Audio

EP9: Stories from sourcing products in Europe, and surviving Tariffs with global brand expansion | Atul Vir, CEO of Equator Advanced Appliances.

Posted on November 7, 2019.

What you’ll learn:
Atul Vir is resilient when it comes to facing adversity in business. Tariffs hit 70% of his product line. But that is just another story he will overcome. He tells us about the challenges of manufacturing a specialty consumer product company abroad, shares his strategy for bringing his products to the global market, and gets honest about trade tariffs.

About our guest:
Atul Vir is a hands-on CEO, seasoned entrepreneur, inventor, business ethics thought leader, speaker and author living the American Dream. He’s lived on 4 continents, making his way from India to Europe to Africa and, finally, to the United States. His business acumen has been featured on CBS, HGTV, Oprah, Fortune, Popular Mechanics, The New York Times, and The Wall Street Journal. His company, Equator Advanced Appliances, has been listed as one of the Top 100 fastest growing companies in Houston for 3 years in a row. He also holds 18 patents for appliance technology. His award-winning products are sold in the home, recreational vehicles and marine markets.

Key takeaways from this episode:

Sourcing products in Europe: challenges and global trade transformation – 7:20
Why strong product strategy is the key to competing against larger companies – 9:16
Manufacturing in India: what to expect – 10:00
Problem-solving your product line for consumers in developing countries – 11:09
Who are the major selling channels and why? – 12:59
How big-box retailers democratized marketing and sales – 15:33
No two retailers are the same: how to manage buyer expectations – 18:15
Biggest focus of growth for Equator Advanced Appliances – 20:46
Patents: are they right for your business? – 24:10
Patents: navigating the challenges that come with getting one – 29:50
Tariffs and the reality of its impact on your company – 33:31
Biggest learning lesson as an underdog entrepreneur – 37:25

Podcast Transcription:

Speaker 1: Welcome to the Page One Podcast a twice weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies to tariffs, influencer marketing, best in class product launches and all the details about how to accelerate your E-commerce sales with the big box retailers or what we call rCommerce. Now, here’s your host Luke Peters.

Luke Peters: Thanks for joining us on the Page One Podcast. This is your host Luke Peters. This is the podcast where I bring the best and brightest leaders in the consumer products industry to share their knowledge and valuable insights and help us grow our businesses. I’m the CEO and founder of NewAir Appliances where I started about 17 years ago selling wine coolers, ice makers, portable air conditioner is actually first product was portable air conditioners, and we do a lot of heating, cooling and wine and beverage right now. And then since that time I’ve started a new company called Retail Band, where I share those insights and help other consumer product brands sell more successfully on online platforms like Home Depot, Wayfair. And then in addition to that, we do podcasting. And of course, also do influencer marketing, which is really incredible area right now for new brands to market their products and get the best ROI possible.

Luke Peters: And in this podcast today, I’m thrilled to have Atul Vir on. And Atul, has got an amazing background, and I’ll give you the quick bio right now. He’s a hands on CEO and the CEO of Equator Advanced Appliances, which we’ll get into more and learn about Atul, and his path to where he is now.

Luke Peters: He’s lived on four continents, from India to Europe, Africa, and finally here in the US. Has been featured on CBS, Oprah, Fortune, New York Times, Wall Street Journal, and a bunch of other places and he’s also his business, Equator Advanced Appliances has been listed as one of the top 100 growing companies in Houston for three years in a row.

Luke Peters: He holds 18 patents for appliance technology. And his award-winning products are sold in the home and recreational vehicle and marine markets. And again, thanks for joining us again Atul, I know we’re just talking kind of before I recorded this interview and you mentioned that you guys have a power outage over there in Houston with the weather.

Atul Vir: Yes we do. Thank you for having me on today. Yes, it’s a difficult day we had a Tropical Storm go through here and the floods all over Houston and power outages. But I know I had scheduled this one on my phone. So please excuse me, that I don’t have all the information but it’s wonderful to speak with you.

Luke Peters: Awesome and thrilled and honored to have you here, and you have an amazing background. So we’re going to dive into that. Did I leave anything out there? Hopefully I covered everything there in the bio.

Atul Vir: That’s good. That’s a lot. Thank you.

Luke Peters: Perfect. Okay, great. So why don’t we kind of get into a little bit like a breakdown of your business. And that way the listener can kind of understand … They understand the markets, but how about like a little bit of the scale, maybe the number of employees or the size of the warehouse? So, everybody can kind of understand what you guys do.

Atul Vir: Well, our company is one of the few boutique, major appliance manufacturers out there, and we have about 50 direct employees working for the company. Our warehouses are split all over the country. We have one in Compton, California, number one in Greensboro, North Carolina, a smaller one in New Jersey and another one in Houston. But there was a time when we had a large 60,000 square foot warehouse in Houston building, which we owned and everything was centralized. And we went away because Houston we had products coming to Los Angeles and coming by rail, took another two or three weeks to get here or things came through via shipments coming from the Panama canal and that delayed shipments.

