Morgan (Host): Hey, everyone. Welcome to the latest edition of ‘Client Horror Stories’. I’m honored to have F.M. Byers here. I love going by the initials. It reminds me of your own S.M. And you were just telling me about your crazy experience in China, which is always a source of adventure. Let’s dive right in. What happened to you, F.M.?
F.M. Byers (interviewee): Well, first I need to provide a little bit of backstory here. I went on a cruise with my family. This was probably in 2014. And I met a gentleman on the cruise on the last day. He coincidentally happened to live about 30 minutes away from me, here in South Florida. But he was stationed in Thailand, of all places, at that time. And, we just started talking on our way out, when we were getting our baggage, i.e., “What do you do?” Actually, he was a Global Sourcing Agent for a big Thai company, helping to drive e-commerce and retail stores from China into Thailand.
And I was fascinated. I loved learning about new cultures and sniffing out opportunities. So, I said, “Well, if you ever need help with some e-commerce or digital strategy to penetrate the US market, let us know.” And again, it turned out he was near to my home base, and he used to commute back two times a year to see his family in South Florida. So, fast forward a little bit, I kept in touch, and we started talking.
Morgan (Host): Let me ask a quick question. I have no idea what’s going to happen. But it’s probably going to go badly because this is Client Horror Stories. So, I’m wondering, looking back on that initial meeting, were there any “yellow flags” or “signs” that you should have picked up on?
F.M. Byers (interviewee): No, not at this point because this guy was terrifically honest. He was a super-smart guy; he had spent some time at Fortune 100 companies here in the States. I did a little bit of background research and found that he had a great pedigree. But to me, he was the conduit to the other market (China). We had talked about it, saying that “China is a monster”. We know that they want to get out of their OEM (original equipment manufacturer) focused perspective.
So, I thought, maybe there’s a way we could work together to drive more business.
So, at this point, we started to discuss some smaller engagements. He had lots of sourcing contacts in China. He was leaning on them for his Thai operation, sourcing products. He used to bring products to Thailand and sell them. And, I have always been so frustrated when I open up an Amazon purchased Chinese product and the instructions on it do not make any sense. It just drove me crazy. I thought they had great manufacturing capabilities and precision, but the Germans must be given credit for doing a good job of cranking out a product. So, I thought, “What if we offer free translation services?”
Morgan (Host): That’s very interesting!
F.M. Byers (Interviewee): Companies try to get their foot in the door and try to build a little bit of trust. It drove me personally crazy. I’m a detail-oriented person and want to see a great product come out of the box, but when I read the instructions, they were littered with errors and had no clarity at all. So, I thought that we should change that, and we went on a mission.
Morgan (Host): By the way, I’ve also bought stuff from Amazon where the instructions are straight in Chinese, not even in English. They just show you some pictures and arrows.
F.M. Byers (interviewee): Yes, right. IKEA style, but IKEA does it quite well. I think you’re giving the Chinese too much credit, in my respectful opinion.
Morgan (Host): Anyway, I just wanted to clarify that many people do awesomely in school, as we expect from them, and we’re talking about certain ones who are less awesome.
F.M. Byers (interviewee): Great point! It just happened that way. I got all the products that weren’t from the good ones. So, I was on a mission to try to figure out how to help. That was my goal. It was my way of getting into the monster Chinese market. So, I said to him, “Why don’t you offer our services for free to a couple of good contacts you have, so we can build good personal and business relationships.” So, we did a couple of tiny projects.
I hired an intern from China, and I brought her over to our Colombian office. So, she could become a conduit between the Chinese people and We tried to do it the right way. My Chinese was bad, and no one on our team spoke that. So, we wanted to have a first-class opportunity. We had a couple of small projects that were going well. We started building out Chinese-focused landing pages.
We couldn’t figure out the V Chat and their style of digital marketing. Because of censorship and regulations, we were not able to put our offers in that field. We just didn’t understand at the time. So, I went to the Canton show, which is held in April or May each year. It was one of the biggest trade shows. They had different flavors, i.e., office products and food. However, we were particularly interested in office supplies and furniture.
So, I went over there with my Thai contact. We toured for three days on the floor. It was not my first time in Asia, but my first time in China. I was amazed at the opportunity. If an American or European company builds a great bond here, it can be a neat little business. We chose one company that seemed interested in learning more about what we could do. And I’m not talking about improving the instructions for a product; I’m talking about branding.
