MarketScale has been following infulential members of the AEC community through our Faces of Design series, chronicalling architects, designers, and influencers who set an example of excellence. For our final episode of season 1, we profiled Eric Edelson, the CEO of Fireclay Tile, who took a dying company during the 2008 recession and breathed life back into it. Now, it’s worth several million dollars, and is growing at an unprecedented rate.
Rejoined by AEC contributor Bryce Stuckenschneider on this supplementary podcast to our main video on Edelson, we pull the curtain back and get more insight on his journey into the AEC industry, an industry he knew nothing about before joining the Fireclay team. His lack of experience but success regardless is a testament to the power of focused, thoughtful leadership. We analyze that methodology for leadership, how Edelson identified the issues at Fireclay, and the initiative he had to take to deliver bad news. But most importantly, Edelson explains to us how powerful software was the single most important change he brought to Fireclay, and why it saved the company.
HIGHLIGHTS FROM THE EPISODE
Daniel Litwin: So obviously bringing technology into the picture helped revolutionize what Fireclay could do and I know you had some specific softwares that you were gung-ho about that, “Hey, look, we have to implement this into our daily operations because it’s going to empower us in ways that you don’t even imagine.” So that includes stuff like Salesforce, Asana, Zenefits. Tell me a bit about how you implemented those technologies and what your thought process was for, “Okay, why does this company need blank? Why does it need blank and how did it turn the company around?”
Eric Edelson: Yeah. So to paint the picture back in 2009, it was really bleak for this company. Sales were cratering. There was no money in the company, owed quite a bit of money to a variety of vendors and banks. So there was really nothing. We did a pretty quick immediately layoff. One of the things I really like about Paul is he acted quickly. So pretty much my first day we shut one of two factories that the company had down and had to lay off about eight people, which was really a struggle but at the same time it was absolutely necessary because there was no money.
And for the first six months, had Paul kind of structure our agreement. I said, “You know, when there’s money, I’ll pay myself what you’re paid,” which literally wasn’t very much money. Because I just felt like, “You know, any dollars to me in Day 1 wouldn’t really help the business.” So I took all of that money and really deployed it at software. So really quickly we took what they already had which is an old file maker process and they have this outdated accounting software. There’s a whole story about his accountant who quit about two weeks after I joined. It turned out she’s been embezzling about $30,000 behind Paul’s back.
DL: Whoa! Okay. Not good.
EE: No. So here I am like doing all of the accounting and everything but really quickly I saw an opportunity to implement Salesforce.com and it’s traditionally used as a sales software, but we actually implemented it to do order management because I knew it was a great platform and it was really customizable that even when we have the opportunity to grow would really kind of scale with us. So I think we spent like 15,000 dollars back then which was huge for us. That was a ton of money on customizing it. You know, but fast forward 10 years later, we still use a lot of that same work that we did back then to run our business today.
So yeah, Salesforce was really important and it really I think set a foundation. Here we were in San Jose, California, the Heart of Silicon Valley, it just made sense for us to really start thinking about where software could help this business. And really for the last 10 years, we have constantly developed and iterated on that. And so software, you know, to this day had become really important and it has allowed us to really kind of transition and transform the business quite seamlessly and quite easily at different points along our history because we have these very scalable platforms upon which to grow and develop.
Bryce Stuckenschneider: And you change the business too, right? So you went from selling to tile distributors and tile shops to going direct to the customer and these software backbones allowed you to create that relationship, serve them, give them visibility into the process. Talk a little bit about that because there aren’t a lot of tile companies doing what you’re doing today. And I think the technology is a big part behind it, but also you knew, we just going to get closer to our customers.
EE: Yeah. Yeah. I mean, that certainly was a really pivotal moment for Fireclay. So take from that period of 2009 to 2012, we were small, we went from 1.5 million dollars to 2.7 million over those four years, barely had maybe 10,000 to 20,000 dollars in our bank account at any given time. I think 2012, we finally made some money. But here I was, I was a new father. I had recently been married. My wife is sitting there going like, “What are we doing here? What are you doing with this company?” We had a five-year agreement that I could do this for five years because I really wasn’t making very much money at all.
End of 2012, I was really depressed because we have this business, we were trying to grow this whole sale business, all these tile stores across the country and it just wasn’t going very quickly. As I said, you know, Fireclay for many years had already had its butt kicked by many other tile companies and trying to kind of grow our presence in these tile stores, from 2009 to 2012, just was excruciating. And even though we were doing a great job on the branding and the marketing and the tools, it just wasn’t happening quickly.
So I ended up having a conversation with… I was really obsessed at the time with the company, The Shade Store. And the story goes that I felt like if I could get to The Shade Store, maybe they would sell our product. They have this idea of custom-made simple and I just felt like, “Hey, you know, window shades, tile, custom, this could be really good to have to these stores.” So I made up a bunch of email addresses for Adam Gibbs, the CEO, and I figured, “You know, one of them would work.” He ended up responding and we had a 20-minute phone call. It was Valentine’s Day of 2013. And it was a very quick conversation. He probably didn’t think much of it. But what he said that was really important to me at the time was he stressed how big an opportunity there was in the residential market.
And to me, I hated residential because we did residential through these dealers and those orders for us were very small. Our direct business, our commercial business, it’s always more exciting, but the whole company was around these dealers because that was how you grew the business, that’s how everyone else did it. And what happened was two days later, I had kind of a Jerry Maguire moment. If you know that movie where Jerry Maguire kind of writes, he writes this manifesto, you know, I woke up at four in the morning on a Saturday, just had this epiphany, sat down with my computer, wrote this three-page document about how we needed to go direct, we needed to fire all of our dealers, we needed to build a brand, I sent it to Paul. An hour later, he replied, “Sounds good.” Emailed this woman who is now our Creative Director who’s living in Texas at the time and I said, “Pack your bags.”
And you know, within two months, had raised about 700,000 dollars to really kind of do tile better, to make tile easier for people by making the connection between the maker, the manufacturer, and the end user just so much easier. And Bryce, you said it. I mean, we had already built a really strong technology backbone that had really been kind of directed to these dealers, but it landed itself incredibly well to the customer, to the end user. And whether that was a homeowner, an architect, or designer, you know, we felt like we could service those end users better than anybody.
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