Mar 29, 2024
42 min
Episode 25

TOP CEO: Gabb - 'The Final Reboot' (With Nate Randall)

Nate Randel  00:00

I wondered if we were gonna stay in business, I'd never faced anything like this.

Tom Cain  00:05

Imagine you're the CEO  of Gabb, a company that makes safe technology. For Kids and Families, you're sitting on a great idea, and a worthwhile cause, offering watches, phones and music devices to provide peace of mind for parents, and a safe digital environment. For children, you found Product Market Fit quickly and confidently negotiated your way into a partnership with a manufacturer. When suddenly, that confidence and manufacture failed,

Nate Randel  00:42

we legitimately believe that we are saving kids from the dangers and addictions. And then to have that potentially break and blow up overnight. It was heavy, you lost

Tom Cain  00:51

your partner, when they announced the shutdown of operations in the US. With only a few weeks notice.

Nate Randel  00:57

You can't be a startup tech company for kids that has momentum and then shut down your selling cycle, have no product and hope you're going to survive that we couldn't afford to do that. You're

Tom Cain  01:07

in a scramble to find a new partner, keep your investors confidence up and most importantly, keep delivering to your customers.

Nate Randel  01:15

What we were asking them was can you partner with us? And can we start tomorrow? Without

Tom Cain  01:19

the means to make your game changing products? How will you survive? How do you get back to your feet after such a knockdown? And most importantly, how do you keep on swinging,

Nate Randel  01:29

were we going to be able to weather this. It's the biggest challenge that I've ever faced in any type of leadership. 

Tom Cain  01:36

This is the story of Nate Randall. And this is The Final Reboot.

Ben Kaplan  01:48

Nate, take me through to this moment in end of 2022, beginning of 2023, where you're moving along well, in your business, you're growing, you're meeting goals, and you have sort of a existential crisis that you didn't see coming that maybe you couldn't have seen coming that suddenly affects your business. Take us back and at 2022. What is your first inclination that there could be a crisis coming? Take us back to that moment in time and when it crossed your desk?

Nate Randel  02:15

Yeah, Ben, good to be with you. So going back to 19, we launched and we found out very quickly, we had product market fit, we offer safe tech for kids and phones and watches. And parents were looking for an alternative from giving their kids smartphones, because we know all the dangers and addictions of smartphones. So we were a couple years into our business had sold hundreds of 1000s of devices. And at the end of 2022, our product manufacturer came to us and said there's a chance we might shut down our operations in the US, which

Ben Kaplan  02:43

was a shock because had they been your partner since the beginning in 2019. And I assume you like carefully vetted them and check them out. And if you're going to actually sell physical devices, you need a good partner for this. So was that a shock and they'd been your partner from the beginning. From

Nate Randel  02:59

day one, they were our partner, we were headed into version three of our our safe zone for kids and our safe watch for kids. We had a full product lineup ready to go for 2023. And at the end of 2022. And they told us it was a there's a possibility this could happen. And then in January of 2023, it hit and it was an overnight we're shutting down business. And

Ben Kaplan  03:21

just for context for people listening that are familiar with Apple or Samsung but are not as familiar maybe with these like kind of niche markets in this case like you know, kind of smart devices that are safe for kids. As I understand it some devices you're maybe now designing from scratch, but also other devices. You're buying an existing smartphone stripping the operating system, putting your new operating system that has features designed specifically for kids and concerned parents. Correct. So take us the nature of what this manufacturing process that this partner needs to do.

Nate Randel  03:49

Yeah, so for younger kids, we have a watch. And it has a lot of features on it that offer peace of mind for parents and allow kids to be safe. So that watch we were building from the ground up with a manufacturing partner because we wanted to make sure that we had the safety right for kids, including the software that we put on it. The next product we have is a lockdown phone, no internet, no social media, just basic talking and texting with a few essential apps. And our goal with that phone has been to keep the size of the screen relatively small because kids have small hands and small pockets. And so we had some input on the back and forth of building a phone with the right size of screen. Then we offer a flex phone for tweens and teens. And because they're older and can use a bigger device, we partner with Samsung, and we take one of their off the shelf devices. We stripped the adult operating system and we we layer in our kids operating system with his

Ben Kaplan  04:42

partner that close down shop. Were they involved in all of that some of that what were they doing for you? Yeah, we

