What we talked about
Brent Hagan is the Chief Supply Chain Officer at Lob, the direct mail automation platform whose tech-enabled network delivers hundreds of millions of personalized mailpieces every year at 99% on-time reliability. He built that logistics engine from the ground up using entirely third-party manufacturing and fulfillment, with no fixed manufacturing cost, and now uses AI to help orchestrate critical decisions. He previously led supply chain at scale across Amazon and Deliverr (acquired by Shopify).
Show notes
Brent Hagan built Lob’s physical supply chain from the ground up using entirely third-party manufacturing and fulfillment, turning a 250-year-old industry with almost no innovation into a tech-enabled network that mails hundreds of millions of personalized pieces a year at 99% on-time reliability. His path from the factory floor to the C-suite shaped a consistent operating belief: the best-laid plans on paper rarely survive contact with reality, so you build credibility by understanding the constraints the people doing the work actually face.
What we covered
- A Technical Account Manager-style operator at heart, Hagan traces his foundation to manufacturing and operations engineering, and to watching his father run shop floors. That hands-on time taught him to respect constraints, build credibility by doing the work himself, and treat the person on the floor and the person in the tie as equally valuable sources of insight.
- As a young plant manager, his predecessor approved a six-week vacation for his only materials planner. After a temp replacement failed, Hagan took over the entire role and figured out how to do it in two hours a day, rebuilding the system with a FIFO and Kanban setup that earned him lasting credibility with the team.
- He gives frontline leaders real autonomy under a simple recurring cadence, what went right, what went wrong, what did we learn, tied back to KPIs and business outcomes, so ownership and accountability sit with the people closest to the work.
- On the unglamorous economics of operations, he breaks down the real cost of lean rituals and gemba walks against the improvements they unlock, comparing it to no-meeting days for engineers, and why protecting a team’s focus has to be measured against injuries reduced and productivity gained.
- On acquisitions, the integrate-or-operate-independently decision can’t have a middle ground. He shares a deal where the acquirer insisted “we’re going to do it this way because we’re buying you,” and why that destroys the very value an acquisition is meant to capture.
- He uses AI as a context-rich thinking partner, loading documents into ChatGPT to poke holes in his own logic and organize his thinking, while being deliberate about not letting it become a crutch. At Lob, AI sits in daily decision-making, routing, batching, and forecasting, with the goal of increasing throughput rather than replacing his team.
- He closes on the hardest problems he solved at Deliverr and Amazon scale, building the plane while it’s already taken off, and on Lab Logistics, Lob’s new third-party logistics network and revenue stream, which grew from an “ignorant” question about why their logistics network wasn’t built like their manufacturing network.
About Brent
Brent Hagan is the Chief Supply Chain Officer at Lob, where he leads logistics, manufacturing, and operations behind the direct mail automation platform. He has led supply chain at scale across Amazon and Deliverr (acquired by Shopify), and specializes in operations strategy, lean, large-scale supply chain leadership, and M&A integration.
- LinkedIn: https://www.linkedin.com/in/brent-hagan/
- Website: https://www.lob.com
Episode 153 of the PreVetted Podcast.
Full transcript
[00:00] Welcome back to the pre-vetted podcast where we spotlight extraordinary people and remarkable talent reshaping our world. Today we are joined by Brent Hagen, his chief supply change officer at LOB where he leads the logistics, manufacturing and operations behind the platform that has powered billions of personalized direct mail pieces. Brent has led supply change at scale across Amazon, the liver, which was acquired by Shopify, and now LOB where he built a tech-enabled logistics network from the ground up.
[00:40] Brent, welcome to the show. Thanks for having me, I really appreciate it. I’m honored to have you here today. For people meeting you for the first time, can you tell us a little bit more about what you’re doing? LOB is a direct mail automation platform and my team operates behind the scene to create a seamless experience for the customers. So from after they’ve built their creative for whatever campaign it is that they want to do, that could be your W2, that could be a new Black Friday sale that’s coming through and everything in between.
[01:15] We’ve built manufacturing fulfillment logistics network that supports all of that. With AI, the hot phrase out there embedded in between helping us make critical decisions. I think the most interesting part about it is that all of this is operated in a third-party manner. So we have third-party manufacturing and logistics embedded throughout.
[01:37] So we have no inherent fixed cost, capital manufacturing costs. It’s a very unique problematic because you’re dealing with a lot of physical mail. Yes, we do hundreds of millions of mail pieces every single year. And we do it quite reliably, 99% on time delivery, which is something we’re really proud of. With such a volume, a single mistake can multiply so fast. I can, yeah, absolutely, especially when you begin to look at, like we just got out of Q1 and everyone knows early Q1 is tax filing season.
[02:17] You know, in April 15th was just here for all of your US listeners. And so getting those in the mailbox on time, there’s federal guidelines that state, how long companies have to do that. And so our backs are really against the wall to make sure that even when problems go wrong, that they’re solved in a really timely manner. Right, right. And they had a friend that used to work on a tire factory, right?
