Here’s a glimpse of what you’ll learn:

• Jon Foster explains how he bought a nearly bankrupt business and turned it into the successful company it is today
• A look at the past year from a macroeconomic perspective
• How is Jon’s company working to deliver the same quality products while cutting costs and adjusting to a disrupted supply chain?
• Jon’s tips for balancing operating costs with investment opportunities in the early days of running a startup
• Jon shares a story from his college days that involves Carl J. Cox and a dance routine
• How does Jon use his personal time to keep himself motivated and driven?
• Carl J. Cox surprises Jon with a challenge
• Jon tells an embarrassing story about a time when he was strapped for cash
• What book changed the way Jon looks at running a business?

In this episode…

Whether you’re just starting out or you’ve been at it for years, running a business can be hard. When things are constantly changing, what solves today’s problems might not work tomorrow. So how can you make smart decisions when you don’t have all the information?

Preparing for what lies ahead might seem impossible when you can’t see what’s coming, but planning isn’t always about forecasting the future. Sometimes you just need to accept that surprises are inevitable and hit the ground running when the unexpected happens. Also, a little bit of resourcefulness might come in handy.

In this week’s episode of the Measure Success Podcast, Carl J. Cox sits down with Jon Foster, the President of Marathon Industries, to talk about growth, contingency plans, and finding opportunities. Jon explains how he took a struggling business on the brink of bankruptcy and turned it into a company supplying products to some of the industry’s biggest retailers. Plus, Jon and Carl J. Cox reminisce about their college days together and agree to embark on a new adventure. Stay tuned!

Resources Mentioned in this episode

• Jon Foster on LinkedIn
• Jon Foster’s phone number: 425-974-4788
• Marathon Industries
• Marathon Tires
• Marastar
• Adam Franklin on LinkedIn
• Bluewire Media Pty Ltd
• Web Marketing That Works: Confessions from the Marketing Trenches by Adam Franklin and Toby Jenkins
• The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich by Timothy Ferriss
• 40 Strategy
• Contact 40 Strategy
• Carl J. Cox on LinkedIn

Sponsor for this episode…

This episode is sponsored by 40 Strategy.

40 Strategy provides strategic planning and consulting to help organizations realize and achieve their dreams by creating and measuring KPIs for success.

Unfortunately, most organizations only spend 2% of their time—or about 40 hours per year—on building an effective strategy.

Increasing the success of those 40 hours is what 40 Strategy does because your success is their passion—and that’s why organizations look to them for guidance.

Not only does 40 Strategy help you craft and implement an effective strategy, but they’ll also work to facilitate teams with proven practices and help with your scenario planning.

Harvard research shows that you can triple your success when you use the right Key Performance Indicators. Who doesn’t want that?

If you have questions, you can reach out through their website or email them at catch@40strategy.com.

Episode Transcript

Intro 0:03

Welcome to the Measure Success Podcast where we feature top leaders on how they measure success in their business and life. Now, let’s learn from their experiences.

Carl J. Cox 0:18

Carl J. Cox here, and I’m the host of the Measure Success Podcast where I talk with top leaders about effective strategies that inspire success. This episode is brought to you by 40 Strategy at 40 Strategy, we provide strategic planning, consulting, to help organizations realize and achieve their dreams, Jon, basically we help companies create strategic plans and measure the right KPIs for success. Unfortunately, most organizations only spend about 2% of their time or about 40 hours per year, building an effective strategy. And, Jon, I don’t know about you, I think that’s kind of crazy that it’s only that little unbelievable. And so that’s why our organizations cost to help. Not only do we come up with strategy, but we have we facilitate your teams with proven practices to make it work. Interesting Harvard research study has shown that when you actually do the right KPIs, you can actually triple your success compared to normal and, and who wouldn’t want that. So emails today a catch@40strategy.com or you can just go to our website at 40strategy.com. So with that, we’re gonna do a little shout out to somebody that you don’t know. But it’s somebody that has been a big influencer and help for me, his name is Adam Franklin. He’s the author of Web Marketing That Works, and CEO of Bluewire Media out of Australia. And he’s been a great resource for me, and connecting others authentically on media. But now I get to introduce Jon Foster here. And so Jon, we’re going to talk a little bit about you here. So I love the story that you help share with your bio. But of course, I get to ad lib a little bit because we’ve known each other for over almost 25 years now. Which is kind of nuts. But you, you started out in and after graduate at the University of Washington, you went in a couple of different sales jobs, you were doing DaVinci Gourmet. And then ultimately, you along with your father in law, you saw this bankrupt tire company. And you said, hey, let’s let’s figure out what we could do with this. And so you took a company that was struggling. And then basically over the next 15 to 20 years, you built it into a nimble, strong, thriving business. And and you are, you’ve been the president of Marathon Tires, which now called Marastar, in 2000, excuse me, repeating that you have developed a flat tire wheel. And you have committed and developed an incredible customer base, you have a lot of large big box retailers that trust you to help provide the product to them. And and one of the things that I know from knowing you so long, you have this ability to be able to continue to be focused and get serious traction with execution. I remember the days when we’re back in the fraternity and you were the president of our fraternity, and you would be yelling at me to come downstairs. So the fraternity thing started on chime. It seemed like I was worried it was always late. And if you know me, Well, yeah, that’s unfortunate. A little bit true. Sometimes it comes to meetings. And and but the good news is you definitely credit the people who you’re with in terms of the people and culture you have a great team that’s helped develop to that. And and you’ve done incredible things. One of the things I love and a personal note about you, I’ve met your lovely wife, Heather, and you have a lovely family, three kids and you are like crazy at swimming, paddleboarding, and sailing. And you’ve also submitted runnier twice. I know wait one time, well done. And and you did the Tour de France. Following right basically along the path stages. Yeah, nice. Nice. And then you also add a personal level. You’re the Finance Elder, Treasurer and High School volunteer at Sammamish Presbyterian Church, and an overall great guy. So Jon, welcome. Yeah, thank

