Scott Andrew (Retail Service Systems) - Just a Redneck from North Carolina

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This is a podcast episode titled, Scott Andrew (Retail Service Systems) - Just a Redneck from North Carolina. The summary for this episode is: <p><span style="color: rgb(0, 0, 0);">Scott Andrew, CEO of Retail Service Systems and CEO/Founder of Rugged Holdings, shares his less-than-legal beginnings as an entrepreneur, and how realizing early on that being “unemployable” as he describes it, was one of his best assets. He also walks through the particulars of managing several companies at once. Ajay deals with a snowpocalypse, and Vincent learns a new word.</span></p>
Disrupting the Franchise
01:25 MIN
Empower People to Make Mistakes
01:00 MIN
Empowering Entrepreneurs
00:19 MIN
The Rugged Entrepreneur
01:08 MIN
Referral Variable
00:55 MIN
Believe in Timing
01:07 MIN

Speaker 1: Welcome to The Marketing Stir Podcast by Stirista, probably the most entertaining marketing podcast you're going to put in your ears. I'm Jared Walls, Associate Producer and Stirista's Creative Copy Manager. The role of this podcast is to chat with industry leaders to get their take on the current challenges in the market. We'll also have a little fun along the way. In this episode, Vincent and Ajay catch up with Scott Andrew, CEO of Retail Service Systems and CEO and founder of Rugged Holdings. He shares his less than legal beginnings as an entrepreneur and how realizing earlier on that being" unemployable" as he describes it as one of his best assets. He also watched through the particulars of managing several companies at once. Ajay deals with a snowpocalypse and Vincent learns a new word. Give it a listen.

Vincent Pietrafesa: Ladies and gentlemen, welcome to another episode of Stirista's The Marketing Stir. I of course am your host Vincent Pietrafesa. The vice president of B2B products here at Stirista. Who is Stirista?. San Antonio- based, we are an identity marketing company. We have our own databases, B2B, B2C. We help our clients target those databases, get new customers, email marketing, customer acquisition. We have our own DSP called AdStir, we can help execute media for you. OTT, CTV, VEP... that last part's just me. Anyway, that is what we do, email me, vincent @ stirista. com, that is how confident I am that we can help you. I just gave you my email address on air. The other thing I'm confident about, I say it every episode, is my partner in crime. I'm riding shotgun, the co- host, the CEO of Stirista, ladies and gentlemen, Ajay Gupta. What's going on Ajay?

Ajay Gupta: Hey, Vincent, pretty exciting day today. Came back to my house after... I don't know, maybe... I guess it's been about a week now. So we had the old flood situation going on from this snowpocalypse in San Antonio-

Vincent Pietrafesa: Snowpocalypse?

Ajay Gupta: ...crosstalk snowpocalypse-

Vincent Pietrafesa: I haven't heard that term.

Ajay Gupta: ...the floors. Well, they're not replaced yet. But it's clean again, after all the water damage so, back at home, and I guess home and office these days.

Vincent Pietrafesa: Well, I'm glad you're back home. And I hope that the floors get repaired, it's no place like home. So it's good to be back. I know you were staying with your in- laws there. And thank goodness that they were able to take you in, but it's just not the same. So I'm glad you're back there. And I'd love to give you a little credit on something. Ajay? Let me crosstalk-

Ajay Gupta: Oh.

Vincent Pietrafesa: ...some credit. Yes. So yesterday, you hosted... Well, you were part of a panel, that I hosted for the Direct Marketing Club of New York, the dmcny. org, great nonprofit organization that I'm a board member of, take a look at it, but Ajay Gupta here the CEO of Stirista, as well as Chad Engelgau, the CEO of Acxiom, great panel, our biggest recharge series, it was about identity, identity graph, identity marketing. You did a fantastic job, sir. You did a great job.

Ajay Gupta: Oh, thank you. You did a terrific job hosting it. And thanks for putting it together in the first place. It was always a pleasure speaking with Chad. And I always learned something new from Chad about... yesterday, the big takeaway was why it's called identity graph. The graph in the identity.

Vincent Pietrafesa: And in those cases me as a moderator I try just to listen. But I know, I have to ask questions and gather the questions from the crowd. But I was just listening. I was learning so much from you. And Chad, great, great CEO, great leader. We'd love to have him on the podcast one day because we have great CEOs. We have great leaders, CMOS VPs. And there's another one today. So I really want to dig into this because, Ajay, this is really the first really, entrepreneur, right? A lot of people have that entrepreneurial spirit entrepreneur, but this gentleman, we're talking to, multiple companies, I would do a nine- minute intro if I had to go through all of the companies that he is a part of, or started or created. Let me get this intro right for the good people listening at The Marketing Stir. Retail Service System, CEO, founder of Rugged Holdings, Rugged Entrepreneur, Rugged American Spirits. Now you're talking my language right there. Rugged Spaces. Love it. Ladies and gentlemen. I say serial entrepreneur, put your hands together... virtual hands, if you will, for Scott Andrew, what's going on Scott?

