Today's Guest

The idea for XION was born when CEO/Founder Dan Fairbanks owned and operated multiple small specialty running shoe stores in the Seattle area. He discovered that there was no integrated e-commerce/marketplace solution for independent retailers. From there, he teamed up with Co-Founder Robert Ivie, and together with the help of a few other dedicated employees, they developed XION to make it easier for consumers to buy online from local small business retailers.

Episode Transcript

(Please excuse grammatical errors due to transcription)

Gordon Henry:             Hey, hey, this is Gordon Henry at Winning on Main Street and this week we're really fortunate to spend some time with Dan Fairbanks. Welcome to the show Dan.

Dan Fairbanks:             Hey, I'm so glad to be here. Thanks for inviting me on.

Gordon Henry:             Yeah, we're thrilled. So quick intro on Dan. Dan is a visionary entrepreneur working to fundamentally change how local retail and e-commerce businesses work. He started multiple companies including a running store chain and e-commerce marketplace and a point of sale software company. Knowing firsthand how hard it's to succeed as a local retailer and small e-commerce store, Dan's down on a mission to create a world where shopping small retail is remarkable and operating a small retail business in person or online is low risk, profitable and fun. To achieve this mission, Dan wants to fundamentally change the way small retailers finance their inventory and educate retailers on the core changes they can make thrive as a small business. So your company is called, or one of your companies is called XION, X-I-O-N, and you're really using technology to change the small retail experience. So can you explain what XION does?

Dan Fairbanks:             So XION does three things that kind of work together. XION started as an e-commerce marketplace. So xion.stores is the website for clarity .store.com, just xion.store. And we started with this marketplace and that's what we sold first and got retailers really excited about was, hey, what if we could get you online without the hassle of figuring out even a template based system like Shopify or Big Commerce or there's a whole bunch of other ones. It's like let's just put you on a marketplace now. It's like, well what about Amazon? Why can't they just get on Amazon? And the limitation there was the brands and specialty retail don't allow that. They're like, no, you can't do that. But our model we would actually make, we have relationships with the brands. We're like, we're different. We're going to treat our retailers differently than Amazon. We're going to treat you differently than Amazon. Amazon has a lot of things that really makes brands upset and this is a different marketplace that takes that into account.

Gordon Henry:             So you really compete now with somebody like Shopify, right? And what makes you a compelling value proposition for the small retailer.

Dan Fairbanks:             And Shopify is a competitor and also not, So a lot of our retailers do both. They have the Shopify store and they put stuff up on site. So on your own store you can control everything and on XION you're part of a marketplace. Now there is XION as a marketplace is kind of a hybrid. You have, you could have your own store that you can send people to, that acts a lot like your website. We have people who, retailers who just forward their domain to their XION store and don't have a website otherwise. Then we have retailers who just do both and we're like, there's really no downside, you might as well get your products up here. We do a lot of the marketing for you, the Google ads to all the products. You're part of a bigger group that has better SEO, better marketing power, better understanding.

                                   You don't have to pay for that. We work out a deal where we'll take a cut where no matter what you win, you're never going to lose. We're going to take that off your plate and we're going to see if we can't get you enough sales that this is, it's an add on to whatever you're doing. It's addition to, but it's never taking away. And so that's how the marketplace works. Is it's kind of like a, let's get you on there, let's get your products on there, let's see if we can sell some stuff for you. We're going to take a cut of those sales at a margin that makes sense and we'll drive the traffic and we'll do the marketing and everybody wins.

Gordon Henry:             So how does this all help a consumer in dealing with the local business?

Dan Fairbanks:             Yeah, that's a really good question and really everything kind of stems out of that. So even though I think about solving retailers problems and even brands at this point, there's more to it there. It's also how does this ultimately impact the consumer and how does that compete in the marketplace against someone like an Amazon? Right. So with xion.store, the specific impact there is it allows a consumer to look up a product and we localize where they are and list the retailers that have it in stock locally. So that way they are having just a real time database of what's where. And instead of having to have it, sure you can get it online and get it shipped in one to two days, or maybe you just want to go pick it up or you want to go talk to a salesperson. That's what a lot of specialty retail is about is that it's an item that is worth talking to someone about.