[02:40] And the process to cure the tire, right, was not visible immediately. But then when they do quality checks, they had batches that were, they could not sell them. They could not destroy them or that required in another operation. So he had warehouses full and full of tires, right? Because he couldn’t have them on the factory as well. So he was managing that and he would end up like renting warehouses in the area just to hide the tires, right? So that’s where I learned that automation is great, but a single mistake and multiply so big, right?
[03:17] Yeah, absolutely. I actually, I saw a video the other day and this guy goes into, this podcaster goes into like old abandoned buildings and areas and documents them. And one of the ones that he started to do was there’s a number of resorts around Disney World in Orlando that have completely aged out. And a lot of it came as a result of the closest properties to Disney for a really long time weren’t owned by Disney. They were managed by somebody else.
[03:48] And then Disney said, like, why don’t we just start building our own resorts that are right next to our properties and managing those. And so these properties, like the ones the guy was visiting, they couldn’t obviously keep up with creating the same experience that Disney could. So eventually they went out of business. And so this guy was touring around this place that’s been closed for 30 years or something like that. Wow. Inside of the large conference center, which obviously there was animals in there. There was all kinds of trash and some people obviously had started to kind of live in there at times too.
[04:24] But one thing that was super interesting based on what you were saying, somebody had decided to take all their used tires from their like repair site or whatever. And they started dumping all the, there was thousands and thousands of used tires dumped inside of this old conference center. And so I had not thought about that until you literally just brought it up and I’m like, what in the world? But it’s, yeah, it’s such an interesting problem. Like those do, they have to go somewhere.
[04:51] Right. Right. I mean, for me reminds me this, this, this movie from Disney in the forest, Fantasia, where Mickey Mouse is slashing, you know, the, the brooms, right? And, you know, more and more keep coming up. Right. I felt that, you know, quality check issue on, on an automated process can create that chaos. Absolutely. That’s right. So, so you started in manufacturing and operation engineering and work your way to CISWIT, right?
[05:26] Yeah, that’s, that’s absolutely right. What did that hands on foundation give you that you still rely on today? I think it’s, it’s an appreciation for reality. You know, you, I think you pretty quickly learned that the, the best laid plans on, on paper don’t, don’t always materialize into, into reality. It also gave me an appreciation for understanding constraints and respecting the, the work that, that people on the, on the floor do as well as the, the work that is expected of your frontline leaders on the, on the floor. You know, the, the problems that we often ask them to solve a lot of times, those decisions aren’t being made by people who understand the, the actual constraints that, that can happen.
[06:08] And so that’s, that’s really impacted the entire way that I think about how do you build action plans? How do you build leader standard work? And how do you even execute a strategy to, to deliver on the, the outcomes that business wants to generate? We, we have to have every level, the organization involved in that to understand how they, how they influence it. You know, that, that all, it actually goes even before that when I was a kid growing up, my, my dad ran manufacturing companies my entire life.
[06:36] And so he actually started as a tool and die maker working in a machine shop. And then by the time he retired, you know, he was VP of engineering for a billion dollar tier one automotive supplier. And so going to work with him on like Saturdays and seeing him walk around the shop floor, which, which was kind of interesting in and of itself, you know, like a nine year old in a manufacturing site, walking around 2000 degree molten magnesium and aluminum while my dad, you know, was smoking cigarettes, walking down the aisle, like none of which would be allowed in today’s, you know, in today’s work cultures.
[07:15] But it was always really important to him to manage the same guy on the shop floor as he does the same guy and the, you know, the proverbial net tie and treat them the same way and value their, their insights equally. And so I’ve kind of really carried all that forward with me. That’s amazing. Yeah. I mean, now that would not be allowed, but it gives you such a unique experience, right? Yeah.
[07:39] The thing I’ve been learning about is this idea of, you know, you, you know what entails on every, most of the tasks, you know, on the operation. So when you’re delegating, you’re delegating with that context and that knowledge, right? Yeah, it’s so valuable doing it that way for sure. Right. Right. And what you’re asking the people to do is something that you’ve already done. Right. So that gives you more trust with your team as well. Right. Yeah.
[08:10] You definitely gained some credibility that way when you can say, and this, this actually goes back to my dad as well. I can remember when he got his first like executive job and he started wearing dress pants and stuff to work every day. We’re sitting there at dinner and he was, he was telling me that his boss, who was actually the new CEO of the company at the time, my dad had moved a maintenance guy out of the way during a plant tour on a machine that was broken. And he started fixing it. And the CEO was like, you can’t do that anymore, man. He’s like, you have to teach them how to do it and how to, how to think like you.