Scott Andrew: As much as I can fill in a day. But thank you for having me. It's really good to be here.

Vincent Pietrafesa: It's great to have you. What do you think of that introduction? We got most of it right?

Scott Andrew: Oh, it was great. It was great. I was wondering what you were going to say, and I'm a redneck from western North Carolina that grew up in the mountains. So I don't expect for things to be right. And as an entrepreneur, I know they're never going to go the way we plan. But you make them into something great, despite whatever challenges are in front of, you build really good teams, and you did a great job. Very enthusiastic.

Vincent Pietrafesa: Well, we're excited to have you because there is... I want to hear so much more. I love that. Just a redneck from... I didn't put that in the intro, you said that yourself. I just want to let the good people know I did not mention that. But, Scott, I want to learn about yourself first, right? And then talk to us about the companies, yourself. That's the first question, then I'd love to learn more about how this started. People just don't wake up and you're like, I'm going to be an entrepreneur. Right? So tell me a little bit about the current companies under your portfolio there.

Scott Andrew: And it does date back, I grew up in an entrepreneurial household. So I was fortunate in that respect. I had an example of people who would rather see a sermon than hear sermon. And my father was an example of a hard working rugged entrepreneur, that maybe so much so that he limited himself by being as good as he was, as an individual, which I learned a lot about that too. And so I after I got out of school, actually my first business was illegitimate. I was a bootlegger. And it just so happened that I went to college at the time where the drinking age was 18. But it turned to 19 while I was in college, and then it turned to 21, while still in college, but there was an instant demand in a marketplace where people weren't going to be having something taken away from them, they already were used to having. So it was an instant bootlegger opportunity. So my first money making business was a bootlegger. But our second business was a business we started in college called College Life. That was a newspaper in the college market that did pretty well. I knew at a young age, I was unemployable and that I was going to be an entrepreneur. I did work in mergers and acquisitions and corporate finance with... it was Nation's Bank back then, today, it's Bank of America for about four years, little over four years. And then I made a jump into the beverage wholesale business with a small equity position, and helped build a company pretty big there. That was where it really started. And then it's evolved to today, Retail Service Systems. We have holding companies today that target different businesses in different ways. Retail Service Systems was the first one, and we were really trying to disrupt franchising. What we saw in the franchising world was the relationship between franchisor and franchisee is very caustic in most industries. And it's a great industry for fixed business models like Chick- fil- A, they'll probably never change the Chick- fil- A sandwich, they may add a menu item or take away a menu item but it is plug and play. It doesn't need to change. It doesn't have to adapt all that quickly. They shut the inside dining down in their restaurants this year, but they made the drive- thru work. So they did have to pivot. But the model itself will not necessarily need to change that much. What we identified as a lot of industries in the franchising space needed to adapt, they needed to change, they needed to change product lines or marketing methodologies. Because as you guys know, because you're so specialized in the data world and the digital media world, that changes so fast. So it affects every industry. And we saw that the franchise industry didn't have the right community dynamics for the models inside it, it needed to change rapidly and evolve. And we thought we could disrupt that, we have BoxDrop mattress and furniture, we have BioPure services, two totally different industries that needed disrupting in the franchise sense. We're working on a media and advertising one, now the inaudible and our Rugged ETV Network, which is a part of one of our other holding companies. So we have a franchise holding company, the scale will disrupt industries in the franchise space. We have Rugged Holdings. That's a business designed to scale. But scale businesses that aren't intended for franchising, like Rugged American Spirits in Tennessee hills, and more traditional companies, where we work with entrepreneurs, and partner with them to help them scale their company, but it's not intended to term, to a franchise. And then we have a real estate development and construction company that holding company developed property.

Vincent Pietrafesa: And like you said, it's an entrepreneurial spirit there, I want to touch upon, how you knew you were unemployable? Is it just because... beat of your own drum. So talk to me about why early on you were like, you know what I... What did you study in college?

