How Chad Rubin is able to Run a Fully Automated 8-Figure eCommerce Business with only 2 employees!

OWEN: My guest today is Chad Rubin and he is the CEO of Skubana, a software company, and the President of Crucial Vacuum, an e-commerce company. Our focus today will be on the e-commerce company that he has. Chad, welcome to show.

CHAD: Thank you for having me Owen.

OWEN: Great. The goal of the show is to talk about how you’ve been able to systematize your business operations so that it actually runs successfully without you. So that the listeners stay all the way to the end what are some mind blowing results you now experience as a result of going through that process of systematizing and automating your business?

CHAD: One of the things I want to establish right away is the fact that I actually have two businesses that I’m running. One is crucial. It’s completely automated with two employees, doing eight figures. And now I’m working on systematizing and automating my software business.

OWEN: That is awesome. And we’ll talk about how the software came about as a result of the other business, Crucial. Since the focus right now is on Crucial, I’m wondering how has the Crucial Vacuum being transformed as a result of systematizing your business?

CHAD: I have two employees. I’m no longer pre-diabetic and I’ve built a software to automate that business. For the Crucial perspective I think most people look at life like, “Hey, how many employees do you have? That’s a sign of success.” But I actually see a different side of success which is what is your revenue per employee? Are you being efficient with the employees that you have and do you have systems in place that you can automate that allows you to take a step away from the business and either work on a hobby or even do something else completely different than what you are doing before. It’s not just my company, it’s also me that’s been transformed. For the company with systems in place I’ve been able to take a step away from the business and I’ve been able to start another business which is you bought out of the software business. Building a software to run my other business. On top of that spending more time focusing on myself not being pre-diabetic any longer, and losing weight, and focusing on a lot of my own self-awareness and things to actually expand my knowledge and my life.

OWEN: Awesome. What exactly does your business, not the software company but the other one, Crucial, what exactly does it do and what big pain do you solve for your customers?

CHAD: Crucial started, I launched a private label, my own brand direct to consumer e-commerce business back in 2008-2009. And we started selling direct to consumer cutting out the middle man on the internet. Our problem that we were solving was that there’s a lot of bloated costs involved in buying replacement filters and accessories for vacuums initially. And so we solved that problem very quickly and we now have about 18,000 skews that we manufacture.

OWEN: Okay. And you mentioned earlier that at Crucial Vacuum now you have only two employees. I’m wondering was it always the case that you always had two employees?

CHAD: No. I used to have my own warehouse along with having a lot of teammates in-house doing a lot of functions. We were extremely bloated and there wasn’t processes in place and systems to automate and streamline the business.

OWEN: Okay. Is the company profitable? What was last year’s revenue if you don’t mind sharing?

CHAD: We’re an eight-figure business.

OWEN: Okay. That’s great. Take us back to when Crucial was not even systematized and automated like it is now. Let’s talk about specifically the things that were wrong with it.

CHAD: It’s like anything else, even if you’re having a child… I don’t have a child. But when I do have a child, there’s a crying baby that you have to get comfortable with and understand what its needs are. And then you get into the flow. And then you can actually systemize. When you’re actually building your own business and it’s nascent and it was just born you have to essentially do everything from the ground up. There’s a lot of grit that happens and you learn from making mistakes. I used to have my own warehouse for example. And I’ve now outsourced that warehouse to a third party logistics company to do the pick and pack for me so I don’t have to manage those employees. I used to have a lot more employees in-house and a lot of it is, A, been automated with technology, or, B, I found other people outsource to do a lot of those manual tasks.

OWEN: During the pre-interview you said something about you used to do a lot of your own picking and packing yourself. Talk about that.

CHAD: Initially I was picking and packing boxes and then I hired people to do the process. And I finally figured out that my core competency and what I’m really good at is actually building a business and operating the business, not actually do the pick and pack. That’s not what I went to school for, and not even managing people to pick and pack. I found a company to actually do the pick and pack for me. And that has made a massive difference in my life and allowed me to run… I’m CEO of Skubana but I’m also very intimately involved at least from a cursory level on the crucial side still. So I run two different businesses.