[08:45] And again, like that’s, it’s a lesson that I take forward. One of the pieces I talked to my team about pretty frequently is that I think the best and the worst thing that could happen is that I have to do their job for a day or a week or something like that. Like they’re going to get, I’m going to get a sense of what they go through. And I think that they’re going to like that, that I have to kind of go through some of the pains that they do. It’s also one of the worst things that can probably happen to both of us because I’m going to get really into it. I’m probably going to leave there for an appreciation for my employee for sure, but, but also I’m probably going to want to change some of the stuff they do and how they do it, which is going to be going to be frustrating for them.
[09:28] But we each get to learn as a result of it. One of the key steps that I’ve started doing when I start hiring is pair programming. This is for hiring software engineers, right? And the intention is to simulate as close as possible what it’s working with that person every single day, right? In a, you know, in a small, you know, hour to hour session, right?
[09:48] Sure. One of the things, you know, that I found out is people, I did this like a pairing session for a day, right? Where they come to the office, we work together for a day. I had a candidate who will look at the clock every single, you know, 50 minutes to leave, right? And, you know, 10 minutes to leave, right? And I was more focused on, let’s finish, you know, the task at hand, right? We’re so close. And when you see those attitudes, you start realizing, you know, on those little details, you start realizing who is a good worker that is going to work hard and who is not, right? Oh, absolutely.
[10:27] Yeah. And the same thing happens, right? Oh, go ahead. No, no, please, please finish. The same thing happens on manufacturing. You know, like, how do you get innovation bottom up, right? First, you need to get people that are curious to do things better. And then they need to have, you need to force to the environment. So they are comfortable speaking up. Absolutely. Yeah. And you have to, that goes back to a piece that you were talking about with credibility as well, like building that trust and credibility is critical in order to move the business forward, because people are going to feel really comfortable speaking up. But I think of, I think of my first plant manager job.
[11:07] I was 27, 28, which was, you know, pretty, pretty young to be a plant manager and have my own site. My predecessor gave me a departing gift, which was that he approved a six week vacation for my materials planner to go to Guatemala from Thanksgiving until after New Year’s and I found out about it like a few months into into my brand new job. And so she’s telling me about this, and I’m like, okay, well, we’re going to need to hire, like, a temp to come in and learn your role and do these things, which we did.
[11:45] And he ended up being absolutely awful. I mean, he was so bad. And so I was like, okay, I was like, well, I’m going like, I didn’t, it was a really small site, like we were like 100 people, you know, you just, you just don’t have redundant resources that can just, you know, pick up the slack like that and, and a site that small. And so I was like, okay, I’m, I’m going to have to figure out how to do this. So before I fired the temp, I was like, well, let me work with you, you know, and learn some of this.
[12:13] Maybe I can take some of it off. And so two, three weeks in, I let, let him go. And I just, I took over the entire role. But I had to figure out how to do it in like two hours a day, right? Because it wasn’t, it’s not like I was sitting on, on all this extra time. And so by the time she got back, I figured out how to do her entire job and two hours a day. And she came back and I had all these new cubbies that I’d set up, and I’d set up a FIFO system, and as well as all of that was, was pulled with with Kanban cards from, from the floor. And she’s like, how’d everything go? And I was like, great, we have an entire new system that you get to learn.
[12:52] I was like, I’m really excited that, that you’re back. And it just like blew up her entire world. But she really liked it, you know, afterwards. And obviously, I gained a lot of credibility with, with her as well as the team of like, I totally understood our, our material flow coming out of that. So it was a life lesson and work, work lesson for me as well. But even with, with teams of, of any size, you know, the, the piece that, that I want all of my teams to be able to do is have reconciliation points within, within their work to talk about, what are we doing really well? What’s, what’s going wrong within our work? And what do we learn from, from both of those, right? And how do we get better as a result?
[13:33] And I want them to, to be able to clearly articulate that, but also tie it back to our KPIs and the business outcomes that, that we want to, that. I think when, when we’re able to do that, they gives them a piece of ownership and what we’re trying to accomplish, right? Like, and they can feel like they’re a part of the solution because they are, they’re a critical piece to, to what we’re trying to do as, as a business. And it also gives them accountability towards improving the business and, and executing their, their job really well. Right. And so like that, that becomes kind of a, kind of a full circle solve for, for the company.
[14:13] Wow, that’s amazing. I started Taylor and Fayol that they started the specialization of manufacturing of, of metallic pins, right? Right, right during the industrial revolution, right? And how specialization was, was the way to improve manufacturing up to a point where the repeated tasks was too boring for the human, you know, quality went down, right? But, you know, a lot of the concepts still remain, right? Anyway, I think that being able to foster that environment, build authority and trust with your team, right?
