Painful Opportunities

I feel like a broken record saying it, but these past several months have been difficult ones. We’ve had to let go of pretty much all our contractors. Our inventory is dwindling, almost completely sold out. From one perspective this is really good, and from another, it spells the potential death of our company. But, amidst it all, there is still opportunity.

Opportunities come and go, but not always in the way or time that I’d like. Allow me to explain.

Just a few short weeks ago I was boarding a plane for San Diego. I had recently been asked to come and sit as an advisory board member for a new startup event. As I boarded the plane, I was pretty excited and quite honored to sit on this board. I was the youngest member of the board – while I was excited and nervous, I felt ready for the task. Sadly, my plane was delayed due to a “failed engine”.  After several hours I made it to San Diego but had essentially missed the first day of meetings. The next day came quickly and before I knew it, the meetings were over and I was on my way back to TN with less than 24 hours in San Diego.

Though short, that trip, that opportunity, left me with one impression: It wasn’t the fact that I had an emergency landing on the way there, it wasn’t even the fact that I traveled over 1,850 miles for 4 hours of meetings. What I left with was a sense of encouragement that I am sure I won’t easily forget.

One of the primary leaders of the organization took me aside as I stood to leave and, looking into my eyes, expressed words of encouragement, truth, and admiration — it came at a much needed time, and I now believe more now of this road that I am on. It makes a huge difference when upright men whom I admire take the time to speak into my life that they are observing, following, and enjoying the walk — dare I say stumble — I am pursuing.

This trip was an opportunity, a gift, and a heartfelt blessing that I am happy to have traveled so far for.

I think Swayy is on a similar journey right now: we have a destination we are trying to get to, we have been delayed, escaped death, but we keep going not because of the goal ahead, but because of the journey.

As many of you know, we lost our largest factory several months ago. In a dash to save this year's opportunity for the Christmas shopping season, I went to China in September to see if our second factory could “pick up the slack” and make both products. Sadly, this was an immaterial wish that was not able to come to pass. But, I was able to learn a lot and meet many new connections within the beautiful country of China.

In a Hail-Mary effort to gather any and all cash that we could, we talked with our new main factory to see if they might be willing to invest cash into the business to keep us afloat as we now had no real way of making enough inventory to sustain our system of cash flow. Although that conversation ended in a "no" for any investment, it did lead to another conversation that, if it worked out, could be very real and pivotal. Our factory owner offered to introduce us to another company that might be willing to invest. That led to another no for any investment, but it lead to another opportunity that I had not considered unto that point — a potential licensing deal.

For those unfamiliar with what a licensing deal is, imagine Samsung goes to Apple and says, “Hey guys, we love your iPhone 11. We want to buy the rights to sell that product under our name.” If Apples says they are interested, the two companies begin negotiations to allow Samsung the right to sell the iPhone 11 under a new name. These deals typically encompass a few terms: royalty payments over time (usually a percentage of the sale price), quality standards (depending on who is manufacturing the product), and upfront cash payments. 

We (Swayy) began having a conversation with the company, which turned into weeks and weeks of negotiations over one major thing: royalty payments. We finally settled on a percentage, a term (length of time for the first deal), and a few quality standards. Now we are waiting for the licensee to draft an agreement contract that we will then review and most likely counter-negotiate. The game will go on and on until we sign a deal and materials hit the production line.

This potential deal has to lead me to a new mindset, that maybe there is more than one way to build a D2C (Direct to Consumer) business. What if we create new, innovative products,  test them on the market to prove viability and demand, and then license those products to bigger brands who can sell them at scale? We can then draw royalty payments to fund more R&D, which leads to more products, more licensing deals, and so on until we are at a point where our name is big enough that we can efficiently order larger numbers of products and sell them alongside our market-penetrated brand name. The real beauty in this model is two-fold: 1) We don’t have to finance any inventory for the licensing deals, we just collect cash and control quality; 2) due the China trade war, the factories are willing to take on much smaller PO’s (Purchase Orders), which allows us to test markets with product batch sizes of 20–100 units.

So that is where we are. We are moving all the time, sometimes forward and sometimes sideways, but moving nonetheless. Just like my trip to California, even though it was hard most of the way through, it was a glorious journey that led to a great blessing of encouragement. I think Swayy’s journey is just the same.

There is still opportunity, and we choose — I choose — to pursue it until the end, wherever that may be.