OWEN: Back then you mentioned during the pre-interview that there was a specific issue that you considered kind of your lowest point. When you had 17 employees, something to do with one of them being previously incarcerated and even drinking on the job. Can you dive into that?

CHAD: That’s part of the issue. When you’re in the tri-state area and you want to find somebody to do lower value tasks to do pick and pack for you, you’re going to tap into a certain labor pool that I didn’t feel comfortable managing. I’ve never built a warehouse before to answer your question. I never built a warehouse. Why not let people do what they’re really good at and they excel at when you outsource and that’s exactly what I did. That was their core competency. I let them handle that so I can focus on building a business and we’ve dramatically built since I let go of that operation.

OWEN: Okay. I’m just trying to really give the listener the back story based on what you shared with us during the pre-interview, something about how you had to even close down because they reported you to OSHA, something like that.

CHAD: It was a complete jungle in my warehouse. Our aisles were very narrow. We had safety violations according to OSHA, all these various things that we just decided to just let go and not have to deal with anymore. And so yes, OSHA did come in, they shut it down. I literally have to stand there and pick and pack with my wife and my father-in-law boxes until we finally found a system and a company to let go of this operations too.

OWEN: What did your wife tell you then on the OSHA issue? She said something that kind of put a pep in your step to say, “Hey, we got to change something.” What did she say exactly?

CHAD: “Hey, you got to surround yourself by really smart people.” I don’t even take credit for this move. My wife was telling me for a year, she said, “Chad, you need to let go of this operation and it’s important you get rid of it.” I was like, “I really want to touch and feel my product and be close to it.” I said I had a connection to it. And by letting go of that emotional connection it allowed me to go well above and beyond my limitations.

OWEN: Let’s jump into the first step you too which was to outsource to a warehouse. Talk about first of all how did you even find this company that you outsourced to and how did you proceed with them?

CHAD: I was doing research on different third-party logistics companies. I have a very interesting model where I sell on a lot of different marketplaces and shopping carts. I sell on Amazon, Wal-Mart, eBay, [Unintelligible 00:08:11] by Amazon. When you have these unique areas of your business as an e-commerce seller you need to find somebody who’s trained and who’s well-versed in it a lot of the third-party logistics companies out there are not well-versed e-commerce selling. And so I literally trained this 3PL from the ground up on my process and now they are very focused on multi-marketplace e-commerce sellers.

OWEN: What is a 3PL because most listeners might now know that.

CHAD: A 3PL is a third-party logistics company. It’s just another word of saying an outsourced warehouse.

OWEN: Okay. Because of your model of selling on different distribution channels like Amazon and all the different ones you listed they’re helping you outsource that actual picking and packing but then you had you to train them on how to work in the different platforms you’re on. You mentioned during the pre-interview that the second step was build your software Skubana. Talk about that and also why you had to do that.

CHAD: First was the warehouse, once I got rid of it I was still using a lot of these very entry-level softwares to run my business. I wasn’t even on the pulse of my inventory in my warehouse. There wasn’t even barcodes or skews on my bin locations. That’s how disorganized it was. Once I got rid of the warehouse it forced me to grow up and to become efficient. And then I was like, wait a minute. I need some technology because technology can really be a core competency. And you can use that as a strength to essentially beat your competition. Because the more you automate the more you can leverage on a lower payroll, you’ve systemized it and you can make more money, where you’re focusing on what you’re doing best. I went out to try to find… I left the entry-level software world and I went out to find a powerful enterprise software and I found that either a lot of softwares didn’t do what they claim that they can do once I got under the hood and signed a contract. That was one piece. Or I had to duck tape a lot of different softwares to make it work. So I had to attach together and cobble together different systems or tools to run my business. And I still was missing things like, I started to use spreadsheets. I went out and I built it. I built Skubana. I found a co-founder to essentially partner with. We found both that there is a massive weakness and we turned this weakness in the market to be our greatest strength.

OWEN: I’m wondering did you have some software background or anything? I’m just trying to figure out how you figured that the best thing to do was to get a co-founder. And this co-founder is he technical…?

