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Interviews with Entrepreneurs - Aneil Manhas

Tell me a bit about yourself, and your professional background.

So, I started my career in finance. I went to undergraduate business school at Richard Ivy, which is based out of Western [Uni]. Then, I basically started my career in finance. I started with Credit Suisse, working in Los Angeles with the investment banking division. From that point, I moved into private equity for a company in Toronto called Onyx. I was there for five years. After that, I made the entrepreneurial jump into what I do now, which is own and manage, to a varying degree, a number of different businesses.

What kind of services and products do you offer?

“So they’re diversified in the sense that they are four companies/projects that I am working on. One is GVA Brands, which is a manufacturer and distributors of powersport products in Canada. We have about 120 dealers across the country. That business is mostly focused on selling kids powersports products. By that, I mean kids ATVs, kids scooters, kids bikes, generators - generally just outdoor powersports and industrial products that you would see at a campsite or in the backyard, the farm. That business is Canadian only - we don’t sell anything to the US or anywhere abroad, and it’s solely dealer based in the sense that we don’t sell anything directly to the consumer.

So do you sell based on individual stores or one retailer?

Right, so it’s all done based on individual stores. At one point, we were dealing with some bix-box retailers, mostly CostCo and Walmart. But that business can be tough. The big challenge with dealing with those big box retailers when working with a product like mine is that - it is low margin to begin with - a lot of the sales through those stores are done through sales, such as big promo done during a long weekend or discount. And those kinds of sales would be where 80% of the volume moves. And what often happens is that you’ll go somewhat dry for a month then run a promo for a weekend. And then you’ll do more during that weekend than you did in in 6 weeks. (Overall, it doesn’t pan out.) You’re selling at a discount, and the margins are very slim. But the bigger issue is that a lot of these big box retailers, CostCo in particular, have very lenient return policies. However, from a vendor’s perspective, specifically when you’re selling somewhat of a seasonal product like an ATV or a generator, unfortunately what was happening was that we’d sell a bunch of them through the summer months but then in September or October, a lot of the products were coming back. So just from a financial perspective, given the low margin [of profit] and the returns, that business model just didn’t work for us.

That’s cool. I guess now, it’s more individual relations with each store or distributor as opposed to signing on the big client like Walmart

Exactly. So now, it’s just a 100 or so single dealer/single operation sports store. That’s the bulk of that business.

The next business would be Rosso Motors, which is an online seller of kids toys. It actually started as part of GVA. Just given that GVA was restricted to our dealer network, one thing I was trying to do was add an online component to the business as a growth engine. My firm belief is that, in this day and age, doesn’t matter what you’re selling - powersports products, soap, makeup, whatever - the online sales platform is where all the money and growth is. A lot of the traditional bix box or brick and mortar stores are facing a lot of challenges because they’re having to compete against all of the online focused retailers. And for me, to add that online component to GVA was important. Secondly, I wanted to develop a product that I could sell and distribute to the US, given that the population and market there is almost ten times our size.

It’s almost like you’re creating a middleman yourself by dealing with these dealers and stores, so now you can go straight from manufacturers to consumer.

Correct, that is definitely an appeal. What often happens is that how these online retailers can grow and scale so quickly is by offering prices that are so appealing, in the sense that a lot of the margin that is taken by the dealer or distributor in physical distribution business models are shared to the customer. What happens is that the customer is now getting access to products at a significantly cheaper price that if they walked into a local store. Secondly, you are able to scale at a pace that has never been done before. Before the online sales really took off, if you wanted to go and build a company that was $100M in revenue, the process was that you started a store, and the success from that one location is invested into the second. That would grow organically, increasing revenue and customer bases in a slow, steady growth. You’d start a company somewhere like in Vancouver and target the local community, and then grow adjacent slowly in your own area. However, with the internet, you can target a much larger market and now you’re looking at like 350 million people who are now your new potential customer base. This has allowed businesses to scale at a degree that was unprecedented. I’m a firm believer that the future of commerce is really in that online platform. 

