Meat and Potatoes Clint Reid
[00:00:13] the meat potatoes podcast to Silicon slopes production meat and potatoes shines a light on the people in Silicon slopes of get things done. We explore how I and when they get those things done and why their work is the meat and potatoes of Utah’s Tech and business. Today we are joined by a traveler from afar Clint Reed.
[00:00:32] Who is the founder and CEO of Zona knows. How are you doing? Good. Thanks for having me Garrett. Where’d you come from Southern Utah st. George drove up this morning. Cool. And how’s the drive it was good here for economic Summits tomorrow for the state. So headed to that to talk a little bit about global e-commerce, but cool.
[00:00:54] Yeah, it’s nice to be up north right now. It’s today is a nice day. They’ll know it’s going to cool down. It looks like next couple days. Yeah, so tell us what zone us is and you know, feel free to tell the story of. Well, you found it and you know where the idea came from? Yeah. So Zone us we were assess company.
[00:01:14] We calculate Customs charges on Imports into countries products into countries. So a t-shirt into Canada or a pair of shoes and a pair of jeans is going into the UK. Could be a bumper even going into Australia and we calculate that local tax like the goods and services tax. Let’s say in Australia and then every single item has a different tariff that Supply.
[00:01:38] And then we focus primarily in the e-commerce space. So we’re not really calculating that at time of Customs clearance. The Customs Brokers do that. The Dilemma for an e-commerce company is they haven’t Shopper that’s from Canada or from Italy that arrives at their website and they buy the product and the product.
[00:02:01] You know purchase goes through three days later. They get a call or an email from Customs that. Hey you owe us 30 $40 in duties and taxes. So in the US were we’re really spoiled because I was last time you paid for shipping, you know, probably been a while. So imagine now the the the barrier still in the friction, that’s still this is common to this isn’t like the exception.
[00:02:26] This is the rule that the consumers are used to getting this. This phone call from Customs or a bill or an invoice and they’re not getting their package till they pay it and if they are surprised they won’t pay it and then the businesses hit with the charge back on the credit card and they won’t they’re not going to win the chargebacks and never actually got delivered.
[00:02:45] So it’s just a mess. So yeah, we integrate with you know platforms like Shopify Magento Bigcommerce and our duty and tax calculations is the core backbone of our products. I which touch a whole lot of different parts of that whole buying experience for international Shopper. Okay, let me make sure I understand it.
[00:03:07] So let’s say an Italian ordered a consumer good product from Utah, Utah widget. It gets sent to the Italian and they get a call from their customs Office saying you owe us X and oh, yeah, you’re not getting you’re not getting that that widget, right? So we work with like Rocky Mountain ATV is local customer for instance, right the works with us and they use our apis to calculate all of this.
[00:03:34] So now the how the experience would change is that same person from Italy that say they wanted to order us some some knee pads or something. From Rocky Mountain ATV they’d they’d go to check out and they would see then the knee pads are going to cost this much in vat, which is the local tax in Italy and this much in duties and tasks and duties and they’d be able to pay.
[00:03:56] All right then and that’s where we come in. So they pay all the duties and taxes right there at the checkout and Rocky Mountain ATV doesn’t really change any of the processes other than they now become the payer of the duty and taxes and then it just clears Customs gets delivered and the no surprises for.
[00:04:12] Customer, okay, very cool. So obviously since I’ve never bought an American product well overseas, I wouldn’t have known about that. All right. Yeah, that’s that’s a bit of a challenge for I think Americans is we are a bit spoiled and rest of the world’s not and so you get Ali Baba or JD.com and these.
[00:04:33] Our retailers that are investing a ton globally I mean and so, you know, the bigger retailers like Walmart acquiring instacart in India. They they know that they have to go Global. I mean, it’s like a four point eight trillion dollar Global e-commerce space and eighty-five percent of global e-commerce is not done in the u.s.