Atul Vir: And so we decided to set one on each coast and close the ports where products are important. So we have one in Los Angeles for products in Asia and one on the East Coast for products from Europe.

Luke Peters: Awesome. I’m developing questions right now just thinking about that, because we often think of East and West Coast and it sounds great to be close to the customers on the East Coast. But it’s expensive to get product there from Asia, and takes longer and sometimes not much of a cost benefit, especially if you’re not paying for the shipping to the customer, which happens with some of the online retail channels. But it sounds like you answer that question and that’s where your products from Asia go to. So that’s smart and probably your least expensive Container shipping costs.

Atul Vir: Yes.

Luke Peters: And Atul, It’s interesting that you have the two different locations where products are coming into, one in the East Coast, one on the West Coast. Tell us, just for the listener more about your product mix, what’s coming into the West Coast, what categories are coming in, and which categories of types of product are coming into the East Coast. And this way, it’ll help everyone gain more insight into exactly the type of products that you sell.

Atul Vir: Yes. But perhaps I should give a little bit of history. Our company started in 1991. And I was an immigrant when I immigrated to the US, decided to get into the appliance business. And I started importing European products, which is washing machines from Europe and refrigerators, dishwashers, all of them were apartment size and compact and energy efficient, water efficient and so on. So we pioneered that whole concept. We actually marketed the second functional washing machine in America. The first was ASKO at the time, and we were the second a year later.

Atul Vir: So historically we were bringing products from Europe and so everything was concentrated on the East Coast. That changed about 15 years ago due to the Euro exchange and so on. It just became uncompetitive to import from Europe. So we moved to Asia particularly to China. And we set up joint ventures and manufacturing agreements, technology transfer agreements and so on. And most products shifted to Asia. I would say 70 or 80%, but some products continue to be produced in Europe. And so that accounts for the difference.

Atul Vir: So an answer to your specific question, which products? We have laundry. Laundry is our product. We pioneered the Combo Washer Dryer, the concept. And we’re on the ninth edition now since 1991, where each one improves on the previous one. We have washing machines, we have dryers. We have induction cooktops, we have refrigeration, all of them coming from China.

Atul Vir: And on the European side, we have remained with Range Hoods. Believe it or not, they’re very good ones, they’re good quality, field and engineering there. And we are doing some refrigeration from there. And we’re expanding our European line, particularly with the tariffs that have been imposed in the last year.

Luke Peters: Thanks for that, because that was an interesting point right there because that’s what I was going to ask. It sounds like right now you’re about 70/30 coming from Asia, so you’re paying tariffs on 70%. And now you’re expanding, which is smart and obviously 25% motivation behind that. What are you finding as far as the capabilities in Europe? Are they able to create the same products that you were previously or currently sourcing from China? Or are you having trouble finding the same product lines?

Atul Vir: When it becomes very difficult. I mean, historically, if you look at Europe since way back from the Industrial Revolution, appliances has been a pioneer in Europe, particularly the energy efficient, water efficient, space efficient machine, because of the small homes and so on. So they’ve had very good technology. And in the last century, they became very good at it. But unfortunately, over the time, let’s say, the early part of this century, they lost their edge. And I would say Europe lost maybe 70% of their factories, the plants that were making … Old brands that were 50 or 75 years old, they shut down because of the Euro exchange rate. And then the advent of China, which came in and essentially bought out a lot of the old fans from Europe and set up their own facilities and had no cost manufacturing.

Atul Vir: And so many of the plants I know well, that is the 10 companies or so we did business with in Europe, maybe only two of them are still around, eight of them were shut down. They were either large companies that shut down their plants and some of them are owned by entrepreneurs and they own factories and they shut down, they just couldn’t compete.

Atul Vir: So across the board, so now when we’re going back to Europe, we’re finding there’s very little left. You have some of the major companies of course, you have Electrolux and you have Bosch, and few companies like that. But the smaller companies are just out of it, they just don’t exist. So when we’re going back to find partners, needless to say, we’re one of the small independent companies here, it’s difficult for us to partner with large companies because our thinking in different.

Atul Vir: Large companies want to roll mass product out and work on high volume, low margin, but as we as a smaller company in order to compete, we work on innovative products, and features and so on that we need to develop, which is our core competency is, we develop products, we go to plants and we get them to make those products for us. And big plants are not able to do that. So there’s a disconnect, so we’re not able to find those partners from Europe, much as we would like to. And, of course, in the US it’s very difficult to set up those manufacturing facilities once again.

