Stephen Brown (00:00)
Matthew Kidman has built a multimillion dollar e-commerce business making strong double digit profit.

while having strong double digit growth. Let's explore why and how he's done it this way. Welcome to the eCommerce Finance Podcast. I'm Stephen Brown with Ledger Gurus. In this episode, I have Matthew Kidman from House of Joppa with me to discuss growing a brand without using debt.

Matthew, thank you for joining me today.

Matthew (00:22)
Thank you for having me here, Stephen.

Stephen Brown (00:23)
Before we dive in, tell us about what House of Joppa is and what it is that you sell.

Matthew (00:29)
We are a Catholic home decor, jewelry gift, ⁓ gift shop. We sell rosaries, statues, kind of all the things that one might buy as a Catholic to have in our home as a reminder of our faith.

Stephen Brown (00:43)
And when did you start the business?

Matthew (00:45)
We started in December of 2019. My wife actually started the Instagram account before we had any idea of a business for the brand. didn't start as a business. It started as just an Instagram account. We are Catholic converts and my wife started this account because she loved decorating and started decorating our home with reminders of our faith and.

She kept hearing from people, where did you find that ⁓ regarding the product that she was decorating our home with or the setup that she had. And after hearing that over and over again, I said, please stop telling people. Clearly we're not the only ones looking for a more modern, clean aesthetic. I think we have a business here. And so that was kind of the genesis of House of Joppa

Stephen Brown (01:36)
Awesome. And you get, mean, that's a good long run. You've been around since the pre-COVID days, the COVID days, the post-COVID days. All those cycles have been very interesting for brands. So ⁓ I wanna talk about, I'm so excited about this conversation because I remember you and I having a conversation briefly a while back and you mentioned you didn't use debt and that's.

been in the back of my mind for a long time. And I think that's a really hard thing to do in e-commerce because of inventory cycles and just the cost of getting that inventory. And I want to know how you've done it. But before we get to the how, I want to know a little bit about your journey. in the preparation for this episode, we talked a little bit about your journey and how you got to this mindset with House of Joppa of ⁓ growing without incurring debt.

So maybe take us through a little bit of your journey before House of Joppa and especially as it relates to your philosophies on debt.

Matthew (02:44)
Sure, ⁓ you for us I think it was more of a tale of what not to do with debt ⁓ that really helped form how we built House of Joppa without incurring debt. ⁓ After college I decided to move to Florida. I always wanted to live somewhere warm. I'm from Michigan. ⁓

and ⁓ flip real estate. So post college, I was a single guy, moved to Florida with the idea of ⁓ buying, fixing, and flipping houses. And I did that and had a great time doing it. But in doing so, it was difficult to find homes to flip during that time because the real estate market was so hot, but ⁓ it was easy to sell them. And so ⁓

I would use credit card because I had no income. would use credit cards, Home Depot credit card or Lowe's credit card to fund the repair and the fixing of the house. But then I was afraid to pay off that credit card afterward because I needed to live on the proceeds and ⁓ to fund the next deal. And so without my intending to do so, that really snowballed into, you know, tens of thousands of dollars in credit card debt.

And that's what I had when ⁓ Tabitha and I were married. She also had some debt. also during that time, ⁓ you know, in the real estate market. ⁓

was part of a real estate investment club. And the real estate in Florida at that time, this is early 2000s, early to mid 2000s was appreciating it just such a fast clip that everyone knew that it couldn't continue, but we didn't anticipate that would crash like it did in the entire country here. But I had friends who owned properties at that time who ended up filing for bankruptcy. And that was very formative for me seeing these people that I knew, young people

just be absolutely crushed by what happened there. so, you know, sometimes you think, well, what's the worst that can happen? Well, you can lose your business. You can lose everything that you have. That's a very real risk. And so I think going forward, that definitely was in my mind of, I want to build something sustainable here. I want to have options rather than be running such a fine... ⁓

razor's edge that any twist or turn might end this.

Stephen Brown (05:16)
So you were riding the wave that led to the Great Recession. When did you get out of the real estate game?

Matthew (05:24)
In June of 2006, yeah, that really wasn't purposefully timed, ⁓ but we moved back up here to Michigan for a variety of reasons. My wife and I got married, we wanted to be back closer to family and those sorts of things, but yes, it was perfectly timed.

Stephen Brown (05:26)
⁓ so right before. Wow.

So you were using your credit cards basically as working capital, right, to do your business. ⁓ Were you able to stay on top of the payments or did it ever get in front of you in a way that you couldn't manage it?

