– Welcome everybody to today’s “Building My Legacy” podcast. I have with me today Michael Amkreutz. He is CEO of Adorama, which is headquartered in Brooklyn. It’s a privately held rather large company there and comes to us from the Netherlands originally and has been in the US for some time working. Prior to being at Adorama he was working with private equity building businesses. He has 27 years of customer advocate and delivering results experience on behalf of customers and companies, 20 years of leading and transforming E-commerce, which is right now today, one of the big things we’re all looking at, we’ve had a tremendous shift in where and how people are shopping. 15 years of manufacturing experience and product development, sales, and marketing. He is a merchant and technology geek, he says, and I think perhaps there’s some truth in it. He is the father of two and in your spare time, you are a pilot and captain of a boat. With that, Michael, let’s get started. How did you get involved with what you’re doing and how did this journey of yours begin?

– I think it really started in 1987. So I was just graduating high school in the Netherlands. And my father who grew up in the world of academia said, listen, the world is a round place. And I want to expose you to as many different people, cultures and businesses as I can possibly think of. And therefore you’re going to the United States to study. I was young enough to understand that he was serious, but also smart enough to realize that I wasn’t ready or capable to maybe make the best decisions on behalf of my own future at that point in time. So I listened to my father, I got on a plane and I went to the United States and started studying at Rutgers University. You fast forward the clock, that whole drive for adventure and learning about new cultures and people eventually led me into the world of manufacturing. I spent the first 10 plus years of my career working on technology product development for companies like Sharp or Toshiba. And then in the young 2000s, I had an opportunity to make a game changing career move that I’ve been pursuing ever since, which is to switch from the manufacturing side to the retail side. I was always a very people-driven person. I love interacting with people. I love surrounding myself with smart people. And when I had the opportunity to join Newegg, which was a startup E-commerce company at the time, I really jumped on the opportunity. And it was a different cultural environment. As some of you may know, Newegg at the time was a Chinese owned company. The founder, Fred Chang spent part of his time remote in China and Taiwan and part of his time in the United States. And he has put together this technology-driven consumer value proposition, which was kind of new in the world at the time. There were certainly were a number of E-commerce players. Amazon was already a up and doing business, but mostly in books and DVDs, buy.com, if you remember that brand was still around and selling general merchandise. You had overstock.com. You had some of these early adopters for E-commerce, but E-commerce at the time was just a cheaper, not necessarily faster, substitute for brick and mortar retailing. And what attracted me to Newegg at the time was that they looked at the customer experience in that digital world of a website as the critical ingredient of driving success. And it really was all about knowing your customer, understanding what it is that they’re looking for, and basically removing the pain points in that journey to get them to what they want. And I jumped on board and I learned so much during those years working with some of the early pioneers in defining customer experience. This was way back before even Google’s search was fully organized, before people really understood the value of organic search versus paid search. Social was just up and coming. And today if you don’t have a strong social strategy as part of your E-commerce platform, you’re probably left behind. So I learned a lot and that became kind of my calling card in the industry is to help legacy businesses transform through the advent of E-commerce and giving them incremental revenue streams by really delighting customers in that digital kind of world and been doing it ever since.

– And you’ve done a great job at it. Tell us a little bit about your experience with Adorama. You came to Adorama in 2019 and it was at that time, several divisions, subdivisions, companies, were they freestanding at the time?

