James is a serial entrepreneur, multi-year member of the Inc. 5000, and the co-founder and CEO of Whiplash Merchandising. Whiplash connects eCommerce sellers with warehouse capacity and coordinates fulfillment for millions of orders.
Prior to Whiplash, James founded VGKids, a screen printing company focused on high quality artist prints and custom printed goods. James also founded SPUR Studios, providing work spaces for artists and musicians, and The Vegetarian Grocer, a natural foods store in Pontiac, Michigan.
Tell me about your early career.
I started my first business when I was sixteen. My friends and I chipped in $200 each to buy a t-shirt press so we could make t-shirts for local bands. It was a disaster; we had no idea what we were doing. I remember going through the trash behind a screen printing shop and pulling out the screens they’d thrown away. That’s how scrappy we were. After I graduated high school, I opened a vegetarian grocery store in a blighted neighborhood outside of Detroit, MI. We sold some groceries, but primarily paid rent by putting on shows in the basement. After two years, I was buried in debt and ready for something else. I focused on making t-shirts fulltime, and started to get a little bit of traction there.
How did the concept for Whiplash Merchandising come about?
When you make shirts for touring bands, you ship some to the band on the road, and some to their warehouse to sell online. It seemed silly that we’d ship these shirts to sit on someone else’s shelf instead of our own. It also seemed like a lot less could go wrong shipping orders on the Internet than interpreting someone’s art onto a shirt. The last ten years had a been a series of hard-earned lessons in all the ways custom printing could go wrong. I thought it would be an easier business to run, with better margins.
So when we started Whiplash, we thought it would be a licensing deal with the bands – we’d just earn a percentage of retail. We signed a couple of deals very quickly, but couldn’t land any others. So we pivoted away from licensing to just earning a “handling fee” to hold the inventory and ship orders. It was still slow at first, but we won a couple of clients and we started building a reputation.
How was the first year in business?
The first year was when we were on the licensing model, and it was just a part-time project. It took 10-15 hours of our time a month, and lost a steady trickle of money. Not enough to shut it down, but not enough to go full-time, either.
One of the key ideas that keeps me motivated in the early stages of a company is from the Zingerman’s team – this idea that success and failure are indistinguishable in the beginning. The fact that it feels like its going well or poorly isn’t a reliable indicator. I couple that with something my brother noticed, which is that it takes about three years minimum of sustained energy for a brand or concept to be known.
In those first three years, I try to stay totally disconnected from whether or not it’s “working.” Likewise, when I start a project, I’ve already cleared the hurdle in my head, “Am I willing to hang on with this idea for three years, knowing full well that for some amount of that time it will be dragging me through the mud?” And that mud could be anything – feelings of failure, self doubt, flaws revealed about the model, cash flow problems, partner problems, etc. You have to disconnect yourself from those negative emotions.
If anything, those bad times may actually be positively correlated with success. Maybe it’s just survival bias and that pain is proof of being alive, but all the good things are on the other side of bad things.
What was your marketing strategy?
The better your product is, the less marketing you need. We’ve done virtually zero marketing for that reason, but there are few things that generate passive leads that are beneficial. One was the mailer we ship vinyl records in – we designed our own that was better than anything we could find, and made sure it had the Whiplash logo on it. When we build an integration to a webstore like Shopify, we make sure it’s listed in their app store – basic stuff like that.
When our customers are happy, we grow. When they aren’t, we stall out. It’s as simple as that. Nothing beats the value of just doing good work.
Would we have grown even faster if we’d done good work and had strong marketing? Of course. And if you can do both, great. For us, improving the product has always seemed more valuable.
How fast did the company grow during the first few years?
The first two years were flat. Once we pivoted to eCommerce fulfillment, it was about 140% YOY.
How do you define success?
Daniel Pink narrowed work satisfaction down to Autonomy, Mastery, and Purpose, with financial stability as a pre-requisite. That’s just as relevant as an entrepreneur and CEO as an employee. I used to have ideas of success based on X employees or Y buildings or Z revenue – some external measuring stick. Now I see those for what they are, which are ego drivers. Success means doing great work.
What is the key to success?
Resilience, Preparation, and Positioning.
Resilience because so many skills are based on time spent practicing, and that means getting up every time you get knocked down. Starting a business means you are going to be knocked down and/or want to quit a lot.
Preparation because you will be presented with opportunities, and whether or not they go in your favor depends on the condition you’re in at that moment. Warren Buffett can have a great insight on an investment opportunity, but it’s useless to him if prior to that he hasn’t amassed capital. You have to know in the bottom of your heart that the opportunity will come, and you have to get ready for it. That’s why we love characters like Jason Bourne – they are deeply prepared, and we get a vicarious joy when we see their preparations play out.
Positioning because you can increase the number of opportunities that come your way – you place yourself on their path. Whether that means working at a co-working space instead of your spare bedroom, going to conferences, getting listed somewhere there’s built in traffic, etc., you increase the number of opportunities you’re exposed to.
What is the greatest lesson you’ve ever learned?
Everything is negotiable, though many institutions work extensively to hide that fact.
What are some quotes that you live by?
“Luck favors the prepared mind” – Louis Pasteur
What are some of your favorite books?
Anything by Malcolm Gladwell, The Power of Habit by Charles Duhigg, and The Snowball: Warren Buffett and the Business of Life.
I actually read more SciFi and Fantasy than business books these days. I like big fantasy series’ to help soothe my mind when things get stressful. Kingkiller Chronicles, The Expanse Series, and Dresden Files are all good.
It’s counterintuitive, but reading fiction helps me make better strategic decisions. By stepping away from a problem and coming back to it fresh, I can think more holistic and long-term, instead of reacting to the moment’s fire.
Tell me about one of the toughest days you’ve had as an entrepreneur
In the early 2000s, the IRS showed up on our doorstep to collect a year’s worth of late 941 payments. It was 10x the amount of cash I’d ever had at one time. They were going to padlock the doors if we couldn’t convince them we had a viable plan to get caught up, and I ended up writing them a check on the spot for a small fraction of it. That check alone drained our bank account, and the payment plan for the next two years kept us on the brink of bankruptcy.
When faced with adversity, what pushes you to keep moving forward?
The adversity is expected – on a long enough timeline, there’s a 100% chance of bad things happening. When bad things come, you’re just discovering the details of something you were already mentally prepared for. It still sucks, but it’s less scary than feeling like you’re somehow off the path and unrecoverable.
We’ve tried to foster a culture at Whiplash that problems are okay. What’s not okay is repeating the same mistakes. So when bad news comes, as it always does, we gather facts and abstract the problem to prevent as many future variations as possible. It keeps you focused on what you can control instead of getting caught up in the emotions of failure.
What advice would you give to young entrepreneurs?
Start your first business now. In my 20s, I would meet people in their 30s and 40s who would ruefully tell me how brave I was to start my own business. I didn’t realize it until I was 30 myself, but starting a business when you’re used to getting a paycheck and supporting a family is very different than what I did. When I started my first companies, I was young and broke with no dependents. It didn’t even seem like a risk, because my standards of living were already low. It wasn’t brave, I was just young.
Now that I’ve built up my skill as an entrepreneur to some degree, starting a business still isn’t brave, because I’ve done it before. But starting your first business in your 40s with a family to support? That’s brave.
This interview was brought to you by Audible. Try a 30-day free trial and receive two free audiobooks!
This interview was conducted for research purposes by author Jason Navallo for his upcoming book, Underdog.
Check out our Books page to see the top books recommended by entrepreneurs, professional athletes, and executives.