And, we learned along the way that the Chinese were great manufacturers, but they did not understand, at the time back in 2015, the term “branding.” So, I tried, with the help of my intern translator, to explain the importance of establishing a brand. But if you want to drive a product, you need to invest in a brand, but they didn’t understand.
Morgan (Host): By the way, I have spent a lot of time in Latin America. And, I also think in Latin America, people have little understanding of branding and marketing. So, if we only take American best practices for branding and marketing and bring them to other countries, it will be an immensely powerful plan.
F.M. Byers (interviewee): Agreed. But if the US’ understanding of branding, marketing, and innovation is here, and Latin America is behind, then China doesn’t even get a seat at the table. I saw so much opportunity there; they had great manufacturing abilities and wanted to be recognized more than just the OEM companies. I thought China had finally woken up. If we’re going to become greater as a company, then we need to think differently. I think they knew that they needed to move on, but they just couldn’t get past that environment.
So, we spent some time in China. Not only did we hit the show, but my contact was kind enough to give us a tour of a lot of business gatherings. I sat at a roundtable with three CEOs from very big, multibillion-dollar companies, one of whom sponsored the 2008 Olympics in Beijing. I got myself right into the inner circle there. I had my first true Chinese Moo Shu pork dinner at a round table. In China, all of their important business meetings happened on round tables, not square ones. I can’t explain that.
And I immersed myself in that fascinating but also different culture. Some parts left me speechless. And there were some parts about which I was just sick, and manners were one of them. Well, that’s another story, but we built some great relationships. One of them was with this particular big manufacturer for whom we thought we could build a brand for them. We can present them with a whole strategy. This was over a year ago. We picked some pens. There’s a sexy product called pens, the ones you see at home, in Office Depot, or at Max or Staples.
Morgan (Host): Just to write? I’ve typed so much on the computer and phone that I’ve almost forgotten what it is to write by hand.
F.M. Byers (Interviewee): Yes. It was a huge business for them. They had a chance to become the largest manufacturer for US and European companies. We toured their facility in Asia, and they had about 100,000 square feet of area, with 3,000 employees working around it. It was very impressive. Our goal was to develop a strategy for them to enter the US market. We talked about Amazon; I had to give them a whole dissertation on what that is and how to do it. But I still felt granted. There was some language barrier. But our intern was unbelievably smart.
Morgan (Host): Did the intern come with you on the trip there?
F.M. Byers (Interviewee): Yes.
Morgan (Host): That’s great!
F.M. Byers (interviewee): Yes, she was in China. And then she was in our Columbia office, and then the story got better. I like to think that I’m an acute listener and that I have patience. And I’m always very respectful. This is what I was told, and that’s what I try to live by.
And over this whole time, it was a two-year window. My patience meter started to run out. I was doing that project because I believed in it and I liked it. But there was no contractual agreement; it was all verbal. They opened their doors. Things were going well when I met the CEO and his wife.
Morgan (Host): So, nothing was written, but what were you doing in the meantime? Were you developing a brand image or were you running campaigns to sell products on Amazon?
F.M. Byers (interviewee): As a result, the first step was to create a brand and a name. I wanted to present the idea of an overarching strategy so that they could understand it. But it went over their heads. And the analogy I tell my kids is that the Chinese think tangibly, i.e., if the pen is $1.10, they will make it for 22 cents, and then Office Depot sells it for $2.50 or whatever.
So, if I said our initial branding concept was $50,000 and they showed me responses like, “Okay, but what do we get for that? Show me what you’ve got, please. And we were like, “No, not yet, until we deploy a strategy and put some thought into it.” And we’ll come back to you with some ideas in a couple of weeks.” I drew stuff on a big conference whiteboard, and then the translator put it in Chinese to explain it. So, I was consistently trying to explain to them step one of the strategies.
As you said, step two was to build an e-commerce strategy and platform. Once the product was in the United States, we built a whole e-commerce site for them so that they could understand the strategy. I learned the hard way that they needed to see and touch things first. We couldn’t just do spec-like graphic images. We had to show them how it works. “Click here, look at the product, put your credit card in order, and then we said; Okay, now we can ship it to the client. And I think that helped them understand that.
