October 29, 2024 • 29 mins
Max Berry and his fellow Allegiance Flag Supply cofounders, Wes and Katie Lyon felt our flag should be made in the USA by skilled craftsmen and women, not overseas where (surprisingly) many are made. The trio founded Allegiance Flag Supply in Charleston, SC and make high-quality, hand-made flags any American would be proud to fly.
Max shares his insight into the nuts and bolts of growing the company from the original $5k used to launch it in 2018. Learn the secrets behind how the team navigated COVID, inventory shortages and maintained profitability on the road to making it the thriving enterprise it is today.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Brad Ebenhoeh (00:08):
All right, welcome to the Accountfully
Chat. Today we have Max Berryfrom Allegiance Flag Supply. How
you doing today? Max
Max Berry (00:15):
Doing great. Brad, thanks for having me.
Brad Ebenhoeh (00:17):
Yeah. I'm looking forward to chatting about this
cool business that'sheadquartered here in
Charleston, South Carolina. Sothere's not a ton of businesses
here. I guess there's a lot ofsmall businesses, but successful
small businesses is always coolto connect so excited to learn
more. Um, so maybe, why don'tyou kind of tell us a little
about Allegiance and how longyou guys have been in business
(00:39):
and the journey since, since2018 to today.
Max Berry (00:44):
a side business. We started in Wes and Katie's
garage in West Ashley andAvondale. We all had other jobs
at the time, and we just kind ofcranked away at it for really,
the first couple of years. Itwas very quiet, a lot of
(01:13):
crickets, not a lot of sales.
And then around 2020 it reallystarted to take off. We were
able to all three go full timeon Allegiance, and it's just
kind of been growing like rapidfire ever since. And we've been
lucky enough to continue toscale every year now we've got
about 60, a little over 60employees. We do all of our own
(01:37):
manufacturing in house.
Obviously, we sell Americanflags as the main kind of core
part of the business, and we'vegot a marketing team, and we've
got an accounting team and aproduct dev team and a lot of
manufacturing and HR as well.
And yeah, it's we're six yearsin. We just turned six years old
(01:59):
the other day, which is wild tothink about, and it's been a
wild ride. One thing that Ithink might be relevant to this
conversation is we're reallyproud to be a bootstrapped
business, and we started thebusiness with, really a little
less than $5,000 of our ownmoney, and we've, we've scaled
it, you know, obviously way pastthat, but it's been really an
(02:23):
exciting ride, and it's, it'salmost hard to believe
sometimes.
Brad Ebenhoeh (02:29):
Yeah, well, first off, Happy belated birthday to
the business. And yeah, Idefinitely want to touch base on
that aspect. So number one, justthat kind of that that minimal,
or that low dollar amount offunding that helped you start
the business, propel thebusiness, and then I think
having, you know, three businesspartners that were probably all
brought into what's going on anddoing everything. So how did you
(02:52):
guys go from starting withminimal money to kind of just
moving forward selling just kindof go through the first couple
years of that business and whatit was like,
Max Berry (03:03):
Yeah, kind of like I said before it was so quiet,
Brad, we're not one of thosebusinesses that you hear a lot
about. I feel like that's, oh,yeah, we built the business, and
it was just we were sold outimmediately and we couldn't keep
in stock. That was our storylater on. But it took years to
get to that point when westarted in 2018 we had no idea
(03:24):
what we were doing. You know, wehad the idea about flags, and
there was just so much. It wasalmost like the first two years
for us were R&D, in a way, eventhough we were technically
launched and we had products andwe had a website, we we had a
lot of pivots to make in orderto reach a point where we could
(03:47):
scale the business. So from 2018to 2020 it was, it was just, you
know, a sporadic sale here orthere. And then, really, what
allowed us to scale in 2020 wasa we figured out the digital
marketing aspect of thebusiness, and we're really able
to scale Facebook and Facebookads. But the real reason was we
(04:10):
got we figured out the product.
When we first started, we wereselling an American flag for
$225 so I would call that. It'slike the Rolls Royce of flags,
and it was just it was too much.
The process, the way that wemade the flag, it was too labor
intensive. It would take like,eight hours to make each flag,
(04:31):
and we figured out a way to cutit down and still make what we
consider the best made flag inthe world, but at a just a much
more efficiently way, much moreefficient way to make it so we
were able to lower the price, Ithink, at the time, we were
selling it for like $75 and Ithink that really allowed us,
(04:53):
with the product, to be at aprice point that allowed us to
scale the business as well.
Brad Ebenhoeh (04:59):
So then. And that's a great point, but then
how? I guess, before we stepback, like selling American
flags, sounds pretty basic, butwhere did that idea come from?
Max Berry (05:15):
Really, all three of us kind of bought houses at the
same time, and we all purchasedAmerican flags for our front
porches, and it was just kind ofone of those things. It was like
a weird personal experience,like I bought mine on Amazon. I
didn't know what to buy, whatsize to buy. Ended up getting
the flag from Amazon and said,like, made in China on it. Wes,
(05:38):
and Katie had a very similarexperience where, I think they
were, like gifted a flag whenthey bought their house, and it
was like a flag made in China.
And like our thing was, ifanything deserves to be made in
America, it should start withthe American flag. And there
were other brands or companiesmaking American flags in
(05:58):
America, and there are, but theway that they kind of their,
their distribution channels arereally through big box stores or
other flag retailers. There wasno really direct to consumer e
commerce, Digitally NativeAmerican flag brand and company.
So we were, you know, justignorance is bliss sometimes.
(06:23):
And we figured, why not do that?
Why not try that and give it ashot? And that's kind of where
the idea started from. And how,how we really started in 2018
Brad Ebenhoeh (06:35):
Gotcha. I love it. Yeah. And back to, like,
2020, 2021, timeframe. Iactually saw you guys pop up on
one of the social mediachannels, and I bought one, and
I bought a flag from my brotherand my neighbor, and they love
it. High quality product. Highlyrecommend. It's great. So then
going back to what you're sayingabout reducing your process, or
(06:55):
the time spent of creating ahigh quality flag, was that new
machinery, like, how did youmake that happen? In that realm,
Max Berry (07:07):
it was a lot of cold calling to suppliers, because at
the time, we weren'tmanufacturing in house. So we
were so small that it was hardto get some of the bigger
suppliers to take us seriously,and we didn't have the money
again being bootstrapped to beable to commit huge POs, we just
(07:30):
didn't. We didn't have the moneyto risk. We just didn't have it.