Matthew (06:02)
We were able to stay on top of the payments, but I would say barely. ⁓ We tried to ⁓ restructure our debt, the debt consolidations that would come in the mail, and we would get turned down for them saying that we had too much debt and they weren't sure that we could make the payment. ⁓ So it was consuming most of our income. It was a very difficult situation.

Stephen Brown (06:30)
So you are carrying the balances and incurring the high interest rate charges and just scraping by to do the minimum payments. Okay, yeah.

Matthew (06:39)
That's right. That's right. When we moved

up here to Michigan, ⁓ we made the decision that this was not going to continue. We were going to dig ourselves out of this. We came across Dave Ramsey's total money makeover and really committed to following that and living well below our means.

and paying off our credit cards one at a time. We have a picture of all of our credit cards cut up ⁓ as is kind of common for those that follow Dave Ramsey. ⁓ But we, yeah, tried to do the difficult thing, the hard thing, and ⁓ writing our mistakes that we had made.

Stephen Brown (07:16)
I am increasingly a fan of Dave Ramsey. I haven't consumed his content deeply. I think I've gotten more into him on YouTube. And I'm, I'm very aligned with a lot of that fiscal philosophy. It's shifted a little bit with business ownership, but personally, I've just, I don't know, I've always been very diverse. And I think that the story you describe, I mean, you got there trying to, you know, through a business strategy, but

the outcome was still painful. It could have been just as bad had you gone out and just lived it up, but it wasn't like you were living it up. You were trying to run a business and you needed some working capital and that was the way you could do it, right? Because you were young and probably didn't have a huge credit profile and so you used cards, which is, you hear about it all the time. People use their cards to bootstrap their businesses, but you've got this debt burden that is hanging over your head that you have to service.

Matthew (08:14)
Yeah, absolutely right. Certainly wasn't my intention to have it turn into what it did. It happens a little bit at a time. But the multi-year process of digging out of that was definitely something that I didn't want to happen again and altered how we handle our personal finances to this day.

Stephen Brown (08:37)
All right, so around 2006 you moved back to Michigan, ⁓ Spent how many years did it take you to get out of the credit card debt from your real estate ventures?

Matthew (08:41)
That's right.

took about two years. we lived in a... Yeah, so we lived in a not very nice apartment, no washer and dryer. ⁓ You know, we were taking our clothes over to a laundromat. ⁓ You know, doing all that kind of stuff, driving old cars, ⁓ living well below our means. We tell our kids now that, you know, we would splurge on going out on a date night and we would split an entree. The server always looked at us like we were strange, that we were just ordering one.

Stephen Brown (08:50)
Okay, that's pretty good.

Matthew (09:19)
We wanted to have a good time and so we did it within our means. But yeah, it was a very concerted effort over that period of two years.

Stephen Brown (09:29)
So 2008, 11 years between that and starting House of Joppa, you told us a little bit about the origin story. Your wife had started an Instagram account, had this idea. You said, hey, why don't we monetize this? Maybe just between getting out of debt and starting House of Joppa, what were you and your wife doing?

Matthew (09:51)
I also own an insurance agency and that's kind why also we moved back up here to Michigan. running that insurance agency absolutely helped to form me in running a business with a recurring revenue source coming in, which kind of gives you some additional flexibility. But learning marketing.

some basics of business finance, those sorts of things. So I would say that period of time was with that. My wife had other jobs, always had a creative side that she was looking to start a business, but really nothing that gained any traction until House of Joppa.

Stephen Brown (10:33)
Awesome. So I think one of the biggest challenges of physical product businesses is the inventory. E-commerce, know, businesses, you have the inventory. And so what I want to understand is you launch the business, you've got this debt, no debt philosophy. ⁓ How did you do it? How did you do it initially? And then I want to kind of talk about the initial launch.

through growing the business, but how did you launch it without debt?

Matthew (11:04)
Yeah.

You know, thinking about that, Stephen, it really wasn't some well formulated business strategy or business plan that we started off with in the beginning. ⁓ You know, it started as simply as ⁓ we sourced the first product. This is before we even had a website. And ⁓ we sourced maybe 50 or 100 of these. They were a bracelet. ⁓ we tab with a post-it.

on Instagram, comment sold if you'd like one of these, people responded ⁓ you know that they did and she messaged each one of them, collected their payment through I think PayPal at that time and then we had to gather their

shipping addresses and you know, log those on Excel spreadsheets and manually. I remember walking into the post office with a box of these 50 or 100 bracelets and having the person at the counter have to manually enter each.

address one at a time. We did not have shipping labels. ⁓ So I would say this started at a very ⁓ small level. We were not trying to hit a certain growth benchmark the first year. It started very organically and just ⁓ products that we could find one at a time. ⁓ we did not feel any pressure to grow at a certain rate. We were just trying to prove to ourselves that this could work.