And then the other piece, as you said, was Amazon. In exchange, we were willing to manage that whole process for them, and in exchange, we expected a little piece of action from them. As for the business model, I was not ignoring it; I approached them, more like a friend. Our conditions were like this: I’m going to help you do this, but when we’re successful, we simply want to share marginally in some success. And if we do better, we can turn this into a real partnership. As I look back on it, I don’t think it could have been better structured.
Morgan (Host): So, at this point, nothing was written officially, but was there any verbal agreement as to numbers or details? Or was it just, oh, we’re friends? Did they say, “Well, we’ll figure it out”?
F.M. Byers (interviewee): No, we only had broad strokes of the economics of a few investments. When I laid the structure in front of them, there was some indigestion. I had to step back a little bit, and I promised to come back a little more compensated on the backend because they were concerned about the upfront costs. I tried to be very flexible with them. I was not giving stuff away for free. I warned them politely about the difference of opinion we had among us. And I was trying my best to bridge that gap between us. I was consistently thinking about how to make the project a win-win.
Morgan (Host): My query is as follows: I don’t know where it’s going. But I’m kind of nervous on the edge of my seat here. But if you look back, was there anything you should have done differently? It feels like you were swimming with sharks, and you thought you could swim with sharks, but you didn’t think about insisting on a legal contract at that time.
F.M. Byers (interviewee): It’s a good question. And I do think of that. And I think if I had put a little more teeth into that project, it probably would have died there, because of the heat I was feeling along the way. When I talked about investment, it wasn’t much, but they just didn’t understand. I was stuck in between. This is not how we work here. We make a product and sell it FOB X (free on board) cleanly.
Morgan (Host): Well, I do understand this situation. I’ll add something from my experience. People usually do not understand when you throw in big numbers. We cannot change the way people think. So, you need to find a better person at the right moment, about whom you can say, “Okay, this is worth $50,000.”
F.M. Byers (Interviewee): Yes, but I was determined to try something different.
Morgan (Host): I love your determination here.
F.M. Byers (Interviewee): I tried to change their way of thinking because I wanted this project to work. I was enamored. I loved different cultures. I saw a big opportunity. I knew it was coming. I mean, look at how China and Amazon are doing. So I was determined. Then we took this pen concept and it was about the time when emojis and AR (Augmented Reality) were circulating.
So, we developed a whole concept around a pen that had stickers. And the stickers then would come alive with AR. So, you would collect a character like in the Disney color books. It was not our idea, but it was quite beneficial as school supplies do a big business in August and September. So, we wanted to come up with a really neat way to market these pens uniquely.
We started licensing. We bought a very expensive domain name and developed prototypes. We put all the packaging together, and they liked it. We went to China and showed it to them, and they said, “Wow, this is interesting.” As you may know, one of the biggest clients is Walmart, and they said to come to Bentonville or Arkansas and let’s pitch this. So, I got on a plane and we prepared a whole package.
Morgan (Host): I’m so scared.
F.M. Byers (interviewee): So I went with him, and this part wasn’t scary at all. We met the salesperson there, and the salesperson was a nice guy. I showed the order-taker the products so that he could set a price on them. There was neither merchandising nor passion in the sale. I thought I was disadvantaged. But I tried my best to do it.
And the Walmart buyer was impressed with the concept. He had never seen it before, so he considered it a well-thought-out product. Our team did a great job of preparing all sorts of prototypes that worked. And I showed it to him. Things were going quite well there. This wasn’t even the $50,000 branding idea to get it going. This whole concept could have been a nice six-digit program.
But again, I was just determined to make things work. And over time, I learned that they couldn’t answer right away. They may need some time to review it. So, we didn’t hear much from them for a while, but they were still selling pens. And we were pretty enamored with the idea. Another six months went by. We were still working on that project. I decided to look back a little ruthlessly to get a little more feedback.
So, I introduced this concept of the stickers and emojis that come to life with AR into the class curriculum at my children’s school. And I was able to convince the administration to make this part of the class so that we could get real feedback from kids. I wanted to share what I know with our team about what makes an emoji tick. So, I hired somebody, and every week, he would go into the school and work with the teacher. It was an innovation and entrepreneurialism class for eighth-graders, and their whole challenge was to pick the pens that they liked the most. And the team in China sent us a crate of every pen they ever made, i.e., Magic Markers, permanent pens, ballpoints. I learned so much about pens back then.
And our goal was to get feedback so that I could go back and tell them, “In this focused study, the 25 students believe that these are the best pens for their needs in the US market.” And here are the ten little emojis that come with stickers that they developed.