CHAD: Yeah, he’s a technical co-founder, D. J. Kunovac, brilliant guy. Enterprise developer. We took demos with… He couldn’t believe that this was a problem. We started taking all these demos and understanding all these softwares. And he was just like, we have one of those aha moments where we just found a massive opportunity that wasn’t being tackled. There’s nothing for next generation sellers to run their business in the e-commerce world all in one place.

OWEN: The first step was outsource the warehouse. The second step was build custom software. What other steps did you take besides this regarding systematizing the operations specifically at Crucial?

CHAD: The first one was outsource the warehouse. The second one that you said was building technology. Your tech stack is extremely important. And thirdly it’s also around finding people whether, for me I like to find employees in the Philippines to help me build the business.

OWEN: Okay.

CHAD: I found a virtual assistant for example I started working with and she changed my life. She runs my life. I have another assistant with me on Skubana. And then I’ve given virtual assistants to all my employees.

OWEN: And the employees, these are the ones on the Crucial side of things?

CHAD: Both.

OWEN: Okay. Just so we can get a breakdown of what’s happening because I thought you said you had only two now on Crucial so I’m wondering…

CHAD: There are two employees on the ground but we have freelancers. We have a lot of outsourced… I don’t call them employees I call them freelancers. But I have two people on payroll that are doing higher value activities. But I’m building an outsource army.

OWEN: Okay. Back then and even until now I’m wondering how exactly did you even document procedures and processes for the task that you do. What tools do you guys use?

CHAD: For documenting procedures… to train typically we’ll do screen sharing. We use Trello to manage a lot of the processes as well. I’m using Gmail. I have certain system setup in my Gmail account for email flow because I get a lot of emails. I use Evernote, Slack, and Skubana. The combo of all those are all part of my automation grind.

OWEN: During the pre-interview you mentioned something 15Five regarding employee engagement. How does that play a role in this whole thing?

CHAD: We were testing out 15Five. It was extremely helpful for understanding employees, what are they accomplishing or what are hiccups that they’re running into. I felt that a lot of the employees didn’t love having to fill that out every week. I do ask them these questions when we’re sitting in our group weekly planning meetings, what are our challenges, what are our accomplishments, is there anything I can to make your life easier, where are you hitting a wall, these are all questions that I’m asking on a constant basis.

OWEN: What are you doing with the findings, the results of these kind of questions? I’m just trying to get a peek into that.

CHAD: We’re really nimble. If there’s challenges or certain walls like we try to brainstorm and find a way to fix it. A lot of times it’s just small tweaks.

OWEN: Okay. At the time when you were working on systematizing and automating parts of the business I’m wondering what books or mentors had an influence on you and why.

CHAD: I tried virtual assistants and outsourcing five years ago and it was a complete failure. I was like I really need help. I really need someone to get inbox. Initially I was hiring executive assistants on the ground in the United States and realized that it wasn’t really the best fit. I’m not looking for someone to make my food and go get me coffee. I’m really looking for somebody to help me manage my life and my inbox, and become another me. My wife went away on a yoga retreat and I read Virtual Freedom by Chris Ducker since I’ve read it a few times. But that was really a blueprint for me to outsource. So I spent the next 48 hours interviewing and finding a virtual assistant to work with. The first one I hired it turns out she didn’t work out well again and I tried one more time and then boom, it worked.

OWEN: That’s awesome. If we talk only about what you’ve gained as a result of taking the steps to systematize your business and don’t talk about the challenges you experienced I don’t think we’ll do a well-rounded interview. Can you reflect on what was the biggest challenge that you experienced with this whole thing?

CHAD: I think finding the right talent was really hard.

OWEN: How so?

CHAD: Finding my virtual assistant to work with, like I said I failed a couple of times and finally found a solid employee. You need to find someone that’s dedicated, who has hustle, who has drive, who gets technology, who wants to be by your side. I even give my personal assistant a shout out. I wrote a book, Cheaper, Easier, Direct, it’s on Amazon. In the back of the book I gave her a shout out. That’s how important and integral she is to me being productive, me being happy, and ultimately to me being a better person.

OWEN: Were there any other challenges besides finding the staff?