Stephen Brown (12:37)
So you weren't buying, were you buying directly from the manufacturers at that time or? Okay. And did they have small minimum order quantities or how did you do that?

Matthew (12:42)
We were. We were.

They did, you know, was very concerned about sourcing products in the beginning because who in the world are we? And, you know, can we afford to buy thousands? But we found people that were willing to work with us. And so we took risks on those initial batches, which were far below what I would think, you know, would be typical maybe 20 years ago.

Stephen Brown (12:56)
Yeah.

Okay.

So you got small MOQs, and I'm assuming you just bought what you had free cash flow to buy, right? Your personal cash.

Matthew (13:22)
That's right. That's right. Everything had to pay for itself, ⁓ you know, very quickly. And still to this day, we fund all inventory purchases out of cash.

Stephen Brown (13:34)
Okay,

so ⁓ how many, so that was the beginning. When did you launch your Shopify website?

Matthew (13:43)
We did that fairly early on as we kind of thought, okay, this actually is going to work. ⁓ We've tried other things in the past that haven't worked. This looks like it's going to work. So we set up a Shopify ⁓ store and built everything out that way.

Stephen Brown (13:46)
fairly quickly.

So as you grew, did you, obviously drop shipping has been popular because of the cash, ⁓ low cash requirements, but you guys weren't drop shipping necessarily. You guys were buying the inventory, ⁓ putting it into a 3PL.

Matthew (14:18)
We did not. We ran everything out of our home for three years. We have an unfinished portion of our basement and we would be carrying products up and down the stairs. ⁓

and fulfilling everything out of this unfinished area. know, putting racks in there as many racks as we could possibly fit to store products. It always felt like a Tetris game. I would stand down there at night thinking, where can we put another rack to fit more product or more boxes? But we did it very in an unglamorous way, ⁓ just ⁓ building it that, you know, out of our basement.

Stephen Brown (14:59)
And that's going to cut 10 to 15 % of costs by self-fulfilling. And that's not an uncommon thing that we see as people doing their own fulfillment. When did you, ⁓ what did you do after those first three years?

Matthew (15:14)
Then we shifted to a 3PL. We were at a point where we had to do something. We had outgrown our space. We either needed to buy a warehouse and fully staff that up. I've never run a warehouse before. I've never worked in a warehouse before. I did not feel like my abilities in fulfillment were a differentiator for us. And so we went looking for a 3PL partner.

Stephen Brown (15:41)
And from a cash perspective, know, warehousing, you can lease, but that's a huge fixed cost. You one of the beauties of 3PLs that I've seen is there's a variable cost. pay when they fulfill, and obviously there's some storage fees, but it tends to be more aligned with sales versus when you fulfill in-house. Even if you're leasing, there's usually some

initial capital costs when you lease and then there's this fixed lease burden, whether you're selling, you know, a million or, you know, 10 million, the lease doesn't change. So that is one of the advantages. I think part of what you guys did was very agile. You did it until you couldn't, you know, three PLs. Oftentimes I see are

⁓ cheaper than doing your own fulfillment unless you have some unique product requirements or have some capabilities that make you very unique. as you grew, how many, know, starting out, I'm assuming you had the bracelets, one supplier?

Matthew (16:56)
No, we would work with as many suppliers as we needed to. So I would think we scaled that quite quickly, just trying to round out our product offerings. ⁓

You know, having some challenges with manufacturers, buying, you know, certain items only to have them arrive all broken. We certainly made a fair number of mistakes in that process, but we really started quickly trying to round out what it was that we were offering. What are our collections from a Shopify store type structure?

Stephen Brown (17:28)
So how many suppliers would you estimate you have today?

Matthew (17:32)
I would say we probably have 50 or 60.

Stephen Brown (17:37)
Okay, so you're dealing with diverse. And I think what's interesting, how many of your products are branded House of Joppa versus not branded on estimate?

Matthew (17:50)
I would say probably half. We're always looking at, you know, we might test a product in a certain niche and see is this something that we, you know, is worthwhile? Does it sell well? ⁓

We've had products in the past where we were 100 % sure this is going to be our next big thing, only for it not to be our next big thing. And it ends up on our sales page. I was trying to liquidate it within six months. we try and test out certain areas if it's something new for us. But if it is something that shows like it works, we'll try and find a manufacturer for that.

