E249: How Our Filipino Team Reacted to the ColorIt Sale

While the process of selling a company is mostly between the buyer and seller, most people forget that it also greatly affects the people on the front lines of running a business: the employees.

We've covered why we decided to sell ColorIt in the first place, how we prepared for the sale, and how the transaction transpired.

In this episode, which is the 4th and last installment of the ColorIt series, we bring our Filipino employees working on ColorIt to the limelight to talk about how they felt about the sale, how they dealt with the transition, and the aftermath of the deal that is going to transfer them over to another company.

Also joining us in this episode is Nirav, the co-founder of the company that is going to run ColorIt moving forward.

You'll learn:

• How Filipino employees react when they learn the company they're working for is being sold
• Making sure you're not uprooting your employees' lives in the event of a sale
• How our manager handled the transition and kept morale high
• What we're doing to keep employees motivated under the new owner

Thanks for listening to this episode! Until the next one, happy selling.

Full Audio Transcript

Intro: This is Mike and welcome to episode number 249  of the EcomCrew Podcast. Today, I have something really special to bring you guys. It's our ColorIt team along with Nirav, one of the guys who bought ColorIt, who was in the Philippines with me. Unfortunately, the audio for this episode isn't as good as we like to do for the EcomCrew Podcast. It's hot in the Philippines, and there's always an air conditioner running. And so it made the room really hot. Otherwise, we had turned on the air conditioning. And that in the background, didn't do justice for the audio, and our Philippines crew, they're always so soft spoken. So it's hard to get good audio with that noise in the background. So hope you guys can bear with us. 

But the whole point here is just to kind of hear from the team firsthand what the transition is like. I think this stuff is often not talked about. So please bear with the bad audio, and try to get the meat and potatoes of this episode, which is that people are human beings too, right? I mean that your employees are human beings too and there's a lot going on in their mind. And it's really important to be thinking about this stuff, and not just about yourself and life and in business. And it really comes through in this episode. Even though I thought so much about this stuff leading up to the sale of ColorIt and I think that they know and trust me that I'm always looking out for them, no matter what they're always going to be on edge when there's big changes in their life, just like anything else. 

So I think that this stuff is important. Again, please bear with the audio; maybe you have to turn up your volume a little bit. It's going to sound a little distorted, it's going to be like a hum in the background from the air conditioning. But I think it's worth putting up with the audio for this episode to really get in the headspace of our staff and also Nirav on this episode. So let's turn it over to them, the stars of this episode, episode number 249. Let's get into it right on the other side of this intro.

Mike: This is Mike and welcome to this edition of the EcomCrew Podcast and hello from Cebu in the Philippines. I'm here as a part of a two week trip to meet with my staff, both current and ex staff now, which is kind of weird being here under those circumstances. But I'm happy that they're still in the same office and I get to see their pretty smiling faces still. And along with them, we have Nirav here who is a representative from Profound Commerce which bought ColorIt. So we're going to be talking about the transition today and just kind of how things have happened behind the scenes. It seems like people find this stuff interesting. I find it to be tedious and dull and not very exciting and a little bit stressful because we're the ones who are going to do it on this end. 

But what happens after a business sells and it still needs to generate revenue? And obviously the people who bought it have big dreams for it and wanted to continue to grow. And our goal was to try to have it be as seamless of a process as possible. And that's all because of the staff here in the Philippines. So before we get into a bunch of the details, let's just go around the room and have everybody introduce themselves. 

We are in a conference room here in the Philippines. There will be some background noise in this episode. Whenever you're in the Philippines’ room, there's usually air conditioning, and it's usually not quiet. That's one thing that I've learned to deal with here in the Philippines. So bear with us with the noise. We're going to pass the microphone around and have everybody do just a quick intro. So Nirav, who is the co-founder of Profound Commerce who bought ColorIt, I'll let you start it off.

Nirav: Thank you. My name is Nirav. I’m working alongside Matt to find great businesses that have great stories of growth, and figure out ways to continue that will allow those businesses to grow. When we looked at ColorIt, it was a marvelous, a marvelous story of growth and capturing an audience and really building a business beyond just what I would call Amazon search term capture. And the thing that I'm most interested in doing in the short term is continuity, is making sure we just don't screw up. If we don't do that for the first year, I would consider that a success.

Ion: Hi, my name is Ion. I'm a writer who is now helping manage the team here in Cebu. The first month was, it was crazy. But it's really fun and exciting. The future of ColorIt is really bright. And I just want to thank Mike, Nirav and Matt for this opportunity. We're so excited for what's about to come.