Nate Randel  04:48

were in trouble. They were building two of our three products. And we had been through several revs with them. So we'd worked through all the bugs and the challenges and the do's and don'ts. We had all the learnings from parents and kids When you're a startup, and you're now clicking, you've got that product market fit. And you've got investors and and demand and forecasts and your manufacturing partner shuts down. It's a massive blow. There were days as the CEO , where I wondered if we were going to stay in business, where are we going to be able to weather this, it's the biggest challenge that I've ever faced in any type of leadership role. And I've been at places like Nike and Callaway, golf and the Utah Jazz, I'd never faced anything like this. You can't be a startup tech company for kids that has momentum, and then shut down your selling cycle have no product for the back half of the year, which would have been holiday, and hope you're going to survive that we couldn't afford to do that. We need a product yesterday

Ben Kaplan  05:43

in the business is seasonal, I imagine on holidays, big season, but also back to schools big season, you have kind of some big moments that might drive that, like, if you miss that moment, you're like missing out of, I don't know, a bulk of your revenue for the year, if you're not ready to sell at that time. Yes.

Nate Randel  05:59

And those were coming, right. So whenever our selling season is whenever kids have the potential to leave their parents side school, going back to school, parents have been with our kids during the summer, and they're sending their kid back to school and they want to be safely connected kids going to summer camps, holidays big for us. So you miss those moments. And you're right, you can't make them up. You can't say well, we'll just wait make it up later, you've missed a major moment to be able to sell the parents and kids

Ben Kaplan  06:25

take me through the different stakeholders that you as CEO  has to interface with. Because, yes, there's an existential threat to just being able to deliver product, which is your business. But there's also like the morale of the team. There's also investors that are now wondering, like, did I just lose a bunch of money on this? Or you're going to ask me for more money. There's also customers and I don't mean consumers, but customers like stores that carry this that you're having to commute. So how did you deal with each of those groups? Was there a morale challenge at all? Were you worried about people, team members leaving stuff like that jumping ship? How did you approach them?

Nate Randel  07:02

Yeah, you always have those concerns, because we have a massive challenge ahead of us. We were in a good cadence. We had product that we had been learning from, and we were heading into version three of most of our products with the last manufacturing partner,

Ben Kaplan  07:16

how many employees or team members when you were going through so we have

Nate Randel  07:19

started last year with 180 full time employees now have 220 Roughly full time employees.

Ben Kaplan  07:27

Okay, so 180 people? And did you have an all hands meeting and talk about this? Or how did you communicate about this to them? And were there? Was it smooth sailing? People were like, Yeah, we're in this together. We got to weather this, or were there people who were like, wait a sec, what does that mean is my job secure?

Nate Randel  07:44

Everyone wanted to weather the storm. I don't think we had one person leave that was involved in the details of launching this new product and new manufacturing partner, but it certainly was heavy during stretches. And we had a 90 to 120 days stretch, headed into the holidays. And then post holidays where it's the heaviest it's ever been in my career. Because we had so many things coming at us and logistics, you can have a piece of hardware, you can have the software, the logistics of how everything is working together on shipping and activation and full experience. You watch Apple, they're on version one of their phone 15. And they still have challenges. LinkedIn, just Facebook, they have outages, how do companies that have been around for now decades still have these major moments where they hit roadblocks and they have to work through them? And when you're a startup or just moving beyond a startup, those roadblocks seem to be every single day.

Ben Kaplan  08:38

But what about the investors? How much money have you raised at that point? were they concerned? How did you sort of talk to them about all of this,

Nate Randel  08:48

we had done a precede our Series A. And we're talking about our series B through all of this. And we were just transparent. We said we've got challenges with our board. So our board was aware. And we talked to a lot of our key investors just said, here's where we're at, and here's how we're going to manage it. And I think we all learned internally as long as we were transparent and didn't try to water anything down. So you

Ben Kaplan  09:13

didn't try to downplay a man you said like, Hey, this is a threat, we've got to find another partner, here's where we're going about it.

Nate Randel  09:20

I think we overstated the concern at times because we wanted to be in a place where we flagged the concern as a 10 and then hopefully landed the plane as a ended up being a seventh or eighth. But if you flag it as a pretty low key it's a one or two and then it's actually a code red 10 That's when layoffs happen and teams get let go and and more challenges hit you straight on and so we we were just transparent and then we spent less time talking about it and more time figuring it out. You got

Ben Kaplan  09:51

almost like have to keep your story straight. Right? I said this What did I say? What are we going to do just have to like manage storytelling as opposed to just getting it out there and then we're working on fixing it. You're saying, Yeah,

Nate Randel  10:01

and we kept it simple. We lost our manufacturing partner at a, there's never an ideal time at the worst time of the year, start of a new calendar year, we're gonna have some bumps and bruises along the way, we'll figure it out. We figured it out before we'll figure it out again. And we've done it. So it's not without scars and bruises. But we did it.