So it was just kind of figuringout if we could be squeezed into
some production runs and andfigure out more efficient ways
to be able to make the flag, toreally reach what I would say is
product market fit and $225 wecouldn't get product market fit
for our flag. $75 it's still byfar the most expensive flag in
(07:55):
the market, but it did allow usto reach that product market
fit, which, at the same time waswhen COVID was going on, and you
had, if you remember, like, alot of the retail stores closing
down. E-commerce in general, waskind of skyrocketing during that
time. And then we really wereable to figure out Facebook ads,
(08:15):
which really propelled thecompany and in 2020 and that's
when we were able to kind ofquit our jobs, go all in. We got
this little 400 square foottornado shelter that we rented
from Smithy Ironwear, who was onthe Navy base, and they were
nice enough to rent it to us.
And it was just a small littleconcrete 400 square foot room.
(08:37):
And it was like me, Wes, Katie.
Our first employee was actuallymy, my little cousin, and we
just cranked away packagingflags for all day, every day in
all of 2020, so it was, it waskind of a crazy time.
Brad Ebenhoeh (08:56):
Yeah, crazy time in general, then specific to
your business. But, I mean, I,you know, my take on business
is, you know, they're a lot ofsuccessful businesses, maybe at
the wrong time, the wrong place,but it sounds like you guys are
at the perfect time and placewhere everything kind of, you
know, converge to, you know,moving to the next level. And
(09:16):
that sounds like when you guyswere in 2020, like, what was
that one decision, or that onething that you guys all saw to
say, All right, let's all jumpin. Because, like, going from
part time and having a stableincome and doing different
things to like, alright, we'reall in now. Was there a
specific, you know, you saw yourEcomm sales, you know, skyrocket
(09:38):
one day, or kind of, what was itthat that helped, helped lead to
that actual decision to jump infull, you know, with both both
feet. I
Max Berry (09:47):
think it was just the volume of sales we were getting.
And I think you're right. It'sall about timing, right? It's
like relationships are abouttiming. Like how I met my wife
was all about timing, thebusiness. Yes, it was a little
the business is different, Ithink a little bit because we
had worked for two years to getto that point. And it's not like
(10:09):
we were really doing much insales, but because we're
bootstrapped, and because we hadbeen profitable since day one,
we were first order profitableforever. We've never, not like
made money on it, on atransaction, so we could afford
to stay in business for twoyears without quitting our jobs,
because there's no reason notto. We were enjoying it, and
(10:32):
although we weren't crushing itfor those first two years, we
weren't losing any money. Sowhen the time finally came where
we could achieve product marketfit, it was kind of an easy
decision. Where we weren't. Wedidn't have any kids at the time
either. So it wasn't like wewere risking our kids futures by
(10:55):
any means, like, let's try this.
Let's jump in and let's do it.
And we grew. I think it was like4, 500% in 2020 so it was just
like, if we didn't go all in thebusiness wasn't going to work,
because we were the ones doingall the work. We were doing, all
the fulfillment, all theordering, all the customer
(11:15):
service, all the marketing, allthe product development,
everything was being done by us.
And like that was our moment.
That's what we had kind of spentthe last two years on. So it
just seemed like an easytransition for us at the time,
even though it was scary still,because we all had real jobs
and, like insurance and stufflike that that we had to walk
away from.
Brad Ebenhoeh (11:35):
So first order, profitability. So great term.
Clearly, it's, it's whateverybody wants as an ecom
business or as an inventorybased company, right, like but
number one, I guess my questionto you is, clearly, you're
(11:56):
factoring in everything and intothat, your cost of your product,
your labor, your marketing, thewhole aspect you're talking
about when you started at thatsmall at the small phase, I'm
assuming you may not have had aton of inventory built up. Or
how did you manage inventorywhen it was slower, and then as
you started growing, I'massuming it started to stockpile
(12:17):
more and more inventory, moreand more finished flags. But how
did that all work?
Max Berry (12:23):
Yeah, I think the thing that's different about us
from a lot of E comm brands, islike, we don't have some like,
contact in China that we cancall up and say, Hey, we need
10,000 more, or now we need100,000 more, or a million more.
Like, we can't get containers inthe ocean, and that's just goes
against all of our core values,like we're 100% Made in America,
(12:47):
sourced in America all the way.
So we've had a unique issuewhere we've consistently been
out of inventory for years. Wefinally got a handle on it. Hits
the 60 employees that we havethis year where we didn't run I
think this was like the firstyear we didn't run out of
inventory, at least for our maincore product, the three by five
(13:09):
American flag. So that was it'sa blessing and a curse. It's a
blessing from a cash flowstandpoint, because always being
out of inventory is great foryour cash flow, but it's bad for
your ability to continue togrow. Luckily, we've managed to
grow considerably every singleyear that we've been in business
(13:32):
since 2020, 2018, 2019, not somuch so we've we've had to make
our own inventory. We we since,I think, in 2021 is the year
that we started to bringmanufacturing in house. And
until that point, we also workwith Co-manufacturers, because
we couldn't do everythingourselves. And this is the first
(13:54):
year we've actually been able toto make all of our inventory by
ourselves, and how So does thatanswer the question?
Brad Ebenhoeh (14:03):
It sure does. And then I guess, while we're
talking about that, how do you,you know, maintain quality
control your products. How doyou, you know, hire good people
to do, do the work. Like, um,you know, like, it's funny, you
go from 2018, to to, you know,small business, shooting
everything to this business.
There's always issues and riskand pain points as a business
(14:23):
owner, but you know, just from aquality control of your product
and and making sure that youguys have your supply chain
internally, like, in house, upto par. How, like, how is that
went? What challenges went alongthe way of that?