[00:04:54] So yeah, it feels all convenient. But if you’re if you’re not trying to export or grow globally. They’re going to be coming after you eventually, right if you’re an online retailer and selling all these other businesses in these countries. Okay. So where did this idea come from to build the. So my background I started the founded the company in 2009.
[00:05:16] Well, 2010 basically, so right into 09 10, and I worked at UPS worked at DHL Express as well which DHL does a lot of international shipping small package movement and I got about five six years in the industry. And I remember walking into I was in a so I’m from Salt Lake area and I walked into a business that they sold nutraceuticals are selling into Canada.
[00:05:45] I start explain. Okay. Well heads up right like this is how it because they’re already getting complaints from their consumers. They’re looking at me at UPS. Hey fix this and I’m like well look, you know, there’s these brokerage fees and Canada and then the customs fees are like this. And by the time it’s done explaining it the business owner and I was I was like helping the sell for up there and the business owner turned to me and he’s like, yep, we’re turning it off.
[00:06:11] We’re not selling any candidate anymore. And so I’m like no that’s like the exact opposite thing of what I was trying to achieve. I’m trying to help them sell internationally. Our ship internationally really that’s what I wanted. Right? I want him to ship a package with ups and the whole shopping barrier just completely ruined it.
[00:06:29] And yeah, it’s remember walking, you know back to my car and thinking man, you’re not going to sell your stuff internationally. How can I help sell their stuff internationally, that’s kind of how it started. And so we do have some fin Tech Solutions around like Global Payments and things but really the core part of it in the friction is really in how do you calculate on so many different products the correct cost and not lose your shorts right and allow the consumer just to pay at it check out so been working on that.
[00:07:28] There’s a you know, I wasn’t a technical founder, right? So I was a in sales even though I like to buy night pretend I’m you know, I’ve done done some coding and I loved it. I like to pretend I’m a sequel Master something. I love I love the tech side of the business. But that was the most challenging aspect was.
[00:07:49] Getting up to speed on the technical piece and luckily. I was able to have a really good architect architect the solution from the beginning and plenty of pitfalls along the way but that was the biggest challenge was getting up to speed on the technology side of it. So once you had something that was workable Bill, how did you get your first customer?
[00:08:10] So I I knew a few customers from UPS when I worked there, but I also want to be extremely careful because I didnt the console. Active interest in things. So I’m you know, the the original product MVP that I that we put out was just a check out. It was his hosted e-commerce checkout took the payment.
[00:08:30] We calculate the duties and taxes and they could just integrate that on their website I and. Man, we’ve worked on for about seven years with a really good customer here locally that see replacement parts. They’re really big e-commerce company great company. And so if they listen to the podcast, they’ll kind of get some insight to the story that they might not have known at the time, but they we help them produce labels for this to actually produce the shipping label and.
[00:09:01] All I had was that I didn’t have a back-end all I was at checkout. And so we I we were awry was you know in like a shipping system printing labels to a PDF uploading it to a server and putting all in a Google sheet and they’re shipping Department going the Google sheet and print out all of these labels and that was a you know, I guess do things that don’t scale.
[00:09:23] That was that was me at the beginning with brought on a, you know, co-founder right around that time and. So it was it was it was very interesting I can imagine so as you get better at it and the products better and you add on additional products and stuff. what’s the most challenging part with I assume these tariffs and prices and duties change and.
[00:09:55] They might even refer to it. I don’t know the difference between a duty and a tariff. For example, it’s basically the same thing which is why I kind of use both words because I hopefully somebody, you know relates to one of them. That is the most challenging part of it is trying to keep up to date with all the different calculations in laws and everything that are changing around the the duty and tax piece of it and trying to.
[00:10:23] Provide that two large e-commerce websites that are trying to export to multiple different markets and they have let’s say it’s a hundred thousand skews like that that way if they wanted to actually every every item just to kind of educate a little bit more but every item like your shirt has an actual code that’s associated with it and that it needs that code in order to clear customs.