Luke Peters: Yeah. 100%. And I guess what I wanted to ask you also in addition to that, it’s just looking at just your career, and you’re born in India. And you’ve traveled all over the world and worked in different places. And I mean, even just looking at your profile, you have a CPA and an MBA, which is a unique skill set to have. But have you thought or have you tried to go back to India? I know India is a growing manufacturing power right now. And we’re definitely looking over there, by the way. And I know there are some great manufacturers over there, but the categories you’re doing in the kitchen electrics might be kind of tougher to find. Just curious if that’s also kind of on your radar. And I’m sure you have probably friends and family and more know how in India and curious your insights there?

Atul Vir: Yes certainly. We’ve been part of the India story for also about the last 15 years. But 15 years ago, China opened up for letting manufacturing and at the same time India opened up for technology and back office services and so on. So we’ve had our office in India, providing let’s say, staff functions and back office functions and analysis and so on that we need to get done. So we’re already engaged with India, but we don’t sell products in India. But we are going to start selling products in the next two months or so.

Atul Vir: So what we have done, we’ve got some core competencies, core knowledge of products that we’ve developed for the US market. But those products are being adapted to specific markets for developing countries and developed countries. And so with variation that they may need, and we believe that we’ve got a great product for India, which is they’ve got certain problems over there, which we don’t have here in the US. For example, they have electricity, the power outages that happen almost on a daily basis in many places. They don’t have running water supply in many places, in the sense that they have water for certain hours in the day and then it shut off certain places regular time and certain time they’re just shut down.

Atul Vir: So if you have an appliance that’s running there at the same time, well, the appliance also shut down. So we installed some of … I’m trying to understand this problem and in fact, solve them. And those same problems are not there in the markets we have. We have other issues.

Atul Vir: Using the machine, our main product is actually a Combo Washer Dryer, and we call it a Super Combo. And it’s called a Super Combo because it can fit many different applications, and many different markets using that one machine, almost like a template, and we adapted to certain situations.

Luke Peters: Interesting. And we’re going to come back to more about this because this is kind of the whole story around tariffs. And I want to get into that, because obviously there’s ways to handle the tariffs as far as price reductions, but also change more resourcing and even changing where we’re selling to, which looks like you’re already kind of headed down a few of those paths. So we’ll definitely circle back to that. But just to finish up the idea here about kind of gaining more understanding about your company, are you able to share … So we talked about the product mix. And now how about the sales mix? Are you able to share kind of percentages or how the different retailers rank versus, Home Depot, Lowe’s, Wayfair, Amazon, maybe direct to consumer, anything you can speak to their to kind of give an idea of where your major sales channels are?

Atul Vir: Well, I can give you some broad directions. And again, let me do it historically because I’ve got the … just one simple reason to put perspective in it, because I think listeners may want to know what happened over the years and how we’re transitioning. So when we started off almost 30 years ago, we were selling a lot to the mom and pop stores that were there in every city, every neighborhood had a neighborhood appliance store, and we had more than 1000 of them all over the country selling our products.

Atul Vir: And as time passed, and then the major companies got involved Home Depot, Lowe’s, Costco, Fry’s, all of them. And they started being able to step up and understand the problems and the challenges and how to merchandise those products. Then they started getting stronger and stronger, as a result, in the last 10 years or so are suddenly from being 80% in the mom and pop stores now it’s become 80% to the majors. So it’s shifted over, they’ve got the buying power, they’re hiring the people who … the old guard. The old guard, who was there who understood appliances, those are being replaced by what I would call young MBAs who are looking at the bottom line. And they’re really not interested in the innovation, or the widget that you’re bringing in. They’re saying what’s it to our bottom line, which is their bottom line that they’re concerned about. And their thing is that, “Well, fine, you invented this product, so you made this innovation, but if people don’t want it, then it doesn’t matter to us.” So people must want it. So it sort of shifted in that.

Atul Vir: So it was become very clear to us also that that’s the acid test, you cannot just invent an innovative product. I mean, it must have a use and customers must be wanted and customers must pay for it. So I mean, I’m not saying it’s good, it’s the way it is. But then it becomes very clear. In the old days, people used to marvel at the technology and say, “Wow! what a cool product.” But people are not doing that so much anymore. It’s just volume and moving up the door. So having said that, I mean, we do a lot with the major companies. 80% of our sales go to the major companies, and only 20% is left with the mom and pops and the independence and so on. And those of course, the mom and pops have also becoming less and less because they got succession issues and so on in their own situation.

Atul Vir: And then, of course, the third dynamic is Amazon, that got involved in the last few years with everything you can see in the world. And has become stronger and stronger. I mean, I would say just in the last 12 months, we have seen our sales with Amazon double, and we have been a key partner with Amazon in their prime program and in the warehouse program and partnering with with them and trying to understand we have people employed in our company. We just work on the Amazon account. Because I believe that they have democratized the process for marketing products. I mean, I know there’s a lot of criticism about Amazon, but I really believe they’re democratized. If you believe you have a product, you put it out there, you set the price, you set your marketing program, and if customers want it, they will buy it. Whereas with all the other companies, you have to go through a gatekeeper, you have to go to the buyer, you give them the price, you have very little control as to what the retail prices and what the programs are, which was the traditional way has been done.

