(Andrew Sewrey, Mark Cuban, Donald Lee and Matthew Griffin, aka Griff, of Combat Flip Flops)

 

Combat Flip Flops has embarked on an ambitious mission to create world peace by shelling the so-called enemy with “business, not bullets.” The Issaquah, Wash.-based company fires up economic growth in war-torn countries by hiring locals to produce its products in addition to donating a portion of sales to local causes.

It wants you! Enlist in the “unarmed forces” simply by buying its sandals made from military boots in Colombia, where it employs former cocaine farmers; scarves from Afghanistan, where proceeds educate girls and jewelry recycled from landmines in Laos, where profits clear explosives.

“Did you know you that during the Vietnam War, the United States dropped between 250 to 280 million landmines in Laos,” Combat Flip Flops CEO Matthew Griffin asked rhetorically in a March 2015 TED Talk in Tacoma. “That’s a B-52 load of munitions every eight minutes for nine years on a country we weren’t at war with. And right now there are tens of millions of those landmines on the ground, threatening its people.”

“Did you know that roughly 15% of Afghan women are illiterate — 15%,” Griffen continued. “Think of how easy it is to radicalize a child who has no education because his mother did not understand the value of an education.”

Griffin concludes: “You can manufacture peace through trade. If we are persistent if we are creative if we are respectful for one another. We can put down our differences and solve our problems and we can depend on one another. Welcome to the unarmed forces.”

Hence the company’s mantra: “we make cool stuff in dangerous places.”

Matthew Griffin, Donald Lee and Andrew Sewrey started Combat Flip Flops in Kabul, Afghanistan in 2011. Griffin and Lee — who served together in Joint Base Lewis-McChord’s 2nd Battalion, 75th Ranger Regiment — are the company’s CEO and chief marketing officer, respectively. Sewrey, Griffin’s brother-in-law, ranks as president.

Conquering Shark Tank

Griffin and Lee are a rare breed of entrepreneurs who didn’t have to audition for Shark Tank, ABC’s hit business reality show. Producers reached out to them in early 2015 after reading about them in Gizmodo. They taped in June 2015 and appeared in a special February 2016 episode (Season 7, Episode 16) that featured all veteran entrepreneurs. They aimed for a $150,000 investment for 10% of their company.

“We went in with a 5x revenue valuation at $1.5 million,” Griffin says. “It was on the high end of an evaluation but not unreasonable.  Knowing that they’re sharks, we set our bottom valuation threshold.  The goal was a valuation in the middle with as many Sharks as possible.”

Technology tycoons Robert Herjavec and Kevin O’Leary both torpedoed the deal, contending Combat Flip Flops had too many products and therefore would be too difficult to scale. But in a rare feat, the two ex-army rangers managed to hook the other three Sharks: QVC queen Lori Greiner, fashion mogul Daymond John and Dallas Mavericks owner Mark Cuban. They pledged $300,000 for 30% of the company, or $100,000 for 10% each.

“I think we were successful because we know our business down to the glue, don’t mind laying it out there with a sense of humor and believe that this mission is our purpose in life,” Griffin said.

Griffin and Lee studied every question ever asked on the show and practiced their answers for weeks with the help of TA Group Holdings. The venture capital firm bought a 15% equity position in the company in January 2015 and helped organize its financials. I was totally enamored when I spoke with Griffin.

Ho: What’s your best advice to landing a Shark Tank deal?

Griffin: You are not the star of the show. But you still need to shine. Know your numbers, answer the questions and ensure your passion for your business comes out in your presentation.

Ho: What misconceptions do you think viewers have about the show?

Griffin: Most viewers believe the entirety of the interview is what they see on TV.  We were in the tank for nearly one hour and 45 minutes. The edit was cut to less than 10 minutes.  The pitch and process is intensive. They don’t cut any slack from start to finish.

Ho: What about being in the Tank (or whatever happened before or after) surprised you the most?

Griffin: Lori tracked down my cell number and called me the next day after I got off the plane home.  She thanked us for our service, welcomed us to her team, and set a follow-up schedule to press forward.  Given the pace of her life, the personal touch was extremely meaningful.

Embarking on a Peace Mission

Combat Flip Flops’s products officially hit the market in 2012 after a year of development. Griffin invested $100,000 of his own money to start the business. All three founders sold everything they owned to bootstrap the business all the while holding onto their jobs. They fill all of the orders themselves.

Ho: How did you come up with the idea for your business?

Griffin: I spent the first few years of my young adult life in conflict zones and developing nations.  During that time, I saw illiteracy and unemployment as the main causes for radicalism.  When I returned to those same areas as a civilian, I saw jobs and school making a massive impact on neighborhoods and communities.

Through a random series of events, I found a combat boot factory in Kabul, Afghanistan.  That factory trained and employed hundreds of people, creating a huge social impact in the area.  And in that factory was a combat boot sole with a flip-flop thong punched through it.

As odd as it sounds, I thought Americans would buy those flip flops from that factory and we could increase the social impact.  That’s how it started.

Ho: What problem were you seeking to solve?