– Yeah, very siloed, structured organizations. So Adorama Inc, a holding company that does business under five key distinct brands. We have the brand Adorama, which is an E-commerce website that specializes in electronics. A lot of it started from the photography world. Then we have a brand called ARC or Adorama Rental Company, which is a standalone entity that rents photography, but mostly cinema photography equipment to content creators, such as NBC, ABC, CNN, Amazon Video, Hulu, Netflix, all of the proverbial content creators out there today. Then we have a government oriented business under ABS, Adorama Business Solutions. This is a standalone team that caters with the corporate world with the educational world, as we well as the GSA slash government world in solution-oriented selling of our technology to those respective commercial businesses. So it could be as simple as us outfitting a classroom with notebooks, with projectors, to something as complicated as building proprietary surveillance kits to the US military and the entire range in between. Then we kind of pivot away from the Adorama branded business. And we have a sporting goods brand called SunnySports that sells a full range of sporting goods, everything from apparel to hiking gear, to snowboots, to water floaties and everything in between. We have one of the largest dive online businesses in the world today under LeisurePro, which also got enhanced by our acquisition of a key competitor in this space in 2019 of scuba.com. So between LeisurePro and scuba.com combined, we are one of the largest online dive shops in the world today. And then last but not least, we have a digital printing business. This business is located in Brooklyn. It’s a factory where we bring peoples’ content to life in terms of picture books, coffee table books, wall art, puzzles, anything that you can imagine that you can print images on, we print on, but we really focus on the upscale part of it. So we’re not a competitor to Walgreens Prints or any of these guys that specialize in four by sixes or five by eights, we really focus on larger format, proper color correction, tasteful pieces of art, really leveraging peoples’ content that they created. They can upload it to us in a variety of different ways. And our factory will print it on anything from a four by eight sheet of aluminum to acrylic to leather-bound picture books and everything in between. And that business is called Printique. Printique, correct. So it’s a full assortment all under the Adorama Inc umbrella that in prior years before my arrival were mostly operated in a silo driven environment. There was lots of duplication. There was very little overlap in activity between the different companies, duplication in terms of technology, in terms of resources and people, and really not, I would say optimized for today’s world. And in 2019, as you can imagine just by looking at a calendar eight months prior to the start of the pandemic or so, it didn’t take much.

– Your timing was incredible.

– Well, I didn’t know that at the time, but it didn’t take much once you saw the pandemic coming and you recognized all the things that would have to change as a result of that, that this was a prime opportunity to build some synergies between these companies. And we certainly started there is by doing a resource mapping exercise and really looking at what were the key expertise that we had in each of these individual businesses and how could we streamline the backend operation of all these businesses and take cost out of the equation, put efficiency back into the equation, time to market, speed, but more than anything, service our customers in a more holistic fashion.

– So talk a little bit about that process, because that’s an incredible process and you did it during a time when most people would’ve said don’t do it now cause that was right at the time when the pandemic broke. So talk a little bit about that. What drove your decisions and how you manage that to work?

– Yeah. So I think it starts when I joined the company in June of 2019, like any new person in a job the first 90 days, you just listen, you absorb and you see where are all the pieces of the puzzle, where are your strengths? Where are your weaknesses? What are your opportunities and what are your threats? And after 90, maybe 120 days of really diving into this SWOT analysis, it dawned on me that we had so much duplication in all these different companies that I went to go look for a process of really streamlining this. And I had already promised our founder and owner, Eugene at the time that by holiday season of 2019, I would deliver to him a five year strategic plan of how I was going to drive value throughout these companies with the ultimate goal of becoming more relevant to our customers, driving more revenues and becoming a great place for employees to work. And as part of that journey was this SWOT analysis, but I needed more, I needed more of a structured method to really look at all these uniquely different positioned companies. And how do I keep what’s really good and how do I streamline and optimize the things that could be streamlined or optimized? And this is where Mark Monchat came into the picture. So when I started looking for some additional resources to help me map out what is this five year plan going to look like, I was introduced to Mark, I’d met Mark during the interview process. I’d seen some of the work that he had done with some of his other businesses. And I said, you know what, this whole resource mapping exercise, I could really leverage some of the groundwork that he had already laid. So I partnered up with him and a couple of members in his team and we spent a number of offsite, really looking at strengths and weaknesses for each of these organizations and then looking at where do we see ourselves five years from now and then mapping these resources against that plan and became an integral part of the five year strategy that I delivered to Eugene in December of 2019. Now all throughout this process, COVID 19 or the pandemic was never on my mind.

– Yes, it happened.