Atul Vir: So in some ways you can say it’s good or bad, but from my perspective, I find it rather refreshing that companies have this opportunity to market this product, and you put your marketing program and if customers want it, then well, you get a good deserving chance to succeed.

Luke Peters: You just brought up a really interesting point, it kind of hit the nail on the head. I mean, it’s literally the reason I started this new agency, Retail Band where we help people sell on channels because of exactly what you just said. Whereas Amazon, it’s self serve, you can do it all for yourself. But then with the other retailers there’s a buyer involved. There’s gatekeepers, there’s approvals. It’s hard, it’s not as easy. And so a lot of products honestly just kind of skip those channels, a lot product brands, and they just go right to Amazon, because it’s so much easier.

Luke Peters: Did I hear you right, in saying that you guys are selling … Are you selling on the seller side? Or I’m assuming on the vendor side? Or maybe not, because you said about controlling price, or you guys kind of on both sides of Amazon?

Atul Vir: When on Amazon, we used to do a lot more on the vendor side. But now it has shifted onto the seller side, I think partly because they’re shifting it over to the seller side. And secondly, we also get more control of the pricing and the programs and exactly what we want to move on a particular day or month or whatever. And how we want to test new products and things like that.

Luke Peters: Yeah. Makes sense. It’s hard sometimes with the larger product because FBA becomes untenable sometimes on the seller side. But you can just fulfill out of the warehouse I guess. But then you gain that pricing control, which I know is really important, especially with all that product development you’re doing, you have to make sure that you’re out in front of that. Besides Amazon, what are, say, two other fast-growing channels for you guys?

Atul Vir: Well, we sell to pretty much everyone. We sell to Wayfair and they are good account and we sell to Home Depot, Costco, we sell to most of the big companies out there. I think we understand them very well, because we have a very good team. I mean, in our company’s case, we almost run like a military organization. I don’t like to use that word because we’re a business. But in some ways, we’ve been around a long time and we have the structure and the setup and it’s easy to understand. In some ways we have the mom and pop stores, for example. And it was almost an emotional decision, you’re going to take, we had our sales reps go in and take doughnuts for them and schmooze with them. And then you walk out with a fixed fees or trustees order, and that was the way it was done.

Atul Vir: But as of now, dealing with a large company, very professional. They want to know what the sales are? What the margins are? What the opportunities are? The advertising program? And so the question isn’t really to understand the way they think, I know you mentioned that the large companies are difficult, but I think it’s also incumbent upon us to try to understand what they want and then becomes very clear what they want.

Atul Vir: So basically, we need to have an understanding as to how each retailer thinks, they’re not all the same. We need to understand what is it they want and comply with what they want. And we sort of made our internal structure that we were able to do that. They all have large 50 page agreements that you go the spine before you do business with them. And I flip right to the last page, and I sign it. Because I said, whatever you want we’ll do it, tell us. And we study it and we comply with it. There’s no point having an argument and it’s because they’re in a stronger position. So, I mean, what’s the point of having an argument with that? Because they don’t need us, we need them. Just to put it plainly.

Luke Peters: No, it’s true. And they don’t like to change those documents. There’s some parts you can negotiate. But, but yeah, you’re absolutely right. And it’s really good insight. And I like your way of thinking, because I mean, it’s the world that we live in, if we’re selling products we need to work with these big guys and you’re making a good point, that understanding and learning about them and understanding their systems. I do agree 100% that’s the way to go on that.

Luke Peters: So kind of with that in mind, and now we got a great understanding of your beginnings, company beginnings, your channels, your products, and a lot of knowledge about you. What would you say is your biggest focus right now this year or maybe over the next 12 months on the company for growing?

Atul Vir: Well, as an innovative company, I mean, that’s what we do. We try to come up with a new model every year, at least in our core product. And then have new products also being launched, two or three new products every year. So as a company, our DNA is to do innovation. And we’re pretty much on track for this year to come up with new models and features that we believe customers may want and say, “Okay, well, I want to buy this brand.”

Atul Vir: We don’t have a monopoly on any single product, we’re a small company, we have an independent brand. We don’t have the resources of large companies to advertise and new brand marketing. I’m grateful for every single sale we make in the sense that a customer has a choice. They go to a retailer, and in every single product category, we have at least three competitors and their customers have a choice. And we realized that they have chosen our product for something and that’s what they’re trying to analyze and in most cases, we have large multinational, global, multi-billion dollar companies who we’re competing. And for a customer to choose that, I believe it’s because of the innovation. That’s something appealed to them that we have that our competitor didn’t have.

