Sheets to Strategy: Cozy Earth’s CFO, Tanner Lamb, on Business Growth

welcome to the know your ship podcast presented by ehub I’m your
host Frank Dolce welcome sorry that was a funny we just started talking this
is a man who needs no introduction the one it’s debatable and only CFO at
cozy Earth for the past four and a half years yeah yeah four and a half years
almost five five years in April Co let me just give a plug you and I have
known each other for I don’t know couple years yeah and our first experience
together was at Disneyland yep and was amazing it was yeah and a lifelong
Bond was built and ever since that time I kept hearing about and of course
your your marketing is fantastic cozy Earth Products mostly the sheets and so
finally one day showed up and there was a package of cozy Earth sheets on my
desk and I am not this is not I’m not blowing smoke this is absolutely the
truth they are the most comfortable sheets I’ve ever had in my entire life
and that’s kind of a long life now I mean I’m over 50 wow yeah yeah yeah and
those sheets are I mean I would go so far as to say they’re lifechanging I
you know that’s very kind of you to say those are very kind words I’m biased
I think they’re phenomenal yeah my kids who are probably biased too they try
to travel with them they you know you know my daughters I’m not joking they
will like take a fitted sheet and they’ll put it over a fitted sheet if we’re
tra you know we’re traveling in a hotel and things like that um so that they
you know can can feel the comfort of cozy Earth uh they’re they’re pretty
great our sheets have been kind of the flagship product and really how we
built our name the business has been around for actually longer than most
people think almost 15 years but really gotten serious in the last six years
um and the sheets are the still the driving force of the business and the I I
really need to start getting into the the clothing options as well so maybe
we’ll talk about that off air that’s fine but cozy Earth is a premium product
yeah and and and a premium product comes with a price tag and in in the day
and age when you can run down to Costco and buy sheets for $1 19999 yep you
know there’s that may be a difficult thing to overcome I’d like to talk about
that at some point so I’m giving you a little this is your prep okay we’re
going to talk about I like it overcoming that kind of perception in the
marketplace uh but first I’d like to dig into your background a little bit
because when we met at Disneyland and hung out we had we had a great time and
then I found out that you you’re a CFO but you don’t do people tell you that
you don’t typically fit like the CFO mold sure yeah I think when people say
CFO or CPA or anything related to kind of the finance of a company realm
there’s a perception about that individual and I don’t know do I don’t know
if you necessarily fit that perception it’s not bad by the way it’s not a bad
thing I don’t have a pocket calculator or pocket protector I don’t wear a
calculator watch and you know I can talk to people okay not great I’m not uh
illiterate or uh unspeakable but I I can talk all right and I I like
relationships and and I think you know I care about people and and getting to
know people and so yeah I would say you know your typical accountant or CPA
with their glasses on and just crunching numbers all the time that’s that’s
not who I am and then that’s not how I operate in my role obviously that’s a
huge portion of what I do day-to-day but really it’s you know how do we work
together with all the stakeholders be it you know our marketing folks are creative
team um our wholesale Partners to to build uh you know a brand that we’re
trying to to to build and I think I will never be you know systems integrator
uh living and dying in the numbers all the time though I do a lot of that uh
but I try to have maybe a little bit more personality than than accountants
uh in general are believed to have and I think that’s a bad rep on
accountants though I think awesome it’s such a terrible perception for me it
kind of started in that movie a long time ago called the Revenge of the Nerds
do you remember that sure you remember that movie and that is that I think
that’s the movie where they had the poor kid who was the numbers guy and he
had the tape around his glasses and and then Bill Murray used to do that skit
on Saturday Night Live I mean I think I’m not familiar with that one I got to
go back look whole thing that is a is a bad a rough stereotype on number
people and and the interesting thing is as you are involved and you gain
experience in the business world the numbers mean everything and if you have
a guy or a gal or somebody who is who understands that portion of the
business it is significant to the growth and success yeah and frankly you
almost need it in every organization of the business you know I think our
business works really well because we have marketing people who are focused
on numbers and performance we have creative people that worry about the cost
per piece of the assets they’re delivering to marketing uh we have you know I
manage the finance and and a lot of the supply chain and operations groups in
the business and so uh all those people everything we order is based on data
and it’s data driven and and you got to have of those people I love that how
do you create that how do you create that culture of being reliant on the