– It hadn’t happened yet. So I was executing, thinking I understand, there is opportunity here. I’ve done a lot of these things. I got the right help. I got the right process. We put it all together in a very convincing package and pitch. Everybody signed off and they’re like off to the races. So in January with a fresh budget and with a clean slate, so to speak, we started executing against this five year plan. Now fast forward to February of 2020, just a couple months later. And I think I shared this story with you once before, I am in a Costco in New Jersey and I walk in and I had heard rumors already on CNN of China is going through lockdown. There’s this thing called COVID, but it isn’t in the US yet, nothing to worry about. And then very quickly after that, there was, I don’t know if you remember this news of this cruise ship that had docked in Seattle and all of a sudden everybody on the cruise ship became sick. And this really started to unfold in the latter parts of February and then really of March. So I’m in this Costco late February, early March. And I walk in and I go into Costco all the time. And right in the entrance is this pallet of latex gloves and masks. And I’m like, what the heck? Why would they put masks and gloves in the entryway of a Costco, it’s never there, there’s typically the seasonal merchandise or they have some kind of a coupon special with their passport promotions that they put right in the front entrance. But this was regularly priced masks and gloves, like the weirdest thing to see in a Costco at bulk. And I thought about it and I kept walking, doing my business and I’m somewhere in the aisle where the water is. And I’m like, I gotta make a call. Something was prompting me like I gotta do something. So I call up Eugene. And I call up our COO, Craig Smith. And I’m like, guys, I’m in a Costco and right at the front door, there’s gloves and masks and something’s up. And I’ve been reading about this thing in China. And this thing just happened with the cruise ship in Seattle. I have a feeling that we need to prepare ourselves. Something is telling me we gotta jump on action and prepare ourselves because things may happen. As a result of that phone call, the very next day, my private brands team started sourcing gloves, latex gloves, masks, and sanitation fluid, sanitizing liquid from China through the channels that we used to develop our own private brands and maybe two weeks later or so, three weeks later, the whole country went on lockdown. And for a very long time, we were one of the only players in town that had plenty of supply on PPE because we recognized it early and we’re a small privately held company. So we were able to react very, very, very quickly. But now tying this back to the 90 day strategy and the change that needed to happen, I had already baked in change in this five year plan, but it was over five years. And basically what the pandemic forced us into was to make five years worth of change in the very first year in 2020. We probably changed every aspect of our business, people, resources, process, technology, customer experience. We tackled almost everything across the board in that first year of the pandemic, recognizing that there was a tremendous opportunity here because people were forced into their homes, they were told, stay home. All of a sudden, everybody started working from home. They needed laptops, printers, cameras, guess what, that’s one of our core businesses. We sold a lot of laptops, printers and cameras. We recognized that people needed PPE. We had a lot of those goods. We saw a lot of schools going to a virtual environment and kids studying from home, that required certain technologies. And it was almost as if something gave us a premonition that said prepare because here’s your opportunity to accelerate beyond your five year plan. And we did. The bulk of our businesses really were able to take advantage of what had happened. Some of our businesses suffered tremendously, our rental business, the movie production industry almost completely shut down. So our rental industry had a tough go at it. Our digital printing business accelerated because all these people were at home. They couldn’t go on vacation. So they were reliving past vacations by printing picture books and memory books and things of that nature. Our sporting goods business initially took a big hit the first couple of months of the pandemic, but as people were staying home and they were getting stir crazy, they’re like, okay, well, if I can’t go to a mall, if I can’t go to work, can I go hiking? Can I go swim in the ocean? Can I go fishing? Can I do anything that has self isolation and outdoor air? Because that was a known fact that if you are outside, the spread of infection is less. So our sporting good business benefited from that. And all of these components fed into what we had already laid out as a five year strategy, but really forced us to look at, okay, we have to accelerate that one. We have to accelerate that one. I’ll give you one example. In our five year strategy, we knew that we were going to outgrow our logistics capacity. 2019 we had a single warehouse with a little over 200,000 square foot of warehousing capability. And I knew that over the next five years, the business was gonna grow. I needed incremental warehousing. Well in 2020, and then onboard as live capacity in 2021, we added close to a half a million square feet. Tripled our warehousing capability and its capacity that we had to grow into. But because of the surge of online demand, we consumed that capacity almost within the first year of being operational. And it was a godsend move. We were forced into it. The timing was right because commercial real estate at the beginning of the pandemic was already hot because people were expanding from a logistics perspective. But today in today’s world, if you try to get a piece of light industrial or commercial real estate to use as warehousing, stand in line, because there is the other 10,000 E-commerce savvy companies in front of you, so warehousing space today goes at a premium. And we were bright enough and kind of forced into accelerating that piece of the strategy. And I’m really glad we did because 2021 was the record year in the history of our organization. We shipped more packages and you could possibly imagine, and it was only possible because we accelerated our five year plan by ramping up our logistics capacity way earlier than we had originally anticipated. So from my perspective, good things and bad things that came out of that dire situation. And we were able to take advantage of the opportunity because we were small, nimble, flexible, change-adopting type of culture. And we managed through it I think better than most. And the credit really goes to the employees, very resilient group, very diverse group of employees. And I think we learned a lot about ourselves throughout those changes, but more importantly, I think the future has become so much brighter and so much clearer, we know how to win in this competitive environment. And we’ve been accelerating every single opportunity against that five year plan.