Stephen Brown (18:17)
Hmm, yeah.

So that's one of the challenges is you're not, one of the things I've seen over the years is a direct to consumer brand can charge a premium price because they have a unique branded product and it sounds like you have some branded products and you've created a brand, but you're also reselling. And reselling is hard because usually you can, the consumer can go out and find,

products elsewhere unless you have really unique manufacturing relationships. And so that limits your ability to get higher gross margins, ⁓ which has downstream profitability impacts. ⁓ Furthermore, with as you start to scale up, right, there's you're dealing with all this different inventory flow. So how did you handle as you scaled up?

you know, one of the things I've seen is the cash conversion cycle, the time between buying inventory and selling it for smaller brands can take a while. ⁓ And how did you handle that cash conversion cycle? Maybe start with where are your manufacturers? Are they US based? they international? Are they a mix?

Matthew (19:51)
I would say a mix. We have ⁓ some in Ukraine, we have some in Italy, some in China, ⁓ some in Italy and elsewhere. Some in the US here, I should say too.

Stephen Brown (20:01)
Gotcha.

How

long does it usually take for you to order product and ⁓ get it into your 3PL? I mean, it probably varies by many.

Matthew (20:12)
Longer than I would

like. I always joke that there's on the wholesale side or the manufacturing side, there's no Amazon two day ship for manufacturing. So that lead time, which is, it feels like never consistent, you know, maybe it was 90 days last time. And for some reason you're at, you know, 120 days now and

Stephen Brown (20:21)
Nope.

Matthew (20:34)
still waiting for your order. that piece, I feel like each year I start ⁓ each year with an ambition to get better at our inventory forecasting and really nailing that down.

it seems like each year presents its own unique challenges. And so we often go out of stock of items. ⁓ I wish we didn't, but ⁓ it feels like each year there's always, or each product, there's always some reason why we're facing that challenge.

Stephen Brown (21:05)
So yeah, mean, the brand that I have co-ownership in, we are an Italian product and we have long lead times. We've been struggling with it for years. How can we shrink the lead times from the minute we start to manufacturing takes a while because we're a smaller brand. So I think we get lower priority. then for, I don't know about you, but our

shipping times from Italy to warehouse, it's like a couple weeks on the sea and then a week or two, sometimes three from port to warehouse. And what happens for us is it just adds up to months from the time we start getting the order started to before it gets in the warehouse, we can actually sell it. Do you find you have similar lead times between manufacturing start and?

or order start and ⁓ receipt to 3PL.

Matthew (22:07)
We do, yeah. And that's kind of what I was alluding to there. And it feels like it's inconsistent too. It's one thing where if I know it's 120 days, I can plan for that, but it won't be 120 days. Next time it'll be something different. so I never fully appreciated the difficulties of inventory forecasting until running this business. It is extremely challenging. It feels like, you know, there's a lot of big macro issues going on that...

Stephen Brown (22:13)
yeah.

Matthew (22:36)
get a challenge. ⁓

and just trying to iron that out and really find the sweet spot. The other challenge that I would say, we purposefully don't have thousands of items or thousands of a skew sitting in our warehouse. ⁓ We tend to carry much lower inventory counts of each item. ⁓ We don't allow things just to sit there and get dusty if they aren't moving. hold things accountable.

And so if things are moving, we'll slowly increase the quantities that we're purchasing. We don't say, okay, we sold 100 of these, let's buy 5,000. We slowly inch up to that. But that means that we're potentially missing out on sales because we go out of stock.

Stephen Brown (23:33)
So I see this as one of your strategic ⁓ ways you do this, is you keep low inventory amounts. ⁓ What happens when you stock out? How do you maintain engagement with your customer? Do you put them on a list and notify them when it goes in and stock? I mean, I guess you wouldn't know because they haven't made the order. How do you handle stock outs?

Matthew (23:54)
We do, it's ⁓ one of our best performing flows, our email flows is our back in stock notification. ⁓ So yeah, there's a sign up on the product that says notify me when available.

And we try and list on each product this typically restocks in, you know, two to four weeks or four to six weeks or whatever to set that expectation. ⁓ But reviewing or reading some of our reviews, you can see where people say this was out of stock. I've been waiting to get this for X period of time. When when I got the email that it came back in stock, I immediately purchased it. I would love to say this is some sort stroke of marketing genius that we're doing this to create a fever.

frenzy about buying our products. It is far less strategic than that, ⁓ but it is an unintended nice consequence, I guess, of our situation that we're not completely missing out on those sales.