                                   And sometimes you just want to pick something up and I get it, but you could also often do, you can do in-store pickups, you could buy it online and just come pick it up so you don't have to waste a bunch of time waiting for something. And even some of our resellers offer delivery, which could be same day delivery. So you order by a certain time of day and you could just have it delivered same day by someone locally, which is, there's a lot of efficiencies there. For the customer, it's a gain of time where you don't have to waste all this time with it. But there's also a gain of logistics. It's mores more efficient logistics use, right? So shipping stuff all over the place doesn't make a ton of sense, but if it's already close to you, we can just go from point to point. That's actually the most efficient way to get it to you in the shortest period of time.

                                   So that ends up competing actually head to head with Amazon because you're saying I can get something to you right away and if you care, you benefit the local community. There's a shop owner that's benefiting from that sale that's in your community. It's not just Amazon. So a lot of our focus recently hasn't been how do we get a small retailer to sell as much products as possible online? It's how do we augment their online sales to their customers with their customers and extend that so they get that customer coming back more often, more interested, telling friends about the whole experience. That's how you help a local retailer grow and compete versus trying to see if he can double their sales by selling as many products as possible online.

Gordon Henry:             Now does the technology you offer help the service part of their business?

Dan Fairbanks:             There's an iPad app that allows them to track their work orders in a Trello like board, if anyone's familiar with Trello where they have a little cards that they can track their whole backlog in, they're in progress, they're complete, and as they move a card from one column to the other, it automatically triggers a custom text message that they want to send the customer and let them know that their item is being worked on, their item is in stock. Or there's some issue with it like, oh hey, we realized as we started to work on your bike that there is this problem, we're going to need this part, we're going to have to order it so they can start communicating via text with their customers just right on the app. And that's been game changing for these retailers because on the service side it gets rid of all their phone calls, they spend hours making phone calls and now they spend seconds making text messages that are prefilled and they just hit send and customers get those text messages.

                                   As for phone calls people don't... people usually don't answer their phone from a number that's not already in it and they often even don't listen to the voicemails when left. And so the communication often gets lost. So this really cuts, it really improves the customer side of things because they see that communication, it's real time, they know what's going on and it's all digitally tracked. Everything's digitally tracked and understood and easy to work for and then they just take payment at the end. So that has been a really beneficial service based piece of what we do that we kind of stumbled into. It wasn't something I was thinking about ahead of time because it shouldn't have been running. We didn't have service. That wasn't something we did. But when I started working with bike shops and ski shops we're like, well this is a big part of my business and there's sort of software for it, but it's never been great. And I was like, I think I could do better. So it honestly was one of the easier things we built, but one of the most impactful things we built.

Gordon Henry:             So how about the support side? I mean you said before small business people in general, small retailers aren't necessarily super techy, they like what it can do for them, but they don't necessarily have that skillset. Is there a learning curve to using what XION has to offer and how do you support the small business who wants to use what you have to offer but needs some coaching and training?

Dan Fairbanks:             Yeah, so honestly I think this is where my perspective on technology comes into play and what XION is built around. It's all meant to be really intuitive and easy to use. And so if for example, if they're hiring, if a retail shop is hiring someone who's younger, that younger person probably needs zero training on it, just put them in front of it and it'll feel as familiar as any other app. Now the retail shop owner manager might be a little bit older and a little less technology savvy. Look, if they've got a smartphone, it's still as familiar and as comfortable as using any other app on their smartphone. So what we do is we set them up, we still give them an hour training of here's what you really need to know to use this software. But frankly we rarely have questions after that.

                                   And even then it's often overkill. Sometimes I'll get a follow up like, oh, I was looking for how to do this and then I'll just explain it really quick and they got it and they move on. But most of the time, it's just really intuitive and that is kind of the reasoning behind it versus a lot of the other software where you really do need training to know how to use it properly. And that's just a philosophy I use. There's a philosophy in software design called don't make me think, right? That's the philosophy we use when we design our own software. They shouldn't have to think about what they need to do in order to do and it, they should just be like, yeah, that makes sense.

Gordon Henry:             When we come back we're going to ask Dan what he's up to next and he got some exciting things to talk about where he's going with his next business. So stay with us.

