is clear, like, “That might be what you learn to help a customer in the past, but this is the way we do it.” So we have principles, they’re clear.

Andrew: Like what? What’s part of the principles for dealing with customers?

Alexi: One of my favorite ones is letting the customers be wrong with dignity just because it’s in a B2B space we’re dealing with the same customers day in and day out, and so it’s not like you deal with a problem with a customer and then that customer and the problem goes away once you’ve resolved it. Even when we resolve issues because our customers are the same customers the next day, still kind of sticky, like, it’s always here on it and it’s kind of hard to bury the hatchet all the time when challenges arise. And so I think being able to give people the benefit of the doubt and know that everyone has good days and bad days and that you can give somebody dignity even if they’re wrong or you feel like we’ve done everything we can to help cure their problem.

Andrew: I’m looking all this stuff up as we’re talking. So I told you, I’m having incredible computer issues. I was thinking, “Maybe I just won’t be able to do this interview.” And then I thought, “There’s got to be a way.” So, usually, I would on the computer screen that I’m talking to you on be researching everything you’re telling me about. Now, I’m doing it on my phone, and I think I found this company. They’ve been around for 25 years. This is them, right?

Alexi: ZingTrain. That’s it. That’s it.

Andrew: Yeah. Look at this. ZingTrain. Never heard of them before.

Alexi: Very cool.

Andrew: All right, let me close it out with this. It seems like you’ve learned a lot now as an entrepreneur. Is there a book? Is there something that’s helped guide you? Is there something you could recommend to us?

Alexi: I would say the most influential thing for me is . . . Sure, books are great, but I’m actually a part of an organization, entrepreneur’s organization. It’s a global organization. I started in the New York chapter and I’ve been a part of the San Francisco chapter. I’m actually on their board for the last six years. And by far and a way that has been the most supportive, influential, mind-blowing experience that I’ve had as an entrepreneur because it’s real life. I read lots of great books with the people that I interact with who I know. But I have a forum. There is nine other people, they’re business owners, all their businesses and industries are different. They’re not wine, but all of our problems are exactly the same.

When I came to my forum meeting that day after learning about this theft and shared this tremendous loss and extreme devastation, I just knew that I had seven . . . Oh sorry. Nine other people staring at me. And maybe they hadn’t lost that much money before. Maybe they had or maybe they lost more, but they all had been betrayed. They all felt betrayed. They’d all taken bigger risks that they weren’t really ready to pay all the way through. And that camaraderie and just genuine support is something that I’ll cherish for the rest of my life.

Andrew: I’ve heard that several times from my interviews, EO. I interviewed even the founder of EO years ago and I never rec . . . I didn’t recognize how powerful it was until I started talking to entrepreneurs who benefited from it. All right. Well, thank you so much for doing this interview.

Alexi: Absolutely. Thank you so much, Andrew. It’s been a pleasure.

Andrew: Same here. Bye.

Alexi: Bye.

Andrew: Bye, everyone.

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