[00:10:44] And that’s called the harmonized code. So that’s what assigned to that Duty rate. Right? So when Trump signs 25 percent tariffs, let’s say on Imports in the US every single code in that chapter in that book just 25% terrorist. Let’s say so but typically those terrorists very bye-bye item almost always and yeah, so keeping up with when you have that many, you know items in the catalog that you’re selling and.
[00:11:11] Trying to figure out that code on each one could it’s just thousands and thousands maybe hundreds of thousands of dollars. You could spend for a very small Roi when you’re trying to like shotgun approach right the global market when you’re an SME, right? So I yeah, we are technology is completely built around a real time calculation for that without having to harmonize all those products to keep it actually affordable and still is.
[00:11:38] Is low risk as possible to go Global because you have to if you’re selling online. So is that 25 percent number that you’ve done? Is that per like shipping containers at per shirt so that it sits on the value of the item. So there’s a value that’s assessed. So, you know, the the original margin or the cost of goods on that shirt is put on an actual invoice that clears customs and let’s say there’s a container of them and it’s.
[00:12:05] You know $30,000 worth of shirts. So that that Duty percentage is applied to that number and the u.s. Is actually really simple like the reason even when us customers buy from China. They don’t have to pay typically duties. It’s why everybody’s like, what do you mean duties? We have a law that says anything under 800 bucks.
[00:12:24] You don’t pay duties or taxes or anything? Okay next, Mexico, Canada. Even though that after or now, you know the new the new Trade Agreement that’s going to come into place between the two they don’t they don’t do the same thing. You send like a $20 item to Canada and they will collect their goods and services tax their provincial tax.
[00:12:42] They’re going to end they’re going to apply then that same Duty rate. So I it’s it’s pretty imbalanced in that and it makes it more challenging I think for the u.s. Exporter because one they can’t relate. And two, they have the biggest problem to start doing it and start exporting. So it’s it’s not a space that’s getting solved any time soon.
[00:13:05] Yeah. Yeah anytime I hear about heavily regulated Industries always think oh, that’s why they’re Smugglers and that’s right. Gosh dang. Yeah. Yeah and then things like brexit pop up or you know gdpr in Europe and it just throws a wrench in everything. Oh my gosh. Certain people love their regulations.
[00:13:26] So you’ve built the team in st. George, correct? Yeah. So actually I originally founded the company up here and had a little office in Bluffdale and the team was still pretty small. I mean my co-founder looked each other like you know, what we love, I love st. George Wright. We loved being down there my parents had a place down there.
[00:13:47] And my wife’s like why are we even leaving and probably still small enough? So we move down there and built the team there so we have a team of 40 right now and mostly you know, the developers and sales team and we have it. We have a couple remote employees here in Salt Lake, but for the most part the entire teams in St.
[00:14:07] Very cool and what are the upsides and the downsides of building a team in St. George over the last 10 years? Okay. All first the downside actually. And I can be optimistic the downside the most frustrating thing is our theaters or terrible. So the II was waiting for after the Millers took over the theaters down there.
[00:14:28] I know they would love to I think put in an IMAX or something like a decent. They’re they’re just nothing like they are up here. So I miss that that’s outside of that at least, you know from the business aspect. I think I originally thought it would be tough to recruit but being a big fish in a small pond down there.
[00:14:48] Is pretty advantageous right? Like we get to meet with the mayor all the time. We get all the different tech companies down there like printer logic. I mean, they just raised a 15 million series a with Mercado. They boot strapped to that. That’s a series a I mean that’s that’s impressive for up North and then there’s easy storage and TCN and you know applicant Pro and there’s a lot of different tech companies down there, but there’s there’s actually still we get a lot of you know, People that for it could be health reasons or just environment they want to live down there.
[00:15:23] So, you know, I haven’t had to scale the company 250 like print logic has yet, right, but I have at least kind of seen them blazed that trail and so far recruiting hasn’t been that bad and the people that work for you want to be there. Right? Like they want to live there. They love that lifestyle and I think we get a deliver a unique product that.
