🎧🍌 How a Hillbilly in Nevada Bootstrapped a $140M ARR Manufacturing Company | Jim Belosic, SendCutSend
Using software to automate factories, creative ways to bootstrap a sheet metal business, using speed to compete with overseas competitors, and how to use PLG in manufacturing
Jim is a self-described “hillbilly from Nevada”, and this latest episode of The Peel shares everything he learned bootstrapping SendCutSend to a $140 million revenue run rate in eight years.
Zane Hengsperger from Nox Metals just called it “one of the best podcast episodes he’s ever listened to”.
We talk about building a manufacturing business in the US, using software to automate sheet metal production, creative ways he financed the company early on, using speed, trust, and software to compete with overseas competitors, lessons from restaurants, SendCutSend’s unique bottoms-up customer acquisition strategy, and why you can’t run factories from a spreadsheet.
People really seemed to like this when I posted it on Twitter last week. Please let me know what you think!
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Timestamps to jump in:
0:16 Automating sheet metal manufacturing
5:59 Zero to $140 million ARR in 8 years
7:58 Acquiring a $750k laser with $0
13:38 Automating factories is like baking cookies
15:17 Being legible to capital
17:31 Unlocking custom, low order manufacturing with software
20:00 Building more factories instead of selling the software
24:50 Run your company like a lemonade stand
28:30 Raising an angel round in 2021 as a safety net
33:21 SendCutSend’s unique bottoms-up GTM
38:24 Fun coupons
40:12 Building a moat with speed and trust
45:55 How US factories can beat China
47:40 Gaslight product launches
52:05 Lessons from non-manufacturing businesses
55:19 You can’t run a factory from a spreadsheet
58:10 Using data in manufacturing
59:50 Lessons from Factorio
1:03:17 Unlocking a negative cash conversion cycle
1:06:14 You need to resist automating everything
1:13:51 Surviving COVID with six weeks of cash
1:15:47 Solving the US skilled labor shortage
1:26:17 Teaching kids about manufacturing
Referenced:
Find Jim on X / Twitter and LinkedIn
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Transcript
Find transcripts of all prior episodes here.
Turner Novak:
Jim, welcome to the show.
Jim Belosic:
Hey, thanks for having me. This is awesome.
Turner Novak:
Yeah, this will be fun. You’re the founder and CEO of SendCutSend. Some people might know about SendCutSend. I feel like it’s kind of an “if you know, you know” situation. But really quick, for people who don’t know, what is SendCutSend?
Jim Belosic:
We are an on-demand manufacturer. What that means is people have an idea, they design it in CAD, upload it to us, and we make it and ship it to their door. We specialize in sheet metal fabrication, CNC machining, stuff like that. Metals, mostly.
Turner Novak:
Just curious: why is that so important? There are a lot of companies that have existed and done something like this. It’s kind of an older industry. But you started a company semi-recently and you’ve grown really fast and gotten really big. Why is that so important?
Jim Belosic:
Sheet metal and machining have been around forever, but it’s traditionally really hard to get access to. Take Reno, Nevada, for example. We’re a pretty small town, about half a million people. But even in a small city, there are probably 10 sheet metal shops in town, and they’re all really busy doing long-run work. Meaning they’re going to make a million units of something. Maybe they’re making computer chassis for one company for five years, then they’ll get another client and make something else. Maybe there are sheet metal companies that specialize in HVAC or something like that.
So if you need something made, maybe a prototype, or a small quantity, or you want to iterate. A lot of those guys aren’t really set up to take on that kind of work. They have to quote it, get tooling, order special material, whatever. They’re like, “I don’t want to take down my production line just to do one or two of something.” And it’s traditionally very low margin as well.
I’m a car guy. I’m a fabricator as a hobby. When I needed stuff made, I knocked on doors and no one wanted to help me. So I said, “Well, I’ll just do it myself.” I thought we could set up a model that would make this manufacturing process easier to access for everybody. It turns out that’s really hard, but here we are.
Turner Novak:
So essentially, if somebody needs one single metal piece made, traditionally that’s very expensive and time-consuming. There’s a lot of friction.