[14:48] It’s a different way, dynamic to build authority with a technical team than it is with an executive team, right? They have different set of values, if you like, right? Oh, yeah, so absolutely. Yeah. And from that being able to give them the environment so they can foster. And the way that I see it is that the manager should encourage the team to become better than, than, than they were as individual contributors. Oh, absolutely. Yeah. And, and some of it, you know, people, people talk about, like, servant leadership or autocratic or democratic and, and what all that looks like. And I’ve never been one to want to, like, choose and fit myself into a single, a single bucket.
[15:36] The piece that is important for me is I want my teams. And this is, this is true when I had frontline leaders reporting to me. Like, I want them to feel autonomy to, like, be themselves and manage their teams the best way that they see fit. But we’re going to need to do that under some really basic principles, you know, and so, and that goes back to what I was saying.
[15:59] Like, what went right? What went wrong? What did we learn from, from both of those? And we’re going to do that on a daily, weekly, monthly cadence. And we’re going to continue to get better as a business, right? And as long as you can tie your outcomes or your actions to the outcomes we want to generate, I really care what you work on, right? Like, I might influence of like, hey, like, we’ve had, we noticed that we’ve had these quality escalations lately, or we’ve had, you know, back before we managed third parties, like, we had these safety incidences. Like, what are we doing here? Like, we have to solve those and guide them in some of those key areas.
[16:36] But how they want to solve those and getting their teams behind them, like, I want them to have that autonomy to be able to do that. Right. Right. I mean, my, my first for as a manager was occupancy, you know, 100% occupancy of workload, then, you know, we’re optimizing, but then, yeah, I’m not living room for optimization for, you know, people to be more creative, right? So, you know, I, it was this year’s old when I realized that, you know, it’s better to have some, you know, some occupancy available so people can, can, can do, you know, rest a little bit or can become creative. It’s, it’s a process that needs to happen naturally.
[17:22] It is. Yeah, there’s, well, there’s a piece that comes up. So a lot of times when you see, especially in manufacturing and fulfillment companies that are rolling out their first, like, lean initiatives. So a lot of the jump to gimba and daily gimba, right? And doing floor walks with visual, visual board that show data trends and, and that sort of thing. And the topic that always comes up 100% of the time when you’re rolling this out for the first time is how do you make up for the downtime that that’s going to create.
[17:56] And everyone off the floor to be able to do these things morning stretches are the is the same way. I like companies that dedicate 10 minutes of morning to morning stretches like that’s all indirect labor time that that you have to have to pay for. So, are the, are the improvements that you’re seeing as a business, paying for that time. And people have a really hard time at first making that leap from A to B, right? Like, we weren’t doing it. Now we’re going to do it because they’re saying, I automatically am losing 10 minutes of productivity in my first hour every single day, right? Or I’m losing 15 minutes in my third hour every single day because I’m doing gimba.
[18:41] Right. And so now I now have 25 minutes of productivity on an on an eight hour shift that I have to that I have to make up for. And so got to be able to measure that and show them like, well, you’ve had a reduction in your injuries. You’ve had an increase in your productivity. It’s the same with you and the concept that that you’re taking. You know, one of the things that you see with engineering teams all the time. A lot with software engineering teams are no meeting Wednesdays. So they can just put their headphones on, put their head down and encode right with the ideas like they have all the context that they need all the context that they need to be able to thrive
[19:19] and just just do their work and are they going to gain value gain value from that. So I think it’s all the same concept. Yeah. And I, the first time I thought about this type of things, I did the math of, you know, how much we’re paying to everybody, how much does this one hour meeting is going to cost the company, right? So you have five people, 10 people, you know, and it’s scary at first because those numbers go go high very quickly.
[19:45] Oh, yeah. Yeah, they do. Yeah. And when you cannot measure the ROI exactly, you know, you start getting nervous, right? That’s a manager. But the benefits are there, right? It’s the idea of sharpening the axe, right? Allows you to be more productive throughout the days, right? And what you’re talking about interruptions? Yeah, I had my experience myself that because going from an individual contributor to managing a team, now I have more and more interruptions. So I fear out that I should be protecting my team for from interruptions so they can focus on building. And it is what you’re talking about.
[20:19] I think that the difference between manufacturing and software engineers is that in software engineers, you don’t see the bodies. You don’t see the products that, you know, failed for whatever reason or the rework, right? For sure. So I wanted to talk about kind of changing topics. When companies acquire other companies, culture, faith, and technology, integration often get underestimated, right? What have you learned about making acquisitions actually work? Well, there’s definitely a few things. I think first, like you have to decide really early on, are we going to integrate this business or are we going to operate it independently?
[20:58] Because that’s going to change a lot of things. And there can’t be a middle ground either, right? Like what systems are we going to force on the acquiring company? Do they have systems that we’re going to want to integrate into? And what does that look like? Are we shuttering all the buildings and, you know, moving the people somewhere? Like, what are those? What are those things? And all that comes down to culture, for sure, and the impact that that’s going to have on the business.
