“Focus On Your High Payoff Activities” — Advice From CEO Luke Peters
By Yitzi Weiner and Sarah Snyder
“ We always want to focus on so many goals but it’s better to focus on fewer more important items. Every department can have several goals and you might make a yearly plan with goals. But ask yourself, what are the top 3 items you should be spending your time on? What 3 goals will have the largest impact? Which 3 goals will make the biggest impact on your business looking forward say 2–3 years? Usually your goals will be a combination of these.”
I had the pleasure of interviewing Luke Peters, CEO & Founder of NewAir Appliances. NewAir is the most trusted name in compact appliances, and over the past 15 years has prided itself on creating quality products that fit into people’s lives.
Thank you so much for doing this with us! What is your “backstory”?
I started the NewAir site around 2002 as a Yahoo! store with no programming background. Luckily, I wasn’t doing this alone. My wife Mariella and I had our second child by this time and were running NewAir, and our lives, out of a condo in Huntington Beach. I was still working as a Hazardous Waste Scientist burning the midnight oil to start the business while she ran the operations during the day.
We continued to grow and move both our family and NewAir. Business never stopped, even when our new house was tied up in escrow and we were living with my mother. We were shipping 20 to 40 products a day, and packages were strewn on her front lawn. Mariella would drive around town looking for UPS trucks if we missed the daily pickup at the house.
In 2016, we moved into our current 115,000 Sq. Ft. distribution center, tripling our footprint. We’ve increased from a team of about 25 to over 65 employees in 2018. Today, our brand is a leader in compact home appliances such as wine coolers, beverage coolers, evaporative coolers and ice makers.
Can you share the funniest or most interesting story that happened to you since you started your company
Grainger was supposed to ship some heaters to a guy in Corona. Well instead, the customer wanted to pick them up at our location, AKA our condo! I was still working as a Hazardous Waste Scientist so obviously that would be a little awkward. Instead we told the customer we would save him some time and meet him half way, at Anaheim Stadium. My wife Mariella drove over there to meet this customer in the parking lot. Again, straight out of a movie, the guy tells her that this is a little strange to do a transaction in the parking lot of Anaheim Stadium — he said it seemed like some mafia deal. So, she gives him the new box and the customer drives away. Later on we received a distressed call that the box was filled with hoses instead of heaters! Somehow Grainger put a bunch of hoses in the box! The customer was confused and upset, so we just refunded him at that point but we learned a lesson. Get a REAL building to run the business out of!
What do you think makes your company stand out? Can you share a story?
I am proud of the team we have here, we never give up and always find a way to get things done. Just this Black Friday we had so many orders that the warehouse team was working past 9pm several days in a row. The business has grown and changed so much in the past 3 years that every team from accounting to sales to marketing have had to adapt and change on the fly and it’s fun to work with such a dedicated team. Our growing Newair brand is competing with much larger more established brands but we are gaining ground daily with our focus on producing the best content in the industry to support our customers.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
My parents always had me working when I was young. I literally had to pay for half of my own braces! I had newspaper routes and also worked at the family donut shop for many years. While my friends were playing Atari or watching TV, I was usually working at the donut shop or collecting payment for my paper route. My younger brother Steve also got me started in Ecommerce where I learned a ton of how the industry works.
How have you used your success to bring goodness to the world?
Giving back is one of NewAir’s core values. We help many charities every year. One of the charities we help sends the kids of fallen soldiers to college for free. This is a great cause that we have supported for years and on a few occasions I had the chance to meet these kids in person. I also work directly with Veterans to provide my vacation home for free so they can experience a relaxing week in Huntington Beach CA.
What are your “5 things I wish someone told me before I launched my Start-Up” and why.
1. Focus On Your High Payoff Activities.
We always want to focus on so many goals but it’s better to focus on fewer more important items.
Every department can have several goals and you might make a yearly plan with goals. But ask yourself, what are the top 3 items you should be spending your time on? What 3 goals will have the largest impact? Which 3 goals will make the biggest impact on your business looking forward say 2–3 years? Usually your goals will be a combination of these. Deciding on new key hires, key talent always makes the biggest impact. Negotiating better bank deals. Deciding on your most important sales goals.
2. Hire The Best People You Can Afford.
Your business is like a sports team, the better players you have the more games you will win. It can take a while to figure this out especially for cash strapped startups or growing businesses that are not that profitable, but you can make the biggest impact to your company by hiring the best people possible. And not only by hiring the best people but then giving them the freedom to succeed. You should be hiring people that are smarter than you and people that you respect enough that you could see yourself working for them. When you have that team in place if will feel like a new company. Spend time developing a more thought out hiring process, here are a few quick tips. Widen your applicant pool by writing and engaging job post. Take your time and set up multiple interviews with you and your trusted leadership team. When you are down to your final two candidates have them perform a test or presentation in person, add some pressure to the process and see who shines.
3. Know Every Detail Of Your Business.
“Don’t micromanage” is repeated in so many books its cliché. But owners take it too far and think they can just abrogate responsibility completely. That’s also called being stupid. You need to trust but verify. Nobody cares like you the owner and it’s your responsibility to know the details, find the money leaks, negotiate the important contracts, and understand your largest vendors. If you are a product company, you need to audit and negotiate your whole supply chain and if you have not done that in the last few years or left it to someone else at the company I would not be surprised to find a 5–20% savings. And this can be huge. Think of all your LTL shipping providers, ocean freight and logistics, small parcel, packaging and supplies, 3PL costs, and so on.
4. Setup Team Scorecards
Set up systems and scorecards inside your business so your team can see their performance against their team-mates. In most departments, managers can see the performance of their teams but often a major part of their perception is qualitative. But when you can make a clear scorecard that rates the team top to bottom on specific outputs that are known to be most important to the company, you will vastly improve team performance. And best of all they will understand the rankings and it won’t get personal when you try to coach them on performance. Everyone is rowing the same direction and it’s all focused on numbers and on the company first.
5. Cash Flow is King
When you are growing fast, you never have enough money. Profits get taxed or spent on inventory or AR’s. For a fast-growing company, it can be impossible to keep up with growth from profits alone and you will need investors or a solid bank. And for the CEO that bank relationship is always one of your most important relationships. Most employees or outsiders just see your top line sales, they see 30 or 40% growth and think you are building a house with $100 bills. But what they don’t see are things like your expenses going way up, you inventory and AR’s going up. You need a bank or investor that understands your vision and believes in your business. Very few businesses can get past 5 million on their own let alone 100 million or more. Even banks can be extremely conservative and for this reason can make fast growth really hard. You need to look at 3 key areas. AR’s, AP’s, and the bank. For AR’s, you need to find ways to shorten terms, easier said than done when you are selling to large retailers. For AP’s you want to extend out your terms, this should be your low hanging fruit and the area you spend your time. And then of course the bank relationship comes into play, but if you set things up correctly your AP’s can act as a second bank line for yourself. Your safer less leveraged alternative to this is slower growth, and that’s a lot less fun for you and for your team.
Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why?
I think it would be fun to have a beer with Tim Ferriss. What stands out about Tim is his curiosity about everything in life. This is clearly evident in his podcast and blog and I think I could learn a lot from Tim.