data within an organization yeah I think that takes time and a lot of
iteration frankly you know I joined Kier four and a half years ago as the
only you know inter internal Finance person and then quickly took over the
supply chain because based on how we were forecasting we were going to buy
based on our forecast uh our revenue forecast and so um you know I think it’s
taken four and a half years but but I would say you know kudos to the the
people we have in the right the right seats because those people are just
naturally uh open and aware of the fact that you know in a growing business
especially like we all have to work together we all have to believe in the
numbers and we all have to be on the same page or it’s just going to be
really really hard and no one’s going to be happy because if I don’t work
with the marketing folks to figure out the promotions they’re going to run
and to which product category they’re going to run it I’m going to under bu
inventory which we’ve done plenty of times in the past we’ve made we’ve made
those mistakes and so it’s this iterative process where you’ve got to figure
out how to work together so that marketing can run all the promotions they
want that and you you have inventory in stock to support those promotions and
so um you know it probably took us two to three years to really get a good
Cadence on on how that went and how that goes and it’s been much more smooth
over the last couple years but it takes a fair amount of time but everyone
everyone within the organization just has to be open to it and and frankly if
you’re not open to that I think that’s maybe maybe a red flag for you as a as
a person like hey you’ve got to get get behind that because so much is going
to come from the data yeah well I I love that I I’ve listened to uh podcast
that you did and talking about Finance being aligned with marketing I think
that’s really interesting and really important and it it seems almost easier
or more natural for like you know marketing wants to put is creative and they
want to put put together all of these really interesting programs and get out
to the market and find the people who are buying the product and and do all
those things and and May maybe maybe their bad rap is they don’t necessarily
consider as much the cost of of the marketing on the other side getting
Finance to understand and align with marketing I think can be a significant
challenge because a lot of us look at look at marketing by the way we have like
a lot of our marketing team in I don’t want to say anything that’s you know
they’re going to shut down the podcast but but uh trying to get marketing or
getting finan to understand what marketing is trying to accomplish because a
lot of us sit and sit there and think well you know how do we even measure
that yeah billboard or the ad that they put out there or whatever they’re
doing with their social media so having those two groups finance and
marketing aligned the way it feels like you guys are aligned maybe I’m just
making this up but that seems significant to how you’ve been able to grow for
sure I think our our approach is just this kind of almost a data science
approach you’re taking the scientific method you’re creating a hypothesis
you’re testing that hypothesis and you’re seeing the results and seeing how
those um how the evidence of that uh comes forth from your experiment in a
way and then and then you test again and you create a new hypothesis and you
go through that process and um I’ve had to watch a lot of uh YouTube videos
on marketing and frankly within e-commerce on there’s there’s a few good
groups that frankly put out a ton of incredible content um that have allowed
me to better understand marketing because that is not my forte and frankly it
is not something I ever wanted to do I’m terrible at selling things uh I just
I don’t I think have that natural innate understanding of of a customer and
what they really care about because I am such a bad customer I am I don’t
care about 98% of the things in the world that most people like care about I
do like Nike shoes you know that’s you from my my upbringing in sports with
both my parents as as coaches and so I have Affinity towards a brand uh I
like to golf now so maybe it’s a little Travis Matthew in there as well yeah
um but I’m a terrible customer and so understanding the customer and their
their needs is not my forte and so I’ve I’ve had to spend a fair a fair
amount of time like studying marketing and trying to understand it well good
for you well like good for you if I were smarter I wouldn’t have had to do
that that demonstrates your intelligence you don’t know and so you you go and
learn I I think that’s I I think that’s fantastic I I love this concept of
utilizing logic and data and science to run an organization like it makes it
makes so much sense you you can kind of take arguments away when you have all
of that in in your background like yeah this is what we spent this is what it
meant this is what we how we drove revenue from that and so we’re either
going to repeat that or we need to tweak it yeah yeah and that that is
honestly what we do every day every week every month all the time you brought
up Billboards as an example you know you may have seen here in the Salt Lake
Valley we have we’ve uh put put some dollars behind billboard spend to test
it out and I think you know you get a lot of questions on well how do you
measure the impact of billboards and we were pretty scientific about it we