That’s pretty much how Rosso started. We started with one product - our main GVA product which was a kid’s pocket bike - that we could ship to the US. Since most of the GVA products are gas powered, there are a lot of regulations around the EPA which precludes us from selling to the States. Secondly, the products were larger - often ATVs and dirtbikes - which made shipping just not feasible from a pricing perspective. This pocket bike was electric, so we began shipping down, selling on the Amazon marketplace. Now, we have around 7 or 8 products. Online, we have our own website where we operate from, but the majority of sales continue to come from Amazon. We’ve expanded outside of the kids electric toys, now having a Rosso water division, sports mats. Still kids focused and toy like, but we’re not sticking to purely electric.

The third company is a company of Surface 604, which is a manufacturer and distributor of electric bikes. Unlike GVA [which is strictly dealer based] or Rosso [which operates only through online channels], this is a hybrid company. We have about 120 dealers spread across Canada and the US, but we also have an online presence where we can also sell our products. Right now, the majority of sales continue to occur through our physical sales but the online component is continuously growing.

The final company I deal with is a startup, pre-revenue stage. It’s gonna be a subscription based electric toothbrush business. I don’t know if you’ve heard of the Dollar Shave Club or Harry’s, and what they’ve done in the razor space. My initial intrigue there was the subscription based business model. It led me to think about what kind of products I could apply that same business model to. That’s what I was passionate about. It is an untapped market - and a huge one too. If you look at razors, you’re targeting every male. But with toothbrushes, we’re looking at every single person potentially.

The common theme with all of these businesses is the fact that I manufacture these products in China. I have a full time team that manages the businesses and processes in China, from the quality control to logistics. When I have new ideas, I have these proper channels in find and select the logical factory to partner with. These existing channels make a huge impact in the feasibility of our products.

What was your mission when you set out on this path? What were you trying to achieve?

That’s a good question. There wasn’t a specific goal in mind when I got started, but what sparked the switch to going down the typical finance, work-for-a-company route to doing something completely on my own was that to me, everyone has different things that excite and motivate them. For me, that was building and developing a whole business. I look at big organizations like Nike or Coca Cola or Dollar Shave Club, and all of them started with an idea. And to think that they went from an initial idea to being billion dollar corporations that are global, that journey is fascinating to me. As both an entrepreneur and a business, that journey and process is what keeps me excited.

So in other words, to see and build off your own ideas?

Yeah! I’m at a very early stage with this toothbrush company - I’m going from an idea to a product. I’m barely moving down the field from where I want it to go. But even then, just seeing that first step keeps you hungry to keep going and see ideas through.

What are your company’s values? What were you thinking of when you started these endeavours?

I wouldn’t say that I was thinking of this when i started these four businesses, but if you ask me now, what do I think is the key component here? Well, if you look at some of the companies today that have been able to achieve a tremendous amount of success in a short period of time, to me, the common trait between all of them is that they all solve real world problems. What does that mean? Let’s look at Dollar Shave Club, for example. Every guy can relate to how miserable the whole process of buying razors is. In Canada, [you can just pick up the razors from the shelves] - the [Gillette] Mach-3 refillables or whatever. It’s easy! But in the US, they are actually locked up. So you have to go and find somebody in the store that has the keys to unlock this, and they’re so expensive. What, 8 heads for $40? Every time I buy these razors, that’s the first concern that comes up. Everyone can relate to that, and this is the problem that Dollar Shave Club is trying to solve. To me, a lot of the good ideas, they solve real world problems exactly like that. Uber is another example. Who wouldn’t want to replace a taxi with a ride or car sharing service that charges you a fraction of the price? You’re solving a real world problem there. There’s a lot of appeal to that. I think a lot of the best ideas are born out of such problem solving, and for me now, that is the main focus when it comes to evaluating a new project or new business. Obviously, there are the typical business school aspects that you look at, right? The value proposition, the price, what the competition looks like - all the standard stuff you learn in business school. To me, the first thing I ask myself is what problem am I solving here? And if I can identify a real world problem that I am trying to solve and I can make someone’s life easier, that’s kind of the first step. Then I proceed to doing the other forms of due diligence.

What are your goals for your company? What would you like to see your business achieve and influence in the future whether it be through outreach, partnership, expansion?

Obviously, for any entrepreneur, you are always trying to grow your business. I would say that given that the businesses that I have are in very different stages of their life cycles, my goals definitely differ for each business. Take GVA for example - the powersports business. As I mentioned, that business is now more stagnant in terms of a lot of the dealers that we’re doing business with. There’s not a lot of growth in terms of adding more dealers or adding new products. So, how do you keep that revenue base growing and moving forward? I mean, the toothbrush business is pre-revenue, so my goal there is to just get that up there and running! That’s the first step. So I would say that depending on where the businesses are depending in their life cycles, the goals differ, but they all are based around growth.