Atul Vir: So in our company’s DNA, there’s just innovation. And we have new products being launched. And as a result of the Super Combo, which I mentioned from a little bit earlier, we are now expanding to other countries as well. So we have a push into Canada, going to Mexico.

Atul Vir: And I just want to mention the result of Amazon, going back to that point, Amazon has got a new platform where you can export to other countries. And we are using their platform to expand into Australia, India, the Middle East and in Europe, all within the next six or eight months. Lets between now and the middle of next year. Because, they’re providing the platform to do that. The question is, Okay, whatever you want, we have a product. So how do we go overseas? Well, they’re saying, “We have the platform, we have the distribution, we got the warehouse, and we’ll help you process the approvals and all those things?” So as long as you have the product and believing in you can sell it. But I think they made it much easier again, I think it may provide a lot of opportunities for companies who want to do that. Clearly they’re doing it in their own their own self interest, but we’re finding a way for us to succeed as well.

Atul Vir: With those twin things of innovation and global expansion. I think that’s the course for, let’s say, the next 12 months.

Luke Peters: And exactly with the backdrop of tariffs again, you’re expanding in other countries, you’re going to minimize your tariffs footprint and excellent point about how Amazon provides a platform. I just attended the IBC, international Global Forum on sales and learned so much about selling into different countries. But it’s also so difficult for brands like ourselves, we both have consumer electrics, we have to deal with different voltage requirements and safety requirements and all of these things. And as you mentioned, Amazon is streamlining that and just making it so easy in helping you choose the different geographies that are going to make sense for the business.

Luke Peters: And, I guess on that point about innovation, you have 18 patents. Are you able to give maybe a specific example of a patent that you’ve used strategically to help you grow your business? And then also, we can follow up with questions about how you keep your patents protected? What specific documents or agreements you have to have with factories. I’d love to dive into that because it sounds like that’s kind of your DNA, is doing this innovation and creating these products with a competitive advantage. So would love to hear your thoughts on that.

Atul Vir: Yes. Well, those are very deep questions, but let me start with the first one, about the patent. So most of our patents are for our appliances and trying to solve problems for our customers. Some of them are for control panel and some of them are for knobs, some of them are functional.

Atul Vir: One of the key patents we came up with was about five or six years ago, where soon after the recession, maybe seven or eight years ago now. After the recession, everybody had, let’s say, was cash trapped. We all made it through the recession and we’re breathing a little bit easy. But now we have less resources. And so let’s say we had this combination washer dryer, so we had two of them actually. We had a vented version and we had a ventless version, which is also called the condensing technology. The vented version, you have hot air blowing in and exhaust hot air from the dryer part and the condensing version, is a water cooler system, where cold water comes in the dry cycle, sprays on the hot air and it goes up to the drain. So it’s ventless unit. We have two models. The ventless model was used in apartments and condos, older buildings where they didn’t have exhaust vents and because of the age they weren’t allowed to drill holes and so on. So it was a perfect example of that.

Atul Vir: And then on the other side you had our RV industry. We are quite strong in that industry and we acquired a brand some years ago to … that we got involved there. But the RV industry trailers, boats and so on, which don’t have that problem, they can drill a hole on the side. They use the vintage technology. So we have two models.

Atul Vir: So as we’re coming out of this recession we said, well we have these two models. The cabinets are the same, the drums and the controls and the pumps, and most 90% of it is the same except for this one issue on this dryer. One is the air vented, the other one is a water cooler system. And we went to the engineer and said, “We want to put this in the same machine. And we want to have a switcher or button that we can convert from one to the other, clearly one is air and the other one uses water, but the programming … the old days we used to have mechanical knobs and those are all gone. So in those days, we weren’t able to do this kind of technology. So we battled.

Atul Vir: So our company we define ourselves that we’re actually a marketing company that we invented or developed products that we know our customers want, whereas most companies they manufacture product and say we’re a manufacturing company. And we manufacture products that we believe customers want. It’s the opposite. So we say we’re a marketing company.

Atul Vir: So when we said … So we’re thinking of our dealers. Dealers only have to carry one sku, because they don’t know when a customer walks in, whether they want to use the vented or the ventless. They’re thinking of the customer, a customer is like a choice. For example, you have a smartphone, you have a million app, you download the app that you want, what you need, and everybody’s using their smartphone in different ways. So who are we to say that this is the product and you should buy it and this invented, and six months down the road, you moved from your RV to your home and you want it ventless and you can’t do that. Now it’s a useless piece of equipment. So to give the customer a choice. And so that was one of the key breakthroughs that we had. And we came up with that and that’s been a runaway success in the last few years, because customers like the choice even though I’d say most customers prefer one but customers like the choice.

