by Nick Waterhouse
This post is the first part of a new series that I will be featuring periodically on the site. I will be interviewing entrepreneurs who are making waves in their industries in order to get insights on what it takes to create a successful, flourishing business. Sure, we have all read about Richard Branson or Warren Buffett. My goal here isn’t to bore you with business lessons or typical success stories. Rather, I want to infiltrate the minds of hugely successful people you probably haven’t heard of to find out how they got to where they are now. I will be asking about habits and personal life, as well as diving into how these entrepreneurs turned a simple idea into a lot of money.
For Part I of the ‘Interview with an Entrepreneur’ series, I talked to Matt Kossoff, President of The Retrofit Source. To get an idea of what The Retrofit Source (or TRS) does, here is a snippet from their homepage:
The Retrofit Source is more than the world’s largest supplier of high-end automotive lighting upgrades. We’re a group of enthusiasts with a passion for perfecting your night-time driving experience. From humble beginnings to our current 15,000 square foot facility that’s always stocked with an unbeatable selection of headlight happiness, our roots have nearly doubled in size annually since opening in 2005.
That’s right. They sell headlights. High-end automotive lighting upgrades, to be exact. Matt is an old friend of mine and I have been fortunate enough to watch him take his business from “humble beginnings” (i.e his parent’s garage) to this:
Awesome office and warehouse space aside, the numbers speak for themselves. TRS is averaging 5,000 orders a month and $30,000/day in gross revenue so far this year. 2015 marks 10 years in business for TRS, and with a projected $10 million in sales this year, the future has never looked brighter. TRS has a prominent customer base in Canada, the Middle East, the UK and Australia and have served tens of thousands of happy customers world-wide.
Talking with Matt was insightful and interesting, I hope you enjoy the interview.
BWB: First off, thanks for taking the time to do this and congratulations on 10 years in business. Take a moment and put yourself back in the mindset of your younger, senior-in-high school self when you started the company. What were your original intentions of starting The Retrofit Source and what sparked your interest in automotive lighting?
Matt: I’ve been into cars, and really anything with wheels that goes fast, since I was really young. I’ve always considered myself a bit of an entrepreneur, too. I remember buying bulk candy at Sam’s Club with my parents when I was in 5th and 6th grade, and then splitting it up and selling it on the playground. When I was in high school, I started a company with a couple friends buying computer parts at wholesale and reselling them on eBay – but we were too naïve and got burned trying to buy inventory from overseas and ended up losing a bunch of money. I had to find a way to make the money back, so I started customizing headlights for other people online. It was profitable and fun, so I stuck with it.
I watched you grow the company while being a full time student at The Ohio State University. After graduating, when did you make the decision to pursue TRS full time?
I went through college wondering if I would end up with a real “suit and tie” job after graduation. The whole time, my parents would bug me about applying for internships and dropping the headlight gig. When I finally gave in and interviewed for an internship one day one of the questions they asked me was, “So tell me why you want this job?” and after a pause, I actually said out loud, “well….I don’t”. And that was that.
When did TRS become profitable enough to support yourself with?
When I was in college I remember my bank account hitting $10,000. Realizing my friends were working odd jobs and donating plasma just to pay the rent and the fact that my overhead was the same as theirs since I just worked from home… that’s when it was profitable.
Was there ever a time when the company was losing money? If so, what did you do to turn this around and how did you keep sane during the process?
The only time we ever lost money was when one of our suppliers email addresses was hacked. Some scam artist pulled a bait and switch and replied back to me with an invoice for $6000 that directed the money to an alternate bank account in China. We never saw that money again, and the real supplier took no responsibility.
Was the company completely self-sustaining or have you ever received any investments or financial support? If not, give us an idea of how much profit you would live on/pump back into the business in the early stages.
The company was always self-sustaining. In the beginning, my personal checking account and the checking account for the business were one, so I had to be careful not to overlook the fact that the money sitting there wasn’t all at my disposal and had to be available for working capital. I actually printed a “poster” and put it on the wall by my desk that reminded me to “Buy Inventory!”. It was hard letting go of the money sitting in the account sometimes, but I realized there wasn’t any more reward without the risks of reinvesting the money I’d worked hard to earn and already had in my hands.
When did you hire your first employee and what does your full time team look like now?
The first full time employee we had came in 2009. He was a friend of mine and a roommate who was also into cars, so it worked well. Ironically the website doesn’t even reflect our team now, we’ve got 17 people working full time for us now including myself. We grow faster than we can keep our website up to date.
Do you like being a boss?