– Let’s talk a little bit about employees because that is right now, today, one of the hugest issues that companies are facing. People not wanting to go back to the office, people not sure if they really wanna stay in the workplace. So you were able to retain people because you also adopted a very unique strategy. Talk about that a bit, if you would.

– That’s a great question, Lois, everybody’s heard about the great resignation and it wasn’t until just recently you started to hear about the great retention, and for us, I think, we didn’t know anything about the great resignation when we went into this pandemic, but I was very much aware of the fragile infrastructure that we have and we’re so dependent on people, when we stop shipping packages, our business stops. And throughout this pandemic, through adopting a philosophy of the great retention, we were able to keep our warehouses safe and open and continue to ship our packages to our customers. So a number of things that we did that you will say, well, that was easy and you’re right, they’re very much known motivators and drivers that a lot of businesses had already adopted and we hadn’t. And then I think there is some unique stuff. So we’re a company that’s been around for 40 plus years. We were founded in 1974 and it was born out of this small Hasidic Orthodox Jewish community in Brooklyn, as a photography store with a lot of people from Brooklyn, a lot of Jews joining the organization. And it wasn’t until maybe 10, 15 years or so that people started to recognize the value in diversity. And when you look at us as a diversity oriented type of company today, we’re truly a potpourri of everything that you can possibly imagine. Every color, shape, size, gender, ethnicity, religion, all mixed together in this family that is relentlessly focused on giving content creators the hardware that they need in order to bring their story to life. So the start of this pandemic hits and immediately you see a lot of other businesses shutting down their warehouse capabilities because of infection or not being able to comply with the rules. And almost day one, we said, okay, we gotta do something special for the people on our front line. And our front line was the folks in the warehouses that are shipping these packages. So almost from the get go, I stopped coming into the office and I started going into the warehouse and I was in there with latex gloves on packaging up products for our customers to go out the door. And I wanted to make sure that everybody that works in our warehouse could see that I’m not some glass princess that sits in a palace and waves a wand, that I recognize the fact that we’re asking these employees to come in under the most difficult circumstances to make our customers happy. So I was there with them. And so was my COO. Secondarily we recognized that we needed to give people some combat pay. So we increased our hourly wages to motivate and incentivize people to show up for work, risk pay, so to speak. And then probably the biggest move we made.

– And what was the change in your risk pay? What was the increase?

– Back at the time we were probably somewhere in the $14 an hour neighborhood, and today we are close to 18 bucks.

– So a significant increase.

