Russ is in San Diego visiting with Steve King, co-founder and partner of IDK Distribution, a software application that has morphed into a business accelerator and fulfillment and distribution company to facilitate bringing products to market. King is a serial entrepreneur who has crossed industries, services and markets and now is working with a diverse B-to-C software product. His experiences have given him great stories about some hard-learned lessons.
Video and Full Interview Text
Russ: Welcome back to The BusinessMakers Show, coming to you today from Southern California. And my guest is Steve King, Co-founder of IDK. Steve, welcome to The BusinessMakers Show.
Steve: Russ, nice to meet you.
Russ: Tell us about IDK.
Steve: Well, I don’t know.
Russ: IDK, I get it.
Steve: So, IDK sort of started life as a software venture, and has now morphed into a business accelerator that uses that software to really assist us in taking a product to market. It’s very much a direct-to-consumer model, online, and what the software does, it basically, once it has identified the target demographic for a product or a service, it can go into the net and find similar profiles, and then serve up other software so we can basically target those individuals in a very efficient way.
Russ: Ok. So you’re talking about B2C commerce (Steve: Yes, I am.) with a product. What’s the product?
Steve: The product can be anything. So, right now we have three products in production, and then we have about five or six different products, or brands, as we call them, that are in R&D. So, right now we have a product in the anti-aging space (Russ: I’ll sign up for that.), I’m a user. We have a service, a product service in the SAT prep space, and, see these are pretty diverse, and another product right now in the cell phone accessory space.
Russ: Wow. Ok, I sort of knew that. You’ve been on my radar, and I had a brief picture, but it’s like a, it’s more of a talent, and skill, and software that knows how to take a product, and find a market, and sell it, as opposed to just having a family of a certain type of products.
Steve: Correct. I mean, the software is so efficient that it improves the quality of the traffic coming to our websites, and it really assists in very high conversion rates. So, you know, we’re talking 7 to 11% conversion rates online, which is pretty awesome.
Russ: Well, it is. I mean, these days and times particularly. There’s a lot of people that are trying to do that. So, and it sounds like you’re exceeding the close rates of most everyone that I know of.
Steve: The challenge right now, in fact, let me just back up. The other thing that, obviously IDK does, it fulfills. So, we’re using our own software and then we are fulfilling the customer’s need.
Russ: Ok, so you’re not just getting an order and just sending it off to somebody and say, ok, ship it.
Steve: Correct. And that plays into my heritage. So, back in ’95, back in England; I come from the UK, been here about 18 years. I had a distributor, I started a distributor from my son’s playroom in the PC components and software space, and at one stage we were, and we had to operate on very low margins. The PC market was, at that time, infamous for their margins.
Russ: Oh yeah. I’ve got some experience there and know that, for sure.
Steve: So, we had a couple of really big warehouses, 50,000 square foot; very automated. We had very low return rates, very high accuracy and throughput, and I’ve kind of missed, when I moved here 18 years ago, I then went into really just IT software development and investment; no physical product. What’s nice about IDK, I can hug things again, and I kind of missed that part, so it’s nice to go back a bit.
Russ: Well, that’s really cool because so many of the ecommerce stories that we’ve had here on the show were exactly the opposite. I want to get out of the business of inventory, I don’t want to handle the product, I just want to market it and sell it, and then buy it and deliver it. And, I guess, when you do it that way you kind of lose control.
Steve: Yeah. This way is total control. Everything is pretty automated. Again, because of our software background, we’re able to tie systems together through API sets. It’s a very efficient operation. But at the front of it, it’s that efficient sales engine which really, just now it just begs for more products and more brands to put it to the test.
Russ: Ok. So, you know, you mentioned, what did you mention? Anti-aging, SAT training, and the other one was,
Steve: It’s a cellphone accessory.
Russ: Ok, wow. So, I mean, I can see SAT training a long time. Anti-aging, there’s probably going to be a lot of competition. I mean, do you just plan to keep adding to that, and those guys stay on forever?
Steve: No, on deck we have more. We have skincare products coming out under our own brand. We have some products and services aimed in the pet space; products and services in pain management. So, it’s pretty diverse.
Russ: Wow; very interesting.
Steve: And that makes it very exciting. And a lot of what we do isn’t just a hardware product. It will be presented with an app that will enhance the interaction of the product. So, there’s a lot of, there’s some pretty innovative ideas that surround what looks on the face of it another me-too product, and we really are not. We are not into me-too products, so again, that makes it quite exciting.
Russ: Ok. Well I understand completely wanting, based on your background, wanting to get into distribution, but I’m just curious, what sort of pulled it all together? What was the idea trigger that said, wow, I can get back into product distribution now?
Steve: I think we just, you know, my company is like Amazon. My journey since I’ve been here, and I’m also a shareholder with a digital agency. And our digital agency, I’ll plug it; it’s called elevated.com. You know, we have a lot of ecommerce customers, and so I can understand the requirements of really accurately focusing and having really measureable ROI when it comes to selling direct to a consumer online. And so I just thought there had to be a software solution somewhere.
Russ: Ok, and you found that, built it, and used it.
Steve: I was still testing that. I mean, I’m still pinching myself that it’s working 3 times out of 3, but let’s bring some more products and keep testing the software.
Russ: Really cool. Ok, so you’ve already mentioned you have a pretty interesting business background in England. What was your first company there? How did that happen?