Jim Belosic:
The price for one is usually the same as the price for 100. The old way of doing things, the quoting process was so expensive. Someone would have to fax over their drawing, and then some dude, a draftsman, who would lay it out and try to figure out how much material they’d need and how much machine time it would take. The quoting process sometimes took days or weeks, then they’d go back and forth. You put in so much effort upfront that you need to make it back in quantity. You’re hoping the job is going to be $100,000 because you already spent hundreds or thousands of dollars just in quoting and getting the supply chain ready.
We tried to strip all that out. My background before this wasn’t in software, but I was like, “We’re smart software guys, we can figure this out.”
Turner Novak:
So maybe that’s an interesting place to go. You were working on a car, you needed a custom part, you couldn’t find it, and you decided to make it yourself. And then somehow in there you started a company. What was that process like?
Jim Belosic:
I was running a software company I had started. It was B2B SaaS, some kind of marketing software, heavily integrated with Facebook.
Turner Novak:
Email stuff. Fake email job type work.
Jim Belosic:
Fake email job, dude. Yeah. So bad.
And what sucks is golden handcuffs, right? We were making good money. I wasn’t particularly proud of running a fake email job, but I’d always worked on cars. So you’re making money and you’re able to go on the weekends and wrench on a car. But the parts I needed started to get more complex than I could produce in my own home shop. I had a bandsaw and hand tools, but when you need something precision, you have to go to the guys with the big, expensive equipment.
My initial thought was, “I really want to buy this expensive equipment.” But the payment was going to be crazy and my wife was going to kill me. So maybe the best thing was to get a few customers just to offset the payment on the machine. I never set out for this thing to be large. I was like, “If I can get 20 customers, I can keep the machine running but still get full access to the machine for free.” Very humble beginnings. Then those 20 customers really liked it, told their friends, and it kind of spiraled from there.
Turner Novak:
How big is SendCutSend today? I saw a public revenue number. I don’t know how public you are about it, but what’s the current state of the business?
Jim Belosic:
We’re about 450 employees. Almost 300,000 square feet of factory under roof. We have facilities in Nevada, Kentucky, and Texas, with a couple more planned. Revenue right now is about $140 million a year and growing every day. We have staff in 18 states and over 150,000 customers.
We started with just consumers, guys in their garage, and now we serve a big chunk of aerospace and defense, and Fortune 500 and Fortune 50 companies too.
Turner Novak:
I think I saw on the website that you serve 59.8% of the Fortune 500. It was a very specific number, like 299 companies or something.
Jim Belosic:
Yeah. And there are some weird ones in there. I look at some of them and think, “What are you guys doing with these parts?” Maybe they just ordered a logo to put on their door. But when you dig a little deeper, some of these companies have R&D labs, or they’re trying to get into hardware, or they have a development arm of some kind. That’s kind of cool.
We have no idea what we’re going to make that day because people just upload stuff and we are challenged to make it.
Turner Novak:
You’ve gotten really big fairly quickly. Someone listening to this might assume you raised a ton of money and bought a bunch of stuff and scaled up fast. What actually happened to get things started initially?
Jim Belosic:
I have a very loving wife. When I wanted to start this, I knew we had to have really good equipment. At the time, the laser I wanted to buy was about $750,000.
Turner Novak:
What is this laser? Can you explain what it is for someone who might not know?
Jim Belosic:
A really good way to cut sheet metal is with high-powered lasers. You take a lot of power, up to 12 kilowatts, and you focus it down to a point that’s about the size of a period at the end of a sentence. Many households’ worth of power focused onto that tiny point. What it does is vaporize the metal, turning it basically into dust. Then we use nitrogen to blow the dust away so it doesn’t remelt and turn back to solid metal.
You’re vaporizing the metal and blowing it away incredibly fast. You can cut a piece of metal the size of your desk in maybe 20 or 30 seconds. These things rip when you watch them. The classification is called a fiber laser because it uses fiber optic cables to pump the beam to the actual laser head. Ultra high tech. The ones we use are from a Japanese company called Amada. Awesome pieces of equipment, but very expensive.