Tom Cain  10:18

As dawn broke in 2023, and unforeseen challenge reared its ugly head. You're on track to break all company records and sales, and then chaos. Your lifeline to the manufacturing partner was cut, and Gabb was suddenly plunged into deep waters. The very foundation of their mission to protect millions of kids from the unseen dangers of the internet threatened to crumble beneath you need help to embark on a quest for survival, and to find a new partner to make their products and to do it all, before their competitors smell blood.

Ben Kaplan  11:01

There's sort of two moments sounds like there's the moment when they say we might close the business. And then there's the moment where they do close the business. It doesn't sound like much time expired maybe a couple months, maybe or something like that. When you got that maybe did you spring into action? What did you need to do? Were you worried or were you like that? They downplay it, or did they apply it? And you're like, Wow, this is serious. What did you do from that first moment,

Nate Randel  11:23

hindsight, it was downplayed a bit. I think they knew that it was coming at probably a faster rate than than we were even feeling or hearing. So we started to explore options. But thankfully, we had one of our best leaders at the company who had already started casual conversations with Foxconn based out of Taiwan. They're the biggest product manufacturer in the world.

Ben Kaplan  11:45

And I think I don't know if Apple does it then but it was famous for like being a partner of Apple's to do the original iPhone. I don't know what the status is now, but they were kind of famous for that.

Nate Randel  11:54

I don't want to speak for Foxconn or Apple because I don't know the extent of their relationship. But the short is Foxconn is still making a lot of Apple's product. They're also doing it for Google and others. So for us to even be considered with our size at the time. Thankfully, we had started dialogue with Foxconn, we met them at Wolfgang Puck's in Vegas during CES, which I think most people know that's the Consumer Electronics Show. Yeah, which always happens in January, early January. So So we meet with them in January. And we tell them our mission and vision and where we want to take the company and their CEO  Foxconn CEO  said, You guys aren't that big yet. But we like your mission, and we're gonna build your product. And so it was a handshake across the table, we still had to figure out the LOI and all the details. But literally over a dinner at CES, we found a new partner. And in a short period of time, they helped us build a watch. We did it in about nine months, which is now our Gabb Watch 3, and now we're working on future product with them. To

Ben Kaplan  12:55

do that. You had some informal discussions, you had an opportunity to talk to the CEO . What was your approach to that meeting? What was it like? Did you feel like a lot was riding on this meeting like either this week convert this? Or we could go out of business? Or we're scrambling or what like how did you approach the whole thing? Did it surprise you? What was that? Like?

Nate Randel  13:13

I felt extreme pressure, because we didn't have any other options. I'm sure we could have with more time we could have gone and tried to connect with more manufacturers, we eventually would have found somebody and you asked, Was I nervous? Or how did I feel about that meeting? Walking in? I was 5050. I had no idea if they would even be open. It's one thing to say yes, we'll be your partner. And we'll add you to our product lineup in 18 months. But what we were asking them was can you partner with us? And can we start tomorrow? And

Ben Kaplan  13:42

were you at that point? This is January 2023. Were you racing at that point? What are you racing for? Is it holiday 2023 Back to School, which would be like August, July 2023? Are you trying to hit that or what is realistic at that point for your

Nate Randel  13:56

goal we knew back to school wasn't realistic, but we had to have something for holiday. absolutely had to we couldn't go into holiday and not sell anything. So it's hard to really describe the people here at Gabb are so committed to our mission. I'm a dad of four. And I've spent 20 plus years of my career in sports. And the reason I left sports and came here is because I have seen what is happening with our kids. Suicide is up 71% Over the last 10 years and teens. And it's because they're addicted to these phones. They're disconnecting from social norms. They don't know how to make eye contact. They don't know how to have relationships. Kids are struggling. They're buried in these screens. And they have life coming at them through social media and they don't know how to manage it. It's completely overwhelming. And I saw this as a parent and as soon as I heard about Gabb I wanted to be a part of it. And so to have the pressure of we're building this new category, we legitimately believe that we are saving kids from the dangers and addictions and then to have that potentially break and blow up overnight. It was heavy. So

Ben Kaplan  14:58

you have the meeting. It goes Maybe better than expected. And then you have to execute on a number of things. Because just you have a handshake deal with the CEO  doesn't mean one that actually the deal goes through. There's a lot of details. And you know, you've got to negotiate. But two, there's a bunch of steps. So what happens after that? How do you mobilize forces the team? I don't know if any of the work with the prior partner like transfers over the plans, the learnings like that, or no, you're starting from scratch because Foxconn has their own way of doing things.