Scott Andrew: Well, I study chemistry the first two years because... and in the book, the first chapter really is fervent work ethic, because I think young people today are often taught, you'll find what you love, and you'll never have to work a day in your life. And that's a bunch of crap. And it is just weird that people would think that way. And I remember at a... I think it was a Thanksgiving dinner, and my grandmother asked me what I wanted to do, because I was getting ready to go to college. I was a senior in high school. And I hadn't really thought about it. But all of a sudden, I said, Well, I think I'm going to be a doctor. I'm good at math and chemistry. I'm going to major in chemistry, I'm going to go to medical school, and I was really just trying to impress everybody at the table, especially my grandmother, and all of a sudden everybody thinks I'm going to be a doctor. So I started out majoring in chemistry and do that for two years, it's hard as heck. I got labs three nights a week. I have got buddies doing in fraternities and having fun and I'm not smart enough to make good grades and be in a fraternity at the same time. So my first two years of college, I had no social life, and I made pretty good grades. But one day I was like, I don't want to be a doctor. I don't want to operate on somebody and they die or their elbows messed up for the rest of their life and I'm majoring in something I don't even really like so, and I made that choice on making my grandmother happier or my family proud. So I switched to business, my junior year. And I found out the classes were a lot easier. I didn't have labs. And the tests were a lot easier to give generic answers to, because you didn't have to come up with some equatable answer. And all of a sudden, I could join a fraternity and have a lot of fun in my last two years of college. I still graduated in four years, but I had a lot more fun the last two years than I had the first two. And I didn't know I wanted to own my own business going in. I worked for four years just to get a high- level view of finance and mergers and acquisitions, in what was one of the biggest banks in North Carolina at the time, but the term to me unemployed was just too creative. And I like to set my own goals and pace. And I can see in the few jobs I had early on, that the pace was too slow for me. And it drives me crazy not to move things at a fast pace.

Vincent Pietrafesa: And before Ajay goes, what fraternity, Scott?

Scott Andrew: I was the SigChi.

Vincent Pietrafesa: Okay, I was a SigEp Sigma Phi Epsilon. We did one podcast where... right Ajay? We were in the same fraternity, but SigChi is great. It's a national fraternity as well, like SigEp. Awesome. Go ahead, Ajay.

Ajay Gupta: Now Vincent asks that to every guest so-

Vincent Pietrafesa: Oh, if they say-

Ajay Gupta: ...crosstalk. He's hoping for a perfect match.

Vincent Pietrafesa: If they say fraternity. If you were a Sigma Phi Epsilon, if I was a SigChi, that's a bond for life right there.

Ajay Gupta: That would be a 10- minute conversation, crosstalk-

Vincent Pietrafesa: 10 minutes. That's it, right?

Ajay Gupta: ...So Scott, how do you manage all of these companies. I just run one company, and it sucks up all of my time. So I'm trying to learn how to manage multiple things myself. So I would love to get to know how you are managing your various positions and holding companies.

Scott Andrew: It's a great question. And it is an evolutionary process. And I spoke about learning lessons from my father. He was an all- American basketball player at Ilan University. And he went to graduate school Chapel Hill and was a graduate assistant basketball coach under the legendary Dean Smith. And then he played Pro Bowl in Italy for a couple of years... my first two years of life, actually. But when he returned those states, he got the sales and ultimately got into a position to own a company, and built it to a pretty big level, still small a business of about 40 employees. But he's so smart. He's on my board today, and one of my best friends and he's more of a small venture capitalist, if you will, because he sold that company years ago. And he's 80 at now, but still sharp as a whip. And gets around good. Even those knees and hips have all been replaced because of basketball. But I learned from several different places a book that I read, that had a chapter about Henry Ford on team building. I was building teams at my college- level of life. And my father was great at building a company, so smart at math. But it was his baby. My sister and I were the only two children in the family. But we knew his business was like the third child, that took a large part of his time he was dedicated to it, and he made it a success. And he had employees be responsible, and I learned to drive a forklift ride around with him when I was seven. I loved working with him and held all kinds of jobs there growing up, to learn the appreciation of work. But it was so much as baby Ajay, he was so committed to it and he made it successful, that he really didn't learn to delegate real responsibility with decision- making power on a high level, to teams and people. He micromanaged a lot of it. And it took so much of his time to micromanage, that that was the main company he was able to build and not early early, not my 20s but in my late 30s and 40s. I had become really good at team building, in such a way where I realized I can hand over... In our companies, we don't only empower people to make mistakes, you'll actually get more trouble if you don't make mistakes, because we don't think you're pushing the envelope or doing enough, than if you do make mistakes. And when people make mistakes in leadership roles in our companies, we found out they'll do about three times as much to make up for the mistake and often create a better, bigger result, from what they learned coming out of the mistake. And we empower them at a level where they run divisions of the company, as if it was a company inside the company, and in almost all our companies. We have an equity- level opportunity for people. So those top three to five percent can rise to the top, and be financially rewarded very well. And if it's not equity in that company, we'll spend companies all from it and put them in that position. And it's not a skill you wake up with one day, it's a skill that evolves, it probably took me 15 years to get good at it.