Leah: Hi, my name is Leah. I’m a social media specialist for ColorIt. Yeah, I'm excited to see where I'm at in the new update for ColorIt.

Hans: So hi, my name is Hans. I'm a graphic designer for ColorIt. I'm in charge of making the videos and the graphics for anything ColorIt. So I think Ion and Leah already said the things but I think Nirav gets the message too.

Lorraine: Hi, everyone, my name is Lorraine. I’m the customer service support for ColorIt, exciting times ahead. And I'm happy to be working with a great and dynamic team; they made the transition a whole lot easier and fun. So yeah, can’t wait for what's in store.

Mike: Cool. And also in the room to my left here as I'm passing around the microphone is Mia, who's helping with the transition. And you guys probably know her from the podcast in the past, but just in case you're new to the podcast, let her introduce herself real quick as well. 

Mia: Hi, I’m Mia so I manage the team, the Terran team here in Cebu. And yeah, I helped with the transition of ColorIt and so I helped with some of the tasks of reviewing some of their work for now. I'm helping Ion a bit and I expect to still be helping them in the months to come.

Mike: Cool. So thank you all for doing your introduction. So let's kind of rewind back to before we had the transaction and we were still in the negotiation phase. I became clear, even though it was kind of against my will that we were going to have to transfer some people along with the business. It's hard to take a multimillion dollar business and ask someone to take it over and not have a lot of the resources. So for me, the things that were important that you guys were so gracious to work with us on was to make sure that these guys kept their same salaries, their same benefits, same location, so they can continue to work together. Life is about relationships and things of that nature. 

So that was something that was important to me, and to try just not uproot their lives and try to keep things as much as possible. I also think that it's created a cool opportunity which sometimes with change it makes opportunity. So for Ion in particular, she's going from being a content writer to a manager now of the team. So it's interesting how life presents opportunities sometimes which I think it's a cool opportunity. 

But I'm just curious in your guys’ own words to talk through your state of mind from when you first heard about this to now. I'm sure you guys were nervous. And Mia and I talked about it at length before we even announced it. It was something I was really concerned about. I think it's only natural, but it's been probably about six weeks or so since we first talked about this. So I'm just curious, in your own words, how you felt at the time that we talked about this to how things feel now.

Ion: We were shocked and sad and it was a real roller coaster of emotions. We loved Terran, we loved the team. It is not just — they're not just coworkers, we are like family. And to hear the news that we have to — ColorIt is going to be sold along with us, we didn't know what to expect. So we were really just talking amongst ourselves and trying to do a debriefing.

Lorraine: My initial reaction was, oh my God. When I first heard the news that we were being separated from their Terran, I was working for Terran for just about three, four months. So yeah, it was a big change. There was a lot going on the first few weeks, but personally works there but what helps me get through work in the past and the stressors of the work is really great working team. So yes, Mia, thank you for still being there when we need you, for Ion, Leah and Hans. So yeah, it's challenging and we have a lot of activities in store but I’m positive. 

Nirav: It's so funny that you guys were so distraught when you heard the news. When Matt and I found out that there was this team of folks in Cebu that were running so much of marketing and customer service, we — well, a little bit about us, we're a very lean team. And so we were looking for ways to scale and the opportunity to have a set of experts that already know the business and potentially could even apply their practices to other brands in our portfolio was really exciting. If anything, we were totally on the same page as far as keeping the staff in place and growing it and doing whatever it took to maintain the growth trajectory that we had prior to the acquisition.

We want to do more. And I think it would have been different had we been buyers that already had a staff whether here in the Philippines or elsewhere that were handling a lot of these activities. I mean, we were starting from scratch, right. So this is kind of accelerated the time it took for us to be able to now be in a position where we're thinking about, well,  what is this team doing for one brand? What can it do for some of the other brands that we have? 

Mia: I guess we’re the — I guess with the ColorIt team, it was just more of like fear of the unknown of what was in store. All we knew was that oh, okay, ColorIt was sold, and we're not going to be part of Terran anymore. So maybe that was the reason why. That was why they had like such a negative reaction at first. But yeah, when Mike told them about it, he always assured them that I'm sure that they're going to take really good care of you and, and Mike told them that if a bit of…

Ion: And Mike was right. 

Mia: Yeah.