created a baseline with several markets of similar size and similar
demographic and you create a b Baseline okay what are our online sales like
and then you go in and you say hey we have this expectation that we’re going
to see a certain uplift from uh these these Billboards within a five mile
radius of all the zip codes that were uh that we have Billboards in and then
you test it and you put spend out and you do it for three months and you you
go back and you say okay what lift did we get how did our control markets
stay the same or did they go up what other things factor in because being
here in Utah there’s a little bit more noise right we might have been on good
things Utah one day and that could have you know driven a fair amount amount
of sales in a in a location and so we have to try to remove the noise as much
as possible but you can see the direct effect through a goo like a
geographical holdout test is what we call a Geo holdout test and and you can
you can measure the lift in an area from a certain activity and and we found
enough success here that we’re testing it in two other markets and so um once
again this is not we didn’t go okay one market to Nationwide it’s one market
let’s let’s try two other markets and see if that that kind of theory this
hypothesis that we now have is is if evidence is still supporting that
hypothesis and then if that is successful we we’ll you know I guess increase
increase the reach there so yeah everything that we do is kind of this
iterative data driven hypothesis scientific method driven process are you
finding success in specific markets specific regions of the US and do you
focus on those re like the same way that you’re going to market with the
billboard campaign I guess sure yeah so we’ll measure the ZIP code
performance across the the country we’re we’re pretty domestic based still we
have a little bit of international sales but it’s it is very limited less
than 1% of the business is international so yeah I think you know we are we
have been so website dependent so driving traffic to our website and growing
that way and have been very successful doing that there’s there’s at some
point uh diminishing returns on your ability to drive traffic profitably to
your website uh and so we have to expand channels a little bit we’re getting
into retail for the first time and that those retail decisions where those
stores are going are very much driven by which of our markets and zip codes
are purchasing the most cozy Earth and we want to be in those markets first
to see if the loyal base of customers that we’ve built on the website is Will
transition to retail and so it’s it’s a similar approach where we are we’re
taking the certain regions where we perform the best in which right now is in
Southern California and you know it helps that it’s closed it’s a couple hour
flight you know uh easy pretty easy West Coast you know so similar mindset in
a lot of ways um our Founders from Southern California I lived out there you
know a fair amount of folks uh at cozy Earth were out there and so I think we
we feel like we know the customer there and the customer is a strong customer
for us and so yeah we’re very much taking the approach of hey the markets
that we’re performing the best which are larger markets generally a little
bit more fluent you know you you brought up our purchase price earlier sure
you’re spending $300 on sheets these better be dang good sheets because you
can go to and get a $49 sheet set and they’re fine you know they’re fine yeah
and I have slept on those sheets for many many many years so you know I I I
before cozy Earth I was not a sheet snob now I I unfortunately am um because
they’re expensive and I don’t always get them for free either so um you know
I got a pony up at least to cover our costs on some of those don’t you get
the scratch and dent like they get you the model we do have a a warehouse and
Vineyard just south of here about half an hour and uh we get a some some
returns will go there yeah most of them are processed at the 3pl but we’ll
they’ll send us a few pallets every now and then we’ll run a local Warehouse
sale and I yeah I live five minutes away so I may have been there this week
for my daughter’s birthday grabbing a couple things so yeah absolutely why
not H how much uh in your role is you’re the numbers guy you control the
you’re like Congress you control the purse how much veto power do you have
yeah I I would say probably more than I utilize I we are not an organization
you know we as we talk with our leaders in the organization a lot of it is
like look be reasonable if it makes sense if let’s try it we’re we’re very
much willing to try or test a lot of different things and so there’s not
often where I’m like Hey we’re not doing that anymore a lot of times the data
just makes that decision for me and then I don’t have to be the bad guy it’s
like hey look this didn’t perform like what what are we doing relying on that
data again yeah and so I don’t have to be the bad guy when when you have that
culture of data then the data gets to be and it’s not even bad it’s just like
hey this is information great let’s use that information to make a better
decision and so it’s very rare that I’m like no we’re not doing that or hey
you need to stop most of the time it’s like we’re getting a little loose with
our uh going to a lot of lunches with the team make them you know the the
