Podcast

David Heacock- Building Filterbuy

The Knowledge Project

Last highlighted February 18, 2025 Source ↗ ← All highlights

Non-Traditional Path to Goldman
- David Heacock’s non-traditional path to Goldman Sachs.
- His economics paper impressed professors who forwarded it, leading to an interview. Transcript: Shane Parrish It’s time to listen and learn. You said you felt like an outsider at Goldman. Why did you stay so long? David Heacock Well, I’m stubborn. And honestly, I had manifested my job at Goldman in a way. Like I really, it’s something that for years I had idolized and made happen in my life. You know, I didn’t go to an Ivy League school. I didn’t come from a rich Northeastern type family that had, you know, family and private equity and all the traditional feeders that lead to a finance career normally. I went to the George Washington University. And about my sophomore or junior year, I really decided I wanted to go into finance. And the premier place to work was Goldman Sachs. And so I became very obsessed with working at Goldman Sachs. And there’s no pathway from the George Washington University to Goldman Sachs, at least not at the time. It’s just not how they hired and recruited. And I studied economics and statistics in college. And I was in Washington, D.C., and I just happened to be really close with the economics professors because I was probably the top, you know, kind of economic student in college and did A paper on predicting currency crises using a diffusion index kind of geeky, geeky thing. And my professors were really impressed by it and kind of ended up forwarding it to somebody within Goldman that that saw it. And then I ended up interviewing within the economics research department. So I ended up coming to New York and doing seven or eight interviews and they hired me. It was less formal of a hiring process than the traditional Goldman process. So I kind of got in through the back door that way. And it was great for me. I mean, I loved it. (Time 0:02:40)
Decisive Risk Management
- Heacock learned decisive risk management at Goldman Sachs.
- This skill translates to quick decision-making and risk assessment in business. Transcript: David Heacock It was such a challenge. And honestly, I would not be where I am today without the skills that I honed in that. Shane Parrish So what did you learn there? Like what specifically, what lessons did you take away from that? David Heacock It’s really the ability to make a decision quickly and then own that decision and manage the risk of that decision. And so when I fast forward to my business career, like one of the things that I think that I excel at is making decisions quickly and owning those decisions and not, you know, second guessing Or not kind of like once I make a decision, I make a decision and I move on. But I also am very aware of my risk. And like if it’s a decision that has a lot of risk associated with it, it’s something that I, you know, make sure that I’m taking that into account. And so, you know, Jeff Bezos has this concept of one-way doors versus two-way doors, you know? So you have to be like, but with two-way doors where you know that you can always get out of it very quickly, like I make decisions quicker than anybody and then manage that and don’t worry So much about it. But I’m also hyper aware of those one-way doors where you need to be super careful doing something that is irrevocable more or less. And so I think the hyper awareness around that and living that on a day-to basis really accelerated the learning curve for me later on. (Time 0:04:29)
The Power of Obsession
- Obsession is crucial for significant achievements.
- To be the best, recognize you compete with obsessed individuals. Transcript: Shane Parrish Love that. You mentioned the word obsessed earlier. That seems to take a negative connotation in culture, but I think you embrace it. David Heacock Yeah. I mean, I think if you want to do anything big, you have to be obsessed because if not, you’re competing with somebody who is. And it’s completely okay not to be obsessed and not to be super driven or like there’s nothing wrong with not having that. But if you want to be the best at something or if you want to have a disproportionate outcome in life, then you have to recognize that you’re competing with other people that are obsessed. And so I think that you’re being quite naive to believe that you can achieve anything big competing with the world’s marketplace without being obsessed. (Time 0:07:26)
COVID-Driven Expansion
- COVID prompted Heacock to open a Utah plant due to Amazon and FedEx constraints.