Ajay Gupta: That's great, that's some good advice, Scott. All of your companies, I'm sure you look at them as your children as well. But is there a favorite child you have, or something you feel particularly passionate about more than others?

Scott Andrew: My wife and I made a promise about 15 years ago, Ajay, that we were going to center our business interests moving forward around businesses that would empower entrepreneurialism in people, and at Retail Service Systems, it has a two- word mission statement, empower entrepreneurs. And we are building up in a house a two- storey building, but when you go under the awning of the building, there's a giant sign. And it says RSS, but in much bigger letters under RSS, it says empowering entrepreneurs. So every day that our customer service and accounting and legal teams, and operation teams go to work there, the first thing they see walking into the building is empowering entrepreneurs. And they have hats that say it, that hang in their office and we constantly remind them of the message. But it's not hard to forget, it's not a five- paragraph mission statement that is supposed to change your life. It's just what we do is empower entrepreneurs. And for Dhapne and I, that is such a fun mission. We've got hundreds of stories, their success stories from from not a nickel in your pocket to now making half a million or more a year. I know you're from India, if you read the book, The Millionaire Next Door, it says foreigners who come to America are 11 times more likely to become millionaires, than native- born Americans, because generally they come seeking a better opportunity, or a better education, a better opportunity. And when you're seeking something that you're hungry for, you're more likely to do something with what's in front of you. So I love empowering entrepreneurs, because it's a constant, creative atmosphere, it's always going to have success stories in it if you're dedicated to doing it, right. So it never gets boring.

Vincent Pietrafesa: And Scott, I want to dig into the-

Scott Andrew: System?

Vincent Pietrafesa: ...Oh, sorry.

Scott Andrew: Vince, I'll answer your question, because I love them all in their own unique way. And they all empower entrepreneurs, but scaling franchises, we get to see hundreds of them. And here at BioPure... where I'm in the BioPure headquarter building right now, one of my friends since the fifth grade, Jim Wilson, he's the CEO BioPure. I hired him away from Eastman Chemical. He is the director of global procurement for a$ 10 billion Fortune 50 company. And I hired him away three years ago, and I said, I'm only going to pay a half what you're making, but you'll have some equity. And in three to five years, if you learn to eat what you kill, you'll be making double what you're making. And more importantly, both your sons will become rugged entrepreneurs in our models, and it'll change their life and your family generationally. And it didn't take five, it only took three. He's done an amazing job with BioPure, one of his sons owns about your franchise, the other one owns a BoxDrop franchise, both of them make six figures, and his whole life has changed dramatically, he has more control of his time. He enjoys what he does. And he's watching his son to start to excel as entrepreneurs. So when you can build stories like that into people's lives, how can your business ever be boring? Because a lot of young people think you... what we said earlier, learn to do, find what you love, and you'll never work a day in your life. That's just baloney. All businesses have hard work in them. And oftentimes, this work that's not fun, that you don't want to do today, but you got to do it. You got to love and be proud of the ultimate result. And our ultimate byproduct is the success of business owners. It thrills me every day. RSS will probably be my favorite but in case the other people hear that, I love those businesses too. RSS is a tall, long- legged, beautiful blonde brunette business and I just have to be proud of her. The other businesses are good too, but they may not be as pretty as her.

Vincent Pietrafesa: I know I were talking about like, I was like right now I do have a favorite child because I have a four- year old and I have a nine- month old. I could just do more with the four- year old so I do, thereby love both. So let's get into that Rugged name. I love that name. So I want to talk about that. And I want to talk about the name behind it. You did touch about it, you said your father was a rugged entrepreneur. And I want to understand, tell me about the meaning behind that. And then I want to talk about the book you wrote, Rugged Entrepreneur, and then we'll... so first tell me about the name.