Morgan (Host): But by the way, two points here. First, I just learned from Baader-Meinhof the phrase “good creators of all time.” So, it’s funny that you mentioned it. Secondly, I think this makes you look weak because you still want to make it happen. You’re going through children’s school and coming up with ways to figure it out, which makes me want to work with you. So, this is amazing.
F.M. Byers (interviewee): This went on for three months. And we were able to develop some ideas and wanted to present them. We asked my contact to convince the sales representatives who were based in California. So, they invited the CEO from China to our office, and we wanted to showcase everything. We also arranged a meeting with the school’s presidential entourage.
And keep in mind that this guy was a sponsor of the Chinese Olympics. He’s a pretty big deal in China. So, we thought, how cool would it be for him to see the education system in the United States? So, we coordinated the whole event with the school. Everything was on time because his time was precious. He came with an entourage of five people, and he went to the school, where we showed him the class, working on his pens and products. And I remember one thing he said to our intern: “Wow, your kids here can talk in school.” And I said, “Yeah, of course.” And he said, “That’s not allowed in China.” They also do not speak unless they are spoken to. ” So, he got a different sense of it. It was not his first time in the US, but I’m sure it was his first time in a school.
And again, we wanted to show him how serious we were. This was an orchestrated event with lots of investment, time, research, and validation. We had the product, we had the prototype, and we were waiting for the buyer in the middle of America to say yes. Everything was looking great. I kind of knew what made him tick, as I had been to China. I looked at the artifacts on his desk and listened to some of the things he said.
So, I found a restaurant in South Florida. That was right up his alley, very Asian Buddha’s incense, got a table, and we asked our translator to join us for this very special dinner. And it was me and her from China, and five from his entourage. And I remember him coming into our office the first time and being very surprised and disappointed. We had a couple of 1000-square-foot offices for this business located here. But we were all computer-based.
It was all we needed. He expected big land property, people running around, and a cafeteria. And it just didn’t resonate well with him. So, I sensed a little disappointment there. Given that he had to fly out early the next morning, and time was precious, we had come up from Columbia at three o’clock, dinner was at seven, and we met in the office for two hours. I said, “Let’s go out for dinner.” So, we drove for dinner. And we were talking with each other, but it wasn’t going very well.
It was eight or nine o’clock back in the conference room when I pulled out the proposal, and the translator helped me convey it. I was trying desperately to explain all the work we had done in the past two years. He jumped on the board with me and things started heating up because he viewed this as nothing more than that we should be doing it all. We had arguments about upfront fees, investing, and reselling. There were risks in figuring out the supply with or without Amazon. And it just went south. I remember that I had this deck that I had shared with them piecemeal, which mirrored what we showed on the screen. I had never done this in my life, but I just threw it at him.
And remember, he was one of the most recognized and powerful Chinese CEOs in the industry. And I said, “Why don’t we just pay you so that we may be able to work with you?” And then there was silence. I don’t think they needed to get the translation because my body language said it all. I was just disgusted with my inability and their lack of understanding. And that is how it ended. I never chatted with them again. They went back. But all the work and all the great ideas just evaporated. So, I knew it would become a horrific client’s story.
And, it was probably more of an agency’s horror story of all time. I was so passionate back then. Now we fast forward. Oftentimes, we’ll debrief on what projects went well, what projects went wrong, or what we could have done differently. And I look now, and I summarize that we were just three or four years too early because now there are so many companies that are doing this for Chinese and they’re paying much more than what we had proposed. We were just too early.
Morgan (Host): So interesting, I have a couple of thoughts. First, on how it ends. It reminds me of T.S. Eliot’s poem, “The Hollow Men,” which ends with a great line that says, “This is how the world ends, not with a bang, but with a whimper.” I always remember his last line, because you always expect a powerful ending, but then a nuclear bomb drops, and it’s all over. Second thought, I’m so cynical, and I’ve seen so much sketchiness in my time. I wouldn’t be surprised if some of these emoji pencils that you see around are the same company, just doing that on their own.
F.M. Byers (interviewee): Yeah, we were always worried about that. It takes a whole idea and the Chinese were good people, but they just didn’t understand at that time. I tried to change their minds for a year and a half, but it just didn’t resonate; the mentality was different. And I like to think this may sound like an unfair statement. But generally speaking, I believe this side of the world thinks about things a little differently and just innovates outside the box.