Max Berry (14:40):
Yeah. I mean, honestly, we just had to figure
it out. There's no easy answerfor it, because when we decided
in 2021 we have to make ourflags in house, it wasn't really
what we wanted to do. We had todo it because nobody else could
give us enough inventory, andthey weren't able to make it the
(15:02):
American flag, and like the waythat we wanted to make it. So
even to go back on your previousquestion, in 2020 there was a
lot of sleepless nights from us,because we had 1000s of orders
in Shopify that wereunfulfilled, and we had
suppliers that literallywouldn't call me back. It's
(15:22):
like, when are we going to getthe flags that these people have
already bought? Because we wereexploding at the time, and it
was really, really stressful,and what we had to do, like, was
to just send it on us email toall of our customers that have
bought, like, hey, and this was,like, right in the middle of
COVID, I don't know when we'regoing to be able to get you the
(15:45):
flag, but I promise you, we areeither going to get you a flag
or we are going to refund yourmoney. And the amazing thing
was, like, 99% of the customerswere like, Fine, you know, I
don't care. It's not like, it'smedicine or food or something.
Like, get me the flag when youget me the flag in. And we did
deliver on all those, but it wasreally stressful, and I'm glad
(16:07):
not to have to, like, live inthat moment anymore. But yeah,
in terms of, like, figuring wejust had to figure it out there.
We didn't know how to make flagsin 2021 we were still buying
them. Like, we didn't know thesewing process and the cutting
process and the quality control,but what we have done is figure
it out, and we've become expertsin the field, and I don't know
(16:28):
that there's really another wayto do it other than just figure
it out, and that's kind of thewhole that's kind of been the
theme of our business since dayone. Just figure it out, because
we don't know. We didn't knowe-comm. We didn't know
marketing, finance. I knew alittle bit about, but I didn't
know like accrual accounting andhow to to model some of these
(16:50):
things and quality control, likewe figured all this stuff out on
our own.
Brad Ebenhoeh (16:55):
Love it. One of Accountfully's core values is
solution or solutions oriented.
So it's very similar to that.
You just gotta figure it out andfind a solution for the for the
pain point that you're having.
So three business partners, youall started, you're doing
everything now. You're 60people, you know, blowing up.
Like, how have you all dividedand conquered different
(17:17):
functions and departments of thecompany, as well as, How do
y'all keep focused, just asbusiness partners, and making
sure going from here to here,that you're also moving forward
in the direction, and you know,in terms of where you guys want
to take this, yeah,
Max Berry (17:34):
Luckily, like, Wes Katie and I have a very, just a
unique, great relationship. Imean, they're married, so that
already brings in a unique kindof factor to it, and they do a
great job of kind of keepingwork life and home life
separate, I think, for their ownsanity. But all three of us have
(17:54):
really different strengths,which is really nice Wes is
great at ops, great at productDev, really. He comes from a
sales background. He's arelationships guy. I am
definitely more of like theintroverted numbers guy. And
then Katie is very much like thebrand tone. How do we look? How
(18:18):
do we feel? So each of us couldnot do what each other person
could. And I think we all reallyrespect each other's like what
we each bring to the table, andwe just get along really, really
well. And I think I know thatwe're very lucky to have that,
because I've heard horrorstories of, you know, other
(18:41):
people that don't like agree andalways kind of go into bat with
each other, and that's justnever really been our
relationship or the case. So Ireally am thankful for them and
how we've been able to kind ofgrow it all together at the same
speed, in the same direction.
Yeah,
Brad Ebenhoeh (18:59):
no, it's, it's definitely, you know, I guess I
don't know if rare is the issue.
Maybe, you know, Yeah, you wonthe lottery of business
partners. You know, it's just, Ithink, from the experience of at
accountably, specifically withmy wife and the company, but
also seeing a bunch of othersmall business over time. It's,
(19:19):
you know, making sure you havesufficient alignment of where
you're at today and where youwant to go. I think that's a big
part of it. And as complexitiesand dynamics arise with business
partners, specifically aroundfamilies or different situations
that happen to pop up a lot oftimes, it kind of gets in in
front of the business, which isa lot of times, very fair
(19:40):
situations. But, you know, happythat it's all worked out for you
all and, and that's super cool.
So from just a day to day basis,you're an analytical brain.
We're talking about accounting,finance, you know, inventory,
kind of, what are some of yourkind of reports or KPIs that you
look out, kind of look atthroughout the week, or, you
know, on a daily basis. It'sjust to make sure everything's
(20:01):
kind of moving forward in thedirection you want.
Max Berry (20:03):
Yeah, we've got an incredibly well built out model
that is day to day with it'sprobably got 50 different KPIs
in it, and that rolls up toweekly, and that rolls up to
monthly, and that rolls up toannually. So we've got our eyes
(20:24):
on everything that happens inthe business with this model.
And really what we're looking atfrom a marketing standpoint is,
you know, obviously top linerevenue, but then what are we
spending on marketing, and whatis our contribution margin, and
what is our customer acquisitioncosts, and our in our M er, and
(20:46):
then ultimately, what is our netprofit? And we were able to
track profit every single day,which is really nice, and we
built OPEX in there as well. So,you know, we're looking at
everything, but really, what,what I care about is, is what's
on the bottom line. You know, Ithe top line growth is fine,
(21:08):
but, and we have that, but it'spointless if it's not growing on
the bottom line and as abootstrap business. And, you
know, that's, that's all wereally care about is how, you
know, how are we going to fundthe growth of the business? It
has to be from our own selvesand and if you don't have that
bottom life, bottom line growth,and then you're not going to be
(21:30):
able to do that. So it's, it'salways been the most important
thing for us.
Brad Ebenhoeh (21:33):
Yeah, I definitely feel like that was
not the norm, um, for the lastkind of decade of especially
kind of inventory basedcompanies, and even tech, you
know, companies, especially inthe world of Shark Tank and
different things that have comeup, you know, to fruition the
last kind of 15 to 20 years,where everybody thinks top line,
(21:54):
top line, top line, more money.
Top line, more money. Top line.