Scott Andrew: Well, it's a name that I've kind of had, for about 20 years, maybe a little bit more. And I always wanted to write a book. But I was just taking notes. And I was just cataloging stories of millionaires, billionaires, when you're in the bank position I was, literally you're getting to know the story of those business owners who you're helping do mergers and acquisitions. So back in my early 20s, I was cataloging those stories, and I was drawn to books by entrepreneurs. So I was always trying to categorize entrepreneurs. And I created three categories. A specialized entrepreneur, and that's somebody who generally has to have a very specific education and a license and continued education, a lawyer, a doctor, a financial specialist, an accountant, some consulting, an IT specialist, they're all entrepreneurs, and they all have some ruggedness to them. But that's a specialized entrepreneur, who's going to start at least in a certain lane, may or may not get out of that lane. Then you've got what I call.... that's a professional entrepreneur, a specialized professional entrepreneur. And then you've got what we call corporate entrepreneurs. And that's usually somebody who's more targeted for a plug and play fixed- franchise model. They've spent a good part of their career 15, 20, 25 years or more, making good money in a corporate scenario, climbing corporate or certain corporate ladders. And they just decide one day, they want to own their own business, but they really want the security of a structured environment, where they don't have to figure it all out, maybe they're not the most creative, but they plug in and they play well, and they own their job, they should be proud of that, they're still entrepreneurs, but then they don't necessarily have to figure out a lot of things, or be as disruptive and innovative. And so that's what we call a corporate entrepreneur. And then rugged entrepreneurs, the catch all that fits kind of into all the other ones, where it's not as plug and play, the market's always changing. Competition is always coming and going. You got to be able to innovate and disrupt yourself, and your company, every two or three years, or you'll find yourself falling behind us over your competitors, or all of a sudden your industry changes in a year, and you weren't able to change with it. And you might be closing the doors. 50% or more small businesses that start, don't make it past the fifth year. So it's horrible to start a business in. A lot of people think they're rugged for starting a business. But a real rugged entrepreneur, gets way past the five- year mark. Now the business might look totally different year six than it did in year one. Rugged is about being able to deal with all the changes, all the negativity, all of the craziness of the world that's coming, it's going to be chaotic, and you got to learn to organize it and only rugged entrepreneurs figure those things out.

Vincent Pietrafesa: I love that. I love that meaning there. Your book, The Rugged Entrepreneur, which... our listeners, go where you consume books, go to Amazon and purchase it. What made you put all that to pen to paper on that one?

Scott Andrew: The enjoyment I got from studying entrepreneurs, they all have such great stories and lessons. And I think what really happened for me, Vincent was, after college, I read a book about American histor, it was a broad historical book, but it had a section on George Washington, that talked about how dynamic he was as an entrepreneur. And I didn't know that. And he was probably one of the wealthiest people at that time. But he was in agriculture and in tobacco. At 17 he was the surveyor of Culpeper County, and what 17 year old gets to be the surveyor of a major county in America today? And he was a soldier and a horseman. But he became an entrepreneur, because of the death in the family, and he was taken overland and he had helped survey and he became a farmer. And at that time, it was tobacco. But tobacco fell out of favor and he moved to hemp for making roads and timber, for making ships. Started a shipbuilding company and a lumber company. He ultimately moved into grains and then that led him into whiskey, and he was the largest whiskey distiller in America with five pot still system at one time back then, making about 11,000 gallons a year. So he was a very, rugged entrepreneur, and build that real estate empire out to about 18,000 acres. But I learned all that after college, and I was mad because I thought, I took American history in college, and I'm pretty sure I paid attention, and how are dates and battles and president, offered to be king, but I was like... I got passionate about that. I already knew I wanted to be an entrepreneur. But I realized America absolutely is... as bad as some things can be, at times, there's always good, bad going on, but America still is such a special place with free enterprise and capitalism, and definitely under assault. I like to say the word free enterprise, because it sounds better in today's climate, than capitalism, but it really means the same thing. But our culture as challenging as it is, still one of the best places in the world to start and grow a company and build a company. And I saw a void in the higher education system for teaching entrepreneurialism that's led to some partnerships with universities. So just had a deep passion for it. And I thought, if we don't start teaching it and promoting it in America, it could weaken to the point where people don't understand how beautiful it is. And I felt agitated that, I love it that we're a place where foreigners are 11 times more likely to come and become millionaires than native born Americans. But at the same time, that's a tragic shame. Because we should be teaching everybody. That opportunity should be here for people like Ajay, who come from a country like India, that sort of got a very ambitious culture and a very strong family culture. That should always be dynamic. But boy, we're not doing a good job teaching it the people who are born here, grow up in a system, and they don't realize how good their opportunity is compared to what other people were born into around the world.

Vincent Pietrafesa: That's something that they don't teach in college. I mean, I graduated college 20 years ago in business and communications, but nothing about being an entrepreneur. And you're right, that wasn't in my history book either, Scott. I knew about the great general and the sneak attack at night for George Washington, even wooden teeth, right? Doesn't that come up? But nothing about tobacco and especially be a whiskey generator. So that's interesting stuff.

Ajay Gupta: I completely agree with you, Scott. There are opportunities in the U.S. and they could be even less regulations in some aspects, but it's definitely lower barrier to entry to start a business in the U.S. than most places in the world for sure. Scott, we have a crack team of researchers here. And we discovered you may own a Guinness Book of World Record. So tell us a little bit about that.