Ion: I think the change is really scary and we didn't know who the new owners are going to be and that was why the initial reaction was fear. But when we got to know about Nirav and Matt and their big plans for the business, we were really excited for growth and the opportunities there.

Mia: I remember right after the meeting, they were like googling “Matt” [laughter].

Lorraine: Yesterday, we were like, googling all the Matt-s…

Mike: There’s a few Matts out there, that didn't probably get you very far.

Mia: One thing I remember, they were looking through all your LinkedIn posts and went through the Matt-s and just thought, “okay, who’s going to be the new boss?”. So yeah, I think that was their initial reaction to that. 

Mike: Yeah, and I get it. I mean, I've been an employee myself in the past. And as a CEO, as a business owner, this is the thing that I think probably keeps most people that are listening out there are business owners, probably the thing that keeps you guys up at night the most is your staff. I mean, people is the most important thing to a business, to life, to relationships to happiness, and it's something that I take very seriously and it's really, really important to me. I always put that before anything else. And it's stressful, because nothing in life is guaranteed. Just because we have a business that's viable today and we have employees doesn't mean that that's the way that it will be in the future. 

And we've been unfortunately, on the other side of this coin in the past with government agencies changing things or the market changing things with a recession, or just whatever it might be, things change. And one of the things that was keeping me up at night was just at any moment, something could change within our business. We can go from having this wildly successful business, at least on paper, because it was making lots of money on paper, but because of our growth trajectory, there was very little cash ever around because of an inventory based business. 

And going from this very happy high five time to if our Amazon account got suspended for a couple of weeks, so there was a recession and not being in a great place financially to be able to ride out that storm. And that was one of the things that was concerning me. So it was how do we make a healthier business longer term and have this be a type of event that makes everyone happy because it certainly has been a positive life event for my wife and I. I think it'll be a positive life event for Nirav and Matt. It's like one of these things where everyone wins. I think that they'll continue to make ColorIt bigger and better moving forward. 

But we also wanted it to be the same thing for all of our employees. That's one of the things I want to talk to you guys about. We decided to set aside a portion of what we got from the sale to give it to all of you guys, including the rest of the team that's been so instrumental in helping ColorIt grow. I mean, people talk about this stuff a lot. Like if it wasn't for the team behind the scenes, that there wouldn't be a business. And that's certainly the case with us. I mean we've had 12 people working on this business in portion over the course of the last couple of years and doing a lot of the things that I'm awful at. 

It's actually I joke a lot of times with like, you guys keep customer service out of my hands, because I often reply with something really inappropriate or I get really mad. There's a lot of other things that happen like in the social media as well. There's things that are tedious that I'm not good at. And wholeheartedly, if it wasn't for things like that, I'm not good at keeping things in stock. That's something that Jacqueline has been a huge instrument to help on. I'm not good at necessarily managing a team. That's something that Mia has done a really good job of keeping everybody under check and balances. 

And so, if it was just me in  [inaudible 00:15:10] land, this would not be anywhere near what it is. So anyway, so what we did for the ColorIt team, specifically twofold. So for every month that you guys are sorry — for every year that you guys have been working for ColorIt prorated, we're going to give one month pay. So if you've been with ColorIt for a year, you'll get one month pay. If you've been with us for six months, you’ll get a half a month pay in addition to as a bonus. And then to thank you guys again, for I know it's been disruptive. We just talked about the disruption of moving and it's been nerve racking. 

So as a bonus on top of that, we're going to give everyone that moved a full month pay extra on top of that once you're with the new team for six months, just to encourage you guys to stick around and have something to look forward to because I know it is trying. So that'll be paid out in July, I think we said, which is when the rest of the money is due on the transaction for the team, so we'll get you guys those exact numbers. But I guess I think the whole goal is to make it a positive life event for you guys as well. So if you've been with us for a year, just as an example basically is two months’ pay extra which is significant. 

This is like a 14th and 15th month pay this year on top of the 13th month that's customary in the Philippines. But hopefully that can go towards paying off some debt or getting married, kid’s college, or whatever other bills. And hopefully, as you're paying those things off or doing those things in the future, you'll think of ColorIt and the things that that's happened here for that. And hopefully, I'm pretty confident just knowing Matt and Nirav now for about three months since we started on this journey, maybe almost four months now that they're good people and they're equally as concerned about you guys’ well-being as I have been. And hopefully again, this time next year when I'm back in the Philippines, we'll catch up again and have nothing but positive stories to tell about this. 