It's like, yeah, you can grow upto a 30 minute company. But if,
literally, every dollar you'remaking you're losing money
because you're spending x numberdollars on marketing, and it
doesn't matter. So, yeah, thebottom line is super clearly,
now what though I would have mypurview the last couple of years
(22:17):
with the economy and interestrates and kind of the capital
markets, kind of pausing alittle bit, you know, to help
small businesses, it's refocuspeople to cash flow, profits,
just the basic fundamentals ofbusiness, which we're talking
about here. So it's kind of,it's a shift, but it's kind of
nice of like, Alright, let's getback to just making money and
funding your business with thethe profits and the earnings of
(22:38):
your company.
Max Berry (22:39):
Brad, I cringe, man, I cringe when I hear this stuff.
Like, yeah, I watch Shark Tankand I see some of those founders
talk about, like, Oh, we're notprofitable, but, and here's why,
and I those are, like, thingsthat make me cringe when people
talk about raising money andlike, bragging about how much
money they raised. I don't getit like, Look at, look at the D
(23:06):
to C darlings that are publiccompanies now, like all birds,
all birds is down 99% from whenthey IPO. Look at all of like,
look at pretty much all of them,Casper, Warby, Parker, figs,
even figs who had, like, apretty good business, like,
they're they're not profitable,they're losing money. What's,
(23:27):
what is the point of thebusiness? You know, like, if
you're not making money, thenwhy do you exist? And and for
these consumer brands to thinkthat they're Tech brands,
because it is different for atech brand, a SaaS company that
can scale, you can't do that ininventory based businesses. You
(23:50):
always need to buy moreinventory and like, that's the
major difference. Not to mentionthat, like, the assumption that
your customer acquisition costis going to get lower as you
continue to scale. That doesn'tmake any sense, either. So when
I see other brands that aremaybe a little smaller or even
bigger, talking about they'renot profitable and they need to
(24:15):
raise money, especially as likea finance guy, that kind of
stuff really just makes mecringe, because I know 99% of
the time what the future holdsfor business like that. Yep,
Brad Ebenhoeh (24:26):
100% are you guys, and what is your your
sales channel mix like, how muchpercent is e com?
Max Berry (24:33):
We're about 98% e com, so we're very much direct
to consumer.
Brad Ebenhoeh (24:40):
Yeah, I feel like, you know, I've seen a lot
of companies that are spreadacross 10 different sales
platforms or channels, and it'slike, you know, is it going to
be wide or deep? It's like,until you figure out, I think,
one or two, and you really havethe numbers and understand the
metrics and the KPIs, it'sreally hard to go too wide.
Unless you have unlimited cash,which is kind of clearly the you
(25:03):
guys focusing on e com andreally honing that in, it has
helped you, helped you kind ofbe, stay profitable, be
profitable from the start, um,from an aspect of just the
business, what else do you have?
Any other kind of things movingforward, new products, new
everything going for, uh, movingforward.
Max Berry (25:21):
Yeah, we actually just launched a really cool,
patriotic kind of leather worksline. It's got a there's a
wallet, there's a key ring, andit basically takes the material
that otherwise would have beendiscarded from our flags and
incorporates them into 100%American source, American made
leather. So we're really excitedabout that. And just continuing
(25:45):
to obviously, flags is ournumber one kind of core product,
but echoing the patriotic theme,and, you know, displaying
patriotism and other thingsother than flags is something
that we're going to continue toexplore here in the future.
Brad Ebenhoeh (26:04):
Also me, I was just thinking of kind of
seasonality as clearly econbusiness heading to as we head
into the holiday season here.
But also for you guys, I'massuming you still have some
kind of bump ups with MemorialDay and late or and July 4 of
the different things. So it'snot just like a ke for aspect.
Is that true?
Max Berry (26:21):
Yeah, we're kind of the opposite, I think, of most e
com brands. Or you'll see most ecom brands probably do 50% or
more of their revenue in Q4 uh,we're the complete opposite.
We're like you said. You hit itdead on. It's Memorial Day. All
the way up through July 4 is ourbiggest peak. We do get a peak
in Q4 but not like thetraditional e com brand would
(26:47):
where, like, that's their breadand butter for gifting season.
Brad Ebenhoeh (26:50):
Yep, yeah. Well, good. Well, Max, this was
awesome interview. As we kind ofhead out here, we typically have
kind of a couple just questionsthat we answer or that we ask
our guests. So the firstquestion is, just, what is one
small business owner do?
Max Berry (27:08):
What Wait?
Brad Ebenhoeh (27:11):
What is one small business owner to do? A fellow
founder? What is one do and onedon't?
Max Berry (27:18):
Okay, so a do for me is know your numbers, know your
unit economics, know what youcan sell something for and what
will like, what will be leftover after you account for the
COGS, any of your overhead, themarketing, all of that. Know
(27:38):
your numbers, because you're notgoing to be profitable by
guessing, or, you know, hopingso. That's, that's my absolute
do for someone that's in theconsumer space.
Brad Ebenhoeh (27:50):
What about a Don't?
Max Berry (27:54):
Don't be okay not being profitable in the consumer
space. Do not be okay with that.
Because there is, there is avery unlikely avenue of you
continuing to scale and thenmaking up that profitability.
Somehow.
Brad Ebenhoeh (28:09):
I love it. I knew those, those questions or those
answers were coming. So alright,as we wrap up our episode here,
where can people find you andwhere can they buy your
products?
Max Berry (28:23):
They can buy our products at showallegiance com.
That's our website. You can findme on LinkedIn. I think it's Max
Barry seven. And yeah, I'maround, and I'm also here, like,
if, if anyone sees this, and ifI can help you in any way, if
you're starting out of business,or you have a business, and I
can help answer a question ortwo, always happy to help,
(28:46):
because I've had a lot of helpfrom others that have helped me
along the way.
Brad Ebenhoeh (28:52):
Love it. Love it.
Well, Max congrats on you andyour business partners. Growth
of Allegiance Flag Supply todate. I love, love just kind of
successful, profitablebusinesses. And they're not
always the sexiest or the mostpromoted out there in the world,
as we kind of discuss, but kudosto you. And just keep up. Keep
up the basics and thefundamentals, and we're here to
(29:15):
support the business movingforward.