Steve: So, my first true startup was Datrontech (Russ: Datron). Datrontech. Up to that point, I’ve always been in semiconductors, and semiconductor distribution. So, my first break opportunity was actually forced upon me. So, just prior to Datrontech, I spend like 3 years bringing a company to the UK. That company was in Garden Grove here, and they made high density memory modules for the defense markets. And so we set up a factory, and we started building our client base; Plessey and the British Aerospaces, to take these memory modules that we were taking chipsets, taking dye, and reconfiguring the dye into multilayered, ceramic substrates.
Russ: Wow. So this is Datrontech.
Steve: This is pre-Datrontech. And so, anyway, that was really my first experience doing a semi-startup, because it was someone else’s money; helping him set up in Maidenhead, England. And fortunately, I guess, for everybody, the Berlin wall came down. At that time, it was not good for business. Literally every defense contract froze. We had a factory that (Russ: Peace had broken out.), yes. With the benefit of hindsight, it’s very fortuitous, on a number of levels. And so, at that time, we had this very fine tuned, 9001, 9002, assembly line producing high row chip sets; memory modules. But we didn’t have any customers, it had frozen. So, at that time, it was also the explosion in the PC world.
And so in the memory module world, the memory upgrades, there’s one fundamental building block called the 1Meg x 8. That would be, they didn’t have a parenting chip, it goes into an Apple machine. Or 1Meg x 9, and that went into an IBM, PC clone, or it’s IBM. And so, I had these customers, and ComputerLand was one of them, and that gives you my history and background. And, my management didn’t want to put a commercial grade order through the line, so we disagreed, and I left. And I went and found someone to build the substrates, I went and acquired the chipsets directly from the manufacturers, and we found a 3rd party assembly house, a 3rd party test house, and I started making memory modules with my first true startup, which was Datrontech.
Russ: Did you actually go out and lease space and all that?
Steve: No, at that time, I started in my son’s playroom, so he was actually one month old. But in 5 or 6 months we were 8 people. We were on a roll; we were still in my son’s playroom. My wife politely asked us to, and so we did. She couldn’t even put a car in the garage because it was full of packing boxes and chipsets. At one stage in our garage we had about 2 and a half million pounds’ worth of product. And we weren’t insured.
Russ: So, did your former company that you left follow your success? Did they see what you did?
Steve: No, because I had to sign a non-compete, and I wasn’t competing with them. I was making these commercial grade. When I went down trying to, because I hawked the house, and literally got my wife to sign over her half of the house, so we had hawked the house. And so, it was just making sure we stayed cash flow positive and I was wowing my customers so that they would come back. And they did.
Russ: And that continued for a long time, right?
Steve: That continued until I left to come here 18 years ago. So, in 1995, so I started in 1988, but in 1995 we went public on the London stock market. When I left to come over here, and really that was a personal decision, because I lost contact of my, by then I had 4 kids. When I moved here all of them were under 10. I just wanted to step away from the business, because at that point, it was 480 million in revenue, dollars, and we were 14 subsidiaries in 9 countries before the common European, the Euro. So, currencies had to be hedged, and inventory had to be moved around, and it was a fabulous moment; it was a good time, but it can wear on you, and it can certainly wear on your family if you spend a whole year of not seeing them.
Russ: So it was a major success (Steve: It was.) but you walked away from it (Steve: I did.). And that’s, right then when you said, I quit, and moved to the United States.
Steve: I did, but I thought just for two years (Russ: Ok.), and here you are in my garden.
Russ: And what else have you done now since you got here?
Steve: So, since I’ve been here, initially for the first year, I tried to get into the investment communities. I was missing, I wasn’t missing managing, I was missing being creative in this space. And so it was really hard to completely walk away, so I found some opportunities to support back small companies, startups, so I did. Big mistake, because what I’ve learned is you just don’t write checks. You only write checks if, for one, you have a control or have an influence on the board. And if the CEO is not prepared to be replaced if he’s not performing, I’m not going to invest. And so, yeah, I lost quite a bit of money in the first couple years. My wife is still keeping score. And, then I eventually decided I’m only going to invest if I’m going to be in the founding team, or I’m going to be on a board, or I’m going to be an advisor. And since then, I must have done 12 startups.
Russ: Alright. So, we have quite a few aspiring entrepreneurs that watch the show, Steve. What general advice would you give them about fundraising, and about launching, and succeeding, and operating the company?
Steve: A couple of things. One is, they’ve really got to know their market. So, if I ask you how big is your market, research that. Know who your competition is. If you’re disrupting a market, explain what you’re doing; tell me how you’re disrupting it. And, have a really good elevator pitch. And then, just basically, understand lean startup methodology, because that’s exactly what we follow with IDK. Understand the difference between persevering and pivoting, and be prepared to pivot more than once. And I would recommend anybody getting, I think it’s Eric Rice’s book, and literally we give a copy of that to most people in IDK because it helps us all get on the same page.
Russ: Right, cool. Great advice. I want to stay in touch with you on this IDK thing. There might be some reasons to come back and visit you again in the future.
Steve: Yeah. I mean, if you’ve got a product or a service in mind that, one, it has to be kind of like, it can tell a story. So long as there’s a story to be told, and the market is receptive, and it’s big enough, we can take it to market.
Russ: Ok, and you just go to IDK.com?
Steve: Yep. Literally.
Russ: Alright. Steve, I really appreciate it.
Steve: Russ, it’s a pleasure. Thank you.
Russ: You bet. And that wraps up my discussion with Steve King, Co-founder of IDK. And this is The BusinessMakers Show.