[21:31] And I think that there has to be really clear direction on which way you’re going to take that culture. And if the business is operating independently, maybe it’s not as serious of an issue as it would be if you’re fully integrating it into, you know, kind of your umbrella company. But I think anywhere between like leaving questions around like, well, what’s going to happen to the business? Are we going to operate independently or even do full integration? Like that causes concern for people. And it’s already a scary time. And so when that happens, like productivity is just going to nosedive like automatically because people are going to people are going to be distracted.
[22:11] So being able to provide that clarity as quickly and as clearly as possible has always been really, really important to me. Right. Right. I think it’s one of the reasons a company is acquired is because they have that culture, right? But in the process management cannot forget about that. And they want to impose one culture into another company. And that could be a recipe for disaster.
[22:37] Oh, totally. Yeah. And it’s not, it’s not a copy paste job. You know, it doesn’t, it doesn’t work that way. Like each company, even if a company is being acquired, right? Like if they’re being acquired because they’re cash constrained and they’re going through difficult financial times or, you know, they’re being offloaded by private equity. Or because they’re subject matter experts in the space, right? And a larger company wants to, wants to buy this really great tangential thing to their, to their overall business. Either one of those scenarios, you have a built in culture and operating system that people have really put a lot of time and effort to.
[23:15] And they’re going to have a certain affinity for operating that way. And whether you’re requiring that, for whatever reason, you’re acquiring the company. Like that has to be appreciated and respected and understand like, okay, how do we get them to operate the way that we want to that respects some of the cultural real differences. I’ve been a part of some really good ones and I’ve been a part of some, some really, really bad ones. I was a part of an acquisition one time where the company flat out said in our first integration meeting was that, well, we’re going to do it this way.
[23:48] And the question was, well, why, why are we doing it that way? And it was, it was their way. We’re going to do it this way. And, and I asked, I was like, why, and, and they said, well, because we’re buying you. And I was like, wow, I was like, that’s really like, so that doesn’t feel good at all. But too, like you’re actually you’re buying us because we’re the best at what we do. And you’re not, right? Like you could, you tried to build it your way and you couldn’t. So you went and bought us as a, as a shortcut. So why would we adopt your way that didn’t work?
[24:21] And it was, it was just dead silent. It is completely dead silent. I don’t understand. Like what? Why are we going backwards? And so that was an example of where the, the culture was, was pretty challenged. Right. Right. What I’ve seen happening in a lot of organizations is that the bigger the organization, the more crystallized structure becomes. Right. And we’re doing things this way because we’re doing things this way. We haven’t like thought about why we’re doing it this way. Right. And, you know, a few times they’re bad actors, but most of the time is good actors that basically get in that comfort zone. Right.
[24:55] So when an organization buys another organization, they have the opportunity to kind of reshuffle that, break up those, those current structures and allow the value of the organization and culture that is coming in to, to be integrated. Right. And I think that, that way it’s a benefit for both. Yeah. Totally. I absolutely agree. I’ve done the other way around as well. I mean, I, I’ve done culture isolation where we build around culture now on team. And because the team is in Mexico and the rest of the team is in the US, we’re able to kind of like, like the Phoenix, you know, rebuild our culture from within. Right.
[25:34] So we were a little isolated. So we’re able to build a better culture that then eventually over, you know, went towards towards the, the other team. They were like, Oh, that’s interesting what you guys are doing. We want to copy it and take it to our teams. Right. So, you know, I found, I found that very interesting. Yeah.
[25:53] I do too. And the way in which I think about that, and I know you and I touched on this, you know, briefly in our, our pre meeting about when I was doing due diligence on a company in Mexico is going to be basically an Aqua hire scenario for, for us and hiring an engineering team based out of Tijuana. And a lot of that comes down to trusting clarity for me. You know, when we talk about clarity, talk about like explaining the why. You know, and so the scenarios of not like, well, you’re going to do it this way because that’s the way that that we do it. But why do we do it this way?
[26:26] Right. Like we’ve built these processes to deliver on this result. And let’s explain like what that result is, why it’s important to the business and how our decisions directly impact that. When you can do that and you can apply that sort of charity, that sort of clarity rings trust with it. Like these guys, you know, and also listen to them around like why they like their processes and maybe there is a middle ground to be had there. But either way, like taking the time to have those those clarifying discussions builds so much trust and obviously the large impactful business outcomes that come with it. Right. I do the same when I when I do pair pairing or when I hire somebody or just when I
[27:10] review some some other people’s work, I ask why, you know, why, why this, why this, why this, you know, and sometimes I do the three wise, the way of the why, right. And what I what I noticed very quickly, you can notice when it’s a shallow boundary, right. Well, because I’ve been told to write that, you know, yeah. Yeah. On my practices as a software engineer, I took me a while to get into this, but I got to the point of understanding what is the value for the user, you know, we’re building a feature.