morale guy I’m not you know big like oh so then you lunch morale guys you and
I might have a little bit of a battle like I may maybe I don’t know depends
on how often you’re going out and how how much you you think uh the company
should pay for the necessities of your life yeah you know outside of all the
salary we always too much yeah every day is too much you know we we have some
policies around that and and generally some some guard rails for people and
and for the most part people just stay in the guard rail I hope they’re broad
like it has to be in kind of a nice guard rail like uh depends depends on if
a customer is there depends on if there’s a vendor there you know those typ
of things there’s I mean I understand getting loose but there’s like a lot of
there’s a lot of good things that happen culturally outside of the office
when we hung out in line waiting for you know the Lightning McQueen ride in
Disneyland that was the basis of our relationship for sure for sure and we do
look we do some fun things I’m I’m not saying we don’t do fun things we do
some fun things it’s just my role is that guy and I have to you know I have
to do you take it seriously I do take it seriously you know as as a
shareholder which I am I have to protect all shareholders absolutely and you
know what all shareholders need that guy we want you on that wall you need me
on that wall we need you on that wall when was the last time you vetoed
something oh I don’t know and was it controversial uh well probably so we
used to do uh we used to do weekly lunches where we we we cater in food and
uh oh no we moved to month I know you might not want to start this here
because we do weekly lunch we do a weekly lunch on Mondays that’s great you
guys are probably you guys have probably phenomenal margins consumer product
goods margins are thin so you got to you got to watch those costs yes um
blame it on let’s blame it on the margins I think that’s fantastic yeah no um
so that we did go from weekly lunches to monthly lunches um for the whole
team yeah for the for the group and and that was a very unpopular decision
but we like I said just getting we just see that those GNA costs those
General administrative costs on the P creep up can’t can’t allow that all the
time you know you got to manage those did you do are people allowed to or do
you get any feedback from anybody is there like a suggestion box outside your
office well not outside my office um you know before a couple years ago we
hired an HR director which has which has been nice in a lot of ways and
challenging in a lot of the the more opportunity you give people to give
feedback the more negative feedback they will give people yeah people rarely
take the opport to be like you’re great I love everything that’s happening
here it’s only when your life is negative negatively affected or you perceive
that your life is negatively effective that you have now all of a sudden the
motivation to write make a comment yeah I think when we ask people how
they’re feeling so much there’s too much introspection almost to where to the
point where we go maybe I am feeling bad maybe I am frustrated and we
manufacture a little bit of that frustration and and soe it’s such a
balancing you need it you need to have that opportunity for people to voice
frustrations but when you give the opportunity people sometimes o you know
overtake yeah too much turkey at Thanksgiving and I want to be very clear we
I we take constructive feedback and constructive criticism and try and try to
get better absolutely but I think in general just as a society we’ve almost
become like uh we we’ve almost focused too much on our thoughts and like how
is this making me feel and how like you know what there’s a lot of things I
do that don’t make me feel great but the reality is I’m an adult and I have
to do them or I’m a parent and I have to parent and I’m a you know I’m a a
manager of some people and I have to manage those people and so they don’t
make me feel good all the time they don’t make the other people I’m talking
to feel good all the time but they have to be done and it’s it’s the right
thing to do yeah I think so I know those are you have to make those tough
decisions yeah sometimes well I I want to keep talking about Cozy Earth and
your your role there and and the growth and and specifically I want to
understand I know one thing that you guys deal with and I and you have a a
third party that kind of manages the shipping and Logistics side of it for
you but I want to understand how that affects your particular business um and
in the cost Associated but I would like to dig in a little bit of your
background to how you got to this sure position because I know you you
mentioned it you you grew up in in an athletic yeah family right yeah so both
how how many siblings so I have two siblings I’ve an older brother and a
younger brother I’ll give you a little bit background of my parents so both
my parents were Collegiate athletes my mother an All-American and a member of
the 1980 women’s Olympic volleyball team before they boycotted Russia so she
didn’t get to go no um she’s a member of the the BYU Hall of Fame she grew up
on a on a dairy farm in South Eastern Arizona in the middle of nowhere uh
they still have the farm today I’m going there for Thanksgiving actually my
grandmother’s getting a little older so we’re going out to visit her
Thanksgiving uh hardworking gal my mom is a hardworking gal learned it from