The cool thing about Amada is they have their own bank, because they’re Japanese and they do weird stuff like that. Their whole finance arm exists to move machines. It’s not there to get interest rates or anything like that. They’re solely there to sell machines. At the time, I think it was 5% down for five years at 5%.
Turner Novak:
An insane deal for just a guy buying a big laser.
Jim Belosic:
At first they didn’t want to sell it to me. They’re like, “All right, let’s talk about your sheet metal shop. Why are you upgrading to a laser?” And I was like, “Well, I don’t really have a sheet metal shop. I’m just starting one.”
Turner Novak:
Maybe you should’ve just been like, “Oh yeah, we’ve got some customers, we’re doing fine.”
Jim Belosic:
Well, that’s the cool part about their bank. They won’t fund you until they actually have sales guys come out on site and look at your operation. They want to see if you’re legit.
So they sent a salesman. He’s like, “You are a moron. You’re a software guy with soft hands. You don’t know what you’re doing.” But he said, “I like you and I’m going to vouch for you. If this thing all blows up, I don’t give a shit. I’m going to come pick up the machine. It’s 50,000 pounds. You can’t move it. I’ll come get it if you don’t make your payments.” And I was like, “This sounds like an awesome deal.”
So we were able to bootstrap because of debt, and that’s really how we run. Getting financing on equipment is relatively easy because it’s an asset. If you don’t pay, it’s like a car loan. They’ll come repo it. Same thing with equipment, especially if it’s over half a million dollars, it’s pretty easy to get a loan.
Turner Novak:
Okay, so you got this laser. But they sell these lasers to anyone. They literally had a program to finance and move them, so tons of people got these things. What did you do that was unique?
Jim Belosic:
That’s where the B2B SaaS, fake email job background came in really handy.
My CTO and I, his name is Jacob Graham. We’ve done two businesses together and met as neighbors, working together for about 17 years. We realized that the pain point for this type of manufacturing was the quoting. And what we call nesting, where you start with a sheet of material and try to Tetris on as many parts as possible. Like cutting cookies out of cookie dough. You don’t want any waste. You want them to fit really tight.
Turner Novak:
So that’s what most manufacturing companies are doing when they’re making things, trying to reduce their waste and minimize scrap. They’re making cookies, basically.
Jim Belosic:
Yep. They want to minimize time on machine, maximize yield, minimize scrap. They want everything to run efficiently. But it’s really hard to do that manually, with dudes at a drawing board trying to figure it out. Even with CAD, moving parts around is really challenging and time-consuming.
Our idea, and I hate the word “thesis”,
Turner Novak:
Such an intellectual word. So sophisticated.
Jim Belosic:
I hear it so often now. All these VCs are like, “Oh, I have this thesis.” I’m like, just say you have an idea or a hunch.
Our idea was, with some software we can solve the quoting problem. We can do instant quoting, because we can take the geometry, run it through our algorithm, and spit out a price that’ll be reasonably accurate. We can use software to nest things, Tetris them together, so we have very little waste. We can use software for scheduling, shipping, logistics, all of that. So we ended up taking this machine that’s kind of a commodity and using it in a way that was very different from how the rest of the industry used it.
About six months later, after we’d been running the machine, the salesman came back and said, “Hey, now that you guys have been running it and making a little money, I want to sell you this automation add-on. It’s another half million dollar thing that’s going to automatically load the metal, and it’s going to bring your beam time up to about 60%.” And I said, “Well, we’re already doing 75%.” He goes, “No, that’s impossible. We never see that. Usually shops are at 30 or 35%.” We showed him all the numbers from the machine and he goes, “Holy shit. What are you guys doing?” From then on we had a little more credit with them and could buy more machines.
Turner Novak:
So the thing you were doing was just the software to automate the quoting and plan out how to use the material.