I’ve lost a lot of sleep thinking about work. I’ve lost touch with old friends from the lack of spare time. I’ve probably aged a bit faster than I should from the occasional stress too. However; I’ve also made a lot of new friends working in the industry, achieved financial freedom, the ability to achieve my dream of owning various sports cars, the honor of employing other hard working people here in Atlanta and even my own brother. There’s a lot of ups and downs, but its definitely fulfilling.
What is the toughest element of supervising other employees?
The fact that not everybody cares as much as you do at the end of the day. They’re here for their paycheck, not the end game.
What is one trait that any employee of TRS MUST have to be hired?
They need to be into cars. Not only to understand what it is they’re working with, but to connect with our customers and get along with the other guys here.
How do you keep your employees motivated?
For a long time I bought everybody lunch every Friday. Not everybody always liked what I decided to order, so we quit doing that. Now, we have a variety of financial perks and rewards that we give out when they achieve certain goals that we set forward.
I know you are gearing up to celebrate 10 years in business come June (2015), where do you see the company in 5 years? 10 years?
We are shaping up to take on some outside investors for the first time in company history. Our goal would be to reach national distribution in a lot of big box retailers. Now, our business is made up 50/50 wholesale and retail, we hope to move more towards the wholesale side of the business and let the other dealers work with the individuals. After all, Pareto’s law says 80% of our revenue comes from 20% of the customers, right?
Aftermarket automotive lighting seems like a very niche industry to most people. Do you have any tips for people on how to be successful when starting a business in other niche markets?
My best advice for anybody whose trying to start a business is for them to only get into something they’re passionate about. If you’re not really interested in it, you’ll have a much harder time succeeding. From there, it will be easy to act like a pro even if you’re not really; because chances are you already know a lot about what you’re doing. I always lived by the saying “fake it ’till you make it” – because, especially for internet based businesses, people really don’t have any indication of how big or small the company is that they’re thinking of spending their money with aside from how the business portrays itself.
Do you consider yourself “successful”? What stands in your memory as the moment when you realized you had accomplished something big?
I would. Even though the automotive aftermarket for lighting isn’t the most glamorous industry in the world, it’s kind of weird, people consider me like a godfather. One time a guy walked into our shop and I casually introduced myself as Matt as I was asking him how I could help out. He said “Wait, you’re ‘the Matt’ ….You’re like a celebrity man!” Haha!
How would you define success and who is someone that is successful in your mind?
My dad told me that “success is wanting what you have, not having what you want” and even though it was in causal conversation, that’s always stuck with me for some reason. Even though he retired successfully after selling his dental practice of 40 years, he’s not a flashy guy and takes more satisfaction from visiting with his family rather than driving an expensive car or moving into a gated community. He was always a humble guy. Success is staying true to who you are, what you believe, and refusing to let money change that. My dad did it, and I plan to follow in his footsteps.
Be honest, how many hours a week do you work?
50, on average. I take off my fair share of Thursdays and Fridays to travel with my wife; basically whenever she tells me we’re going out of town.
What is your current advertising spend (% of sales) and which ad avenues have proved most profitable?
We spend $60/day on Facebook advertising, and that’s it. I think it’s the best way to spread the word since social media is so popular. We have a coupon code for our Facebook fans and monitor it’s use, so we know it’s definitely paying for itself. $60/day divided by $30,000..I guess that’s like, .02%? Haha!
Do you actively watch the market for new competitors?
Yes, we’re always keeping an eye on other companies to see what they’re up to. What they’re saying, what products they’re developing, how they’re pricing similar products, etc. We spent a long time climbing to the top of the totem poll and the last thing we want to do is get knocked off.
What do you do to stay ahead of your competition?
We’re constantly evolving our product line, making sure we’re delivering the best possible product at the most reasonable price. We’ve got great economies of scale that allow us to undercut most of our competition when we need to, and a lot of our suppliers recognize our buying power and have granted us exclusive rights in our territory. We also tend to eat a lot of costs associated with taking care of customers even when they’re flat out wrong, just to uphold our reputation for perfect customer service.
If you had to give one piece of advice to aspiring entrepreneurs, what would it be?
Do what you love to do. Don’t try and grow faster than you can manage. Too many customers isn’t necessarily a good thing if you’re not equipped to serve them.
If you had to give one piece of advice to people sourcing products from overseas, what would it be?
When there is a language barrier, don’t bombard them with lots of complex details as they’re bound to miss something. Stress what is important.
Is “the customer always right”? How important is customer satisfaction to your business?
Yes, unfortunately we deal with a lot of customers who think they’re right, but are flat out wrong. For us, taking care of these guys is one of the costs of doing business just to keep everybody happy. Refunding one customer whose irate about something even though it’s not your fault is the right thing to do…especially with social media and the like these days. One bad review can potentially turn away ten good customers.