Nate Randel  15:26

We had our learnings. But part of what we learned with the original partner we had is we didn't in the contracts, didn't commit or didn't put ourselves in a place to own the majority of what we had built with the operating system and other things, because we were using them to help us build it. So as we transition to Foxconn, we realized we've got to be the owner of the operating system. And we got to make sure that we can push out updates when we need to to kids and not wait for somebody else to do it for us. So as soon as we had the dinner, we assumed the sale. We weren't waiting to hope that they would come back and say, Hey, let's figure this out. literally the next day, we were saying, Okay, we're ready to go. What do you need from us? Well, we need x y&z Okay, how do we set up financial terms? And how do we forecast the product we'll need? And how do we figure out the features and benefits of the product? We have people go to Taiwan, they came here, we went there as a senior team, middle of last year, and we just immediately started to assume that the relationship was moving forward. And it happened because we we didn't take no for an answer at any point during the process we just kept creating Yes, as with well,

Ben Kaplan  16:34

and sometimes certain deals are almost the really important ones. It's almost like you have to act like it's done already before. It's not done, because the only way to get it done is to get everyone so invested in it. And like we're used to working together, this is gray, this is proceeding. And you almost have to take that on as a risk. That's the only way to get certain ones certain deals done. Now,

Nate Randel  16:54

that's exactly what we did. And we said internally, when they respond to something that we that we immediately respond, if they say they need something we're on it doesn't matter when it is. And our goal was to be their very best partner, let's be a partner that's so easy for them to work with, that they're celebrating us internally in Taiwan at their HQ and saying, let's do what we can for Gab, even though we're bringing them on at the last minute in a new year, because they're so proactive and easy to work with. And so that's the cadence that we developed. And and I'll tell you some of the misses that we've had, because no partnership is perfect. And although Foxconn has been incredible with with product manufacturing, we fell short in a couple of areas because of the rush of things. So the hardware has been really, really good. We figure that out. The software was good in the activation for a customer of how to take the hardware and software and get it on the network and get it all set up for their kid. We were tight on some timelines. And we thought we had it dialed and we found some bugs along the way. And so I've even had to publicly apologize, 90 plus percent of our customers had an incredible experience, but seven to 10%. Through this transition didn't

Ben Kaplan  18:06

mean just the unboxing experience to getting going getting this all that it wasn't seamless for a percentage of the people because you were rushing to get this done. Yeah,

Nate Randel  18:16

it wasn't so much even just because of the rush, it was new layers of activation had been added to the process. So we had partnered with Amazon, we are now selling through Some of the activation challenges on the back end there. When we had a new manufacturing partner, the first rev of a product and a new econ partner, there were just some misses. And we've certainly learned from those. And we've immediately made the improvements to make us better going forward. The reality is I would do the same thing all over again, because the alternative was no product for holiday. And that would have put us in a much, much more difficult position. And so I feel like we did what we could with what we had. And now heading into 2024 back to school and holiday. We're primed to deliver product and a full experience that our customers will absolutely love. And so watch how everyone has rallied together, I can tell you that Gabb today is in a much stronger position to lead this safe tech category than it ever was at the start of last year.

Ben Kaplan  19:17

If you enjoy this show, you'll love TOP CMO


with me, Ben Kaplan, has never been a better chance and opportunity to do that. I would definitely encourage marketers to be engaged in the product development process because you're banking your brand's great

Customer 1  19:34

moments, but it's the great brands that create movements. And that's the spirit of justice. Of course.

Ben Kaplan  19:41

This is the podcast where we go around the globe to interview marketing leaders from the world's biggest brands, fastest growing companies and most disruptive startups available wherever you get your podcasts. And what about the customers meaning is your product carried an individual stores is it more online retailers like the Amazon and others did you have to be transparent with them and say we've got some issues on supply side orders are coming holidays, even no need to know how the sausage is made, it will be there, and then hope for the best.