Jim Belosic:
Yeah. In most manufacturing, people bias toward quantity because setup is so challenging. For us, if you remove the setup equation and it costs you nothing, you can offer much lower quantities, lower prices, more accessibility. In one sheet of material, we might have a hundred different customers. But you need software to be able to say, “Alright, here are 100 unique line items on this sheet. Where do they go? Which customer is which? Is there additional processing that needs to happen?” Because it’s not just cutting. It’s bending, countersinking, tapping, powder coating, PEM hardware, anodizing, and all kinds of things can be part of the manufacturing process.
Turner Novak:
There are different ways of thinking about this strategically. This is capital-intensive. You could have taken a more capital-efficient approach, like selling the software to other manufacturing companies. How did you think about that? You run multiple plants now. You went all in on a certain strategy. How did you decide which way to go?
Jim Belosic:
Honestly, selling the software was our first choice. As we started to build it out, we went back to the shops that had told me no. I said, “Hey, we have this proof of concept. What do you think?” They immediately wrote us off as dumb software kids. Very dismissive. So I thought, “To do this right, I should probably get my own machine.”
And funny enough, that same thing happens to me every single day now. I have so many people coming out of YC or wherever saying, “Hey Jim, what you really need is more software.” I’m like, the problem you’re trying to solve tells me you’ve never been in a shop. You’ve never been in a factory. Everyone thinks a little more software will fix manufacturing, and many times it won’t.
It’s like if I knew nothing about restaurants but drove by one with a line out the door, and I went up to the owner and said, “You know what you need? Some software to help that line.” If I actually had experience in restaurants, I might realize what they need is more burners, or more refrigeration, or more staffing. It’s seldom software that’s really holding people back these days.
Turner Novak:
It might be another location for that restaurant.
Jim Belosic:
Exactly. People are so used to the SaaS era. They think software solves software, so they try to apply that to hardware. That just shows they’re inexperienced.
It’s weird when you’re in a vertical like manufacturing. There are no manufacturing clubs or manufacturing TV shows. When you go to a backyard barbecue, everyone’s talking about sports and NASCAR and popular American pastimes, and I’m like, “Hey, anyone want to talk about supply chain?” I’m not super popular at barbecues.
Turner Novak:
It was kind of dirty almost, or maybe that’s not the right word. I was thinking about this when I picked up my coffee an hour ago. The way America has evolved, we basically guided society away from doing these harder things. You don’t want your kids to be a plumber, standing all day and hurting their back. You want them to have a cushy fake email job where they sit at a desk and it’s easy.
Jim Belosic:
As a parent, you want your kids to have a better life than you had. I think a lot of boomers worked their ass off and they saw this new thing called college and computers and they thought, “Air conditioning, that’s the job I’d want if I could.” And everyone went into that. It was good for a while, and now everyone’s getting their ass handed to them with AI and stuff.
Anyway, you were asking about bootstrapping and raising money. Capital-intensive, yes, that’s a term I learned. Because I feel like manufacturing is a somewhat sexy category for VCs right now, at least in 2026. It was not in 2017 or 2018. Everyone wanted capital-light back then. So many people told me to sell the software.
By that time I knew more software wasn’t the solution. And just based on how the industry adopts software, I knew it wasn’t going to work. So we bootstrapped it for as long as we possibly could. I used a lot of personal money, personal guarantees on all kinds of crazy loans. Then my wife was like, “Hey, if something goes wrong, we’re losing the house, we’re losing everything.” To help us sleep at night a little bit, she said, “Maybe we should try using someone else’s money, just in case.”
Turner Novak:
What a novel idea.
Jim Belosic:
Yeah. All of my business influences came from growing up in Genoa, Nevada, a town of about 400 people. I went to school in Minden, Nevada, about 30,000 people. So all my business references were agriculture, blue collar stuff, plumbing companies, lumber companies, whatever. I knew that to run a business, you take a product, sell it at a profit, and put that profit into buying more product. I always tell people I run my business like a lemonade stand. I buy lemons for 50 cents, sell them for a buck, and go buy more lemons.
That’s how I thought businesses were run. I have a high school education. I still don’t know a ton about accounting and finance. I’m learning. I learned about GAAP accounting a little bit. Holy shit, that’s all made up too, by the way.