They are OEM. I can develop a brand and sell it for more than a 10% margin, but that was a huge stretch for them. They just couldn’t get out of their box. They were so comfortable just in that role. As I learned, it’s all about legacy businesses. The father leaves it to the son; the son leaves it to the other son. They had to get out of that mindset, or else they were going to be crushed. It was a bittersweet thing with a super learning opportunity. But unfortunately, we failed.
Morgan (Host): So let’s talk about the lessons from this incident. And we usually group the lessons into two categories: First, what should have been avoided? But the more interesting question is: what things could you have done differently? If you had tried different negotiations, strategies, or ways, could you have done anything differently from day one to have a different ending? Or do you think they play it their way or don’t play at all?
F.M. Byers (interviewee): From what I can remember, I think we came up with about five different business models that were quite entertaining. But there was always some sort of upfront because I believe, to be a business partner, you need to have some skin in the game. I just wanted them to commit to something.
It was not about the money, as it was a very big company and money was not an issue. Because they didn’t understand the concept, it was tough to part with them. So, I tried many different ways to have them get comfortable with this idea, and we were the ones who were taking most of the risk. We had already spent hundreds of thousands, not high hundreds, but probably a low six-digit number in market rates, developing all this. It is a huge opportunity cost.
Morgan (Host): So, I’m trying to come up with lessons here. One interesting lesson could be that it’s often a good strategy to get someone to pay some upfront, even if it’s in small numbers because once you get someone to pay something, then all that’s left is a negotiation about whether to pay this or 10x. It’s harder to go from zero to one than it is to go from one to ten. Maybe one strategy for the next situation like this is to focus on going even tighter, even $10,000 tight, as we know money is a sign of seriousness.
F.M. Byers (interviewee): You’re right. But I just think whether it was $1000, or $5000, or $10,000, because what was I getting? They were the ones who were going to make a profit. They got a 3D pen. But they didn’t understand, or maybe we didn’t explain that well. But there was nothing else to explain. We made a very nice pen. We worked on the project for three months. All the kids from the school were saying, “Now that’s a pen I would want.” So, I thought that the actions would speak; the actions would justify that. But it didn’t happen.
Morgan (Host): I would say there’s another lesson here. There’s an old saying that I’ve only heard from New Yorkers: “If you look around the room and you don’t know who the sucker is, it’s you.” You can’t do business with those people unless you share the same mentality. When you think alike, then it is the game everyone plays. But when you tried to play this type of game two years ago, they were not ready to play that game. If someone tries to play basketball while you’re trying to play soccer against them, it will be confusing.
F.M. Byers (interviewee): True, it was a great learning experience. We don’t do anything until we get something from the client. But sometimes you have to take risks. We are genuine and create value for our customers, and I have got myself some of the best relationships in North and South America by taking risks. It didn’t work out in Asia, maybe because of the language barrier. There were so many variables there that we couldn’t control. We were in a new market. I should have just aborted, but I’m a stubborn New Yorker, so I was determined to try to make this work.
Morgan (Host): I see you had a lot of different risk factors on top of each other. My risk strategy is to do one extremely risky thing and then try to minimize other risks around it. This was a great story and a good learning experience. And I think it was a good reminder for you to experience clients with wildly different expectations. You need to be clear on these expectations as early as possible. The more you differ in expectations and work styles with each other, the more it will have a chance of blowing up in one form or another. That’s my high-level takeaway from this.
F.M. Byers (interviewee): Where were you in 2015? We could have called the Morgan hotline and said, “I need some help.” You’re right, you hit it.
Morgan (Host): Well, luckily, because you like taking risks and this world is full of more exciting opportunities and experiences, I’m here for you to call next time.
F.M. Byers (interviewee): We’re going to continue to take risks, and I can assure you that they’re going to be much more calculated and cautious. I’m never going to lose the innate fire in my belly that I get from my culture about taking risks because some wins come with them. And, I’m okay with taking risks as long as I can protect myself. Thank you for great learning opportunities and your great, infinite wisdom, as always. I enjoyed listening to the other “Client Horror Stories”. You’re now my digital therapist.
Morgan (Host): And we’re going to make sure that the editor doesn’t edit that out. I’m honored to play that role. It’s been fun chatting, and to continue, I’ll stop recording now.
This transcription belongs to episode #6, you can watch the complete episode here.