So one last thing I want to kind of go over is just from Nirav’s position also you guys like how has the transition been? I mean, for me, one of the things that I was really concerned about, I like to treat others like I like to be treated. I’ve bought a business before more than once and had the person once I gave them the money like ghost me. That's a term that us young kids use Nirav, but basically just disappear once they had the money and I didn't want to be that guy. And also, I know there's a lot of moving parts in trying to make sure that as smoothly as possible, I knew that nothing would be perfect. So I guess first from your point of view Nirav, and then also from the team, how are things going from that perspective? What's gone right? What's gone wrong? And how do you think things are going to go moving forward?

Nirav: Yeah, so thanks. So as far as what's gone right, I think when we look at the numbers, March year over year, April year over year, it is a stronger story than when we even considered buying the business. And so, that's amazing because that means that when we look on a forward basis, the business is even cheaper than what it was when we decided to buy it. Related to that, when it comes to the marketing machine and the community, there haven't been that many hiccups in terms of this — the transition has been seamless to the community and to at least from the consumers perspective, the marketing activities that have gone on. 

Clearly though, there's been disruption on the ColorIt team's behalf in terms of just changing ownership means change to systems, or at least change to the people behind and the owners behind systems. So I would say on the flip side, things that have been a little bit bumpy really relate to fulfillment. And they relate to some of the, I guess, the customer service related issues related to that. So on the fulfillment side of things, I mean, the thing that — to maintain our growth rate, we need to have inventory in hand, right, simple as that. This business is you put a bunch of money into inventory and you get a multiple of that out in terms of sales and earnings. 

And so, the bumpiness has really just been in making sure that we're able to put in the various orders, get them to the places that they need to be. And the remarkable thing that Mike and Jacqueline have done is basically plan out the rest of the year for us, which has been huge. And so the bumpiness is really just us sort of understanding what Mike and Jacqueline had done, more so than having to kind of do it ourselves. But I feel like I'm playing a little bit of catch up here, which is probably fine. I mean, it is a very large business that we've bought. 

Related to that on the fulfillment and the customer service side of things, we as part of this acquisition, our supply chain looks a little differently. There was a change in the 3PL that we had. And so when it comes to the workflow for doing giveaways or for satisfying edge cases, when it comes to orders it's a little bit, it's different. And so, that is something that I mean, in hindsight, perhaps it would have been great, maybe if that the supply chain, like that was one less moving part as part of the acquisition. But all in all, the new 3PL that we have, they're good, and they're expensive, and they're good. And that's probably all forgo a little bit of I guess short term margins for a very good partner. And I think that's who we found with our 3PL.

Mike: So I mean, in terms of the email that you never want to get while you're under LOI to sell your business, the one that you don't want is the 3PL emailing you saying that we're ceasing operations. Basically, a couple weeks after the sale of ColorIt was going to close, and it wasn't obviously just for ColorIt, it was for our entire business. So in the middle of due diligence and all the other things that we were dealing with, our 3PL decided that they were going to just cease operations. So we were in this massive panic to find a new 3PL. And there is no perfect solution when it comes to this. I mean the problem is that every 3PL has its deficiencies. 

What seems like the most basic easy business in the world to me seems to be much more difficult to run than I guess I give it credit for because most 3PLs do an awful job for whatever reason, I don't know what it is. But even the 3PL we worked with before, even though they were the status quo, they did an awful job. They would just not respond to emails for weeks on end or shipping the wrong stuff or not communicating with us or give us an inventory account and all these different things. And we were reluctant to switch because they were cheaper than a lot of the other solutions but it came with its disadvantages as well. 

And as we started looking to switch, luckily, we have a huge community of people to lean on. And I wanted to switch to a 3PL that at least a couple of people could vouch for. And believe it or not, that was really difficult. There's very few people that will vouch for their 3PL. Most of them are like, these guys suck, but we're with them because everyone else sucks or whatever it is. But we did manage to find one I think that is better than the rest. I'm not ready to recommend them publicly yet because we are new in the relationship but so far, so good. And they came recommended from two other of my good friends in e-commerce that vouched for them and said they do a good job. Their only complaint was that they were more expensive. 

And from my point of view at this juncture, knowing that Nirav and Matt were going to have an overwhelming amount of stuff to figure out, having to deal with a 3PL that was going to cause even more problems than just spending a little bit extra money probably was the way to go. And so we went with them as well. We wanted to try to be in the same boat as them, so to speak. So we switched to that 3PL as well. And we've been using them and they've been — they definitely have been great. 