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Gordon Henry:             And we're back with Dan Fairbanks. Really interesting story about finding his way to build a fascinating technology company, really a retail system for small retailers. So we talked before the show in addition to everything you're doing with XION, you've got your eyes on a new company, a new opportunity. Why don't you tell us about that?

Dan Fairbanks:             Yeah, so as I was working on XION and meeting with retailers, I started to understand their biggest and most... their biggest pains. What is the biggest pain of running a business? What are your costs sucked up into? What causes you to struggle financially? And so as I did that research, I also met somebody, his name is Tyler, who had been a brand and he sold products into retailers and he had his own set of problems as he was growing in his brand, which eventually he grew relatively big and sold and had a nice exit. But as we kind of got together and brainstorm on his strategies, we realized that there was a huge opportunity to solve some major financial problems for retailers and brands through something called vendor manage inventory.

                                   Now, vendor manage inventory was a term we had to discover way down the road. We had other ways of calling it for a while, but it exists at the Walmart level and what vendor manage inventory is, it's when a vendor actually manages the inventory at the retail level and with the added benefit of pay on scan. This is another term that's used at the kind of high level is that you don't pay as a retailer, you don't pay for the product until it's sold. And what this allows is for the retailer to reduce all their inventory risk pretty much down to nothing. If they could do all their products on vendor manage inventory, pay on scan, they would have no inventory risk. Now there's some like they do sign over some liability to say, hey, I'm responsible for this inventory if it's stolen or whatever. But they just can carry insurance around. And then the brands, so that's a big benefit to the retailer.

                                   So now they can actually stock better, stock bigger or stock more often, the products that are really selling and reduce all this capital that's tied up in inventory, which is a huge, huge problem for retailers is, I was talking to a retailer the other day and they were like, oh, I used to carry apparel, he owns three bike shops. He's like, I used to carry apparel really deep, I had a big apparel selection and it's like it was doing really well for me until I had all this apparel I couldn't sell, had to sell it at a discount and in the end I didn't make any money, lost a little bit of money and so I stopped carrying apparel and I'm like, so, but the apparel, if you think about it, it's keystone margin. So maybe it's a $50 shirt that you had to pay $25 for, but the brand's risk on that shirt is only like $5 maybe less, right?

                                   And so the brand has a lot less exposure by having more product out there. They still made money even when the products that didn't sell didn't sell, but the retailer didn't. And that doesn't really make a lot of sense. So retailers are afraid to carry a lot of items because of that, which means products are not getting in front of retailers when they should be. That is a really good example. Apparel bike shop is actually a really big one. This is really common with that scenario. And vendor manage inventories allows those retailers to carry a whole category they may not even carry and make money on it and the brand still makes money on it because now the brand is in front of a lot more customers. There's a really good example of what that does for brands and retailers and that's what helps the brand.

                                   Again, that's the benefit of the brand is they can get into more stores with more products. The other thing that's the major problem that this solves is retailers, they don't always realize this, but they're not usually good at managing inventory and there are exceptions and they're the usually the ones who do really well, but most retailers are focused on the customer and the customer experience and manage... they just don't use data to run their business. They're kind of like, Oh, I kind of see what's going out the door and I buy more of it. And instead what we're saying is with vendor manage inventory, the brand really cares. They really care about what's in the store, what's selling. And so we give brands that data, they have a dashboard, they can see the data, they know what's selling, what's not selling and they can keep that retailer stocked with what's selling.

                                   And if it's not selling they can pull it back, they can put it somewhere where it is or they can blow it out somewhere else where they don't lose money. But the retailer would've had to lose money at those prices, but the brand wouldn't lose money and they're not diluting that brand's equity with that retailer by having to discount all the time. So this allows brands to get into more stores have better data, run their whole manufacturing process different because they know exactly what's selling in real time and they're in control of making sure it's out there in front of the customer. And what retailers not having to take on inventory risks. Now more retailers are willing to take those products. We're currently, this is something we're launching in the first quarter of next year and right now we are collecting brands and retailers to be on our wait lists.

                                   We cover pretty much every industry, we are going to... when we launch. We haven't decided exactly which industries we're going to, within retail, that we're going to focus on. But we're... at some point we're going to focus on some industries to make sure we have a lot of brands and retailers within the same industry really matched up properly. But we're taking everyone from every industry to get on our wait list because this is game changing. This is a complete paradigm shift of instead of doing business on purchase orders and accounts receivable and accounts payable, this just gets rid of that all together and is a completely different model for doing business that much better aligns the brands and the retailers.