How do you drive traffic to your website? Where does most of your traffic come from?
I wish I had better advice here, but I think we’ve just got great SEO and traffic because of the age of the domain. We rely heavily on word of mouth from customers, and include a promo card with every shipment that promises them store credit in exchange for a positive review anywhere on the net. It’s the best advertising out there!
I saw you recently hit 100,000 followers on facebook! Congrats! How does social media benefit your business and how do you plan on continuing to leverage these avenues to drive sales?
We put out a coupon code for our facebook fans that we can track in our website’s back-end. Even though we spend money advertising on facebook, the marginal revenue generated by our following there easily pays for it. It’s a great way to let them know we’re always active in what we’re doing, put the word out on new products, sales, etc.
You strike me as a routine person… do you have a basic routine that you stick to daily?
I actually wish I could be more routine, but my schedule varies pretty often. I generally work out with a trainer at 615am M/W/F. When it gets dark outside, I’m ready for bed. What happens in between is different every day.
Run me through the first two hours of a typical day in your life.
I wake up 1 minute before my alarm goes off because I can’t stand the noise in the morning. I take the dogs out, feed them, eat breakfast. Depending on the day, Ill either work out and head straight to work after that, or just push everything back a bit, skip the workout, take a shower, and head to work after that.
How do you unwind after a long day?
I like to cook and catch up on some TV shows that me and Ashley like to watch together.
Do you find separating home life and work life hard?
Not really. Back when I used to work from home it was more difficult to maintain two separate lives. When I leave work for the day, I try to avoid thinking about it until I’m back in the morning.
How do you “shut it off” at the end of a workday so your mind isn’t constantly worrying about work?
I enjoy the drive home. I don’t listen to the radio, and value the quiet time spent in the car just reflecting on the day.
Do you exercise regularly? If so, what do you usually do and when?
Yep, 30 minutes at 6:15am with a trainer, Monday, Wednesday, and Friday. That’s it.
Do you have a certain time that you do your best critical thinking? Are there certain times when ideas seem to come easy? If so, do you schedule your day around this time?
Yes, I tend to be the most productive early in the morning. After a good nights sleep and with some good coffee in hand, I’m on top of shit. If I know I have something critical to accomplish that day, I’ll push the other stuff back so it’s later in the day.
What guidelines have you set for yourself to limit working too much? I know how easy it can be to just keep working when things are going well.
I basically just make a point to shut it off when we close up for the day. I’ve realized that there will always be a mountain of things to accomplish, and I could work around the clock 7 days a week, 365 days a year and it would never go away completely anyways, so I might as well save my sanity and energy for a taste of life outside of work at the end of the day.
Do you like working with others or do you do better work on your own?
I like working with others, and I especially like delegating small tasks to others. Another one of my mentors told me that I’ve got to spend more time working on the business than in the business.
How do you stay productive and drive processes when having so many things on your plate?
Being overwhelmed is an excuse for lack of priorities. Set deadlines to accomplish certain things and stick to them.
Do you make to-do lists? What would a typical Matt Kossoff to-do list look like?
Imac’s “Reminders” tool is very helpful. I make lists for things that I need to accomplish, and things that I need to make sure others are accomplishing
Do you invest? If so, what kind of investing do you do?
I invest in headlights. Investing in markets that I don’t know anything about scares me.
Have you ever thought about starting another company? What has held you back?
TRS has kept me so busy it’s prevented my mind from wondering into other ventures. I did try and patent folded chips because I liked the crunch so much and couldn’t find them anywhere in stores. Who doesn’t like folded chips? Im talking an entire bag of intentionally folded chips. The idea ended up already having a patent on it though, unfortunately.
What motivates you/gets you out of bed in the morning? Do you have any sort of songs, videos, quotes that you use to stay motivated?
Admittedly no, not really. I have a lot of random quotes that I live by, but none that personally motivate me on a daily basis
If TRS never happened, what do you think you would be doing right now?
That’s a great question, I have no idea. I’d probably still be in Ohio living an average life. TRS opened a window of opportunities for me and I’m enjoying life everyday.
If you are ever feeling lazy, what do you do to get rid of that feeling and resume productivity?
Call it a day and resume work after some rest. I don’t like working when I’m not “into it” because I know the quality will be compromised.
A special thanks to Matt for taking the time out of his day to answer some questions for me. If you are in need of some quality lighting upgrades for your ride, or just want more information on The Retrofit Source, check out their website here. If you have any questions or have a suggestion on who else to interview, please ask in the comment section below.