Griffin: We’re trying to solve the problem of armed conflict.  In spite of all of the knowledge, technology, infrastructure, media, financial models, etc. we still resolve conflicts as nations by putting little metal fragments into the sons and daughters of each others’ nations.

I’m pretty convinced that if people can read and be employed, there would be less of that going around.

Ho: What is the market for your service or product?

Griffin: Combat Flip Flops targets the U.S. social/cause buyer.  Over the past few years, we grew the company in the military market. Now we are riding the Shark Tank exposure to bring our mission to the non-military consumer.

Ho: What made you think it could be a successful product and/or service?

Griffin: Our customers made us think it would be successful.  From the beginning, we tested products with photos, samples and pre-sales.  Customers bought the product. We manufactured the product, then shipped the product.  Don’t get me wrong, there were plenty of days where we thought it wouldn’t work. But we kept selling and the business is viable.

Ho: How did the military prepare you to be an entrepreneur and CEO of a company?

Griffin: The military taught me how to fail, then recover and be better for it in the end. War isn’t like the movies. There is a lot of failure involved. The best units are the ones that learn from mistakes, plan to mitigate future failures and continue to execute the fundamentals aggressively.

Trial by Fire

Before starting Combat Flip Flops, Griffin served as vice president of operations for a military equipment cleaning service and was an army officer (Company Fire Support Officer, 2nd Ranger Battalion). He left the military in 2006 after four deployments to Afghanistan and Iraq.

Most everything he knows about business was learned from asking questions in online business forums and reading business books for at least 45 minutes each morning.

His seven favorite books and the key lesson he’s applied in his business are:

  1. Zen and the Art of Happiness by Chris Prentiss:  Whatever happens, good or bad, it’s the best thing that could have happened.
  2. The Personal MBA by Josh Kaufman: There isn’t a problem you can’t figure out in your business with a little quiet reading time.
  3. Drive by Daniel Pink: If you want a team that performs, hire people that can work responsibly with autonomy, demonstrate an aptitude for mastery and require a purpose.
  4. Tribes by Seth Godin:  Conflict brings people together.  When your organization is threatened, use that tension to make your team stronger.
  5. The E-Myth by Michael Gerber: Know the difference between being a technician and a manager.
  6. W.K. Kellogg: A Biography by Horace B. Powell: If you’re willing to outwork everybody, you’ll be successful.
  7. Social Media 101 by Chris Brogan:  Follow the data.  Embrace social media.

Post Shark Tank Explosion

Sales exploded right after their Shark Tank appearance on Feb. 5 (Season 7, Episode 16). In less than 19 hours, they sold more than they ever did in 2014. And in less than 36 hours, they surpassed all sales for 2015. Sales shot up to $400,000 in three weeks after their airing. It’s a major reversal of fortune from 2015 when they ended the year with a loss despite $300,000 in revenue.

“And the best part is that we’ve funded over 50 years of school for Afghan girls and cleared over 2,500 square meters of landmines in Laos,” Griffin said. “If we stay on this track, we’ll conservatively hit $1.5 million for 2016.”

He sees sales blasting to $100 million within the next five years and aims to roll out new products every week. He also hopes to provide more education in developing countries and surpass the U.S. government in land-mine clearance.

Ho: What are the next steps in working with the Sharks after getting a deal?

Griffin: After making a deal on Shark Tank, you go through intensive due diligence with the Shark teams. You mainly discuss historical weaknesses, forecasts and how you can grow the business to meet profit goals.

Ho: What do you hope the Shark(s) will do for your business?

Griffin: We hope the Sharks drive attention to Combat Flip Flops and remove sales barriers.  Historically, our mission and style have had a hard time getting the attention of buyers.

There’s a lot of flip-flop companies out there. So how do buyers pick winners?  We hope the Sharks remove that doubt from buyers.

Ho: What are you doing now to move your business forward and expand?

Griffin: Currently, we’re focused on keeping customers happy.  Prior to Shark Tank, we were already having record sales and inventory was sitting on one shelf in a garage.  When the show aired, we back ordered into May for a few products.  Those are direct customers, linked via social media, driving high-margin sales.

Keeping those customers happy mitigates refunds, prevents a social revolt and enables Combat Flip Flops to use that cash for inventory during our historically high sales months, May through July.  Large direct-to-consumer growth with available inventory is our current plan for business expansion.

Ho: What is your marketing strategy? How do you acquire new customers and what are your customer acquisition costs?

Griffin: We market through social media and public relations.  Using our customer base, we are continually analyzing demographics, purchasing patterns and seasonal sales.  From there, we build look-alike audiences and target new consumers.

Using Facebook (FB) as an example, we use a conversion pixel to track a customer from impression to sale.  Depending on the ad served, we’ve seen acquisitions costs range from $2 per customer to $14 per customer.

Ho: How do you find business partners, instructors, salespeople etc? What qualities do you look for?

Griffin: We find business partners through trusted networks.  Small businesses need to optimize every dollar spent. Business by referral based on past performance removes a great deal of doubt.  This goes for retail partners, instructors and salespeople.

For qualities, it’s pretty simple: we look for people that turn a little into a lot.  At this point in our business, growth is key and we need partners that have a historical track record of growing business in their respective field.

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