[27:44] Okay. And the product owners providing me the requirements. That’s great. But why, what is the most important value for the user and put a priority of values. Right. I can not only make sure that the expected behavior works out as it should, but also I can write automated tests to make sure that it works. Right. So, if you go to the ATM, you want cash, right, you know, one of the operations, right. But you want cash in hand, right. It doesn’t matter if the screen has some, you know, fading colors. It doesn’t matter if a light is not working.
[28:19] Cash in hand is the most important thing. Right. So understanding that allows you to automate, build automated tests to make sure that that always happened. Right. And then everything else becomes secondary. Right. And it’s basically getting to a point where I could understand the impact, you know, of the product to the user rather than just I build this because that’s the requirement. Yeah. For sure. So what drew you to love and what did you take? What did it take to build a logistics network inside a sales company?
[28:50] That’s really a good question. I was actually on a sabbatical when I got called by the recruiter for lab and it was someone that I’d known and talked to in a few different times and he was like, oh, I think you’re really going to like this. I was like, well, you know, I’m not, I’m not really exploring yet. Like I’m enjoying time with my family, my wife and kids. And he’s like, no, he’s like, you need to listen to this one. I was like, well, what do they do? And he’s like, they do direct mail.
[29:20] I’m like, what does that mean? And he was like, he’s like, they, he’s like, they make and send the mail. I’m like, like, the mailbox mail. And he’s like, yeah, I’m like, why would that be interesting to me? And he’s like, you need to, he’s like, you need to just meet these guys. He’s like, I think he’ll be blown away. And so I met the guy who’s now our CEO, Ryan Farrier, who’s been my boss the entire time and was just blown away by where the company was some of their major pain points and who, you know, he thought they could be in where he thought I could add value in that. And there was just this, this really interesting scenario where 100% lab historically wanted to be focused on the front end digital orchestration of mail.
[30:01] You know, and that’s where we gained our name. You know, it’s the original API in direct mail. It’s still the best API in direct mail. But where we struggled was on the back end, you know, with really building the physical supply chain that that supported it. We were dealing with significant cost proliferation, quality issues, and all the things that go with sort of some of the rampant scale that they had, that they had seen and add in, you know, kind of a startup environment, if you will, on, on top of that. And so all these, all these struggles were there.
[30:32] And so that was something where it was like, I just love doing that stuff. Like those are things. Those are problems that I love fixing. And one thing that I really hadn’t got a chance to do was, which very people get the opportunity is the USPS itself is 250 years old, 251 years old. I think Benjamin Franklin was the original postmaster general. And he was named postmaster general in like 1775. Right. So like, this is a very old industry.
[31:04] And our largest competitor in the space is 150 years old. You know, and so our ability to take the digital infrastructure that we had already created and pair that into a physical network that has really remained the same for decades. For for the most part, there’s been very limited innovation, especially in the middle mile transportation piece related to the USPS and in a really long time. Like that was something that was like, wow, like, that’s a lot of fun, you know, and so, especially leaving e-commerce, you know, where I, where I came from, which has rampant innovation, you know, but it’s really only like Amazon was founded in what 1996 something like that.
[31:51] So it’s a 30 year old company 95 somewhere around there. So it’s a 30 year old company and it’s the best and the brightest and everyone’s tried to kind of keep up with them, which means like rampant iterations of innovation. That’s just not the case here. You know, and so what can we build or what have we built that’s truly defensible and creates a large moat for us and what can we add to that in terms of the incremental offerings. Like, so all of that came came up in my mind. Like when I was evaluating like, do I really want to move into into direct mail?
[32:25] Very interesting. The issue with a company that’s 150 years old is that the level of innovation is very minimal, right? And you come in from outside the industry, you can ask questions and get to non traditional solutions that somebody that has been in the industry forever could not figure out, right? So you can basically reshuffle the whole board for sure. Yeah, we’re actually we’re doing that right now.
[32:52] So the way lab has been built on the manufacturing side is we leverage third party manufacturing, but we actually own patents on technology that takes these regionally based print manufacturers and their manufacturing permutations and the way in which we route material to them or our demand to them. And so we were able to treat that manufacturing network as if it’s, you know, one completely integrated entity versus a bunch of third party manufacturers who otherwise have nothing to do with each other. And one of the things that we did when I got here was I wanted to start removing some of their responsibility and go back to basic principles of why do we operate with third party manufacturers and a lot of it has to do with the total scale and the geographical
[33:38] and geographical disbursement, but ultimately comes down to a function of fixed cost. We don’t really today want to own those fixed assets and leverage our cash to buy them versus going to print manufacturers who are very good at what they do, which is manufacturing the mail and having them do it for us. So I wanted to start taking all of their activities that didn’t have to do with the actual manufacturing of the product and say, like, we’re going to take those over.