from her her family uh grew up you know was the first woman to actually
receive a scholarship at BYU after Title 9 and so pretty pretty cool really
neat lady special lady um she got into coaching after after playing won a
national championship at the junior college level and then and then was a
coach my dad football player um he actually was he played junior college and
then went to Utah broke a vertebrae in his spine had that fused transferred
to Oregon and played basket so good good athlete as well he got into coaching
coaching football after the fact um and my parents met while coaching at unv
they were both my mom my mother was a women’s volleyball coach my dad was a
football coach uh they got married there my uh my brother was born there
moved up to Idaho my mom took a job at Washington State my dad at University
of Idaho they’re like half hour AP hour apart pman in Moscow um I was born in
pman lived in Moscow we so we moved a fair amount when I was really little
just as you do in the coaching world you take the next best opportunity or
you get fired and you got to find a new opportunity it’s like it’s like being
a military family yeah you move around a little bit he took a job at San
Diego State my mom was helping with the national team in San Diego and so uh
he was the defensive coordinator there so we spent until I was seven six or
seven in San Diego they got fired and he had joined who was that wait who
when was that uh this is 94 yeah who was the do you remember who the head
coach was then at San Diego State if someone said his name i’ I’d be able to
but the good with good team no good players Marshall Faulk was there during
that that’s what that’s what I’m saying early 90s Marshall faul I can’t it
wasn’t Tom craft I no he was after I can’t remember anyway it doesn’t matter
doesn’t matter so okay so that staff got so that staff got fired my dad in
the interim my my mother was a member of the Church of Jesus Christ of
latterday saints well we’ll refer to them as Mormon at this point my dad had
joined the Mormon church when we were living in San Diego okay and so he gets
fired from there wants to go to BYU gets a gets a job working on level staff
in 94 at BYU and then my mom took a assistant volleyball job with elain
mikelus who had been the head coach had women’s volleyball coach for a long
time so that was the environment I was raised in where Sports were everything
the theater not a huge part of my life uh singing other than at church you
didn’t do it you don’t want to hear me sing now um are you sure I’m sure yeah
uh you know so so my I wouldn’t say I was super well-rounded you know my
childhood was very much just Sports and after school you went to BYU and you
hung out and that that’s what I did and so was awesome were both of your parents
coaching there at at the time D your dad was on the football staff your mom’s
on the volleyball staff okay so both of them are coaching at the same time
that’s the environment I grow up in so sports are my life you know my dad
bred me I’m I’m 65 230 you know my dad bred me to play quarterback that’s all
he wanted me to do uh I kind of like a kind of like a Todd marinov I just
didn’t like it though wait you didn’t like playing quarterback or I didn’t
like football in general I was kind of wuss actually like that that’s I think
like when you you don’t like football no but no like that’s why I didn’t like
it though it was like hard uh so like I would I grew up and it’s spent a
couple weeks at BYU’s Camp every year and I’d go out of state and do some football
camps and was good good athlete you know can sling the ball a little bit had
a lot of success you know pre- nth grade just got I I just got tired of it it
was like I could tell you anything about a defense at age 11 you know I just
got real tired of it and I was getting better at basketball and so basketball
was was fun and you traveled all over the country to play the really
incredible teams and you had coaches of nationally known programs that would
come watch your games not to watch you but to watch the people you were
playing but it was still it was it was fun and it was I could go to hell week
you know or I could go to the a national championship in Florida for
basketball and I I can promise you I didn’t choose hell week and so I stopped
playing my sophomore year break my dad’s heart he’ll still Ras me about it
you know cuz you know relative to my size uh football you know I I have a
better body for football I’m a dime of dozen in basketball he 65 white dude
in basketball of which I had some good success in high school and then
College how would you measure your athleticism I mean are you an elite
athlete are you a mediocre athlete but you’re Scrappy or okay we won’t even
go I would say somewhere between those those first two athlete I jump well
you know I won some a lot of dunk contests locally growing up yeah like I 360
wind all that yeah yeah I told my yeah I uh about a year ago you you’ll you
can you can ask for verification this uh a year ago last August uh I could
still 360 so myid I tore my ailles playing basketball in January but but yeah
but but yeah so mid-30s could still 360 fine um not fine it’s harder now uh I
started playing basketball game a couple weeks ago and and I can I can dunk
again but not not really so like good athlete good hand like wow Mo most
sports things but let me tell you what that doesn’t do for your life anything