Jon Foster 4:01

you, Carl. I have to realize this is 21 years to the day where Heather and I joined you and Sarah and seaside, Oregon for the weekend. And the reason it sticks out is because I started Marathon the next Monday after that weekend with the side so that’s when it all started so I got to spend that time with you. I can’t do this day. So Tuesday yeah 21 years to this day. Wow.

Carl J. Cox 4:28

That that is a that is super cool. It is a super long time.

Jon Foster 4:33

I think we must have been 10 years old at the time right

Carl J. Cox 4:35

yeah about six something like that. And we the icicle is pretty fun to get get back there back. That’s nuts, man. So tell me more tell the I obviously know about about my Marastar, but tell the audience what Marastar does and what keeps you up day to day.

Jon Foster 4:52

Yeah, no, it’s good. We did. As you said you started the company 21 years ago and our first product was a flat three wheelbarrow tire that was that that was the one product that I had thought was an interesting product, interesting opportunity. There’s nothing like it on the marketplace. At least so we thought who started the company is kind of the internet was still pretty new and quickly learned that we did have some competition. From there, what we’ve done, really, you touched on this, they assembled a really strong team and this team, I’m still together with this team, it’s been 20 years, there’s four or five people that have been the core to this entire operation. And that what that helps out tremendously. There’s so much trust and, and all that. So we built a product line that includes tires, and wheelbarrows, and construction equipment. Stuff that that goes sold into Home Depot, Lowe’s, Amazon, Walmart. So yes, we deal with some really big, big retail players, which presents a lot of different challenges in that, that regard. So in 2015, we were approached by a large company, large in our field, product line was a little different than what we were doing. And they saw us as a really nice fit for their for their strategy. And so they acquired us. Now I work for a large corporation on Nashville, Tennessee area, work to them. So that’s, that’s been interesting, last four or five years figure out how to kind of work in a different corporate environment. And still, fortunately, they still give us a lot of freedom, where a lot of fun things and try to keep small and nimble here on the Seattle area.

Carl J. Cox 6:39

That’s it, the story of and we want to get you to share a little bit more about today, but it’s pretty incredible of what’s again, you probably never imagined you’d be doing this today. Right? You know, I mean, you know, of going in and doing this and successfully being able to grow a company, first of all, be able to successfully sell it and you do something that not a lot of entrepreneurs done is you’ve actually stuck with it, you know, and continue the growth of the company. And that’s, that says a lot about you and says a lot about the organization that is bought you right that you’ve been able to find a quote unquote, a good marriage, right, you know, to help drive the future. So it’s been interesting times from a macroeconomic standpoint, right over the past year for a million different reasons. And most people are aware of the COVID reasons that people would come Top of Mind with but right, tell me you when we prepped for this call, you said there’s some really interesting things happen in the macroeconomic economy. Tell me about that. And how is that impacting your organization?