What do you strive for when you start a business?

That’s a good question. I think what I’m trying to achieve is what I’ve already discussed a bit in terms of solving a problem. To me, if I take the toothbrush business, for an example, a high end Philips Sonicare toothbrush costs around $250 or something - north of $200! Whether you’re buying Oral B or Sonicare, they dominate that industry. That’s a lot of money. So for me, with my business model, the goal of that project is to be able to offer the consumer a product that may not be at the high end Philips level but still a high-end electric toothbrush model at a fraction of that price. I’m still figuring out pricing - it’ll be under a hundred bucks.

So in a sense, making that level of quality product more accessible? That’s the important part, right?

Yeah! Exactly. It’s kind of what we’ve talked about in the past, real world issues. It’s about trying to take that problem and making one that is more accessible. For the vast majority of people, $250 is not what they’ve budgeted for their toothbrushes. But for me - as I’ve mentioned, I’m still figuring out pricing - $80 is a quarter of the price and still pretty expensive, but it is definitely more accessible.

Who's your target client? Who are you aiming for?

That varies based on the business. For Surface 604, the target scope is two-pronged. We’re dealing with dealers and consumers. But if I look at the fact that these dealers, even though they’re our customers, are selling to our end consumers, who tend to be a lot more baby boomers. For the powersports business, it’s obviously based around parents. They’re often purchased as gifts, whether for birthdays or holiday seasons. The three weeks leading up to Christmas time is our busiest season by far. Definitely, that targets families there.

How do you network in your industry? How do you meet your contacts and expand your industry base?

I think that within an industry, you just naturally build your contact list by doing day-to-day things that you would do regardless of whether you’re trying to network or not. You know, attend trade shows, talk to other people in the industry whether it be on the manufacturing side or the sales side. [You should] really just interact with as many people in the industry as possible. I would say that is kind of on the company side. When you are an entrepreneur, what’s very important is to have very strong, professional relationships. Have a good lawyer, have a good accountant, have a good banker - those relationships are very important. I think networking on that side is also something that can help. Being strategic as your grow.

Who would you like to work with, partner or collaborate with in the future? Whether this is a company or cause or foundation?

I think that, if I look at the businesses, the first one that comes to mind would be Surface604. A couple of groups that have bought our electric bikes recently have been police departments. The Marquette Police Department did a test run with our bikes, and most recently, the LAPD (Los Angeles Police Department) bought a bunch. Given the use case for electric bikes, a fit with the police department, whether it be in beach patrol or wherever else, I can see the value in a bike that can travel at over 20 miles an hour. There can be a lot of benefit in having the ability to move at that speed versus a traditional bicycle where you’re stuck to just pedaling.

So you enjoy seeing your products slowly moving outside of the typical household setting to other real world settings.

Exactly! So to partner with some of these larger groups where they can get a tremendous amount of benefit. Another example is that we sold a bunch of our electric bikes to a fellow who owned 8 Domino’s Pizza franchises. So in a delivery service, especially in the downtown Vancouver area where traffic becomes a growing concern, that’s where the ability to go 20 miles an hour can make a lot of sense. With electric bikes and the accommodating road structures such as bike lanes, you can move with ease as opposed to being in a car. I think that the challenge there ultimately will be is how the legislation will affect riding electric bikes in those bike lanes. When you really look at it, electric biking in North America is at its infancy. When you look at Europe, whether it be Germany or Netherlands, you’re looking at one in four bikes sold being electric. In North America, less than 1% are electric - it’s a fraction. The industry here is growing but very much in its infancy. As it grows and becomes more popular, so will the legislation and the rules around it. A lot more people in Europe use bikes as a mode of transportation whereas here, it’s mostly recreation. Continued use would change the culture over time.

Given your long career and your time in the industry, what would you say are some keys to success for an entrepreneur starting out in the field?