- This decision was pivotal to Filterbuy’s growth from $70M to $250M in revenue. Transcript: Shane Parrish Up and running, how did you decide what next? Walk me through sort of like, how do you go from that? How do you determine what the next step is? David Heacock Well, I think that people like to look back and, you know, kind of idolize and act as if there’s, you know, there was a plan, it was a plan all along, when oftentimes it’s, you know, evolution Of skills and an evolution of your thinking. And, you know, honestly, you know, for the first eight years, we only operated in Talladega, Alabama, where I’m originally from. And I knew it was important for us to diversify geographically, but I was too scared to do it because it felt like such a big risk and such a big undertaking. And I didn’t have the guts, quite frankly, to go in and to do it. And then COVID happened and I worked with the team to figure out how we were going to work through it. And we were getting so slammed. And about two to three weeks into that process of working with it, Amazon stopped third-party sellers from sending products into their warehouses. And at the exact same time, FedEx made the decision to cap the number of trailers that we were able to ship from our Talladega location because they were getting overloaded. So basically saying, you know, we can’t take any more business. And I was faced with the decision, do I either expand my geographic footprint and I made the deal with FedEx to allow me additional capacity if I would expand it out and not overload just Their Southeast network? Or do I just raise my prices like a lot of our competitors did and milk this for what it’s worth and stay as we are? And I made the decision to open our Ogden, Utah plant in May of 2020, after those discussions. And by July of 2020, we were shipping products out of there. And that was when I made the decision to really go all in and kind of stop being scared about it to an extent and was really kind of the point that led us from where we are today. In 2019, we did about $70 million of revenue. So we had gotten to some size just grinding, but it was not super profitable and it was still just really difficult. And now in 2024, we’ll do about $250 million of revenue. And so COVID was a big tailwind for that. Consumable product where customers need to come back after they find you. And COVID was such a good customer acquisition time for us that my decision to actually lean in and figure out a way to service those customers at scale is really a key point that allowed Me to get to where I am today. (Time 0:10:00)
Bootstrapping and Manufacturing
- Despite lacking manufacturing experience, Heacock built a profitable air filter plant.
- He bootstrapped, working tirelessly and doing multiple jobs himself for years. Transcript: Shane Parrish Me through building the first plant and the problems and challenges that you had to overcome. David Heacock You know, it’s one of these things that is extremely difficult to articulate because it almost sounds far-fetched, so much of it, and it’s hard for me to even believe I lived it. You know, in retrospect, and being a bit more mature now, when I look back on it, it was very much a hubristic move to say, I’m going to go out. I have zero experience in manufacturing, zero experience in manufacturing an air filter, never been in an air filter manufacturing plant. But I’m going to start the process of manufacturing air filters at scale. So, you know, when I look back at it with, you know, kind of more mature eyes, it seems quite crazy. But, you know, I was younger and I guess I was very self-confident and I knew, just had the self-belief that I was going to figure it out. But it really took me three to four years to get to the point where we could manufacture a product profitably. And what I mean by that is until that three or four-year period, it would have been cheaper for me to buy the product we were selling from a large manufacturer of air filters. And just repackage it. And repackage it. And so, you know, we weren’t actually losing money in that, you know, our business model was different. And we were lucky that I was good with the online marketing piece of it. And it was, you know, I brought a lot of those skills that allowed us to kind of get through that, through that period that I did it myself. But, you know, I, any time in that, you know, first four years, if you had looked at it, you would have said that this manufacturing makes no sense because, you know, we weren’t making Any money. In fact, we were losing potential money by doing it. And it was taking up so much of my energy and we had so many employees in that and it was constantly bringing problems. But I knew that to do it at real scale that I needed to have that manufacturing. So I stuck with it. And I was living in New York City at the time. My wife was, or still is, a radiologist at NYU. And we were living here, and I would travel every Monday morning to Alabama. I actually kept a car in Atlanta at the, you know, parking go where I would go there on Monday morning and then drive from Atlanta to Talladega. It’s about a two-hour drive. And I would stay there Monday through Friday and come back. And so for the first three years, I did that essentially every week, you know, building the manufacturing during the day and doing all of my programming work or marketing work or whatever You need at night for, you know, that first three years. I mean, and I still did a lot of those functions for the first eight years of the business. And, you know, because I couldn’t afford to actually hire anybody else to do any of those things. (Time 0:12:45)
Understanding Operations
- To scale a business, entrepreneurs must understand their operations deeply.