Stephen Brown (24:56)
Gotcha.

So you keep low inventory levels, means you're not, because those of us in this space, already have to, the way I think about the cash conversion cycle, there's a component called days inventory outstanding. And that's usually from the time you start paying for inventory until you sell the inventory. And that's the biggest challenge for consumer product businesses. ⁓

along that journey would include, you know, starting manufacturing, the importing, and then actually selling the product, right? So the time sitting in the warehouse. You've tried to cut down on that last leg of the journey. What about the other parts? Do you have better payment terms with your manufacturers? I guess with that many suppliers, you probably have a variety of terms, but tell me about some of the terms and what you've been able to do over the years.

Matthew (25:52)
Yeah, so there's probably a lot that we don't do what would be best practice in a lot of other businesses, but we pay cash for things upfront. I say cash, but we're paying for things. You we might put 30, 40 % at the time of order, and then when it's ready to ship, pay the balance, you know, some way that that's split up. But by the time it ships, we've paid for it in full.

Stephen Brown (26:18)
So you've got a structured payout for your inventory. ⁓ Which is great, and this is one of the big advantages I always tell brands, and it's hard to do when you're small, but if you can, getting terms. So hey, can we put a certain percent upon order start and a certain percent on ship, and if you can break it up. Because a lot of times, manufacturers will have access to financing that suppliers won't.

Matthew (26:23)
Yep.

Stephen Brown (26:47)
have really low cost financing. China's notorious for this. They do a lot to help their manufacturers succeed. So they may be able to do things that you can't as a brand. go ahead.

Matthew (27:02)
No, I was going to say, I found...

pretty much everybody that we've worked with very willing to do that. We will often ask for those sorts of things if they don't offer. We ask for better pricing when we place larger orders. I think a tremendous amount comes, Stephen, from being willing to ask and saying, hey, the last time we ordered 500 of these, we're ordering 5,000. I would like to see the price at this now instead of what we

last time and negotiating better prices using the opportunities that you have. ⁓ The worst I can say is no.

Stephen Brown (27:42)
So I think the big question for me, I'm seeing some of your strategies. You're using low inventory balances. You're trying to get terms with your suppliers. How do you pay for the orders? I mean, you say you pay for cash. Where's the cash coming from?

Matthew (27:58)
just out of our sales. We keep, you know, even in my insurance agency, I probably keep, we keep more cash in our business checking than what we, what is wise. It would probably be wise to withdraw that money and, and, you know, put it in an investment. So we keep a larger cash balance there to give us flexibility. So much of our, our

motivation for running the business the way that we are is to reduce our stress and not keeping us up at night wondering if we're going to be able to pay our bills to give us flexibility. ⁓ So we don't withdraw every penny of money that we can from our business. We purposefully keep a cushion there so that we can afford to do these things.

Stephen Brown (28:50)
But you guys are paying yourselves out of the business on top of everything else. Okay.

Matthew (28:53)
We do, we do. I would say

very early on, Stephen we worked for pennies. ⁓ First two or three years. ⁓ We did this as, I don't wanna say a hobby, but we were not paid handsomely those first years. Absolutely.

Stephen Brown (28:59)
Yeah.

you were reinvesting in the business too.

Matthew (29:13)
we were not building for, you know, some strike it rich super quick. We were building something that we wanted to be here in 20 or 30 years and something it's honestly a business that we want our kids to eventually take over. much of our strategy and thought process is around that. Are we building something sustainable?

Stephen Brown (29:32)
And part of the way you could do that is because you've had your insurance business. Was your wife also working or did she put all of her energy into House of Joppa once you guys got that going?

Matthew (29:42)
She was working the hardest job that I can think of. She was a stay at home mom. We have five kids and so she was a stay at home mom when we started the job. That's right, yeah.

Stephen Brown (29:49)
Wow. Doing on top of everything else. Gotcha.

So you were able to sustain yourselves off of the income from your other business. But now House of Joppa is larger, you've got the ability to pay yourselves out of that as well. But you're putting a lot of those profits back into the business.

Matthew (30:04)
That's right.

That's right. That's right.

Stephen Brown (30:17)
Gotcha.

do you find yourself, you know, we're to be doing an episode where I'm talking about a self-funded growth calculator. There is mathematical limits to how fast you can grow without investment or debt because of cash cycles and everything in these businesses. How do you find yourself limiting growth because of

know, cash is a limiting resource.