[34:05] And so a lot of that included beginning to source our own procurement paper envelopes like that, that sort of thing on our own behalf. So every site was using the same stuff. And obviously there’s there’s cost benefits that they go to the economies of scale that that lab operates with at, which is larger than most of the printers that are in our network. And so we’re much larger than than each one of them. But then as well as beginning to look at middle mile logistics, especially middle mile sortation.
[34:35] And so I had asked someone on my team, when we were looking at that, I was like, you know, we go to really like two, three partners across all of our middle mile needs, commingling, dropship, all of our material movements. And why is that? Like, why don’t we, why isn’t our network built the same way our logistics network as our manufacturing network, right? Like leverage, regionals, some mob and mom and pops, you know, some multi region companies and combined all those together. And the answer I got back was like, well, that would be really hard. You can’t do that. Like the contract structure won’t let you do it.
[35:12] And you have to combine their technologies and integrate them together on a common system, which we don’t have. Like, well, let’s just go do that. Like, why not? You know, and so the one Goliath in that space, they’re the only one with true national representation. They’ve got a ton of capacity, but you really pay for the convenience of working with them, because they’re the only ones that have it. And so I’m like, well, so we begin building our own logistics API, and we begin setting up regional manufacturing, our regional logistics contracts.
[35:47] And then we decide which player needs to be involved at one time. And we orchestrate that between our customers, actual physical delivery needs, the manufacturer that we’re choosing and the region that we’re choosing in. And who needs to be present in the middle to connect all of that to the USPS to meet that final mile that I was just talking to you about. And it’s worked. And it’s worked really great. And to the point where we’ve begun selling it as a new revenue stream for us called lab logistics.
[36:17] And the idea to your point came from someone who was just asking a really ignorant question, because I didn’t know how the industry worked. I’m like, well, it feels like we could solve all this. It took us two years to solve all of it. But we did solve it. And it’s something that we’re really excited about. That’s amazing. I mean, yes, it’s what I was talking about. I mean, you come with curiosity asking questions that nobody asked anymore, because this is how we do things, right? Yeah, that was the exact answer I got back. Well, we don’t do it that way because you can’t. I was like, well, why can’t we?
[36:49] I don’t understand. Why can’t we? We literally already did it over here. Why can’t we do it the same way? Right. Right. And in those questions, when you figure out those things, that’s when you can get the innovation and have the most significant impact on both the organization and the industry, right? Absolutely. Yeah, for sure. That’s amazing. And when we were talking about it, you can offer that platform to other people and get another revenue stream that proves that there’s value into that platform, right? But there’s traction into it. Yeah, for sure. Yeah. We’ve started booking revenue. We’ve got a handful of customers already. We have an incredibly attractive pipeline that’s actually a larger pipeline than our traditional lab business.
[37:33] And we’ve done all of this. We started building it about, it’ll be two years in June, and we started selling it in the last eight months. So we’ve done all that in eight months, which is, which is just unbelievable. Right. That’s amazing. And it’s basically entrepreneurship, right? Just a technical word, but it’s basically applying the same experience you had building other companies to just one particular process within a larger organization, right? Yeah. Yeah. And it’s true zero to one, for sure. It’s a brand new customer base. We obviously, we have the backing of lab as a business, but it’s true zero to one, but you’re absolutely right.
[38:11] It’s kind of called a skunk works project and in a larger company. That’s amazing. And the other thing that happened with that is that you can see the impact on the business directly. So I was wondering how have you been leveraging AI into the manufacturing process? Are you using it to analyze data? Are you using it to automate processes? Yeah, good question. It’s actually, it’s one I’ve, I’ve, I meet with, with my team, like my four drug reports every Monday and Friday, kind of no matter what. And we’ve got a pretty static agenda.
[38:47] And then we just kind of go through like ideation, you know, what’s everybody working on, but what do they want to work on and what are things that they’re thinking about and how did they think about it. And I brought this up to them of where like, I feel like we’ve grown stale a little bit on how we solve problems and look at patterns within the business to generate actions. And I started asking them like, where can we introduce AI to start like poking holes to your point? Like, even if AI gives a silly response back, like one that makes us think about something because we’re like, well, that doesn’t make sense.
[39:21] Well, why doesn’t it make sense? You don’t really start kind of breaking our own logic. Right now, we’re traditionally using AI on daily decision making, routing, batching, forecasting. I want to start using it more to identify any efficiencies. We have quality measures across every manufacturing permutation as well as from site to site. And I want to start looking at corollaries there. And there’s no reason that we shouldn’t be using AI tools to start breaking, you know, some of that logic and identifying those trends, like all that data is already sitting in those dashboards, like, let’s have them do that.
[39:59] Additionally, I want, there’s some good tools out there that can integrate into all of our workflows, like our Slack workflow, Jira, Asana, and all of that. And it can pull all of that into single source dashboards. So you gain some efficiency right there, but as well as it starts looking at patterns of things that are coming up. And so those are the primary use cases. You know, there aren’t scenarios with my team where AI is completely supplementing what anyone on my team does.