- Hire people to manage established systems, not build them from scratch. Transcript: Shane Parrish Were doing the manufacturing during the day and trying to figure that out at night. You were doing all the admin work, all the marketing. That’s often, my friend Brent Beshore calls this the ceiling of brute force. And it’s where a lot of businesses get stuck, a lot of small businesses. It’s the limitation on the entrepreneur. And how did you decide when to hire people, when to go big, when to take the next step? David Heacock You as an entrepreneur have to really understand your business if you want to be able to scale and do anything big. And it’s almost impossible, in my opinion, especially when you’re smaller, to hire somebody that’s going to build the systems that you need to really do something big. And you kind of have to do it yourself. And at least that has been my experience. And, you know, I think that it sounds great to say, hey, I’m just going to go and hire somebody to do all of these things. But the reality is that if you really want to do something big, and if you want to do something different, that there’s not an established playbook for, which is, which is what we have Done, then it’s your, it’s your responsibility as the entrepreneur to go and figure all of that out. And, you know, we have a mutual friend in Dr. Garner, and I actually have been working with her for about two years now. And I’ve really enjoyed that. Is that, you know, I think that I’m at my best when I’m out there, you know, building new systems, new frameworks, and getting them started to the point that and solidified to the point That then I can bring in other people to actually manage them and improve them going forward. And so that’s the framework that I like to think about it. And, you know, I only know my lived experience. I don’t know how other people live this stuff. But I think the fact that I understand our finance function, I understand our marketing function, I understand our manufacturing and operations function, I understand our shipping Function, all with a great level of detail, puts me in a position that if you to go and hire all of that out for your business and you want to compete with me, you’re going to struggle. But it doesn’t mean I do all of those things now. And I have a great team and I’ve really worked hard at building a management team in the last couple of years to allow me to build, you know, to grow and build this business. I think as an entrepreneur, if you really want to grow a business, then it ultimately is your responsibility to go and figure out the systems and processes you need to grow. If you just want to maintain a business, that’s a very different calculus. (Time 0:16:04)
Hiring for Experience
- Hire people who have solved the problems you face, not just those with potential.
- Focus on experience over aspiration for key management roles. Transcript: Shane Parrish Walk through a particular example. So you’re doing all the functions and then what was the key role you hired first? And I want to walk through how you hired them. Did you hire somebody who’s done this at scale before? Did you hire somebody who like, what were the, what were you looking for? Maybe it’s a COO, maybe it’s a CFO. What was that first role? And how did you decide, I want somebody who’s done this at a hundred million? Cause you’re trying to build a billion dollar business. David Heacock I’m not trying, I’m going to do it, but I just, I hate the word trying. It’s a pet peeve of mine, but yes, I intend to build a- I love that you corrected me. I intend to build more than a billion dollar business. Honestly, I think, you know, I intend to build the roles leading indoor air quality company, which I think is a $10 billion plus opportunity for a business easily. I’ve scaled from zero to $250 million a year. And, you know, in the next five to 10 years, I intend to take that to a billion dollars plus, you know, I don’t like putting an exact timeline on it because I, I don’t believe that, you know, That is even that helpful, but that is the trajectory that we’re on. And, you know, like, I think we need to have an honest discussion about what you’re, what you’re talking about, because I am not the poster child you’re going to put up for great hiring Practices for management teams. And I don’t want the poster child. I want the raw, you know, the reality is I’ve been in this business for 12 years and basically there’s one person there that I hired four years ago and they were my first marketing hire. So like I’d had some, some people that it kind of helped along the way. So like, you know, somebody’s watching this, like there were a few other people that came in and out, but I effectively did all of the marketing for the first eight years. And, you know, so then the last four years, you know, I’ve slowly been offloading pieces and pieces of it, but I’m still heavily involved in our marketing function as an example. But, you know, now, like 18 months ago, I hired a CMO to be our chief marketing officer that oversees our marketing team. And she was probably the first of the higher level hires that I actually made. And she’s still with us today. And, you know, late last year and early this year, I really focused on recruiting and learning how to build management teams. I studied a lot of, you know, the operating systems that you hear people talk about, like traction or the Rockefeller habits, you know, which have a lot of similarities and overlap and Really, you know, did a lot of soul searching about like, how am I going to put together the management team for me going forward? And I worked with a couple of recruiters and hired a CFO and a VP of ops to handle both the finance