Matthew (30:50)
I would say certainly. ⁓

You know, for example, we're one of our core product collections right now. We're changing manufacturers. It's a, it's a pretty big change for us. And we're out of stock of most of our items in this collection. And that's frustrating. ⁓ It is, I will say it, I'll say it's tempting, but it's not really tempting for us to just say, let's take out a loan of X number of dollars. can switch everything over to this manufacturer.

and we can be restocked within the next three or four months. ⁓ But that never feels like a strong pull for us. ⁓ So are we giving up sales that we could have had? Yes, we are. We absolutely are. We're missing out on some sales right now because of the...

decision that we've made. But I wouldn't trade that for the piece that we have ⁓ just funding it the way that we are.

Stephen Brown (31:52)
How do you deal with, one of the challenges you have in this ⁓ industry is your holiday surges. And because we've worked together, I know your numbers, I see that you guys have a pretty good holiday peak. And one of the challenges you have is you have this inventory buildup you have to do for your holiday surge. How do you approach that, knowing that you don't want to choose debt, but you also know that there's going to be a higher demand?

⁓ What's your strategy there?

Matthew (32:24)
It definitely is a balance, Stephen. I would think of it, I mean, we think of it just like if you know you have a big personal expense coming up in six months, you might start saving a little bit extra in the lead up to that. And the way that we think of that in terms of inventory is we start buying, you know, six months in advance, which isn't unusual for econ brands, but we don't do it all at once. We don't place massive orders. ⁓ You know, we start inching toward that and

and growing those inventory levels in anticipation of peak.

Stephen Brown (32:58)
Do you find that you stock out a lot during the holidays?

Matthew (33:01)
We do. ⁓ you know, again, getting back to the difficulty of ⁓ inventory forecasting, just because something sold well last year, ⁓ there's numerous examples that I could give you of our products that did not sell as well this year. And that to me in lies the dangers of...

having so much capital that I can just get everything that I want all right now. It amplifies the incremental misjudgments that you may make in your forecasting, at least from my perspective. ⁓ I like having some flexibility as we're getting into peak of, this product selling as well as it did last year or is it not?

⁓ Do I need to shift some capital that I would have put toward that to a different collection or some, you a different product category? ⁓ That's always a ⁓ fluid thing that I've discovered is it's hard to just assume what the next season is going to look like.

Stephen Brown (34:10)
And I think this, would say this is one of your other strategies. Having worked with you on a project and talked to you a couple of times, you're very in the details. You understand, ⁓ you scrutinize your business very ⁓ assertively. And I do think that's a quality that I don't see as much in brands your size and even bigger. They're just like, let's go, let's go, grow, grow. And I've seen how you watch the details.

Tell me a little bit about your inventory planning. do you, that is very hard, ⁓ even at a business your size. I've seen eight figure brands that really struggle with inventory management and inventory planning. How have you done that knowing that you've got a lot of, I mean how many SKUs would you estimate you have? it hundreds, thousands?

Matthew (35:03)
for 500.

Stephen Brown (35:04)
Okay, so that's a big number of skews to kind of keep your hand on top of. do you go about inventory planning and forecasting?

Matthew (35:14)
So we use a tool called Inventory Planner that has really been incredibly helpful in providing some visibility. We did not have that ⁓ our entire time in existence. And Shopify is incredible. They are so great at so many things. ⁓

Stephen Brown (35:17)
Okay, yeah.

Matthew (35:33)
tracking and planning inventory, it is a just black hole. There's nothing there and you need some other tool to give you visibility. ⁓ And so this inventory planner, it shows you, you know, your sales ⁓ for the last whatever time that it's been tracking it. It tries to help forecast what your, ⁓ you know, sales will be coming up, but I always take that with a grain

Stephen Brown (35:41)
Yeah.

Matthew (36:03)
assault. ⁓ I want to dig into the details as you said and say and see if I agree with what they're proposing. ⁓ But yeah, I love business, Stephen. I think it's a wonderful puzzle. It's a wonderful game. Getting into the details, I find ⁓ very fun.

Stephen Brown (36:24)
Awesome. So what are the things that you look at specifically? you looking at like inventory sales velocities? Are you looking at year over year growth by SKU? What are some of the things that Inventory Planner provides you that you use to make your decisions?

Matthew (36:40)
Yeah, sales velocity, certainly. Year over year sales. You know, are we increasing, decreasing in the last three, six months? What did we do in this last year? And this is just one of those things that I...

as a business owner, think so you can, have all this data, right? Whether it's on marketing or inventory or wherever, but I feel like so much of it still comes down to your own gut instinct. What do you think? Here's the data points, but what are you going to do? And I think.