Max Berry (29:18):
Thanks for having me, Brad. Appreciate it, for sure,
Brad Ebenhoeh (29:22):
it was great.
Take care. Max. Bye. You.
All right, welcome to the Accountfully
Chat. Today we have Max Berryfrom Allegiance Flag Supply. How
you doing today? Max
Max Berry (00:15):
Doing great. Brad, thanks for having me.
Brad Ebenhoeh (00:17):
Yeah. I'm looking forward to chatting about this
cool business that'sheadquartered here in
Charleston, South Carolina. Sothere's not a ton of businesses
here. I guess there's a lot ofsmall businesses, but successful
small businesses is always coolto connect so excited to learn
more. Um, so maybe, why don'tyou kind of tell us a little
about Allegiance and how longyou guys have been in business
(00:39):
and the journey since, since2018 to today.
Max Berry (00:44):
a side business. We started in Wes and Katie's
garage in West Ashley andAvondale. We all had other jobs
at the time, and we just kind ofcranked away at it for really,
the first couple of years. Itwas very quiet, a lot of
(01:13):
crickets, not a lot of sales.
And then around 2020 it reallystarted to take off. We were
able to all three go full timeon Allegiance, and it's just
kind of been growing like rapidfire ever since. And we've been
lucky enough to continue toscale every year now we've got
about 60, a little over 60employees. We do all of our own
(01:37):
manufacturing in house.
Obviously, we sell Americanflags as the main kind of core
part of the business, and we'vegot a marketing team, and we've
got an accounting team and aproduct dev team and a lot of
manufacturing and HR as well.
And yeah, it's we're six yearsin. We just turned six years old
(01:59):
the other day, which is wild tothink about, and it's been a
wild ride. One thing that Ithink might be relevant to this
conversation is we're reallyproud to be a bootstrapped
business, and we started thebusiness with, really a little
less than $5,000 of our ownmoney, and we've, we've scaled
it, you know, obviously way pastthat, but it's been really an
(02:23):
exciting ride, and it's, it'salmost hard to believe
sometimes.
Brad Ebenhoeh (02:29):
Yeah, well, first off, Happy belated birthday to
the business. And yeah, Idefinitely want to touch base on
that aspect. So number one, justthat kind of that that minimal,
or that low dollar amount offunding that helped you start
the business, propel thebusiness, and then I think
having, you know, three businesspartners that were probably all
brought into what's going on anddoing everything. So how did you
(02:52):
guys go from starting withminimal money to kind of just
moving forward selling just kindof go through the first couple
years of that business and whatit was like,
Max Berry (03:03):
Yeah, kind of like I said before it was so quiet,
Brad, we're not one of thosebusinesses that you hear a lot
about. I feel like that's, oh,yeah, we built the business, and
it was just we were sold outimmediately and we couldn't keep
in stock. That was our storylater on. But it took years to
get to that point when westarted in 2018 we had no idea
(03:24):
what we were doing. You know, wehad the idea about flags, and
there was just so much. It wasalmost like the first two years
for us were R&D, in a way, eventhough we were technically
launched and we had products andwe had a website, we we had a
lot of pivots to make in orderto reach a point where we could
(03:47):
scale the business. So from 2018to 2020 it was, it was just, you
know, a sporadic sale here orthere. And then, really, what
allowed us to scale in 2020 wasa we figured out the digital
marketing aspect of thebusiness, and we're really able
to scale Facebook and Facebookads. But the real reason was we
(04:10):
got we figured out the product.
When we first started, we wereselling an American flag for
$225 so I would call that. It'slike the Rolls Royce of flags,
and it was just it was too much.
The process, the way that wemade the flag, it was too labor
intensive. It would take like,eight hours to make each flag,
(04:31):
and we figured out a way to cutit down and still make what we
consider the best made flag inthe world, but at a just a much
more efficiently way, much moreefficient way to make it so we
were able to lower the price, Ithink, at the time, we were
selling it for like $75 and Ithink that really allowed us,
(04:53):
with the product, to be at aprice point that allowed us to
scale the business as well.
Brad Ebenhoeh (04:59):
So then. And that's a great point, but then
how? I guess, before we stepback, like selling American
flags, sounds pretty basic, butwhere did that idea come from?
Max Berry (05:15):
Really, all three of us kind of bought houses at the
same time, and we all purchasedAmerican flags for our front
porches, and it was just kind ofone of those things. It was like
a weird personal experience,like I bought mine on Amazon. I
didn't know what to buy, whatsize to buy. Ended up getting
the flag from Amazon and said,like, made in China on it. Wes,
(05:38):
and Katie had a very similarexperience where, I think they
were, like gifted a flag whenthey bought their house, and it
was like a flag made in China.
And like our thing was, ifanything deserves to be made in
America, it should start withthe American flag. And there
were other brands or companiesmaking American flags in
(05:58):
America, and there are, but theway that they kind of their,
their distribution channels arereally through big box stores or
other flag retailers. There wasno really direct to consumer e
commerce, Digitally NativeAmerican flag brand and company.
So we were, you know, justignorance is bliss sometimes.
(06:23):
And we figured, why not do that?
Why not try that and give it ashot? And that's kind of where
the idea started from. And how,how we really started in 2018
Brad Ebenhoeh (06:35):
Gotcha. I love it. Yeah. And back to, like,
2020, 2021, timeframe. Iactually saw you guys pop up on
one of the social mediachannels, and I bought one, and
I bought a flag from my brotherand my neighbor, and they love
it. High quality product. Highlyrecommend. It's great. So then
going back to what you're sayingabout reducing your process, or
(06:55):
the time spent of creating ahigh quality flag, was that new
machinery, like, how did youmake that happen? In that realm,
Max Berry (07:07):
it was a lot of cold calling to suppliers, because at
the time, we weren'tmanufacturing in house. So we
were so small that it was hardto get some of the bigger
suppliers to take us seriously,and we didn't have the money
again being bootstrapped to beable to commit huge POs, we just
(07:30):
didn't. We didn't have the moneyto risk. We just didn't have it.