Atul Vir: And then we develop further on the Super Combo. We had a customer in Washington DC, they were building a couple of hundred apartments. And they called us and said, they want to buy our machine that it needs to exhaust 50 feet. And we said, this machine can only exhaust 15 feet. I mean, it’s got a certain strength in the exhaust fan, and then this is in the venting cycle, it will exhaust 15 feet. They said, “Well, in that case, that’s the deal breaker because there’s another brand out there that … it’s not a Combo, it’s a separate product, but it blows the air 50 feet.”

Atul Vir: And again went back to my engineers and I said, “Well, we got to do something about this. We can’t just walk away.” Now I have to battle with my engineers, it’s not Slam Dunk, that they’re waiting for me and saying … They fight with me, they say, “Who is doing this product in the world? Is it do you see anybody doing it? Is Whirlpool doing it? Is you doing it? And why are you giving us these impossible projects?” And I say “No, I’m giving it to you because we know our customers want it and precisely because it creates an opportunity for us.” It’s not an easy discussion.

Atul Vir: Anyway, so we can up in a solution that we came up with a stand at the back of the machine that blows the air out, and we blew it to about 60 feet. And we got the contract and that is how we solve that problem. And this was an example of how we call it Super Combo, you can add different pieces to it almost like a legal system and make it work for different applications.

Luke Peters: Yeah, and and I love how you guys were able to … seems like close it really fast. Because I know these quotes don’t last forever. So your engineering team must have done a really good job there and created a solution that was easy and quick enough for the factory to implement. And then on the factory side. Talk to us a little bit … I mean, this is more for the listeners out there, if they’re thinking about patents and the cost involved and even the tooling oftentimes. And, just quickly how are you able to keep it protected and what type of conversations and agreements are you needing to have with the factories?

Atul Vir: It’s very difficult. I mean, we all from from a layman’s terms perspective. And I started off as a layman, and got into the industry, we believe you file a patent if possible, it’s very expensive to file patents. Design patents can cost maybe five to $10,000, depending on the complexity, and utility patents can go up to 20 to $30,000, depending on who’s writing it, and so on. And of course, there are the patent office always takes it back and you have to keep paying more and more money to get it approved. It’s never a slam dunk that you go in and the first shot it’s approved. It’s like getting into a black hole, and you’re sort of stuck in over there.

Atul Vir: So let’s say that you’ve got the patent, I know of story where patent … in there is a whole movement out there about patents and how it’s almost like a scam you can say. Because patents have the issue. And if you have a much larger company file a patent that conflicting, they have the resources to go and fight the case and say why their patent has priority over yours. And as smaller company, it may cost you about a million dollars to defend the patent that you have. And most companies just don’t have this kind of resources.

Luke Peters: Yeah, I’ve seen that.

Atul Vir: So I would say, it’s paper value. It’s there for marketing to show that you’ve done something, but realistically, if you get into an issue, it’s a very difficult unless it’s a slam dunk that openly violated or copied into something. How do we protect it? Well, we had a situation many years ago in Asia, where somebody just took the product and knock it off. And we saw it in the market. And we didn’t know whether our partners were responsible for that, or somebody in the open market copied that. I mean, we all hear about these stories about not being protected and so on.

Atul Vir: So when I had a change of partners over there, it was seven or eight years ago with the new partners on this now. I went to them with my new patents including the ones that just described. And I said, “Listen, this are my patents, I’m going to share them with you. I’m going to sign over half of them to you, because I need you to make good products. I don’t need you to go behind my back and finding it over here. And they were shocked. They said, “Nobody’s ever done this before.” And I said, “I’m giving it to you because I’ve been doing this, but I got burned the first time, because you have a patent and there’s no protection. What can you do? So I’m sharing it with you, so you have me protected, let’s work together and build the market.” And they love the idea, they got television stations and put me on TV. They said “Hear this person has come to me, see what he saying.” They were so happy about it.

Atul Vir: And eight years later, we are operating, and they’re happy and you’re happy. And we haven’t seen anybody knock it off in Asia or here. And so that’s the way where we are now. My lawyer said, you’re crazy. You’ll never survive. Everybody said you’ll never survive. And I said, You know what, you can have a piece of paper but it’s only so much valuable if it can do something with it. And that’s what I’ve done.

Luke Peters: Yeah, so I’m glad I asked the question. I mean, that’s the most efficient interesting insight actually. I mean, with all the experience you have, it’s a remarkable way of solving that problem and really is a business way of solving a problem. You partnered with somebody, like you said, kind of ignored the law or the legal advice you were getting. Which is is usually very black and white. But you found a compromise and formed a partnership over it so incredible. That’s a great story, and thanks for sharing.

Luke Peters: I guess, now, what I wanted to quickly move into was tariffs. You’ve got great negotiation experience and prowess it sounds like. And tariffs are massive disruptor, I guess we can start with that point. How have you guys been able to work through the tariffs situation. And then I guess from that, we can talk about if you guys have been made whole on the … been able to get the price increases and cost decreases that you’ve needed or if it’s still kind of a constant struggle?