CHAD: I have a lot of outsource employees so I think we’re still working on streamlining. It’s a work in progress. Finding people, hiring for certain tasks, it’s also hard to find the right people. You have to spend a lot of time reading the feedback of these individuals. I’ve been hiring a lot of my outsource employees on Upwork. I read a lot of reviews that people leave for these assistants and I try to understand and digging to their core competencies and what I can give them. That’s time consuming and time is very limited.

OWEN: I’m trying to make the story more recent. At what point in time did you feel like Crucial was systematized and can actually run without you?

CHAD: Probably for the past 2 years.

OWEN: Did you test it out to actually see…? How long have actually been away to see if it will actually work without you being there?

CHAD: I’m away from it every day. I don’t spend any time on that business. It’s operating. It’s working. It’s running. I have a strong team in place to run it. The higher value activities are really focused in the United States. And the repetitive, more mundane is being outsourced. But just like I did for myself, I took an inventory of my own hustle and my daily grind. I have my employees do the same thing in the United States. What are you spending your time? I had them literally create a calendar of where they spend their time for that week. And for me my goal for that was how can I find you two more hours extra of the day.

OWEN: Let’s dive into that a little bit. You said that you have people who are doing the more mundane stuff in other countries and then the ones who are doing the higher value task are here. I’m wondering, can we talk about what specifically they’re doing, just to give insight into what’s happening there.

CHAD: When you say they who are you referring to?

OWEN: The higher value ones.

CHAD: Of course. It’s a few things. One is listing optimization. Doing a lot of my listings on Amazon. Also sourcing, purchasing, inventory stuff, that’s happening here on the ground. When it comes to customer support, when it comes to understanding competitive intelligence and doing some data mining that’s all happening overseas.

OWEN: Okay.

CHAD: But also on top of that I had employees take a hard look at what are tasks that they like to do. Everybody has a bucket list, things that they love to do but on top of that we all should have a bucket list but I think we don’t like to do it. What are things you need to say no to. Or maybe even things that you just don’t know how to do but you shouldn’t be spending your time doing it. I like to focus on my team’s core competencies and their expertise, and get rid of low value task to outside.

OWEN: Not only did you get rid of stuff for yourself you also applied that to your high value employees as well. It makes sense, so that way they are also just focusing on the highest value work regardless any time they’re working for and everything else is handled by the other assistants that you provided them. Now that we’re talking about the more recent part of the story we always want to give the listener kind of a behind the scenes of your business. Imagine the business kind of a conveyor belt. On one end there’s one person who’s looking to buy a vacuum and on the other end is some who’s bought… actually they’re buying filters right? And on the other end has bought the product from you guys for their vacuum. Can you talk about what the different parts of the business currently is like right now and feel from to start from how you find them in the first place this customer.

CHAD: That’s a very large question…

OWEN: Break it down as much as you want.

CHAD: Okay. The orders flow in and so you’ve got orders, inventory purchase order management, vendor management, analytics, it’s all coming to the technology that we’ve built. Then you’ve got customer support side. You’ve got the marketing side. You’ve got the purchasing, sourcing side of things so that’s all on Crucial. And then on the Skubana side you have development team, operations, account management, marketing, both paid marketing and organic marketing content, driven marketing strategy. Did I say account management team already? Sales. Literally I am managing two businesses with so many moving parts.

OWEN: I’m wondering, how do you even track and verify the results being delivered by your employees that are crucial right now?

CHAD: We throw everything into Trello. And then we attitude on it. And it’s all driven by KPI’s. And we’re numbers driven so we analyze how we’re doing. Typically we have weekly planning meetings where we go over accomplishments, anything we can be implementing in terms of strategy, one hour a week.

OWEN: I’m assuming that’s kind of based on their role, you come up with kind of a KPI of what should be achieved. Can you give us a concrete example with any role in the company especially the higher level ones like you mentioned so that it’s more concrete to the listener.

CHAD: Revenue is a perfect example. Everything that the higher value employees are doing, all the higher value activities that they’re working on is all driving revenue.

OWEN: Okay. It’s self-explanatory. Now that you have more free time I’m wondering which areas of the business do you focus on now and why?