[00:15:44] Super challenging and and and the global market is just so open for the taking but yeah, it’s a it’s a great place to be you know off the top of your head and it’s fine. If you don’t have a percentage of employees that are native st. George Ian’s or small actually I bet you off top my head. No, but I’m going to guess I would guess that it’s about.
[00:16:11] 30% so I mean we have a Brazilian that works works their lives in st. George. We have one of our programmers. She’s from France and and they’re amazing and then a lot of other transplants that you know, you ask why you moved to st. George like oh, well, I Googled which which city had the most sunny days in the United States, you know, that’s how they end up there something so yeah, there’s a.
[00:16:37] There there there’s there’s some natives but there’s a lot of transplants to school. So how did you you build your team? Was it tech-heavy at the beginning cells heavy what we’re what was your process of building your team? Yeah tech-heavy at the beginning. But well, I mean Tech have he’s like definitely we’re bootstrapped right?
[00:16:56] So tech-heavy being me and me paying my next door neighbor. You know five thousand dollars a bill being original prototype, right like that was and he was awesome did a great job of putting that together. That’s that’s the tech-heavy side of it so slowly and we’d add another developer and a salesperson developer salesperson and I love the operation side of it.
[00:17:18] I had to learn some of the tech side of it, but it’s just, you know, When you’re bootstrapping it just goes slower right luckily sass compounds. And so we have a tip pretty much a low churn rate, but you know, I probably don’t learn as fast sometimes, you know, it’s feels like I always have to learn the hard way and maybe someone could have told me to look out, you know half the time when I’m making some of the decisions I make but yeah, we got we got gotten this gotten to this point and film pretty good about where it’s going.
[00:17:50] So you’ve been strapped for a decade. Do you have any plans for raising Capital? It’s a good question plans. I would say no, I. do a we talk about it often right now. Yes, like pretty often. So plants would be like a in the next three months. We’re going to go and really start talking to some VCS.
[00:18:12] My biggest concern is finding the right VC that wants. Is willing to go along right? Because I really like doing this. I want to stay in st. George. I want I want to build something really, you know special generation, whatever it is and so find it just find the right Partners the most most important part and if they can help us we’re we’re missing out on going into Europe right like that that’s eating at me.
[00:18:37] The fact that cross-border said the global e-commerce is soap and are ninety percent of our customers businesses e-commerce companies are in the United States. Well, that’s not where most all e-commerce companies are so we could use Capital to expand and grow. So yeah, it’s always something that’s it the back of my mind or top of my depends on the day.
[00:18:57] Yeah. Yeah. I imagine there’s people that reach out to you as well. So it’s a good good problem to have well, we’ll Circle back on st. George. I have a few more questions about kind of your business model. What’s the worst country? To deal with who are the ones constantly thrown curveballs or just can’t get their act together now right there.
[00:19:21] Of course, it has to be some of the bric countries China Brazil actually India and RAV Russia’s terrible to and Mexico is really bad. So in any Commerce there there China’s like everybody wants to go into China. They’re so excited about going to China One the Chinese don’t speak, you know English.
[00:19:42] Like a lot of Europeans do right. So you’re upset a huge Market to go into and says Canada Latin America stuff Brazil. The Imports are like the cost of the just the tariffs and duties and everything is double the price of the item at least right? So if you buy a hundred dollar shirt, and you’re in Brazil, you’re going to be paying a hundred bucks when that clears Customs again.
[00:20:03] Well, and you know, it’s Brazil challenging because of the. China’s kind of challenging because I don’t really know what they’re going to do half the time. It feels like and then India just you know, just to has a lot of different ways. They apply duties and tariffs and everything. So yeah, like, you know, some nightmares of are just some products and can cause you issues.
[00:20:28] I remember talking with a retailer that sells paintball gun stuff and they were. Selling like it’s like hand, you know the grenades that like you throw and they spin and all the paint. Well, they put on the commercial invoice paintball grenade right or whatever. They called it what they you know, that’s the name on your catalog, right?