Atul Vir: I’ll be honest with you, it’s a constant struggle. We have not been able to negotiate with the plants to get it down to reduce the prices sufficiently. Needless to say, I feel bad about asking them, I know there’s a lot of talk about the devaluation of the Yuan and so on. But I guess, people who are able to do that are large companies, over here American companies will have plant their own plants in China or will have a dominant relationship with the plant, they are able to negotiate and basically say, “We need this, all those kind of things.”

Atul Vir: We’re a small company and then I suspect most people are smaller businessman who don’t have the leverage that we’re talking about. So we have not been able to do that. And frankly speaking, I feel bad doing that because if you push your supplier to cut costs, and they’re going to cut the quality. And in our kind of product, electronics and appliances you need good quality, because … You can get somebody to save a dollar on a part and if it breaks down you’re going to take back $1,000 product. So, I’m not naturally inclined that way. I want to make good products that last that make people happy rather than nickel and diming the people who make the product for us. And push them into a corner that they are not going to tell you this is what we did, we’ll only find out a year or two later. And, when we sell a product, it looks nice and much later on you find out that it doesn’t last or whatever, it’s crud so burnt up or whatever.

Atul Vir: So I’m not gone down that route because we have strong relationships with our vendors, we have about seven or eight relationships with four different products. And I don’t want them to go down the road where I push them. I believe that relationship is is important. So we’ve tried to absorb some of it, the price increases, learning the character there, about 70% of our products have got tariffs on them to various degrees. And we’ve talked to the customers, some of them push back.

Atul Vir: I would say the larger companies are more understanding, they’re professionals and they say, “Well prove to us this is what’s happening, give us the code.” You give it to them. And they say, “Okay, fair enough, we understand. And if this is what has increased then, we know you should increase it so much.” For example, if the tariff is 10%, they will allow you to increase it by 6%, not far from the entire amount, which I think is fair. And they also take some and move the dots. So, I think we’re all trying to manage, it’s a moving target, where everybody’s in the same boat. Nobody really knows what’s happening next month. So I wish I had a better answer.

Luke Peters: I mean, it’s a real answer. So yeah, I mean, and you know how far you can push your partners and what negotiations you’ve done in the past kind of leading up to this point. So you know what your price points are. I think a lot of people are in similar situations and just like you said, “No one’s getting the full tariff increase.” But there’s a little bit of pain on everybody’s side, I guess.

Atul Vir: That’s right.

Luke Peters: Yeah. Listen, it’s really been interesting kind of getting to know the whole history of how you’ve grown the company, and the skills that it’s taken for you to get to this point. What would you say is something that you can share with the listeners is maybe kind of the your biggest learning that you want to share with the listeners that you think might be actionable or something that they could take away?

Atul Vir: So, I give you a lesson?

Luke Peters: Yeah. Your biggest lesson or your biggest learning. Words of wisdom or something that you want to share, over your years of business experience, a tool that you want to kind of pass on to the listeners, what would that be?

Atul Vir: One of the biggest thing I would say is that you got to be flexible, you can’t be rigid in anything that you’re saying. You never say never, never make it an ego issue that you cannot reverse yourself. You have things that you said, I said it yesterday based on certain circumstances yesterday, new information or new circumstances happen. And you may need to reverse yourself. So everything is fair game, you’re not too rigid that you’re boxed in, you should be able to move and be fluid and be flexible at all times, because as business your survival depends on that. It should never be an ego issue that you’ll stuck to a particular position.

Atul Vir: And it took me a long time to understand that. Just to let you know, I went to a military boarding school for my education. There we had order and structure laid down and strict timings for study and work and play and all that. So it took a long time to be so flexible, and to understand that this is the way the real world operate, took me 15 or 20 years. But now and even for my employees, sometimes they say, “Well, you told us this yesterday, why are you changing our mind today?” And yesterday was yesterday, I learned something new. I can even say I had a new thought that made me change my mind. And I know it sounds very weird that people say, they flip or something, but you’ve been saying that. But, no, that’s what you have to do to be ahead of it. Not worry about people’s feelings and just be ahead. Just be flexible, mobile, fluid if possible.

Luke Peters: Yeah. That’s great, actually. I mean, decisions are based on information that we’re receiving. And as you receive new information, you have to change those decisions, and that’s interesting. So you have quite the background. So you started in the military school and probably some of that organizational structure helps you, is running a business and I can tell that you’re very thoughtful and measured. I can tell you’ve held on to some of that and then add to that the creativity and that’s helped get you to where you are.

Luke Peters: And before we finish today, Atul, I know you are an author. And you’re the author of a book called Underdog Thinking. And why don’t you tell us a little bit about that book, what it’s about and where people will be able to find it?