I have not found the ability to just hit an easy button and allow their forecasting models to tell me what I should order. ⁓ And some of that is learning the tool and dialing it in. certainly those metrics are the ones that we look at in trying to determine ⁓ our next order. ⁓

what's going on in the market, what's going on in our collections, have we added additional SKUs that might steal sales from this particular product. There's a lot that goes into it besides just the sales on that particular SKU.

Stephen Brown (37:47)
the last few years of e-commerce have been really crazy. There's been lots of ups and downs. You know, we've had COVID peaks, we've had supply chain bottlenecks during that time. You've had post COVID slumps, you've seen inflation.

higher interest rates, which hasn't been as big of an issue for you because you don't do debt, ⁓ tariffs. How have you guys navigated these ups and downs of the last few years?

Matthew (38:14)
You know, trying to think back through each of those, ⁓ think growing at a slow pace and trying to ensure that we had a stable foundation, we didn't need to hit a certain benchmark for any particular reason. And so we never felt rushed or pressured to get through a challenge with, you know, any undue speed. ⁓

So I would say we felt comfortable just learning as we go. Neither Tavatha nor I.

come from any sort of e-commerce experience. And so there's so many things in this process that we were learning for the first time. And I think a tremendous ⁓ benefit that we've had along the way is finding tremendous partners. ⁓ Ledger Gurus is absolutely without a doubt one of those examples. We've been incredibly blessed to find great partners.

And that has been, I feel like that is ⁓ one of the secrets to our success is ⁓ knowing what you're looking for when you're finding a partner, finding people who are smarter than you are in the areas where you're not as strong. And that has absolutely, without a doubt, helped us navigate the challenges, ⁓ you know, these since our inception.

Stephen Brown (39:42)
Awesome. So if I could summarize, let me see if I can capture your keys to success. One, you've been willing to keep lean inventory and stock out, and that's actually been okay from the customer relationship standpoint. Two, you've tried to get terms with your manufacturers wherever possible. Ask all the time, right? Three, you ⁓ are very

Matthew (39:57)
Mm.

Yep.

Stephen Brown (40:11)
focused on your planning, you use a tool, you're trying to be strategic about how much you buy and when. And four, you use your cash as a constraint. And I'd say fifth, I talked about at the beginning, you've got good margins on your product which allows you to generate a decent amount of cash to fund inventory purchases. Maybe let's start, let's finish off there. It's really hard to achieve

the margins that you've achieved in e-commerce, especially the last few years. Do you have any idea how you've been able to do that, especially where in some cases you're reselling product?

Matthew (40:50)
I think, so if we were purely a reseller, I think that would be a completely different picture for us because we've always had that balance of. ⁓

manufacturing our own products with wholesaling from other manufacturers or reselling, I should say. I think that has provided us that ability. ⁓ We're always still mindful of what is our next product category for us to manufacture. We can never neglect that understanding that that is where... ⁓

better profit margins come from. So really looking out for that. ⁓ Are there other products here that ⁓ we, as I mentioned before, that we resell now that we could change, expand, broaden and manufacture ourselves? We're always keeping an eye out for those sorts of things as well.

Stephen Brown (41:47)
And I think one of the other hidden secrets to your profits is you don't spend a ton on advertising as a percentage of sale. That's very hard to achieve in e-commerce. Is that partly because of the social media following that Tabitha was able to create on Instagram? How have you been able to achieve that and sustain that?

Matthew (42:09)
Yeah, so I absolutely think, so I haven't given enough talk to ⁓ my business partner here, my wife Tabitha. She is ⁓ great at all the things that I'm not. Without her, we would not have a brand. ⁓ She provides the beautiful aesthetic and all the things, the marketing collateral, the videos, the reels that make ⁓ my job and managing our marketing easy.