– Significant increase. And that is just rank and file. Obviously managers and supervisors are at different rates, but I think the biggest difference really came in when we started to care about peoples’ safety. And so we wanted earlier companies to partner up with local testing in our warehouses. We brought in specialized companies to on a weekly fog with disinfectant fog everything in our warehouses. We had a specialty crew that would come in overnight every single night and clean all high traffic areas. We had an abundance of what’s called hydroxyl generators. These are negative ion generators that attached themself to pollutants, including COVID virus and kill it through a series of UV light and all kinds of cool stuff. So we aggressively, tens and tens and tens of thousands of dollars, invested into safety equipment and safety protocol to make sure that we kept our people safe. We staggered shifts, we broke up the lunchrooms and installed plastic barriers before everybody else did. So we were really early on to recognize it’s really about the people and making sure that we hold onto it. So that was the front line. Much later as people stayed home and as the government started handing out a lot of this free money to employees, to our employees, they started to think, well, wait a minute. I get all these benefits from the government. I get all these special perks, my motivation to stay working is less and less and less. And that started to become a problem probably in late 2020, but more so in ’21, the whole great resignation piece really started to rear its ugly head for us in 2021. So I started looking at what additional things can I do to hold on and retain to the right people. And here are some of the things that other companies had already pioneered well ahead of us and we just hadn’t adopted, but I had to build it into the budgeting cycle. I had to fit it into the business model. So we implemented a matching 401k program, which was high on the list for people, which we hadn’t had before, we had a 401k, but it wasn’t a matching program. We overhaul twice now our complete medical benefits package and reduced our copays on behalf of the employees. So we sponsor most of our employees in the entire organization. We added dental and vision benefits. We added life insurance. We added all these tools like EAP, employee assistance program, specifically the psychological benefits as the pandemic was taking full grasp and people were struggling with how to I balance work from home with my children and daycare and everything else. I think a lot of our employees benefited from having a qualified professional to talk to about these stresses in their lives. And I think at the end of it, the biggest piece was communication. I’m always a firm believer of an organization will run the smoothest if everybody in the organization understands how do they plug into the greater good? How do they see their role being as critical and important to the rest of the Adorama family? And so we started a series of newsletters that I would send out on a monthly basis and I would communicate with the entire organization, good, bad, or indifferent, how we were doing throughout the pandemic every month. We started leveraging a Microsoft teams town hall, a virtual town hall that I would do every quarter and bring people into the fold of what was happening. But the biggest piece that I think people benefited from was packaging up that five year strategy that we talked about and how we were out accelerating by making some of these key investments in employees and in technology and in warehouses and sharing it with the employees so that they fully understood here’s where we are today, here’s where I thought we were going to be tomorrow, but because of the pandemic, here’s what we’re doing to take advantage of this unique situation and to make people feel like they were really part of a winning team of a winning culture and that our customers would be the beneficiaries of that. And that’s been a proven recipe throughout this entire pandemic. And even today, because all you gotta do is read the news, the landscape is constantly changing with the war in Ukraine, with inflation being close to 8% with continued supply chain issues and being shortages of goods that people want and abundances of goods that people don’t want, this unique recipe of having to convert these lemons into lemonade on a daily basis, it continues. And to me, the magical ingredient is transparency to our employees and transparency to our customers in terms of communicating on any given point in time, they know where they stand, what is expected and where we’re going. And that I think has given on us a more motivated, more retaining workforce than a lot of our competitors. We’ve lost some people, I’m not saying we’re flawless, but we’ve done better than most.

– So Michael, part of what you were able to do was to bring these entities, look at cost sharing where appropriate, and through that, my understanding is you’ve also been able to take on expansion into other areas, perhaps acquisitions as well. That’s pretty significant because I think a lot of times that is one of the things that doesn’t get measured enough is when I bring these entities that I have and you’re not alone, so many companies have a piece here, a piece there, but really looking at how do you pull them together and share isn’t so easily done. And you were able to do that and get egos to be willing to do that. How did you do that?