Nate Randel  20:13

Same, we're just transparent. We don't sell anything through retail brick and mortar right now everything is through E commerce. So we sell through And then we opened up a partnership with Amazon in the middle of 2023. Last year, and, and sold through Amazon through the holidays, even up to today. And we just had to, I mean, Amazon has been I know a lot of companies have challenges there because they feel like Amazon calls all the shots, our Amazon relationship has been unreal, they have given us confidence to say, Look, everyone has these challenges when you're trying to sell through a major retail or EECOM partner out of the gate. And they have helped with metrics and learnings and improving our our whole logistical process. I couldn't be happier with how things have gone with Amazon.

Ben Kaplan  21:01

Finally, consumers. Was there any kind of message you mentioned that you had to issue some kind of an apology or clarification or something for people that didn't have a great onboarding experience? What did consumers know through this whole process? They don't really care how the product is made, as long as it works for them. But what did they have to know? They

Nate Randel  21:21

just want product that works. And they want it to be simple. And what I've learned through all of this is I mean, we we tested everything. But when you put 10s of 1000s of devices on a network, the day after Christmas, you can try to anticipate all the bugs and challenges that you're going to have. But there's no QA that gets you ready for mass scaling. And so when we went live, we had some bugs that we didn't anticipate, and a small percentage of our customers had challenges. And we just had to own it. I did a public apology and said, Look, for the majority of our customers, you've had a very positive experience. But for those who didn't, we fell short. And we're sorry. And here are the things that we're doing to make it right. But there was a stretch there of 30 to 60 days where our customer service was behind. We couldn't catch up on emails, we were doing everything we could to answer the calls. But we had long wait times, it was not ideal, but through all of it. And I say I would do it again, the exact same way we did it, because the alternative was much worse. And the learnings we have now have made us so much better.

Ben Kaplan  22:28

Meaning that you couldn't have predicted everything you just had to like do it and deal with it and learn from it was the fastest path to get through it versus trying to anticipate everything because that would have been impossible and probably would have slowed you down for what you had to do. Yes.

Nate Randel  22:43

And there are learnings that I have now where I can look back and say, Oh, we should have done this differently. But who doesn't do that?

Ben Kaplan  22:49

What about your role as CEO ? Is there anything you would do differently during this whole ended 22 to through 2023 period as CEO  that in hindsight, you'd learn from or even advice to other CEO s going through some kind of existential crisis, whether it's manufacturing related or otherwise,

Nate Randel  23:06

I'll never only have one partner, again, you have to have a couple of whether it's manufacturing, or agencies, anything outside of the company, I think you always have to consider having more than one partner that you can go to, so that they're competing against each other to deliver the best services for your company. And then if anything goes south, you already have an alternative lined up the challenge, because I could see some saying, well, you should have known that. Why didn't you do that? Well, when you have a manufacturing partner, to start up product and product lines, you have to spend millions of dollars upfront, they call it NRA, but you have to invest upfront to start a product line, you can't just roll into a manufacturing partner and pick off a line and say I want that product and they start making it the next day with no upfront cost. It's expensive. And so part of the reason that we were only with one partner was because we were trying to manage the upfront cost of launching these products, meaning

Ben Kaplan  23:59

sort of redundancy, yeah, or a backup. sounds good in theory, but you're gonna double your costs right away. And we're a startup that's struggling to grow. And so we can't necessarily take all of that on if it's not clear that we need it. It's like nice to have but maybe not essential.

Nate Randel  24:15

Yes, that's the short of it is the upfront costs, the more partnerships you activate, the more upfront costs, you have to keep those relationships going. And you can spread yourself too thin, and be in trouble before you're ever in trouble with a manufacturing partner just financially. So we were playing this balance of we spent a lot of money up front with this current partner, and to find out that they were shutting down operations was a massive blow because we'd already spent a lot of the upfront investment and now we got to start all over. So biggest learning stretch of my career. I said it but scars and bruises but man, we're better for the learnings we now have of what to do and what not to do and how much better our product and logistics will be night and day difference.

Ben Kaplan  24:56

And I think you've said that in the end through 22 23 you actually hit your goals, meaning your goals for sales everything out you were able to not only weather the storm but but manage the growth plan you had set out for yourself? Yes.

Nate Randel  25:09

And that's because of people, the leadership team we have that was committed to do whatever it took to figure it out. I've never worked with a better group of people that are more committed to working through challenges. leadership teams do great when you're winning and things are rolling. But who do you have with you when things are falling apart or when you're up against major challenges, and the leadership team we've got here and Gabb is second to none.