[00:20:53] Well, you custom start with a grenade. So, you know, it’s it’s like, you know, you know tubing with water soluble paint, right? So. He did things like that pop up. And if you send a will have we work with some really big gaming PC companies and if if the customers aren’t willing to pay those duties and taxes we’ve seen, you know, three four thousand dollar machines just stop and customs and it cost so much to get it back and hopefully it doesn’t disappear and.
[00:21:34] Yeah, so but it’s you know for all those challenges. There’s there’s plenty of good stories too. Sure. So I assume you know, the there’s Legions of lobbyists on you know, the American side and all the other foreign country side and they all have different opinions on low tariffs. I high tariffs. Do you guys how do you measure kind of the windage of you know these World economy?
[00:22:01] Yeah, so I did last month. I got to go to Geneva to the UN to speak on a panel at you any Commerce week and I’ve never done anything like that and I got to sit in a room with a bunch of bureaucrats and be the only American in the entire room and all they would talk about was what you were bringing up earlier, which is consumer privacy this protection are consumers.
[00:22:28] To know their data is protected and we need to know where these this data is being hosted in all this information, you know, and like your consumers are really saying that because we sell we help us Company sell to them and they don’t say that they say that it’s a pain in the butt to buy like they just want some convenience.
[00:22:47] So these are the same people right that come up with those, you know there that they want to streamline it and I think they but there. Yeah that the regulation is causing definitely a whole lot of issues Australia for instance on on like Australia the other day not the other day. Sorry. This was about six months ago.
[00:23:09] Australia came out with their low value tax law. Well the day that that came out Amazon shut down amazon.com for Australian customers. They have amazon.de you write for Australian customers, but for if an Austrian want to buy from amazon.com. Because what Australia was asking Amazon to do and now retailers is hey, if you sell over $75,000 a year of product into our country you now have to register for a tax ID here.
[00:23:35] You have to pay the 10% and Amazon was like forget that so but that these these these laws are continuing that like four exits. Just causing. Major issues for especially European retailers, right? Like again, we have a customer in Switzerland and all they could talk about was brexit. And because they’re so used to the UK everything just flowed between the borders just fine and now brexit happening and they’re like, this is our next door neighbor and we now have like tariffs like what we’ve never had tears when we ship to the UK and they don’t even know what the tariffs are going to be and they don’t know when the law is going to finally like, yeah.
[00:24:12] So a lot of uncertainty can can cause some issue in the space. But luckily e-commerce has you know, it’s it’s a tech heavy industry. And so there are these companies can adapt pretty quick. Especially what I think would like technology like ours right? So when that happens, we’re right there ready.
[00:24:32] To immediately start calculating, you know, the proper terrorists and everything for companies like that. Very cool. So let’s jump into some actual meat and potatoes. How do you like to structure your days is it meetings phone calls slack? How do you run your business? So I do one out one on ones on Monday trying to cut meetings in half right now basically and then we had, you know have a staff meeting.
[00:24:57] In the afternoon all my meetings I try to do in the afternoons on my one-on-ones. I we typically because we’re in st. George will just we do a walk so I’ll get in I don’t how many miles because but I’ll just it feels like I’m walking all day on Monday pretty much all afternoon. So. Then yeah, we use slack internally and we have an all hands on company meeting which we bring in lunch on Wednesdays for everybody and then do a big company training for everybody right when lunch is done.
[00:25:29] It’s because everybody loves lunch so it’s so easy to get you know, all right done eating but 30 minutes to eat now. We do a company training or so, that’s that’s usually Monday through then Thursday’s no meetings and Friday. Hopefully no meetings, but not you. That’s why I try to do and try to talk to customers as much as possible or go travel and visit them and yeah.
[00:25:53] Okay, so you’ve got it figured out no, no not even close if we had a figured out we’d be okay 10 years over like no, they don’t have figured out. We’d be four or five times the size. Yeah. So I like the idea of walking and during your meetings. It’s a good way to stay a little bit in shape and I imagine at some point.