I think that it is primarily in the idea itself. As we’ve talked about a number of times, the ideas that tend to be very successful are the ones that solve problems and are very applicable. I think that no matter how hard you work or how good of a team you may have or any of these other things you need to be successful, if the underlying idea is flawed, you’re dead from the get-go. Secondly, I think having the right team is critical. With a lot of startups and growing companies, you don’t have that team from day 1. But to grow and to become successful, a lot of entrepreneurs look at like they are building a team just as much as they are building an organization. As that team falls into place, so will the growth and the other benefits. For me, something I look at and pay a lot of attention to is scalability. I think that it is very important to identify and focus on opportunities that are scalable. At the end of the day, a lot of people work hard - the hard work tends to be a common trait when it comes to running your own business and see it be successful. But that ceiling for success is capped if that idea is limited in terms of scalability. When you look at that person who, tens years down the road, has the business that is large and successful, a lot of the time, that success is predicated on how scalable that idea and scope is. I think that if you talk to any entrepreneur, they’ll tell you that you can have the right product, work hard, do a lot of the right things and - for better or for worse - timing and luck can play a pretty big role in your success. You have to work hard and put yourself in a position to benefit from that timing and luck. Ultimately, that will dictate your success to some level.

How do you measure your own success? What makes this worth doing for you? What made you want to make this switch from your stable job in finance to going out on your own?

For me, I like being in control of my own destiny and ultimately being fully involved in my projects. I’m a firm believer in my team, and I’ve always had a solid group of guys working with me on these projects. Like any entrepreneurs, you put your whole heart and soul into this. I spend more time with these guys than I do with anyone else, whether it be my girlfriend or my dog or even my family. They really are a close, tight-knit bunch. The whole process of building these businesses up with this group of people is very motivating for me.

As an entrepreneur but also as a person, how have you seen yourself grow over the years?

I would say that I am much more selective on projects and things that I look at and dedicate my time to. As the saying goes, time is money. You only have so much time and as you get involved in more things, that time shrinks in a hurry. I’m not in a position where I can be wasting a lot of time, so I’m very selective when it comes to new projects or ideas or whatnot that I’m evaluating, being much more selective than when I first started. Now, I have a good sense of exactly the direction that I want to take things and the projects that I want to be involved in. I live within that bubble and if it doesn’t fit within that scope, I probably won’t be putting in too much time into them.

Less projects to look through, but more stronger investments, is that right?

Yes. That’s accurate in the sense that I’m a bit unique in the fact that I have a bunch of projects happening simultaneously. Most entrepreneurs are traditionally focused on one idea and spend all of their time and energy working on growing that one idea. To start a business and grow it continuously forward is kind of all-encompassing - it takes a lot of time, effort, energy, resources and human capital to drive those projects forward. I’m lucky to have great project managers to be on top of these separate companies to help me juggle these different ventures. Yet, it’s still very challenging. There’s no question that if I spent all of my time on one project, that company would be further along that me focusing on these four together. I have goals and objectives, and I see a growth path for all of my companies. They align with my goals and values, and this drives me.

What are your responsibilities as the business owner? What changes when working with a team versus working with your own team and chasing your own dream and idea?

I think the difference there is that I view my job and my role as making sure that my team has all the resources to be successful. First and foremost, you’re providing the direction. We’re at point A, and this is what point B looks like. Here are a clear set of objectives to get there. Next is to make sure that the team has all the resources and tools that they need to accomplish and get to point B.

Given the type of business you own where you have multiple products that you create, manufacture, and distribute, how would you summarize your strategy for realizing an idea from a thought for a solution that the world needs to an actual product that you can launch?

I think that for the existing business or the electric bike business, a lot of that feedback and research and development around launching new products is based off feedback that we’d received from our dealers and the market. We take this information and see if we can deliver a product that meets the demand for this particular notion that is not being served right now. I would say that for the existing businesses, a lot of that is in conjunction with our dealer network. For a startup, you have the idea in and of itself. For the toothbrush, it was to develop a high-end electric toothbrush that could be presented at a price point that was lower than the regular, dominant competitors.Then it turned to whether or not I can actually make the product, whether I can achieve this level of quality but also pricing. Once that’s complete, the next step is whether I can actually deliver this. Let’s say I can deliver this product, but what do production times look like? It’s great that I can make a product in demand, but if the lead time is looking at 12 months, that’s going to be a real challenge looking back at the scalability of this endeavour. The first step is having the idea, and then how you can feasibly deliver this.