Tom Cain  25:35

With the future of children's safety at stake, Gabb barked on a relentless quest for solutions.


You may think you know what's in your child's phone. But think again, the prevalence of cell phones among teens and preteens has nearly doubled


their platforms and the impact it might have on children, social media and cell phones affect children's privacy.

Tom Cain  25:58

The turning point came under the neon glow of innovation and hope. A new alliance was formed not just a partnership, but have been forged in the fires of adversity. Foxconn, a titan of manufacturing extended a hand and together they charted a course towards redemption. As the gears of production sprang to life once more, Gabby's vision for safe tech for kids began to take shape. Watches phones and devices designed to empower and protect the youngest among us started flowing into the hands of grateful families. The crisis had been averted, who would have the future, the Gabb.

Ben Kaplan  26:49

What are the challenges now? Where's the business? Now? What are the obstacles to success and growth that you face now? And just to give us a sense, I mean, I think you're closing in on 100 million in annual revenue, you have a couple 100,000 devices sold in the holiday period alone, you're selling north of 100,000 devices? What is the goal of the company? What's the next major milestone and what are the blockers and obstacles and challenges that you will now face to achieving this?

Nate Randel  27:16

We want to protect millions of kids our stance internally as if we don't stand up for our kids who will. And you've seen these social media companies in front of even Congress getting drilled for the algorithms that they've created. And the dangers they're serving up to our kids, they want them addicted, they want to make the ad revenue, they want more time on screen more time on screen as more data plans, it's all a more and more and more concept. And so our goal is to protect millions of kids. And we'd like to do that globally. And the biggest challenge in front of the company is Scaling. Scaling is hard when you have 10,000 customers in one product, kind of know that the inputs and outputs, when you get to hundreds of 1000s of customers and multiple products, there are so many moving parts and pieces that if any one thing isn't clicking, you can have major problems. So what we're trying to figure out now is how to scale in a way that our infrastructure moves and supports our growth. And that's where a lot of companies fail is bringing your infrastructure along to support the growth, you can go sell, sell, sell all day long and hit a number. But if your back end processes aren't set up the right way to manage the customer, and all of the logistics of billing and everything, you can create a bunch of issues that you're not anticipating. So

Ben Kaplan  28:30

you think it's holistically managing a company of a different scale than you are now and you're going to grow into a scale in terms of US customers, you'll be selling globally, it sounds like some point in the future, maybe in the not too distant future. And then it's not just that you can sell a bunch of products, and pat yourself on the back. You also need all of the infrastructure of a much bigger company to handle everything from customer service, to support to other issues that just involve having potentially millions of products out there.

Nate Randel  29:05

Yes. And I think that's one of the biggest challenges for any company is you figured out your product market fit, you know, there's demand. And now how do you grow and scale in a way where you can consistently serve that demand? It's one of the biggest challenges CEO s face?

Ben Kaplan  29:19

And what about you as CEO , because certainly, in the lifecycle of companies, it's actually somewhat rare, at least for the companies that go from very small startup to big company, that the CEO  either makes it through all of that or just is the ideal person for each phase, right? Because sometimes there's a great CEO  that's a visionary have an idea but they don't know about scaling, manufacturing and or scaling a global marketing operation and there's some people are good at that, that are good at scaling but are not good at like running a big company. So how do you have to evolve if you're gonna be potentially or you could say if you're you don't necessarily have to be this but if you're gonna be someone like a Mark Zuckerberg, who from the beginning is with the company at the early stage and manages to hold on and sort of has to evolve to, you know, I don't know when he was starting Facebook or meta now Facebook, then if you imagine that he'd be spending all this time testifying in front of Congress, that's what he's doing now, how do you need to evolve as CEO , I have to

Nate Randel  30:14

evolve immediately, I have to evolve every day. And one of the biggest learnings that I have to try to try to take in is I don't know everything, and owning that. And just letting the team know that I don't know frees us up to be able to go figure out things on a on a faster pace. Because when everybody's defaulting to the CEO  to say, well, you must know you're the CEO . I don't know a lot of things. And so hiring the right people to be on our leadership team. And even mid level management has become so important because I lean on them heavily for us to be able to make decisions. And I hope that I'm self aware enough that if I ever get to a place where I'm holding Gabb back, then I'll step down. I know, Gabb is so much bigger than me. And I would love to lead it for as long as I possibly can with this leadership team that we have. But I also know that there will be a day where I'll know that enough's enough. And I'll I'll let somebody else take it the mission is far greater than any one person here.