[00:26:20] There will be an employee that you don’t know right if you get to a certain level, but it sounds like you know all of them at this. Oh, yeah. Yeah, I’m. I’m probably too involved half the time. I love everything about the business and being involved in whatever I can and so. Yeah, we’re at 40 so I don’t think what’s that?
[00:26:40] What’s that number of the dunbar’s number, you know 120 or something. I don’t know. I guess it depends on your memory. Yeah. Okay lady. I’ll probably start kissing. Yeah that depends on that. Probably not know someone’s name at that point. Yeah. So what are your plans for Zone owes over the next couple of years?
[00:26:58] What’s the big thing on the horizon that you want to accomplish? Yeah, the I think the the biggest thing for us is to word in the SMB space right now SME and when I say that I mean are you know? I guess how maybe I won’t go over some of the revenues too much but Shopify. Magento those those platforms.
[00:27:23] We need to go up Market into Enterprise. So that’s one of the biggest things that we’re trying to do right now with our apis is build out that Enterprise product a little bit more and go after that space and we do have a few Enterprise larger customers, but it’s one that we need to really go after the other then the other thing is expanding into.
[00:27:42] Into Europe and Asia pack because I are our two biggest competitors that I see is like really doing something are in Europe and that space is just it’s just massive. Yeah, gotcha. Okay. So let’s Circle back on Saint George silicon slopes helped put on an event a little bit down there recently. And that event was called 5 thrive thrive Beyond Thrive Beyond 5 and so what essentially Beyond five employees, you know, how do you how do you thrive and we you know, we Clint bats came down and Nate walking shot.
[00:28:22] So we did this up on Tech Ridge, which if for those that don’t know what’s happening in st. George where the old airport it used to be up on that bluff. It’s. That land somehow nothing has happened to it in years right until just in the past couple of years. They’ve started to kind of build out some infrastructure and have a master plan for a Tech Community up there.
[00:28:45] So hopefully I its it where we’ve planned far enough ahead that some of the challenges I think that we may be or we Face here in Utah down it like you know up here at Lake Traverse Mountain Area. Yeah. I I think they’re really thinking ahead. So we’re going to go up there. Courage with printer logic when they when they head up next year and so there’s a building up there that Dixie Technical College which different than Dixie State.
[00:29:13] It’s a beautiful 30 million dollar building or something. And that’s where the event was for Thrive Beyond 5. It was it was it was awesome. Not just you know hearing what was L. Tell you the most interesting thing to me was the fact that Clint bats and Nate walking Shaw. I think had a better idea of what was going to happen to us in the next five years than anyone in the room, right?
[00:29:41] Because you guys have all seen it like his first thing, you know, we talked about when I we got when I when I arrive we talked for a few minutes and you’re saying oh man the growth it’s comin in. I you know careful what you wish for I guess. Yeah, but that was that was the most interesting thing is I think that st.
[00:29:58] George especially a lot of the the locals don’t really understand the how amazing of companies tech companies that are there and that are growing and luckily we have, you know companies like printer logic and Ryan we take who’s the CEO there? I I think really helping lead the way and its really encouraging and exciting.
[00:30:21] But yeah, it was a silicon slopes event. So there’s a chapter down there silicon slope st. George and even though we don’t really have the the slopes it’s still we’re just glad to be included because we are you know, we’re in the same state and. Culturally, we are tied, you know, all of us are going back and forth between locations talking to one another absolutely very cool.
[00:30:46] Well, this has been educational and enjoyable and congrats on bootstrapping up at this point building successful product and team and we look forward to hearing about your continued success and appreciate all. You and the others are doing down there to help the Silicon slopes chapter. So Clint read founder and CEO of Zone owes.
[00:31:09] Appreciate your time. Yeah. Thanks Garrett. Thanks for
[00:31:19] having me.