Misfit Entrepreneur May 2020 - 197: Finding the Gap, How a 20-Something Created a $50+ Million Business in 3 Years with Dylan Jacob

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Dave Lukas Chats with Dylan Jacob

197: Finding the Gap, How a 20-Something Created a $50+ Million Business in 3 Years with Dylan Jacob

This week’s Misfit Entrepreneur is Dylan Jacob. Dylan has a incredible story. He’s already built and sold multiple companies, has built his current company, Brumate, is set to do over $50 million in sales in just a few short years with less than 10 employees and no outside capital, he’s been awarded Ernst and Young Entrepreneur of the Year for the Midwest, is a Forbes 30 under 30 recipient…and he’s only in his mid-20’s.

But, he didn’t start out with anything handed to him. In fact, quite the opposite and his path went through a lot of twists and turns, but one thing was constant – he was an entrepreneur from a young age. A Misfit Entrepreneur. And true to Misfit form, he’s used his inner Misfit to bootstrap companies and create whole new markets. I’m excited for our conversation today and know that your going to get some great takeaways from him.

www.Brumate.com

@Dylan.Jacob on Instagram for updates and keeping up with Dylan’s story

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Show Notes

Dylan grew up in a small town in Indiana. There wasn’t much to do. His childhood consisted of him looking for and finding things to do. He always wanted to be an inventor, so he would tinker and create things. He grew up poor and his parents split with he was in 4th grade. His mom was working for minimum wage. He had been home-schooled prior and thus 4th grade was his first year in traditional school. Of course, having next to nothing, he would see other kids with things he wanted to get.

So, he started doing everything he could to make money to buy things and not burden his mom. He did everything from yard work to odds and ends jobs for people. This made him realize that if could provide value, he could get paid for it.

In 7th and 8th grade, trying to fit in and gain acceptance led him to hanging with the wrong crowd. He was expelled twice. He was an entrepreneur, but not in the right way. He sold drugs (weed). It wrecked his life. He was expelled, when to juvenile detention for several months and was put on house arrest. His mom had to pay for everything and it hurt their family.

It was at this time that Dylan took a step back to reexamine his life and looked for legal ways to make money to pay back all the costs of his trouble. He took a nod from his grandfather who had come over from the middle east and started fixing things like TV’s and VCR’s, etc. and had a little shop. As Dylan went into High School, people were getting smart phones and would damage them or break screens. Instead of repairing them, Dylan would buy them cheap, fix them up, and sell them on Craig’s List. He would order the parts from overseas and resell them. This was his first taste of making real money.

This started Dylan’s career of finding unique opportunities in gaps in markets. Big gaps.

As sophomore year started competition in the form of repair shops started to come in and he was doing less business because people were getting their phone fixed. But Dylan found another gap – He got to know the others of the repair shops and where they were getting their repair parts. They were ordering from E-bay and Amazon and getting B and C grade parts, not OEM parts that were A-grade. Dylan made deals to supply better parts from the connections he had made and was using. He made the competitors his new clients.

By senior year, Dylan’s business was working with over 100 repair shops around the U.S. doing hundreds of thousands of dollars. The funny thing was he still held to this theory of wanting stability and a job in life and decided to go to college for engineering. As he says, he “didn’t quite believe in himself as an entrepreneur.” He had gone from being expelled to being top 10 in his class with a thriving business – but still thought he needed a job!

During Christmas break of his first year, a larger franchise ended up putting Dylan’s repair parts in the bulk of their stores and then shortly after gave him a buyout offer. He took the deal and took the semester off. Once he saw the money is his bank account, it was a reality check. There was something to entrepreneurship.

He decided to put school on hold and go full time as an entrepreneur. He bought a house to fix up and as he began to fix it up over the course of a year. He kept a journal and would jot down ideas they came up. One idea came to him while fixing the house. It came out of the need for a better selection of kitchen backsplash tile. There was hardly any selection and none of the options, he liked. So, he saw the need for more options, specifically glass backsplash.
Vicci Design was launched in 2015 and provided the largest color selection and size of glass tile available. Over a year, he knocked on doors and local showrooms and started working with Wayfair and Overstock. It was profitable from day one. He was still doing side hustles and launching other businesses during this time.

He turned 21 in 2016 and started to love craft beer. And most of it came in 16 oz cans. He’d notice that always the last ¼ of his beer was warm. It drove him nuts, so he wrote in his journal, “Find a way to keep beer cold.” That was the beginning of Brumate.

He started looking at the stainless steel insulated drinkware market. In 2016, it was the fastest growing category in the housewares market. All the major players were focused on hydration drinkware. It was all about water bottles or coffee. Dylan decided to create the products for the “dehydration” market – making drinking alcohol a better experience. It was huge gap that no one else was doing and ignoring.

His first launch on the concept sold out in a couple weeks.

Dylan’s story has a lot of teachable moments…

There is opportunity in everything you do.
Don’t give up on an idea.
Asking how and finding a way and making a way.
Looking for the gap, opening the niche, and owning it.

It’s one thing to have an idea for a product, it’s another thing to create it. How do you source and get a product done?

If you can source locally, it’s better.
It won’t be cheaper, but will be better.
In Dylan’s case, he could not find a manufacture in the U.S. capable of producing insulated drinkware.
He worked with a company in New York to take his designs and get a protype type 3D printed.
He looked up records of competitors or like companies on Port Examiner to see who their manufacturers were.
He contacted them to see which would be the right fit and new they had experience producing the kind of product he wanted.
It was important to have a manufacturer that had a very strong in-house engineering team – it was the best thing he ever did. They helped him take his concept and make it manufacturable from day one.
- Many times the engineering is free as part of their service.

What can you tell us about selling online once you have a product?

Dylan’s has used Shopify for his sites.
He started with creating a landing page with pictured of people holding the product. He collected emails of people who opted in with interest for when he launched the product. This was the group that was the first round of buyers.
What worked for Dylan was showcasing the product in real life situations. He photoshopped it into pictures.
Dylan scaled the company to a little over a million before beginning to hire a focused, in-house team.
Customer service is another part of marketing as it is a retention tool. So a lot of emphasis was put there as well.
Messaging is key and will be different for every product or service. You must try as many times as needed to figure this out.

At the 43 min mark, Dylan discusses some unique ways he figures out what is in demand.

What was the tipping point? $50 million+ in 4 years – what was the inflection point?

Q4 2016 did over $300k in product selling out.
He put his up for sale, sold Vicci, and got as much cash as he could putting every penny into Brumate.
His biggest challenge was cashflow and keeping stocks.
He would be out of stock for months and have to take pre-orders.
Once there was enough cashflow to sustain inventory and outsourced fulfillment, things really started to take off.
He was then able to focus on marketing full time with the team he was building.
Basically, the company now is really just a marketing company for the product, everything else is outsourced.
This took them from $2 million to $20 million in the next year.

Constant innovation and testing is critical to staying on the forefront of product creation and growing the market.

Best Quote

"Your biggest opportunity is what your competition is failing at or not servicing with their products."

Your biggest opportunity is what your competition is failing at or not servicing with their products.

As a founder, focus on what you are very good at. Stay in your lane.

Outsource to scale and grow. Fill your team with those that are best in class in their own categories that compliment you.

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