So it was just kind of figuringout if we could be squeezed into
some production runs and andfigure out more efficient ways
to be able to make the flag, toreally reach what I would say is
product market fit and $225 wecouldn't get product market fit
for our flag. $75 it's still byfar the most expensive flag in
(07:55):
the market, but it did allow usto reach that product market
fit, which, at the same time waswhen COVID was going on, and you
had, if you remember, like, alot of the retail stores closing
down. E-commerce in general, waskind of skyrocketing during that
time. And then we really wereable to figure out Facebook ads,
(08:15):
which really propelled thecompany and in 2020 and that's
when we were able to kind ofquit our jobs, go all in. We got
this little 400 square foottornado shelter that we rented
from Smithy Ironwear, who was onthe Navy base, and they were
nice enough to rent it to us.
And it was just a small littleconcrete 400 square foot room.
(08:37):
And it was like me, Wes, Katie.
Our first employee was actuallymy, my little cousin, and we
just cranked away packagingflags for all day, every day in
all of 2020, so it was, it waskind of a crazy time.
Brad Ebenhoeh (08:56):
Yeah, crazy time in general, then specific to
your business. But, I mean, I,you know, my take on business
is, you know, they're a lot ofsuccessful businesses, maybe at
the wrong time, the wrong place,but it sounds like you guys are
at the perfect time and placewhere everything kind of, you
know, converge to, you know,moving to the next level. And
(09:16):
that sounds like when you guyswere in 2020, like, what was
that one decision, or that onething that you guys all saw to
say, All right, let's all jumpin. Because, like, going from
part time and having a stableincome and doing different
things to like, alright, we'reall in now. Was there a
specific, you know, you saw yourEcomm sales, you know, skyrocket
(09:38):
one day, or kind of, what was itthat that helped, helped lead to
that actual decision to jump infull, you know, with both both
feet. I
Max Berry (09:47):
think it was just the volume of sales we were getting.
And I think you're right. It'sall about timing, right? It's
like relationships are abouttiming. Like how I met my wife
was all about timing, thebusiness. Yes, it was a little
the business is different, Ithink a little bit because we
had worked for two years to getto that point. And it's not like
(10:09):
we were really doing much insales, but because we're
bootstrapped, and because we hadbeen profitable since day one,
we were first order profitableforever. We've never, not like
made money on it, on atransaction, so we could afford
to stay in business for twoyears without quitting our jobs,
because there's no reason notto. We were enjoying it, and
(10:32):
although we weren't crushing itfor those first two years, we
weren't losing any money. Sowhen the time finally came where
we could achieve product marketfit, it was kind of an easy
decision. Where we weren't. Wedidn't have any kids at the time
either. So it wasn't like wewere risking our kids futures by
(10:55):
any means, like, let's try this.
Let's jump in and let's do it.
And we grew. I think it was like4, 500% in 2020 so it was just
like, if we didn't go all in thebusiness wasn't going to work,
because we were the ones doingall the work. We were doing, all
the fulfillment, all theordering, all the customer
(11:15):
service, all the marketing, allthe product development,
everything was being done by us.
And like that was our moment.
That's what we had kind of spentthe last two years on. So it
just seemed like an easytransition for us at the time,
even though it was scary still,because we all had real jobs
and, like insurance and stufflike that that we had to walk
away from.
Brad Ebenhoeh (11:35):
So first order, profitability. So great term.
Clearly, it's, it's whateverybody wants as an ecom
business or as an inventorybased company, right, like but
number one, I guess my questionto you is, clearly, you're
(11:56):
factoring in everything and intothat, your cost of your product,
your labor, your marketing, thewhole aspect you're talking
about when you started at thatsmall at the small phase, I'm
assuming you may not have had aton of inventory built up. Or
how did you manage inventorywhen it was slower, and then as
you started growing, I'massuming it started to stockpile
(12:17):
more and more inventory, moreand more finished flags. But how
did that all work?
Max Berry (12:23):
Yeah, I think the thing that's different about us
from a lot of E comm brands, islike, we don't have some like,
contact in China that we cancall up and say, Hey, we need
10,000 more, or now we need100,000 more, or a million more.
Like, we can't get containers inthe ocean, and that's just goes
against all of our core values,like we're 100% Made in America,
(12:47):
sourced in America all the way.
So we've had a unique issuewhere we've consistently been
out of inventory for years. Wefinally got a handle on it. Hits
the 60 employees that we havethis year where we didn't run I
think this was like the firstyear we didn't run out of
inventory, at least for our maincore product, the three by five
(13:09):
American flag. So that was it'sa blessing and a curse. It's a
blessing from a cash flowstandpoint, because always being
out of inventory is great foryour cash flow, but it's bad for
your ability to continue togrow. Luckily, we've managed to
grow considerably every singleyear that we've been in business
(13:32):
since 2020, 2018, 2019, not somuch so we've we've had to make
our own inventory. We we since,I think, in 2021 is the year
that we started to bringmanufacturing in house. And
until that point, we also workwith Co-manufacturers, because
we couldn't do everythingourselves. And this is the first
(13:54):
year we've actually been able toto make all of our inventory by
ourselves, and how So does thatanswer the question?
Brad Ebenhoeh (14:03):
It sure does. And then I guess, while we're
talking about that, how do you,you know, maintain quality
control your products. How doyou, you know, hire good people
to do, do the work. Like, um,you know, like, it's funny, you
go from 2018, to to, you know,small business, shooting
everything to this business.
There's always issues and riskand pain points as a business
(14:23):
owner, but you know, just from aquality control of your product
and and making sure that youguys have your supply chain
internally, like, in house, upto par. How, like, how is that
went? What challenges went alongthe way of that?