Jon Foster 7:37

Yeah, it’s interesting. Obviously, in March, when, when COVID really was kind of taken hold, and we were starting to get, you know, pretty scared and nervous, I was really worried about the business, what direction we’re gonna go is our plants gonna get shut down is our warehouse distribution network gonna be shut down. And so there was a lot of a lot of concern and fear. What came from that, and the next few months is what we learned that consumer spending went up dramatically, you know, travel trips, and so forth. And so our demand for product was, people were focusing on improving their homes. And we’ve thought, crazy demand for products. Our best year ever was last year, which I know companies, unfortunately, can’t say that. And I know that a lot of struggles. But from that, we’re seeing a lot of challenges on that the macroeconomic side, as you mentioned, its supply chain is extremely hard to get raw materials. Shipping all over the world is extremely tight, the container spaces as COVID hit shipping companies pulled back their containers. And now there were not enough containers in the system to get product into the us into Europe into Africa, throughout. So there’s not just that a Marastar problem, but everyone is based in SEO, I read that Volkswagen had to shutter five factories in Germany for the time being because they couldn’t get on its intimate cars. So that has just been, it’s been a real challenge. I think on top of that, we’ve we’ve lost two three years, we’ve really had to deal with this trade war with China. And I, I do source a lot of our products and components out of China’s many companies do. And all of a sudden you get hit with a 25% tariff that we’re paying huge impact to the bottom line. And of course, the company’s Home Depot and Lowe’s and Walmart aren’t real to synthetic on that day. They realize that the cost of doing business and so you know, it forces product innovation and forces us to look at Okay, how can we cut costs even further and in Look how we can supply a product that meets a customer’s needs, it still helps drive the business. Now,

Carl J. Cox 9:50

Help Help me understand the listeners a little bit so you have operations the Seattle area and operations overseas as well. Right so so it was interesting when When COVID did hit, how long was your factory actually not working for over there? I mean, did that was it? Did it get shut down? Did you have actually wrote down things? Yeah, Yeah,

Jon Foster 10:10

I did. It was the time it was interesting, if you remember, you know, for China, it was in February, was was great, late January, early February is when COVID started to really manifest itself over in China. So the factories, it just coincided with the same time that the Chinese New Year was hitting. So the factories were already going to be shuttered. So what happened is that three, four weeks that they’re normally shuttered, became five to six weeks. So there was that a couple week leg there. So that did disrupt our, you know, our supply chain for a little bit. Fortunately, we had we Front Load a lot of our inventory coming in getting spring, summer season focus product lines, but yeah, I remember just working on contingency planning, wherever you find new products and different sources, and yes, very, very interesting time.

Carl J. Cox 11:04

Exactly. Well, I, what’s interesting, what you described, and we had this conversation, in one of our chats we had earlier of, you know, first of all, congratulations again, I’ve actually having a successful two guys right here. I think it’s one of the really interesting pieces that there’s actually a lot of companies have done really well actually, I’ve talked with a lot organizations, but there’s this kind of Hush, right? You know, people don’t want to brag right now, right, of being successful, because it’s like, well, there’s because there isn’t sort like being a restaurant right now, what a difficult, you know, time period, right? And but some people have been at the right spot to be able to capitalize with some of these macroeconomic things that are taking place that you’re out of your control, what are you doing thing? What can you do to take some ownership and take some control, yet you have a customer who is not willing to pay, you know, some of these tariffs and deal with it, they’re demanding they want to fill their shells, right? What type of things or if you can get into some kind of key level concepts of how you staying nimble, you know, in these challenging environment?

Jon Foster 12:10

Yeah, I think, you know, these, these crisis type situations, if you will just really force innovation, right, I think, really taking a look at what’s important for the business, and what’s really the key drivers. You know, for 2021, we, you know, we’re really taking a hard look at our product line, you know, I started with one one product now have portfolios, nine 950 items? Well, 250, those items make up 1% of our sales, but the data warehouse space, and they take up time, and they take up energy. So how do we work more efficiently and more effective? on the product side? And how do we take it to the end, we want the end user to have the same experience, when they bought our tires 10 years ago, as they do today, when they buy it? They so how do we deliver that same experience for the end user, while taking some cost out, improving the supply chain looking at different materials. So those are the things that were really forcing us to focus on because I can’t, I can’t increase container capacity coming out of China, I can’t, unfortunately, get rid of the 25% tariff, so I have to live with those things. So it really forces us to be creative and innovative.