– I think the ingredient to the success in that story really was understanding our customer. Prior to my arrival, like I said, all these entities were individual entities with lots of duplication, from people to process to technology. And what I think they failed to recognize throughout the history of our organization is how similar our customers really were. And it wasn’t until as part of the five year strategy exercise, I really started digging deeper into who are our customers in the rental business, who are our customers in this sporting goods business, who are our customers in the electronics business, who are the customers that print our images with us. And I found this common character in all of them. They’re all adventurer content creators at heart. All of our customers love to buy these goods and products from these different companies that we have, but what they all have in common is that they want to share their experience with said products. And that is the common trait. When you look at our core customers, every single one of them, whether they are a hiker or a swimmer or a boater or a professional photographer, what they all have in common is that they wanna journey map their experience with those products. And they want to share it with the world. And that one is a very temperamental type of audience because they’re very online savvy, they’re very socially savvy. So it behooves us to keep them happy because they’re very vocal when something goes wrong. And when something goes right, they’re less vocal. That’s an expectation that they wanted to go right. But when I looked at that customer and I said, wow, we could significantly enhance our customer experience if we had a much deeper understanding how each of these companies could uniquely tap in to that whole content creation sharing type of notion of that core customer. And we did that, we implemented it in our marketing, we implemented it in our technology streamline exercises, you know, simple example, we had five different organizations, all five different organizations used a different email provider. So you would get different email templates, different times, different look and feel, no audience segmentation, no personalization, none of that stuff existed until we streamlined all of this. So yeah, you’re absolutely right. There was some cost savings as part of driving those synergies. But the bigger opportunity really was in improving the customer experience by not treating every customer as a stranger, because many of them had shopped with multiple of our brands. And once you recognize that it would be easy to see the transition from a guy that buys an underwater camera at Adorama, then bought a wetsuit at scuba.com, and then three months later started printing the underwater photography that he took on his last trip to Mexico. Now if you look at them all as individual instances, and you treat that customer as a stranger in each of those three companies, you get result X, one plus one plus one equals three. But if you understand the synergies and you can see the handoffs in that experience, you truly can turn one plus one plus one into five. And that’s what we saw as a result of really streamlining, not just the technology, but the marketing and the people and the content, and really understanding who is our customer and how can we get them more benefits?

– I think that’s what people are asking for. They’re begging for it almost right now, especially coming out of the pandemic, it’s like, please connect us. But I think today with what’s happening in the world, it’s that same request. Please let me feel connected to something. Our time is almost up, Michael, what did we leave out? What do you think our audience needs to hear about that we didn’t talk about?

– I would tell you, and somebody asked me this question before, Michael, what’s the number one skill that you have to exhibit on a day in day off basis in order to bring any of this to life, let alone successfully to life. And I would just paraphrase my mother and said, Michael, God’s given you two ears and one mouth and make sure you listen and not just listen to your employees, but listen to your customers and listen to the industry at large, try to be ahead in your thinking of where the trend is going and then lead and execute against that. And that’s where the mouth comes in, but make sure you listen. And I think it’s a skill that a lot of people underestimate, there’s a lot of people that wanna be vocal, that wanna be loud, that have an opinion. And I’ve found that a little bit of humility balanced with a little bit of patience and listening skills goes a long way in figuring out how to out maneuver the competition, because it isn’t all done in a complete vacuum. The signs and the signals are there. Customers will tell you, employees will tell you, when you look at industry data, it will lead to certain trends that you can be ahead of. And the recipe between those factors is really important. So if there’s one piece that I would want people to take away from this is that listen to the folks around you, really absorb before you react.

– People want to be heard, oh, do they want to be heard. I think more than ever, they wanna be heard. They’ve been home so much. It’s like, please, I have thoughts.

– Oh, I know. I know. And like I said, we mimic internally our employees very much our customers, we have very online savvy employees. They’re very socially vocal. They are content creators themselves. A lot of them have their own podcasts or their own YouTube channel or they have their own Instagram channel and they are the first ones to tell you that’s not right. That’s really good, but don’t do that. And a lot of companies, and especially large companies, that there’s so many voices talking all at once, it’s very difficult to rise above the noise, it’s not a matter of just speaking louder, it’s just, let’s say something more interesting that gets you heard. And I think our employees are really, really good at that. I think our customers are really, really good at that and we’ve become good listeners and we’re deploying our resources as scarce as they may be against solving those problems, because I think it has good outcomes, both business and for the organization at large.

– Michael, our time is up. You have been so wonderful. Thank you so much for being with us on “Building My Legacy” podcast today. And for those of you who are with us on our podcast, thank you and please visit our website at www.build2morrow.com and also startwithcollaboration.com. And if you should wanna get in contact with Michael, let us know, we certainly will be glad to connect you. He has such wisdom. So thank you. Thank you for being with us.

– Thank you, Lois. Have a great day.

– Thank you.