[40:30] What I want it to do is increase their total throughput and help us get to a better state faster. Very interesting. The, I’m writing a book about software engineering, management, software engineering teams, culture. And one of the things that I argue is that context, it’s the most important competitive advantage for a team, having a long year senior team that is committed to the work, because those are the people that are going to be able to leverage agents much more than somebody knew that comes to the team, right? Because people that know about the business, know about the business rules, know about where are the bottlenecks or the issues, right?
[41:13] And can guide the agents to be better on automating the process, right? Absolutely. Yeah, for sure. And I put, I put all of my papers and stuff that we write and we’re a document heavy company, for sure, just how we operate. And I put all of them into my chat GPT conversation, so it can load all of them in there, right? And I’ll ask you questions like, Hey, I’m thinking about doing this, like break this assumption.
[41:46] Help me add context here. And, you know, there are days where I just want to get a thought out and I need to put together a one pager or a two pager about this thought. And so I’ll just spit into chat GPT of like, Hey, these are all the things that I’m thinking about. You know, help me organize these thoughts. And what should I do next? You know, and the prompts and the way it makes me begin to think about that next step. Like, it’s so beneficial.
[42:13] I don’t want it to become a crutch, you know, like I want to be able to free think on my own. But it, it’s, it’s like you’re talking to a friend who has all of the context in the world about you and your business, you know what I mean? And it’s been an amazing tool for me. I personally, I’ve been able to use it a lot to sort my thoughts. I describe it that I argue with the agents, right? And I asked the agents to critique my work to my thoughts, give me ideas and they give you such a raw, you know, so it’s hilarious. Such a rough feedback is like, you suck here, you’re making a mistake here.
[42:52] Yeah. Yeah, for sure. And you can provide rules of what you want to do. And then, you know, it’s very interesting. What I haven’t figured out yet is how to share that experience with my team. So we can have this shared knowledge of how we do things, right? Right now, each of us has our own, you know, agents and memories. It’s not something that I want to share everything with my team, right? I want to have like, you know, these little bubbles, we can share stuff, right? So that’s the next thing I’m trying to figure out how to.
[43:24] Can you tell us a little bit what is the hardest operational problem you ever had to solve for this operation? For this is this is one that I thought about a lot. You know, my time at the liver was really hard. Like, those were really hard problems to solve. And both when you look at the scale in which we are operating at, as well as the velocity in which it was required that that we that we work, right? Like it was the fastest growing technology company, the 200 million in revenue and history. The network was not built well initially. Like it was built for kind of like ultimate infinite scale, which involves bringing on just an unbelievable amount of third party fulfillment capacity and that sort of thing, which the ironic part about that is like that that model doesn’t scale, you know, literally at all.
[44:11] And so that was a challenge, especially when you look at the overall macro environment. Coming out of COVID e-commerce was the hottest thing out there, right? Like, there was tons of VC money. Amazon was obviously going crazy with what they were doing. Salaries across the board, operations, engineering, product, everywhere. It was very expensive to go and recruit people. And then you have to give them that context. You know, like you and I were just just talking about on what the business does, how we think about solving these problems in the space and why it’s differentiated. And so at that point, you’re beginning to build the plane while it’s already taken off. So that can be a huge challenge.
[44:54] Same way with Amazon though, you know, Amazon is very much the same way. Those buildings typically in their first 90 days scale from literally zero employees to within the by eight weeks, nine weeks before it’s launched. You have 155 salary managers by day 14 or, yeah, maybe day 14, day 21 of it launching. You probably have 1200 employees on site that can come with significant challenges. You know, how do you bring problem solving into a site when you’re bringing employees in at that rate? How do you establish a day one culture and maintain that culture that it always looks the same?
[45:42] You’re creating the same experience for everyone, no matter whether they came in on day one, where everyone’s still figuring out their own job and how it operates versus, you know, day one of year three. And so that can be a challenge in and of itself too. So like, I’m really fortunate in my career to have gotten to solve a lot of really unique, really hard problems. And it’s probably why I look like I’m 50, even though I’m only, you know, 25 years old. But I’ve been really fortunate to be surrounded by great people to solve those problems with.
[46:14] Amazing. We’re running out of time. I truly appreciate it. You’ve been here today. Any final advice, remarks, or do you want to share a little bit more of the future of love? No, I was able to talk about lab logistics and something that we’re really excited about. We believe that that’s our next frontier in building an end-to-end supply chain orchestration engine in the direct mail space. It’s a very unique problem to solve. And one that I would love to talk to your listeners about.
[46:45] They can always reach out to me on LinkedIn to have those conversations. Great. We’re going to leave your LinkedIn in the description below so people can reach out. - Great, I look forward to it. - Great, Brent, thank you for being here today. - Yeah, thank you so much.