Scott Andrew: Well, in our businesses, one of the most important concepts is the word community. In the franchise world, we saw franchise owners who did their franchisees almost in a union sense... labor versus management, very authoritarian, do what we say. And those it was caustic. And we believe the franchisee community was the biggest asset in terms of research and development, and in the trench ideas, on a day- in, weekend, month in, month out basis. And so we said, there's a community void, in most franchise places, and we're going to disrupt the franchise world by building community as our best resource, and that those relationships will be dynamic. So we actually have a Chief Community Officer at Retail Service Systems Darren Conrad. And his sole job is to grow the community concept and continuously create things whether they're training, reward trips, national conferences, he does a Rugged Roadtrip every year where he buys a transit van and decks it out for a BoxDrop, but then he drives it around and we'll visit 150 or so locations, over a three- month timeperiod. And do a podcast out of the van, take people to dinner, give away t- shirts, and then at our national conference every year. We give that van away in a qualified drawing, which happened to be tied to that world record event. So, that team created a world record event that we did at TIAA Bank Field. I think on January the fifth this year. It was during our national conference for BoxDrop, where we had a trade show for mattresses and furniture for about 550 people. And we were at the Hyatt downtown Jacksonville but we bust them all to the Jaguars stadium, where the Jaguars play. And we had a team there and we have a new mattress line launching called Sleep2Win. Sleep with a number two and win and they did a mattress stack and they practiced it a few times. It wasn't raining and one windy. So we got very fortunate in that regard. BoxDrop team now owns the tallest mattress stack in the world. And we did it to break and set a new Guinness World Record. But it was a part of that community element, because the whole organization owns that world record now. And it is a world record that we might get... somebody might challenge us and beat it, but then we'll just keep beating it back. So it's one we're going to try to own forever.

Ajay Gupta: Well, I think it's fair to say you're our first guest out of the 60 + we have had, that owns a Guinness Book of World Record. So, there you go.

Vincent Pietrafesa: Nice. A lot of first's, a lot of first's today.

Ajay Gupta: So tell us a little bit about BoxDrop in from what we understand is a high degree of referrals that come in to the business, how is it growing? How many locations do you have?

Scott Andrew: A lot of people like to say they're disruptive. But really what kind of fruit is on the tree. And in the BoxDrop world, you mentioned referrals. So for three straight years now... and we open six to eight new locations a month. It's been one of the fastest growing companies in America on the Inc. 5000 list this year, a fourth year in a row. And we grew 52% last year in a segment of the industry, which is brick- and- mortar not eCommerce, that was down about 15 to 20% last year, we were up 52%. So with no eCommerce, but the referrals for enterprise- level franchises, there's generally about 23% of the new locations or referrals. For BoxDrop, it's been 70 to 72% for three years straight. And it's just astronomical. So I think that's the biggest result of community in our organization. And we have a lot of second generation business owners, where families have multiple franchise locations now. But that referral variable is just phenomenal. And kind of is the fruit on the tree of how disruptive we've been in that industry space. And the fact that in a brick- and- mortar play, we've figured out how to help small local business owners be as or more powerful than the regional, super regional and national players, that have dominated the brick- and- mortar space for about 20 years. But BoxDrop is just a mattress and furniture franchise in the $ 110 billion U. S. home furnishing space. And we call it BoxDrop because a lot of our products either shaped like boxes or a container of products comes in a big box and you open it up and it's full of a bunch of other boxes, and you put stuff together. But we also didn't want to have a name that was normal in industry, because we have a good sense of appreciation for SEO optimization. And if you put the word mattress in it, you're with a million other people. So, when you Googled BoxDrop there wasn't anybody else using it. So we've got to the top of the page pretty quick. And now we're established enough to where it stays that way. So it was just a creative thing using Google and a word that nobody in the industry was using. And fortunately, our mission to empower entrepreneurs has worked in that space, well, in our community concept was disruptive in the franchise furnishing world, which didn't have anything that wasn't one plug and play, to tell us. First year we ended with 17 locations in 2013. Last year, we ended with about 452. And you'd say it's a good business. It's growing fast, with a lot of good coaches and a lot of good experts just focus on helping customers grow their businesses.

Ajay Gupta: And Scott, before we get into some of the personal side, get to know you a little bit better. What was 2020 like for you and your businesses? What was different? What changed for the worse? What change for the better. I would love to understand what 2020 was like for you?