Ben Kaplan  31:09

What are you doing to protect against future iterations of this existential threat? Are you doing the redundant partner? Now? Are you taking other steps for maybe there's other types of existential threats? For instance, products with kids, you know, price was kids can have recalls, there can be safety things, there could be other stuff. What are you doing now, both on that sort of manufacturing threats, but also other threats, that would be the real serious ones that could like totally derail the business, now

Nate Randel  31:37

have multiple manufacturing partners. And I won't get into those details, but feel much better about where we're at should any challenges surface, and then we've got a board that I believe in. And so I go to them and seek advice fairly consistently, and get guidance from them. And they all have different areas of expertise. And it helps shape some of the challenges that we know that are coming, we're able to get out ahead of them, because they'll say you should be thinking about this, or we should go protect against that. So the combination of a senior leadership team that's diverse with background and a board that I can go to and get advice from is the winning combination of we certainly don't know every challenge that's coming. But I feel like we're we're able to take steps along the way to keep from having bigger issues coming at us.

Ben Kaplan  32:25

And what about the threat and the existential threat of just you're playing in a space in an industry with really big players? What I mean by that, who might not view you, as you're not big enough to be maybe Apple is super focused on you as a competitor, but you're dealing with like, I think they go back and forth between Microsoft and Apple, which is the world's most valuable company, for a startup that seems like almost like a competitor in some sense, that has almost like unlimited resources to do everything. And they could come in one day and said, We're gonna do all these kids say features on an iPhone. And Tim Cook has been kind of a proponent, which is a bit of self serving proponent of reducing screen time and reducing other things and building in features. So do you think about that of just being a growing startup in a field with such big players, that a decision they make could have a real impact on you and your business? Yes.

Nate Randel  33:15

And not yes, but yes. And the reason that we have a winning formula in this space, and parents trust us is because we have taken every challenge head on. And I'm not talking about manufacturing challenges, we have taken a very hard stance against social media, there is no social media on our watches, or phones, we don't believe that kids younger than the age of 16 should have social media. And I don't care what people think about that stance. That's our stance. If anyone else wants to come into the space and compete, you have to take a stance Are you going to serve social media up to kids or not, and I don't want to call out any of the big giants. But if they're truly going to step into the space and be trusted by parents, they have to talk about less screentime. Eliminate all the dangers and addictions say that social media is a major problem for our kids. And none of them so far are willing to do that. So it's a lot of lip service with some parental controls, but they're not proactively taking action and being an educator of the dangers and addictions that our kids are facing.

Ben Kaplan  34:14

From a business perspective, what you're also saying is, we're going to focus on this core market that we want to serve that believes this way. And we're going to have a stronger brand with this market, which allows us to maybe weather threats from bigger competitors, because it's very unlikely to be so focused on this market, to the extent that we are and we can serve this market well. And incidentally, we don't need to have as big a market as Apple or Samsung or anyone else. We can have a big, successful growing business and we don't need to be everything to everyone like they might have to do.

Nate Randel  34:47

Yes. Here's what happens over and over and over again. I talked to parents every day. They have two or three kids and a mom or dad will say Our oldest child, we lost them to a smartphone there a day. Did they have withdrawal problems they've got into porn or gambling or sexting, pick the challenge that a kid faces on a smartphone. And we tried to protect them with parental controls, and it didn't work. And I feel so bad as a parent that I let my kid get into that position, I'll never do it again. I'm not giving the next two kids coming up smartphones. So I'm looking for an alternative Gab, can you be the alternative, that's the parent we're serving, a parent has already been burned. They've already seen what happens on these phones, high school kids are spending eight hours a day on smartphones, eight hours of screen time, if you add in a little bit of sleep and class time, they don't have time to do anything else. They're living on these phones. And when parents see that they need an alternative. And if we continue to be that alternative, not only we're protecting millions of kids and families, it's a valuable business that has upside. So there will always be competitors in a space. But if you obsess the problem that you're trying to solve, there's always an opportunity.

Ben Kaplan  35:54

And what about the other side in terms of realizing your goals? Having millions of Safe Kids a global business? What about the threat of other startups other in niche areas, people that look at Gabb and say, Oh, they found a market there, they took five years to get to this point, we can take learnings that we've seen from them and apply it, do you wonder about someone else that could disrupt you in the way that you're disrupting maybe some larger players?