CHAD: I’m 100% focusing on the software business. Crucial is really automated and I have a good team in place like I said running that business. It comes down to Skubana which is, I’ll go back to the initial example I gave you which is taking care of a child. Skubana is very much so in its infancy and requires an all hands on deck approach from me. As we’re growing and as we’re building I’m adding more roles to essentially alleviate a lot of the responsibilities from me.

OWEN: Okay.

CHAD: On top of that I’m taking care of myself which is also very important, right? If you want to make a million you got to look a million.

OWEN: It’s so true.

CHAD: I’m working on myself. I’m cross fitting two times a week where I’m doing high intensity efficient workout. And then I’m so going to the gym on the off days just getting my body moving. And that keeps the endorphin running, keeps clarity of mind, keeps me connected, and allows me to just keep moving and kicking butt.

OWEN: Specifically for Crucial what was the next stage of growth for the business? What are you planning to do next and why?

CHAD: Crucial is growing at a rapid pace well above the e-commerce growth rate. Skubana is growing. Every month is a record on that business. I also read another book called Essentialism which is really about saying no and focusing on your energy. And that also has impacted my life quite a bit because I used to do a lot of different things. And instead I’ve channeled my energy into things that are going to produce the best results.

OWEN: I think during the pre-interview you mentioned something about regarding Crucial. Initially it was Crucial Vacuum and there was a re-brand to Crucial and a move towards auto products and stuff like that. Can you share that with us?

CHAD: Sure. When I first launched Crucial we picked a very myopic focus. I thought it was going to take me years to disrupt the vacuum cleaner space. It turns out it took me six months to a year. I wanted to combine what I was passionate about with, what I knew. I knew the vacuum space. My parents owned a vacuum store when I was growing up. I love coffee though. We started making coffee filters and it was hard to maneuver that because Crucial Vacuum is so focused on vacuums who would want to buy a coffee filter from a vacuum site. We started Crucial Coffee, another brand. Now we’ve developed that into just one brand that’s all encompassing called Think Crucial.

OWEN: Awesome. Just so the listener who’s listening all the way to this stage, if you want to leave them with the very next step they should take regarding getting to the point where their business can actually run without them what would you say they should do?

CHAD: I would start with yourself and I would ask yourself what do you like doing, what are you really good at. Then I would ask yourself what don’t you like doing. Are there tasks that you don’t like doing that could be done faster by somebody else? Are there lower value repetitive task that you can be giving to somebody else? These are all things. It’s really about where you’re spending your time and where you can actually make the highest impact with your time.

OWEN: Okay. So basically put a list together and then after that figure which ones to attack first?

CHAD: Yeah, start looking at your life. I think we’re always so busy and on the move and we have a routine already where we never take the step back and with a pen and paper look at where you’re spending time. I look at my calendar every week and the week before saying, “What is a high priority task here, what’s high impact, and what shouldn’t I be doing? What’s going to have the lowest impact or change? And if so maybe delegate or just say no to it.

OWEN: Is there a question that you were wishing I would’ve asked you during this interview that I did not ask you yet? If so pose the question and the answer as well.

CHAD: You didn’t ask me about my book.

OWEN: Go ahead.

CHAD: Cheaper, Easier, Direct is actually my process of how I built my business from how I discover products to manufacture, to how do I validate those products and attitude on it. That’s also part of everything I’ve been working on. Upon all the other things I’m working on I also wrote a book at the same time. I think that’s important. If people want to follow me or want to learn more about what I’ve talked about today they can check out my book. They can find me. They can find other interviews I’ve done on Google or even LinkedIn me. Or even email me at chad@skubana.com

OWEN: Thank you very much. I’m speaking to you the listener. Thanks for listening all the way to this point. If you’ve enjoyed this interview I want you to leave us your feedback on iTunes. To do that go to sweetprocess.com/iTunes. And also if you know another interview who will find this interview useful feel free to share with them. And finally if you’re at that stage in your business where you’re tired of being the bottleneck, want to get everything out of your head and document step by step how you get tasks done so your employees know what you know, well, sign-up for a free 14-day trial of SweetProcess. Chad, thanks for doing the interview.

CHAD: All right Owen. Did you record it?

OWEN: And we’re done, yes. We’re done. I’m actually going to leave that in there.