Scott Andrew: Well, one of the reasons I wanted to diversify companies, was there were... franchising was one way to empower entrepreneurs, helping entrepreneurs scale businesses, was another way in a different category. And then real estate's just always an animal that you can do things in, in a good market or a bad market. But it also enabled me to diversify. A lot of people understand stock portfolios, as you diversify your portfolio so you can manage ups and downs better. And we have multiple companies so we can do the same thing. Our media company, the Orient TV network, we didn't lay anybody off. We actually hired a couple of people this past year, because the industry got hit hard. It definitely was down and harder to sell advertising and services. So in that space, that business was off. And we had to invest in it to keep it. It didn't do as well but we didn't lay anybody off. And that company didn't apply for funding or anything. But that was the benefit of having other companies Retail Service Systems and BoxDrop, they did incredibly well, up 52%. So some pivoting is pivoting to play defense a little bit. And hopefully you can grow but maybe you can't, but you can acquire talent. So we took an attitude of, okay, people are going to be down, they're going to be laying people off, they're going to be selling equipment, we're going to invest in that media business, and we're going to acquire some great talent, which we did, and get some equipment at a discount. With BoxDrop, we pivoted real quickly and created an appointment- centric... this back in March, an appointment- centric scenario. And we had our legal team read every state, county and city ordinance or regulation because there was no federal... it was olly, olly oxen free, different counties, in different cities, in different states, at all kinds of regulating changes. We read everyone that came to us and we created what we define each of our locations as essential for the services and the products they were providing. And we only had about 30 locations that have been closed down out of 400 + locations. So in some markets, we were kind of like the Bubba Gump shrimp company, we were the only player in town that was open, and we gain market share like crazy, that still continues today. So we were good at seeing around the corners. We also had BioPure, which is a microbial germ remediation company, that we acquired in October of 18. But I had helped the young men start it about four years earlier. And we were way ahead of our time, but then COVID hit, right when we were getting ready to franchise it. We open 50 franchises last year, very quickly. And it was just in the right place, at the right time. I don't believe in luck. But I do believe in timing. And when you hit timing right... I've seen people not too smart, be good on timing, and make a fortune. I've seen people who are really smart, have terrible timing, and lose a fortune. So timing is a beautiful ally. And for BioPure, we had a specialize electrostatic spraying application scenario that was highly advanced, that allowed you to use chemicals more intelligently and with less volume. And then we had a very good chemical situation with an ingredient that was food- grade safe. But you had hospital- grade disinfecting, but only active for 30 days once you entrapped it in a water molecule. So it's not a product that, a Lysol, or somebody would love to run through a Walmart or a six to 12- month shelf life- span. It was really only being used in water systems and hospitals. But those companies all were ready to pivot our teams because we work with an attitude to innovate and disrupt ourselves every year. Our teams are always ready to pivot when chaos happens. And we actually like chaos, because if you pay attention to chaos, there's usually equal or greater opportunity and chaos than when things are going really good.

Vincent Pietrafesa: No, I agree. And I love the point on timing there. Because we've had a lot of people on this podcast where, some businesses, maybe they were cinemas, they're down, right? But then there are others where they just had a product where you drop... they come they pick up your clothes, they wash them, they bring them back. Okay, that's great. So a lot of places succeeded other companies that worked in digital transformation, really were getting calls a lot to help those companies become more the digital world. And that's why I wanted to ask you, you hit the nail on the head, because you said early on that, for years you were helping franchises pivot and disrupt, and to transform. So I loved hearing that. Scott, we have just a few minutes left. Let's get to know you personally. What do you like to do for fun? And then I have a question about what football team you root for, because we were talking earlier about some of the... your travels. So tell us what you'd like to do for fun.

Scott Andrew: Okay. My wife and I have some property but we've got two big dogs. I love to do anything with Daphne. And we're business partners. We have a metric in our businesses that say in a marriage two plus two equals... or one plus one doesn't equal two, it equals 11, which is five times greater than two. And we just work together so cohesively, and I have a great respect for her, and her for me, to build companies together. But we do love to stream movies in the theater room and where you can just relax and kind of escape. We love to be out on the lake, on a boat. We take time to do that. With our dogs together and walk the dogs, and we love to walk properties and talk about our adventures but really to tell you I'm an entrepreneur- holic and thank god she is to, because building businesses... we've long made enough money to not have monetary goals. We like to help other people hit theirs. But we so love growing companies that it really is our hobby. Now, I don't want to say that like we don't do anything and then lead the football. I learned as I studied the difference between millionaires and billionaires, there were a lot of differences and a million dollars is about an 18- inch stack of$ 100 bills. A billion dollars is about 140 feet higher than the Washington Monument. So there's a big difference between a million and a billion. And I've gotten to meet and study Shad Khan with the Jaguars and be a part of some of their programs. We actually have Donald Dairs workforce, in a training program we have, we've done lots of events in their stadiums, but he's one of the billionaires that I studied. I've been in his suite with him for football games.

Vincent Pietrafesa: Oh, nice.