Max Berry (14:40):
Yeah. I mean, honestly, we just had to figure
it out. There's no easy answerfor it, because when we decided
in 2021 we have to make ourflags in house, it wasn't really
what we wanted to do. We had todo it because nobody else could
give us enough inventory, andthey weren't able to make it the
(15:02):
American flag, and like the waythat we wanted to make it. So
even to go back on your previousquestion, in 2020 there was a
lot of sleepless nights from us,because we had 1000s of orders
in Shopify that wereunfulfilled, and we had
suppliers that literallywouldn't call me back. It's
(15:22):
like, when are we going to getthe flags that these people have
already bought? Because we wereexploding at the time, and it
was really, really stressful,and what we had to do, like, was
to just send it on us email toall of our customers that have
bought, like, hey, and this was,like, right in the middle of
COVID, I don't know when we'regoing to be able to get you the
(15:45):
flag, but I promise you, we areeither going to get you a flag
or we are going to refund yourmoney. And the amazing thing
was, like, 99% of the customerswere like, Fine, you know, I
don't care. It's not like, it'smedicine or food or something.
Like, get me the flag when youget me the flag in. And we did
deliver on all those, but it wasreally stressful, and I'm glad
(16:07):
not to have to, like, live inthat moment anymore. But yeah,
in terms of, like, figuring wejust had to figure it out there.
We didn't know how to make flagsin 2021 we were still buying
them. Like, we didn't know thesewing process and the cutting
process and the quality control,but what we have done is figure
it out, and we've become expertsin the field, and I don't know
(16:28):
that there's really another wayto do it other than just figure
it out, and that's kind of thewhole that's kind of been the
theme of our business since dayone. Just figure it out, because
we don't know. We didn't knowe-comm. We didn't know
marketing, finance. I knew alittle bit about, but I didn't
know like accrual accounting andhow to to model some of these
(16:50):
things and quality control, likewe figured all this stuff out on
our own.
Brad Ebenhoeh (16:55):
Love it. One of Accountfully's core values is
solution or solutions oriented.
So it's very similar to that.
You just gotta figure it out andfind a solution for the for the
pain point that you're having.
So three business partners, youall started, you're doing
everything now. You're 60people, you know, blowing up.
Like, how have you all dividedand conquered different
(17:17):
functions and departments of thecompany, as well as, How do
y'all keep focused, just asbusiness partners, and making
sure going from here to here,that you're also moving forward
in the direction, and you know,in terms of where you guys want
to take this, yeah,
Max Berry (17:34):
Luckily, like, Wes Katie and I have a very, just a
unique, great relationship. Imean, they're married, so that
already brings in a unique kindof factor to it, and they do a
great job of kind of keepingwork life and home life
separate, I think, for their ownsanity. But all three of us have
(17:54):
really different strengths,which is really nice Wes is
great at ops, great at productDev, really. He comes from a
sales background. He's arelationships guy. I am
definitely more of like theintroverted numbers guy. And
then Katie is very much like thebrand tone. How do we look? How
(18:18):
do we feel? So each of us couldnot do what each other person
could. And I think we all reallyrespect each other's like what
we each bring to the table, andwe just get along really, really
well. And I think I know thatwe're very lucky to have that,
because I've heard horrorstories of, you know, other
(18:41):
people that don't like agree andalways kind of go into bat with
each other, and that's justnever really been our
relationship or the case. So Ireally am thankful for them and
how we've been able to kind ofgrow it all together at the same
speed, in the same direction.
Yeah,
Brad Ebenhoeh (18:59):
no, it's, it's definitely, you know, I guess I
don't know if rare is the issue.
Maybe, you know, Yeah, you wonthe lottery of business
partners. You know, it's just, Ithink, from the experience of at
accountably, specifically withmy wife and the company, but
also seeing a bunch of othersmall business over time. It's,
(19:19):
you know, making sure you havesufficient alignment of where
you're at today and where youwant to go. I think that's a big
part of it. And as complexitiesand dynamics arise with business
partners, specifically aroundfamilies or different situations
that happen to pop up a lot oftimes, it kind of gets in in
front of the business, which isa lot of times, very fair
(19:40):
situations. But, you know, happythat it's all worked out for you
all and, and that's super cool.
So from just a day to day basis,you're an analytical brain.
We're talking about accounting,finance, you know, inventory,
kind of, what are some of yourkind of reports or KPIs that you
look out, kind of look atthroughout the week, or, you
know, on a daily basis. It'sjust to make sure everything's
(20:01):
kind of moving forward in thedirection you want.
Max Berry (20:03):
Yeah, we've got an incredibly well built out model
that is day to day with it'sprobably got 50 different KPIs
in it, and that rolls up toweekly, and that rolls up to
monthly, and that rolls up toannually. So we've got our eyes
(20:24):
on everything that happens inthe business with this model.
And really what we're looking atfrom a marketing standpoint is,
you know, obviously top linerevenue, but then what are we
spending on marketing, and whatis our contribution margin, and
what is our customer acquisitioncosts, and our in our M er, and
(20:46):
then ultimately, what is our netprofit? And we were able to
track profit every single day,which is really nice, and we
built OPEX in there as well. So,you know, we're looking at
everything, but really, what,what I care about is, is what's
on the bottom line. You know, Ithe top line growth is fine,
(21:08):
but, and we have that, but it'spointless if it's not growing on
the bottom line and as abootstrap business. And, you
know, that's, that's all wereally care about is how, you
know, how are we going to fundthe growth of the business? It
has to be from our own selvesand and if you don't have that
bottom life, bottom line growth,and then you're not going to be
(21:30):
able to do that. So it's, it'salways been the most important
thing for us.
Brad Ebenhoeh (21:33):
Yeah, I definitely feel like that was
not the norm, um, for the lastkind of decade of especially
kind of inventory basedcompanies, and even tech, you
know, companies, especially inthe world of Shark Tank and
different things that have comeup, you know, to fruition the
last kind of 15 to 20 years,where everybody thinks top line,
(21:54):
top line, top line, more money.
Top line, more money. Top line.
It's like, yeah, you can grow upto a 30 minute company. But if,
literally, every dollar you'remaking you're losing money
because you're spending x numberdollars on marketing, and it
doesn't matter. So, yeah, thebottom line is super clearly,
now what though I would have mypurview the last couple of years
(22:17):
with the economy and interestrates and kind of the capital
markets, kind of pausing alittle bit, you know, to help
small businesses, it's refocuspeople to cash flow, profits,
just the basic fundamentals ofbusiness, which we're talking
about here. So it's kind of,it's a shift, but it's kind of
nice of like, Alright, let's getback to just making money and
funding your business with thethe profits and the earnings of
(22:38):
your company.