I mean, you always look at the positives compared to what current relationship to the old one. And just the fact that they respond to our emails, and they seem to send the right stuff off, and they do it in a timely manner is pretty awesome. So we're excited about that and hopefully that will continue. So we did cut off and didn't get a chance to ask the ColorIt team from their perspective. So let's end with that and just on terms of how they feel things have been working so far in terms of transition and what's gone right for them and what hasn't gone right.

Ion: Well, I guess Nirav already discussed the highlights. What's good was the Q3 marketing activities were already planned out. And all we had to do was continue working on those projects. But not really great things, the order fulfillment to Lori had really had — she had a hard time working on those orders that weren’t getting shipped. Yeah, and here I've also had to figure those out from her because of everything that was going on.

Nirav: I think you guys [inaudible 00:24:57] everything.

Female: [inaudible 00:25:01]

Mike: Any thoughts from you Mia on the transition?

Mia: Well, on the transition side, I didn't have anything to do with order fulfillment. I didn’t know anything about that. So I helped where I can, like I prepared the Q3 plan for everyone. So everyone had like tasks and goals set up. And I also provided like a list of ColorIt activities of sending to Nirav and Matt so they would know these are all the things that’s happening in ColorIt. So there's a weekly thing, there's a monthly thing. And what else, also I helped Ion a bit with management or like brought her up to speed with what I've been doing with Terran.

I've been doing performance evaluations and doing one on ones with them. So I told her that its really important to talk to them regularly just to get a feel of how they are and make sure, because sometimes when you're at your desk, you don't get to talk. You don't get to vent out your feelings and really air out your concern, so one on ones are a great opportunity for that. So basically everything that I learned from managing the Terran team, I passed it on to Ion. So we're still planning on meeting regularly, I guess she’s still getting used to her new role, and I'm very happy to help her wherever I can so yeah.

Mike: Cool, all right guys. Well, thank you so much for coming on the podcast. It's funny; I learned my lesson with our Philippines team in podcasting. I tell them about four minutes before we start recording because they get really nervous when we do podcasting, so we try to make it a surprise. So thank you guys for accommodating. I think this was a great episode. I think it really it is the stuff that doesn't get talked about a lot in business, some of the behind the scenes details and the things that people are thinking about, but that often don't know how that transpires. So hopefully this has been helpful for everyone. And at least gives you kind of an insight into how things have transpired since the day that the wire transfer hit our bank, because we've done some other podcasts that we recorded.

I'm not sure what other things are going to come out but we'll be talking about the specifics of the due diligence and all the other stuff that kind of went into getting to the point where the thing sold, but obviously, there's a business to continue to run after the thing sold. And this kind of gives you some insight into how that's transpired. So I want to thank you guys for listening to the EcomCrew Podcast. As always, thank you for all of your support. If you have a moment, leave a review in iTunes. It really helps Dave and I. And if you haven't checked out our free resources yet over at EcomCrew.com/free, I highly encourage you to do that. And until the next episode everybody, happy selling and we'll talk to you soon.

All right guys, I hope you enjoyed the 249th episode of the EcomCrew Podcast. Sorry, again for the audio quality. But hopefully you got some takeaways from this and really understand just how we interact with our staff here in Cebu. We're recording these last few episodes from Cebu. It's been great to be here. It's been an awesome trip. And we're actually recording this on the eve of a party that we're throwing for our entire team, including bringing back the ColorIt team to come to the party with us. A tradition here in Cebu and in the Philippines is karaoke night. So we're going to be having some drinks, doing karaoke night, having lots of food and snacks as they love their food and snacks and just having a good time. Let everybody kind of relax, let loose a little bit, thank them for all their hard work. Without a doubt, hands down bar none, none of this would be possible without my team. They take care of all the stuff that I don't want to take care of that I'm not even really capable of taking care of and they mean so much to me. So, all right guys, that's going to wrap it up with this episode. If you do have any questions or comments, you can go to EcomCrew.com/249 for the show notes. And signing off from Cebu, that's going to do it for this episode. And until the next one, happy selling and we'll talk to you soon.

Outro: Thanks for listening to the EcomCrew Podcast. Follow us on Facebook at Facebook.com/EcomCrew for weekly live recordings of the EcomCrew Podcast every Monday. And please, do us a favor, and leave an honest review on iTunes, it would really help us out. Again, thanks for listening, and until next week, happy selling.