that productive like being good at sports is cool when you’re 15 and 20 but
like when you’re 35 38 it just doesn’t matter you know I wish I was smarter I
wish I spent more time like being more cultured I’m going to defend you a
little bit maybe a little bit we have I have worked with a guy here who says
this kind of the same thing like why are you getting your kids all involved
in sports because the the chance that they’re going to be an elite athlete
and make a living in athletics is super low so make sure you know why aren’t
they doing other things and that’s kind of the thing you’re saying is like be
more well-rounded be more you know do do other things or get but there are so
many things that you learn in athletics so many lessons that you learn in
athletics I think are very transferable I I don’t disagree and I’ll caveat
that like I am am I mad at all that I spent all the time I spent doing sports
know but I but I literally thought it was life I thought that because both my
parents worked in sports I thought you know that’s a you know a good Avenue
to to earn a living um whether or not that’s true like there’s big money in
college sports now there wasn’t 20 30 years ago right uh even as a you know I
walked on at BYU post uh twoyear Mormon sabatical Mission um I’d I’d have
gotten School paid for like just as a walk-on I’d got you know and now
obviously players can get paid and things like that but there’s big money for
coaches too if you’re in a good conference a lot of money to be made it’s not
historically been the case except the last 10 to 15 years I would say so
anyway that’s the construct I grew up in you work your fan off playing sports
you be a good teammate um if you’re you there’s a role for everyone to play I
think that’s a really important lesson to learn from life and when I try to
teach my kids I’ve got kids that are good athletes and kids that are you know
mediocre at best and everyone’s got a role to play my 10-year-old son he is
such a good kid he is so smart loves chess loves reading he is not an athlete
he is a good athlete just doesn’t care for sports that much no passion about
no but he plays them with his friends and if he he’s got some friends on the
team he’ll he’ll play a game but in his in basketball his role is to rebound
if you get an offensive rebound you can shoot other than that probably not
shooting um and play hard defense and that’s great well Dennis Rodman made a
career out now I don’t yeah he did he’s kind of you he’s a little goofy I
don’t know if I want him as a in terms of in terms of a rebounder and a role
player I don’t know is there a better one better example than a Dennis Rodman
no no not in all of sports I I I I don’t think there’s a single player in all
of sports you may be right that H that is a better role player than Dennis
rod and that’s what makes a great championship team and and I agree Frank
100% there are so many lessons and that’s why I still have my kids play
sports there are so many lessons to be learned to be a good teammate to be
unselfish to to know know a role and just love your role and exceed in that
role to be a winner in your role there’s incredible lessons and so I love
that environment I grew up in but I didn’t know a lick a thing about business
I was not raised in a business environment everything I saw was you know
related to business was was really from my friends parents uh and things like
that I had great group of friends and some some friends whose parents had
been very successful financially and I guess in their career and you know you
perceive that growing up but you don’t really know what that means or what
that looks like but but that have been very helpful and good mentors to me
over over the years so did you grow up thinking that you would have some
career in athletics no or you didn’t no so so where did that like when when
did you determine that you you had this affinity for the business world or
for numbers or or whatever LED you to where you are today yeah Mah Hall’s
class probably can VI junior high school or Utah um really she taught an
accounting class that I thought was interesting um in I don’t know it was
probably nth grade yeah nth grade and uh you know from there I got I just got
really interested in like personal finance I I read Rich Dad Poor Dad and
that book like opened up this new world to me of like oh my gosh your money
can make you money like oh my what is that is crazy uh what is compounding
interest and so even in high school I was pretty pretty interested in that
I’d take investment class in high that our high school offered uh I lost a
lot of money on micron’s stock back then you know you do you do this fake
stock portfolio thing I was like Micron they’re they’re local I’ll buy them
you know and it didn’t work out for me super well I think Micron did fine
they didn’t they didn’t need my investment but um and so I was just I was
always interested in money I like to save money my dad I’ll give him a lot of
credit he he was really good at saving and was a good communicator about that
and he set up a plan where if if if I saved money he would match it dollar
for dollar um so if I put $50 in my bank he would put $50 and have $100 the
the rule was I couldn’t touch it uh except for a couple things a mission P to
pay for school you know later on uh or things like that and so I really I you
know I I I came home from my my uh mission for for my church and I had a few
thousand b