Nate Randel  36:20

Yes, and I don't worry about it. And I don't say that arrogantly, I say it from a place of, we know the problem that we're tackling, and we're gonna keep serving the parents and kids that need us. I was at Nike, and Nike had Adidas, and Under Armour, and Reebok and you can list all of them. There's enough space in categories for multiple players. Are you going to be the leader of the category and the lead player? Or are you going to be a follower? And I've been at brands like Nike and Callaway, I mean, the golf space, Callaway golf title is tailor made paying, every category has multiple players, it's how you differentiate yourself, and what problem are you solving? And what customer are you trying to take care of. And so far, with hundreds of 1000s of customers, we're learning on how to serve the parent that's looking for safe tech for their kids.

Ben Kaplan  37:09

I think it's interesting, your background. I mean, obviously, you come from the sports world, like you said, but you were first at the company, as CMO and then became CEO , how does having that CMO hat or the marketing perspective help you as CEO , and I do another podcast called TOP CMO? Also, and we don't see as many people as you might say, obviously, CMO is a senior position, who transitioned from CMO to CEO . Why do you think that is? Do you think the experience is valuable? Why don't we see more of that jump, I

Nate Randel  37:40

don't have a perfect explanation on why we don't see more of that jump. But I do know we're in a consumer driven business. And if we can't position, the problem that we're solving in the products that we're offering to moms and dads, we've lost if they don't clearly understand what we're trying to do. It's just hard to get this business to grow. I learned this at Nike and one of their Maxim's was the consumer decides. And the learning from that was if a consumer has $1, to spend, and it's totally in their control, are they going to spend it on you or not. And so the way that we message Gab, and what we're trying to do to take care of parents with peace of mind, and kids with safe tech is the most important part of what we do, if the message isn't clear. And the marketing isn't very direct, there's just no reason why parents should consider us because there's so many other alternatives, you can just hand down a smartphone to a kid. There's just a lot of options now in tech. And so we want to be very clear in our messaging. And I think that's why part of the reason why I had the opportunity to do this is our messaging is the leading reason why we're winning in this category.

Ben Kaplan  38:43

And do you then for the growth that you want to achieve? Do you activate more marketing channels? I don't know how you reach consumers now. But it seems like for instance, with your message, there could be a channel through schools of using networks of schools and parents and Parent Teachers associations, there could be channels of faith based organizations and churches, and you're in Utah, which is known for the Mormon church there as well and others, do you think about how important are those networks to you? And do you think about expanding those to get to the millions of people you want to help? Yes,

Nate Randel  39:16

it's everything for growth. And I think where a lot of people miss is they think you can just go grow and then open up channels. And before you can even grow, you've got to have an investment to be able to acquire the customer. And so our growth is dependent on CAC, what's the cost to acquire the customer. And we have a formula and have that laid out in a way where we know the levers that we can push and pull. And our growth really comes down to how much cash do we have on hand to be able to invest in growing more, and growth is expensive, and that's why we raise different rounds of funding and we're headed into our series B raised right now so that we've got enough capital on our books to be able to say okay, back to school or holiday. Let's go have millions of dollars worth of inventory, and let's spend X amount to go acquire the customer and let's go add 300,000 customers, let's go add 400,000 customers, but you have to have money up front to invest in acquiring the customer to do that. That's one of the biggest challenges with growth. So yes, we had We've added Amazon, we're already exploring other channels and we'll we'll double and triple the size of the channels that we're selling through this year and into next, you can't do that without money to invest.

Tom Cain  40:28

Faced with the existential threat of losing their product manufacturer, Gabb demonstrated the resilience and innovation necessary to pivot swiftly securing a new alliance with Foxconn and turning a critical challenge into a milestone victory. The solutions forged in the heat of crisis ranging from reimagining their product pipeline to solidifying their commitment to safe technology for kids have not only saved gather, but have propelled them towards their ambitious goals to protect millions of children in a digital age, teeming with unseen dangers. Adaptability in the face of uncertainty, the importance of transparent communication with stakeholders, and the value of preparing for unseen challenges are but a few of the insights gleaned from Gabb's journey

Tom Cain  41:28

a compelling reminder of the strength found in unity and the transformative power of a shared vision for a safer future. And with that, it's Case Closed.

Tom Cain  41:47

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