Carl J. Cox 13:29

I love that analysis that you did of how 250 of effectively your 900 pieces are representing only 1%. And that’s the classic Pareto principle, the inverse, right, you know, is that that classic, you know that 20% of things that we’re selling is typically representing 80%. And it’s interesting, one of the things I saw some of the restaurants that successfully navigated through this is their menus are a lot smaller now. Right. And, and, but that’s brilliant, right? You know, there’s this feeling of like, we have to provide everything to everybody because they potentially could come in, but you don’t make money off that stuff. Right. And and, and so when things are tight, and it creates this constraints, those who navigate properly and you apply the Pareto principle, end up finding there, once you get through it, you’re so much more profitable on the back end, right? Because gotcha. You know, how if you did that get down to 600 skews from 900 skews.

Jon Foster 14:22

That makes life a lot easier. Yeah, no, that’s exactly right, Carl. That’s exactly right. So

Carl J. Cox 14:29

times weren’t always great, right, you know, with a startup and and one of the things I like to you know, ask is, you know, how were you measuring success in the early days as you’re bootstrapping this business?

Jon Foster 14:39

Yeah.

Carl J. Cox 14:40

What was that and and share with us share the audience. Yeah, the

Jon Foster 14:45

key things are, well, a couple couple things really come to mind thinking about 20 2021 years ago. It’s kind of the internet bubble. You remember, you know that those? Were these. These new the new fangled internet was really Taking off and these companies had tons of cash and they’re spending it, you know, lavish. And it was all very interesting and their stock options, and it was just a crazy time. And that just didn’t feel right. To me, it just felt like, you know, I read that, you know, most businesses and to then is this day most businesses fail because they don’t have enough cash, right, they don’t have the resources. So the focus for this business that I was starting, we didn’t have a ton of cash to play around with was, I got to really focus on our cash, I need to measure where we are at any given time with cash and spent a lot of time projecting where we’ll be next week, next month, next year. And really concentrate on our inflows and outflows and under really get a true appreciation. So we set a route, whatever, actually modeling and creating the perfect, perfect model to help us make decisions on how we’re going to spend our cash. And that really guided us, as we can see that more cash flow is going to come available with Okay, let’s see, let’s hire that extra person. Oh, great. Now we can work on production efficiencies, we can buy a new piece of equipment, finally, because now we can afford it. And but I’ll tell you, you know, it’s It was a tough time, I’d say the first four or five years of just really spending a lot of time in measuring that piece of our business. But really it paid off. I mean, there’s no question that it certainly paid off. So,

Carl J. Cox 16:39

Jon, what came to my mind when you’re saying that is it’s, it’s really common to it? First of all, it sounds like you had this, you hit a certain cash threshold. And that gave you the confidence ultimately, to reinvest. Right. And because you’re thinking we can do this and go into it, you don’t have to give too many details. But I’m curious for you, one of the things I like to talk with, with organizations about is having that safety net of cash, the right amount of cash, the right the optimum amount, it’s a little bit different for everybody. But from from in those early days, were you trying to have one month of operating cash, you know, sitting beside was a two months was a six months, was it a week, you know, what was what was the for you in those early days? What was that optimum amount of cash where you felt like you could sleep at night, but you still had to stay, you know, grinding and making sure you’re being efficient.

Jon Foster 17:30

Yeah, I remember the start of the conversation talking about the team, right, talking about these folks have been would be 20 years. So for me, first and foremost, the number one outflow that I needed to protect was was the labor right the payroll and so for us, I think that was my my driver I was my concern in terms of you know, I need to make sure that I can keep this team if we’re going to be successful long term I need these key players with me, I didn’t envision there’s gonna be 20 years they’d be with me but I needed them for the next year to three years. So that was kind of our focus so I you know, in terms of an exact number I don’t know that I really have we have like that that magic number but I know that the concern or what we’re careful about is was that that payroll number to make sure that we had in the next few months type thing that we’re able to function keep it going

Carl J. Cox 18:25

yeah, I found often have that you know that two to three month window of payroll is it It helps owners sleep better and then then it comes down to the question is Does it make sense depending on your investment strategy and your return you get in your cash Do you go up to six months down the road you go to nine months to a year it there’s this you know sometimes you could sit on too much cash right and and it’s like you could get a better return by literally coming out of it and because that’s that part especially when your ownership role of Hey, if we invest $100,000 or something we get $25,000 out of it, why we hanging on to that 100,000 because that’s a huge huge return on money you get 25% cash you know an investment so it that’s I appreciate you sharing that let’s let’s pop over to the personal side, you know once again we’ve known each other totally long period of time and and seen you know, your your family grow up. So I’ll do kind of a fun question for you. So what what’s the funniest moment you remember about perhaps you and I that you can share? Once again, I’ll put that to you for the audience of something that that you it’s pretty funny looking back at today? Well, I

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