Gordon Henry:             Fascinating stuff Dan. So we just have a few minutes left. I want to ask you a few more personal questions while I call up the lightning round. Just some things we'd like to know more about you as a person. So first question is, do you have a mentor or a person you've learned from who helped you along the way?

Dan Fairbanks:             Yeah, absolutely. I think seeking after mentors is a really important thing to shortcut your growth. You can learn a lot, more lot faster if you seek out mentors. One of my first mentors that I had as an entrepreneur is John Richards. He was one of my college professors at BYU and has been a long time mentor of mine and an investor. More recently, Chris Crone is one of my best mentors and someone who I love learning everything I can from and he's someone who's had a lot of mentors, so like mentors who have mentors, It's a really great setup and system and those are some of my favorite mentors who've influenced my life. And then lastly I'll mention my dad. My dad's been a great mentor, someone who's been a great example, someone who's been an entrepreneur. He's built a very successful business during his lifetime and career and someone who's very generous, very abundant and gives back. And those are examples to me that are really important.

Gordon Henry:             That's great. Thanks for sharing that. Whenever we talk about small businesses, this issue of managing your time always becomes a big deal. Small businesses are sort of famous for kind of having too many things to do, not enough time to do it. What's your secret to managing your time?

Dan Fairbanks:             Delegation? I delegate a lot of the things that someone else can do better to someone else. And the way that I think about that, there's a formula to delegation, when there's a good time to delegate and a good time not to. You have to think about how you value your time and what value is your time for what you're doing and everything that is not the top value and the top 10% or 20% of what you do, you should delegate to somebody else because it's called time arbitrage. So if you're worth 50 bucks an hour to do something, delegate stuff that's anything less than that to somebody else because then you could spend a hundred percent of your time doing $50 an hour kind of activities and that allows you to manage your time much better. This is something that Chris Crone taught me. We talked about mentors, this is something he taught me that's changed my life.

Gordon Henry:             Yeah, great. Great example. Thanks. And last of those quick questions, do you have a favorite hobby or pastime when you do have some free time? You mentioned you're in Hawaii, I imagine there's some things you could do there.

Dan Fairbanks:             Yeah, I moved to Hawaii recently. I do love to be in the ocean. I've been getting into surfing. I've always enjoyed water sports, so wakeboarding, surfing, stuff behind the boat. So wake surfing is something I've also done a lot of. So, and then I also enjoy snowboarding, which is sort of a water sport, but it's frozen water, right? So I love board sports. That's something that's like one of my favorite things to do. I also I'm very adventurous. I love to travel and visit new places. Those are a big part. So I spend a lot of my time when I have free time. That's what I do.

Gordon Henry:             Very cool. Well, it's been great getting to know you Dan. Really, really great story. And I'm sure of interest to a lot of small businesses who tune into this show. How should entrepreneurs learn more about getting involved with you and XION? Which again is X-I-O-N folks, not Z-I-O-N, X-I-O-N. How should they find you and get in touch with you?

Dan Fairbanks:             There's a couple of ways. I mean, if they go to danfairbanks.com, it'll kind of link them to all the different things that I work on and then they can find links to XION and links to Thatch, which is the vendor managed inventory stuff. Xion.store is the website for that. And then if you're a retailer, if you scroll to the bottom and you can click on a link to go to kind of the retail oriented stuff with the brand oriented stuff. And thatch.tech is the website for the vendor managed inventory. Those are all the different ways that someone can get ahold of me. But if you want to remember one, danfairbanks.com, it'll link to everything.

Gordon Henry:             Fantastic. Well, thanks for coming on the show, Dan. Great to have you here and good luck with XION and Thatch.

Dan Fairbanks:             Great. Thanks, I really appreciate you having me. Had a great time.

Gordon Henry:             And I want to thank our producer Tim Allman and our coordinators DF Barnett and Daniel Huddleston. They do a great job. And if you enjoyed this podcast, please tell your colleagues, friends and family to subscribe and please leave us a five star review. Really appreciate it and helps us in the rankings. Until next time, make it a great week.

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