Scott Andrew: And he's a cool multi billionaire. His family moved to from Pakistan. He was an engineer. I think in Indiana is where he went to school, met his wife there. But he did an internship as an engineer with a company he ultimately bought because he needed more manufacturing. When he created the continuous bumper, with his first company started Flex- N- Gate. He ended up buying the company that he had interned with to have manufacturing capacity. But that was the first company that made him a billionaire. But in 2012, he bought the Jaguars for 7 million. And even though they haven't won the most games are gone, to a Super Bowl, five years later, Forbes valued at two billion, so he created a billion dollar net- worth in two companies, and but that's inaudible but I did notice that... he was one of the ones I studied to notice it a lot of times billionaires... Mark Cuban is a great example, like Shah Khan. A lot of multimillionaires have very expensive hobbies. And that's okay, they earned the money, they deserve it, whether it's yachting, or hunting, or whatever. Billionaires often have a passion that would seem like a hobby, but they turn it into another enterprise. What is a hobby to most people becomes a business to those billionaires, and they end up taking what they know and make it very successful. So Mark Cuban is such a great example because everybody knows he's world- renowned for screaming at referees and being at the games front and center. Passionately being involved so that's a hobby that he made into another business that probably... I don't know the financials there, but I'll bet he doesn't lose money with Mavericks.

Vincent Pietrafesa: No, he definitely doesn't. So I take it, it's the Jaguars and if that's the case, you're going to... next season, you're going to enjoy watching that Trevor Lawrence from the box with the owner.

Scott Andrew: I would say football in general, we've had internship programs at Clemson and had their football players at a store in South Carolina, that my wife actually started years and years ago. So I'm excited for that. Retail Service Systems headquartered in Columbus, our President of BoxDrop Jerry Williams, who was my Chief Operating Officer. And I stepped down as the president, a year and a half ago and he became the president, but his wife was one of only three Brutus Buckeyes. They both went to Ohio State, that were women. And she was the only one who won a national championship against Miami, 10 or so years ago-

Vincent Pietrafesa: Oh crosstalk.

Scott Andrew:, they gave her, her costume, her Brutus costume, that hangs in their entertainment room-

Vincent Pietrafesa: No, that's awesome.

Scott Andrew: ...very passionate Buckeye fans, they both went to Ohio State, but she's one of Shelley Meyers best friends, and they know the Meyers, and they've been each other's houses. So he knew about the potential of that happening before most people, and so we're excited about Urban and Shelley Meyer-

Vincent Pietrafesa: crosstalk.

Scott Andrew: ...being the coach.

Vincent Pietrafesa: And maybe getting Trevor, that's cool. That's cool. Why not-

Scott Andrew: crosstalk.

Vincent Pietrafesa: ...find out.

Scott Andrew: How much we got in common inaudible. And in sports I was a Philip Rivers fan. He's not going to get a Super Bowl, but I generally follow the character of the players, and have some favorite teams. I'm a Jaguars fan because we have a National Training Center in Jacksonville and I'm a fan of Shad Khan so, he's a winner and sooner or later I believe we'll make that program a winner, but I do like the Tennessee Titans too.

Vincent Pietrafesa: I figured I didn't get the Jacksonville reference upfront, at first, but now I do so I understand. But thank you so much, Scott, for sharing some time with us today. We really appreciate it. A lot of first's, great firsts here on tHe Marketing Stir Podcast, we really appreciate it. Go out and purchase The Rugged Entrepreneur. Scott, it's been a pleasure. Thank you so much, ladies and gentlemen. Again, that is Scott Andrew, the founder, chairman of the board, president and CEO of Retail Service Systems, Rugged American Spirits, Rugged Spaces. Ladies and gentlemen, I'm Vincent Pietrafesa. That's Ajay Gupta. This has been another episode of The Marketing Stir. Thanks and have a great day.

Scott Andrew: Thank you.

Speaker 1: Thanks for listening to The Marketing Stir Podcast by Stirista. Please like rate and subscribe. If you're interested in being a guest on the podcast, email us at info @ themarketingstir. com and thanks for listening.


Scott Andrew, CEO of Retail Service Systems and CEO/Founder of Rugged Holdings, shares his less-than-legal beginnings as an entrepreneur, and how realizing early on that being “unemployable” as he describes it, was one of his best assets. He also walks through the particulars of managing several companies at once. Ajay deals with a snowpocalypse, and Vincent learns a new word.

Today's Host

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Vincent Pietrafesa

|Vice President, B2B Products, Stirista
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Ajay Gupta

|Founder & CEO, Stirista

Today's Guests

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Scott Andrew

|CEO of Retail Service Systems, CEO/Founder of Rugged Holdings
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