I get to choose what beautiful things we're going to share with people. So all that I do is the easy stuff. She does the creative difficult things. ⁓ But I would say, I think it certainly is that ⁓ we gain traction at a time where there weren't a tremendous amount of other people doing what we do. We do see a lot of people ⁓ inspired by us and ⁓ you know,

starting their own Catholic home decor businesses, which is great ⁓ to see other people ⁓ venturing out on their own as well. ⁓ But I will go back and this isn't just lip service. ⁓ We have great partners that we work with. And I say that, Stephen, because we had not great.

partners ⁓ in the meta, you know, Google PPC advertising space before. ⁓ I would distinctly remember sitting in meetings with some of these ⁓ folks for a half hour trying to figure out if they could articulate to me what didn't work, why it didn't work, and what are we going to do differently, and at the end of 30 minutes still having no idea.

the answer to any of those questions. So I would encourage other business owners, again, if you feel like this is not what it should be, you need to find somebody else. Keep going until you find people that ⁓ you feel like represent your brand, that understand your brand, and that can get you the results that you're looking for.

partners that we work with right now, they understand our brand. So many ⁓ agencies that you work with, I'm sure Stephen you probably know this, ⁓ they have one template they put down on every brand and that will get you a modicum of success. That will be functional, but you're not going to have great results with an agency that does that. And so we've been very blessed to find great people that really are

excellent at what they do in the advertising space and that have helped us. And these are not large agencies that you might see advertised. ⁓ So I would say without a doubt that enables us to advertise a lower percentage of our or spend a lower percentage of our revenue on advertising because it's so efficient.

Stephen Brown (45:04)
And I think my assessment of agencies over the last few years, think a lot of them, they built up their strength on the back of being able to navigate the complexity of these ad platforms, which is really crazy. Google ads or, you know, metas, it's insanely complex. And so they created that value and then they were dependent on the algorithm for efficiency. when...

Matthew (45:20)
you

Stephen Brown (45:33)
we had that change in iOS a couple years ago that really killed Facebook's efficiency, I felt like a lot of agencies were exposed. And what they were good at was running the platform, but not actually driving good ad copy, good ad creative, good ad campaigns, the algorithms did that. And so,

Matthew (45:44)
Mm-hmm.

Stephen Brown (45:59)
I feel like what you said is really important for a lot of brands at all sizes. Marketing is one of the most important things for these things. I'd say same thing for us with finance. Just because you work with us for accounting doesn't mean that you should wipe your hands of it. It just means you've got some help, but you need to go in, you need to ask them questions, you need to understand what's going on. If anything, I feel like...

when you're working with a partner, allows you to elevate and be less in the weeds on stuff, but be more strategic. And I think one of the mistakes that lot of brands make is they go get an agency or an accountant and they just be like, cool, that's taken care of. It's like, no, now you can be more strategic with that partner. can ask them quite, you have head space to ask questions, to dig in in ways that you haven't before. It's not something you just throw over there and say,

Just make this pain go away.

Matthew (46:58)
I absolutely agree with that. Stephen, ⁓ you you said that I like to get into the details and I do ⁓ because I in whether it's with your 3PL, your advertising partners, with your ⁓ accounting firm, nobody is going to care about your business like you care about your business. And you cannot outsource that for X number of dollars per month. And so

You know, I might drive people crazy initially with questions, trying to understand what it is that they do. Explain to me the details. How does this work? Really getting into the details of our relationship. But I'm doing that so that can better understand ⁓ the results that I'm getting, the direction that I want to go. Because any of those partners that we've listed here are not the leader of my business. I am, and my wife is.

And so I cannot take that responsibility, put it on somebody else for a flat fee.

Stephen Brown (47:59)
Awesome. Matthew, thank you for sharing your journey, sharing this path showing that there is another way to go about growing your business. It's not easy. I think you've had some really great insights and I just love what you've been doing and want to see you continue to succeed. Maybe we'll have you back on here and tell us how it went in a couple of years when you get to eight figures. ⁓

and how you were able to sustain that strategy because it's not easy, especially considering all the challenges with selling products. So thank you for joining me. If somebody wanted to go get some of your product, tell us the best way to do that.

Matthew (48:43)
HouseofJoppaa.com.

Stephen Brown (48:45)
J-O-P-P-A dot com, right?

Matthew (48:48)
J-O-P-P-A,

yep, house of J-O-P-P-A dot com.

Stephen Brown (48:51)
Which is, and maybe just to end, where's the name come from?

Matthew (48:56)
So ⁓ my wife's name Tabitha is in the Bible and ⁓ the name, she lived in Joppa. ⁓ Joppa means beautiful, so house of beautiful. So there's kind of a whole connection there with what we do and ⁓ her name.

Stephen Brown (49:14)
Awesome, have you been to Joppa by chance? I actually have. ⁓ My last job, we acquired a business in Tel Aviv and Joppa's pretty close. So had some of the best hummus of my life in Joppa. So it's a beautiful part of the world. Well thank you again for joining us Matthew and I'll talk to you later.

Matthew (49:17)
We have not.

Amen to you.

My pleasure, Stephen. Thanks for having me.