and the operations function that have been with me for six to eight months now. And I’m very happy with how that’s progressing. But it’s really very recently that I’ve really started to figure out how to do what I would call management level hiring. You know, over the years, like I have people that are in charge of manufacturing facilities when that’s where a lot of our people are. So like it’s more hiring and then training rather than hiring people that have experience because nobody has experience doing exactly what we’re doing. So I’ve done it, but you know, I’ve had people that have been in place in each of our manufacturing facilities that have been important to keeping our operational piece of our business In check. And that’s really where I spent most of my time and energy. And until recently, I largely did all the higher level management functions. Like I, I built all of the systems that do our finance and accounting. Shane Parrish I want to come back to the systems, I really want to get specific on like how did you identify – you’re building a huge company. How do you identify the talent? Is it somebody who’s done this before at a different scale, the scale you’re trying to reach? Or is it somebody that has different traits that you’re looking for or? David Heacock I think that it evolves over time, but how I think about it now and where I found success, and I’ve worked a lot with Dr. Gerner about this actually, but I’ve realized you need to find people that have done the tasks that you’re looking to get done today or before. At least maybe it rhymes, maybe it’s not exactly, but if you want to hire a CFO, for example, I want to find somebody that has done the things that I know we are lacking before. And so in my example, I hired a CFO that came from US Foods that has a lot of managing distribution centers experience and really cost accounting and understanding, you know, zero-based Budgeting and this kind of stuff. That’s what we were lacking. That’s what we needed. And so I went out and I searched for somebody that had done exactly that before. And, you know, that is how I chose him. And, you know, he’s been successful in his role with us so far. So I do think that historically, I have made the mistake of hiring aspirationally, because if I like somebody or I think, oh, they’ve got a lot of good energy and a lot of potential, then I have been burned by that so many times in my career. And I really had to take a step back a bit. And I think it’s, for me at least, somebody that’s done what I’m looking to solve before is really kind of an important factor for me. But that doesn’t mean that you cannot then grow those people or mentor those people or bring them up into other things. And I’ve had some success with that. I think that I’ve made the mistake historically of hiring aspirationally when I think that you’re much better off, or at least I’m much better off, hiring somebody that’s already solved The problem that I’ve already noticed I need to solve. (Time 0:18:48)
External Accountability
- Bootstrapped entrepreneurs should seek external accountability.
- This helps maintain focus, gain self-awareness, and make quicker decisions. Transcript: Shane Parrish But what have you worked with Dr. Garner? What are the lessons that you’ve learned in terms of management level hiring? David Heacock The most important thing that I get from her and I would recommend for anybody to consider is, first of all, I’m a bootstrapped entrepreneur. I own my own business. I don’t have a board of directors. And so I don’t have accountability that’s baked in, right? And I ultimately have the power to make effectively any decision within my business. And, you know, and that’s great, super important for me, but also accountability is very important. Or one of the ways that I was forcing that accountability, because I know if I tell her in a week that I’m going to focus on X, Y, or Z next week, that she’s going to be asking about it the next Week or asking for an update. And I want to be able to deliver on that because that’s just how I’m built. And so for me, the most important thing with her has been building that accountability. But then the second part of it is having somebody to bounce around things that are maybe going on in my head and help me to become self-aware about what I deep down know the right answer Is. Because I think so often, we know in our gut the actions that we need to be taking. And, you know, they say that the easiest person to fool is yourself at the end of the day. And so it’s so easy to talk yourself into believing, you know, things that you want to believe, but maybe that’s a little bit different than what you know the truth actually is. And by talking it out with her every week, then it allows me to get to that truth and make those decisions quicker, I think. And so when you talk about management level hiring, she’s been super important for me in figuring that out. And part of the reason why I feel so comfortable going public with everything is I feel like I’m really getting better at that and really have a solid team around me that can help me to achieve These bigger goals. But I think the biggest thing that she brought to that was forcing me to be honest with myself in conversation every week about what really the root cause of maybe a problem is or what I’ve Overlooked in the past in examples where this has gone poorly and we examine those and she forces me to articulate those. And oftentimes by the end of a hour long conversation, I’ve come to the conclusion myself just because I have somebody to talk about it with and because I don’t really have anybody else To talk about those types of problems with or in a detailed way. (Time 0:26:47)