Max Berry (22:39):
Brad, I cringe, man, I cringe when I hear this stuff.
Like, yeah, I watch Shark Tankand I see some of those founders
talk about, like, Oh, we're notprofitable, but, and here's why,
and I those are, like, thingsthat make me cringe when people
talk about raising money andlike, bragging about how much
money they raised. I don't getit like, Look at, look at the D
(23:06):
to C darlings that are publiccompanies now, like all birds,
all birds is down 99% from whenthey IPO. Look at all of like,
look at pretty much all of them,Casper, Warby, Parker, figs,
even figs who had, like, apretty good business, like,
they're they're not profitable,they're losing money. What's,
(23:27):
what is the point of thebusiness? You know, like, if
you're not making money, thenwhy do you exist? And and for
these consumer brands to thinkthat they're Tech brands,
because it is different for atech brand, a SaaS company that
can scale, you can't do that ininventory based businesses. You
(23:50):
always need to buy moreinventory and like, that's the
major difference. Not to mentionthat, like, the assumption that
your customer acquisition costis going to get lower as you
continue to scale. That doesn'tmake any sense, either. So when
I see other brands that aremaybe a little smaller or even
bigger, talking about they'renot profitable and they need to
(24:15):
raise money, especially as likea finance guy, that kind of
stuff really just makes mecringe, because I know 99% of
the time what the future holdsfor business like that. Yep,
Brad Ebenhoeh (24:26):
100% are you guys, and what is your your
sales channel mix like, how muchpercent is e com?
Max Berry (24:33):
We're about 98% e com, so we're very much direct
to consumer.
Brad Ebenhoeh (24:40):
Yeah, I feel like, you know, I've seen a lot
of companies that are spreadacross 10 different sales
platforms or channels, and it'slike, you know, is it going to
be wide or deep? It's like,until you figure out, I think,
one or two, and you really havethe numbers and understand the
metrics and the KPIs, it'sreally hard to go too wide.
Unless you have unlimited cash,which is kind of clearly the you
(25:03):
guys focusing on e com andreally honing that in, it has
helped you, helped you kind ofbe, stay profitable, be
profitable from the start, um,from an aspect of just the
business, what else do you have?
Any other kind of things movingforward, new products, new
everything going for, uh, movingforward.
Max Berry (25:21):
Yeah, we actually just launched a really cool,
patriotic kind of leather worksline. It's got a there's a
wallet, there's a key ring, andit basically takes the material
that otherwise would have beendiscarded from our flags and
incorporates them into 100%American source, American made
leather. So we're really excitedabout that. And just continuing
(25:45):
to obviously, flags is ournumber one kind of core product,
but echoing the patriotic theme,and, you know, displaying
patriotism and other thingsother than flags is something
that we're going to continue toexplore here in the future.
Brad Ebenhoeh (26:04):
Also me, I was just thinking of kind of
seasonality as clearly econbusiness heading to as we head
into the holiday season here.
But also for you guys, I'massuming you still have some
kind of bump ups with MemorialDay and late or and July 4 of
the different things. So it'snot just like a ke for aspect.
Is that true?
Max Berry (26:21):
Yeah, we're kind of the opposite, I think, of most e
com brands. Or you'll see most ecom brands probably do 50% or
more of their revenue in Q4 uh,we're the complete opposite.
We're like you said. You hit itdead on. It's Memorial Day. All
the way up through July 4 is ourbiggest peak. We do get a peak
in Q4 but not like thetraditional e com brand would
(26:47):
where, like, that's their breadand butter for gifting season.
Brad Ebenhoeh (26:50):
Yep, yeah. Well, good. Well, Max, this was
awesome interview. As we kind ofhead out here, we typically have
kind of a couple just questionsthat we answer or that we ask
our guests. So the firstquestion is, just, what is one
small business owner do?
Max Berry (27:08):
What Wait?
Brad Ebenhoeh (27:11):
What is one small business owner to do? A fellow
founder? What is one do and onedon't?
Max Berry (27:18):
Okay, so a do for me is know your numbers, know your
unit economics, know what youcan sell something for and what
will like, what will be leftover after you account for the
COGS, any of your overhead, themarketing, all of that. Know
(27:38):
your numbers, because you're notgoing to be profitable by
guessing, or, you know, hopingso. That's, that's my absolute
do for someone that's in theconsumer space.
Brad Ebenhoeh (27:50):
What about a Don't?
Max Berry (27:54):
Don't be okay not being profitable in the consumer
space. Do not be okay with that.
Because there is, there is avery unlikely avenue of you
continuing to scale and thenmaking up that profitability.
Somehow.
Brad Ebenhoeh (28:09):
I love it. I knew those, those questions or those
answers were coming. So alright,as we wrap up our episode here,
where can people find you andwhere can they buy your
products?
Max Berry (28:23):
They can buy our products at showallegiance com.
That's our website. You can findme on LinkedIn. I think it's Max
Barry seven. And yeah, I'maround, and I'm also here, like,
if, if anyone sees this, and ifI can help you in any way, if
you're starting out of business,or you have a business, and I
can help answer a question ortwo, always happy to help,
(28:46):
because I've had a lot of helpfrom others that have helped me
along the way.
Brad Ebenhoeh (28:52):
Love it. Love it.
Well, Max congrats on you andyour business partners. Growth
of Allegiance Flag Supply todate. I love, love just kind of
successful, profitablebusinesses. And they're not
always the sexiest or the mostpromoted out there in the world,
as we kind of discuss, but kudosto you. And just keep up. Keep
up the basics and thefundamentals, and we're here to
(29:15):
support the business movingforward.
Max Berry (29:18):
Thanks for having me, Brad. Appreciate it, for sure,
Brad Ebenhoeh (29:22):
it was great.
Take care. Max. Bye. You.
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