Atul Vir: Yes. Well, my book is about to come out. It’s going to be available on Amazon. And it’s called Underdog Thinking. There’s more information on it on the website, which is underdogthinking.com. And I was asked by a few people, some years ago, some people close to me who knew my story, and my story is just not an up and up story, the ups and downs. And the ups have been very high and the downs have been very know. And they wanted to know what it takes to come out of those things and survive through all these experience.

Atul Vir: At the end of the day, I was an immigrant to the US, I’ve lived the American dream. I came here with $10 in my pocket 30 years ago and actually lived it. So I thought I’d put everything down right from day one and all the things … that considering I don’t come from a business family in the sense even though I studied business, but actually when you get into business, it’s something quite different. And I decided to put those lessons down. At the end of the day I was the underdog being an immigrant, first of all, starting off with only $10.

Atul Vir: Getting into an industry, the appliance industry where there was so many … and those days there were five big players. You had Maytag, Whirlpool, Amana, Frigidaire . And so, I went into that industry competing with them. And I think I was young and foolish when you do that. But, I decided to put those lessons down. And I think, I mean, one can even say the appliances it’s more like a vehicle for what I did. And the lessons out there on how to start a business, build a business, succeed in business.

Atul Vir: And there’s a whole chapter on innovation actually, what’s the definition of innovation and how to innovate? So how do you innovate? So, all those lessons that was which I didn’t know, I didn’t read any book, you can read the textbooks and the theory books and so on, but they don’t teach you. And in those days, there were very few entrepreneurs in this bricks and mortar kind of business.

Atul Vir: So I decided to write that. And hopefully, I’ve got some good reviews from few people who have showed it to. And those reviews are on the website. And hopefully when it comes out, I hope it will be useful in fostering entrepreneurship. And then we have some entrepreneurs. It’s lonely being an entrepreneur, because you don’t have too many resources to exactly understand your situation. But I think there are commonalities with all entrepreneurs face, and hopefully it will help some entrepreneurs to help them better in whatever they’re doing.

Luke Peters: Sounds like an amazing subject and we’ll put the link in the show notes. So all the listeners can hop over to retailband.com, and then in the show notes will have a kind of the key ideas and subjects from this podcast typed out. And we’ll have that link in there and you guys can check it out and again, I agree with you 100%. I mean, schools great. I have to convince my kids to go every day. I mean, they teach you kind of how to get a job, and not how to be an entrepreneur or oftentimes not how to think creatively. So it sounds like you’ve hit on a couple subjects. How do you find the time to write it while you’re running your business? And I know, it’s something I thought about as well. But it’s hard to commit that time. And I know it’s a labor of love. So did you just kind of have to cordon off certain days? Or where do you find the time?

Atul Vir: It was tough. And let me say it took a long time, it took me five years. So it took a long time to put all the pieces together. And over the years, I selected quotations and things that struck me and then how to put it all together and distill it in every word. It shouldn’t matter why is it this word or that word? It’s more like a product, like I was developing a product, and why does this machine do this or that? It became engaged with that product. It was a creative process but it’s like the innovative products I do. And so I hope the results will be good, will be everything from the color and the writing and whatever it is.

Luke Peters: Oh, can’t wait to see it. And sounds you’ve put a ton of time into it. So definitely going to check it out myself and I hope you do well with it and we’ll do everything we can on our end to help you out. And then before I let you go here, how can the listeners get ahold of you? How can they find you or reach out to you?

Atul Vir: Well, they can reach me through Equator. I have a direct contact over there to contact me or through my company. I have a website for myself, which is atulvir.com, your listeners can reach me there and also through the book website, which is underdogthinking.com, so maybe tell me what is it you need or what I can help with? I’m very accessible, I have a business card I have my phone number on there. And I can give it to you that it’s probably better if I hear what the listener wants first, before I respond. So my website’s available.

Luke Peters: Great, and then we’ll put that in the show notes as well. And Atul, I want to thank you for joining me today. I’ve learned a lot personally, I’ve taken a ton of notes. And hopefully you enjoyed it. And I know this contents going to be valuable for the listeners.

Luke Peters: And want to thank you the listeners for joining as well. And this podcast, Page One Podcast is sponsored by Retail Band, which is my new company. And as I mentioned earlier, if you guys are looking for help to grow your business on online channels, such as homedepot.com, wayfair.com and all the other online channels or if you’re looking for help with influencer marketing and how to quickly launch products, get reviews. It’s not just about influencers, but it’s about a better ROI than traditional advertising and a longer term evergreen ROI that continues to go and the water spigot never shuts off like it does with advertising. That’s how we help people.

Luke Peters: So if you’re interested, head on over to retailband.com check us out and you can get ahold of us there. Again, thanks, everybody for joining, and we’ll see you next time.

Atul Vir: Luke, thank you very much.

Luke Peters: Yep.

Atul Vir: Bye.

Luke Peters: Bye.