Turner Novak:
It is. Hopefully my accountant isn’t listening to this, but I just look at my bank account. My accountant will do all this stuff and I don’t even look at it. Then you owe them a bill for quite a bit of money and you’re like, “What were we just doing here? I know how much money is in my bank. I get that you have to pay taxes.” This is kind of ridiculous.
Sorry to all the accountants out there. I feel like accounting was invented to keep other accountants busy. I feel the same way about legal sometimes. I love my legal team, by the way.
Jim Belosic:
I run my businesses very simply. The idea is to make money. So we had to be profitable very early. We had a couple months where I could self-fund a little bit because it was me and two other guys. And the other cool thing about the laser company is sometimes you can delay that first payment. I think your first payment is due after you’re done with training, and we just never did the training. So you wait until the salesman comes by and goes, “Dude, you guys have to make a payment.” We could run like that for a little while, and then we were buying sheet metal, adding value to it, selling it, and making a profit. That allowed us to bootstrap for a while.
But because it’s capital-intensive: you’ve got to have inventory, more staff, all this stuff in order to grow it. It did make sense for us to take someone else’s money. Shout out to Sandy Corey from Horizon. He knew me from the software company because he’d always tried to do his VC thing with it, but I was making so much money I was like, “I don’t need your money.” So we had this relationship for a long time. Then I called him and said, “Hey man, I told you I didn’t need you, but I need you now. I’m doing this weird manufacturing company.” And he was like, “No way. That’s capital-intensive. Call me in six months.”
So I made a little chart showing where we were and where we were going to be. Six months later I called him, sent him the chart, and said, “Look, I did what I said I was going to do.” And he was like, “Oh shit. You guys are awesome.” So he backed us. It allowed me to sleep at night a little bit. It was very expensive money because we ended up not deploying all of it, but it gave me just enough of a safety net to really haul ass.
Turner Novak:
Because if you actually calculate the cost of equity, the implied interest rate on a venture investment when it works out, it’s like three figures. It’s basically close to 100%, essentially a payday loan when it works out. Sometimes it can be a pretty high implied rate. But to your point, sometimes it’s the only capital available. And as you said, you probably would’ve done things differently if you didn’t have it in the bank. Even though you didn’t touch all of it, it allowed you to take more risk. That’s kind of the point of it.
Jim Belosic:
A million percent. When I tell this story to close friends, they’re like, “Oh my God, don’t you wish you could go back and say no?” And I’m like, “Hell no.” It got me to where I am today. Yeah, it was expensive, but I don’t have a time machine. Everything kind of builds on everything else. Having that money in the bank allowed me to make riskier bets.
Turner Novak:
I think the interesting element is that let’s say when you raise VC money, you sell about 20% of the company, as a rough number. And let’s say you only technically needed the capital equivalent to 12.2% of the company. Would you go back and only sell 12.2%? Well, you don’t really know what that number is going to be. And the chances of succeeding might’ve been lower without the cushion. It’s really just about optimizing the chances of success. You want to win. You want this thing to be successful. Do what gets you there.
Jim Belosic:
It could have all gone to zero, but it’s doing great. Sandy’s been an awesome partner this whole time. The cool thing about the investors we took on is they know nothing about manufacturing, so they’ve let me do whatever the hell I want to do. They’re just like, “Whatever you say, Jim. We have no idea what you’re doing over there, but you’re doing a good job.” It’s been a really great relationship.
And I’d say that’s probably the ideal target for investors. If you’re investing in someone, they are the subject matter expert. Let them do what they do. I’m bad at accounting and finance, and investors are usually pretty smart on that stuff. They’re good at what I suck at, and vice versa.
Turner Novak:
I actually have a question from Sandy. I want to make sure we get to it. He said that your go-to-market execution is epic, and nobody in his industry has ever done anything like it. He’d be curious to hear how you think about the strategy behind that. I don’t know what you’re going to say. I have a little bit of an idea, but how did you guys think about getting customers? What did you do, and what was so different from how others have done it?
Jim Belosic:
Thanks, Sandy. And also, sorry, “go-to-market” is another term I hate. What does that even mean?
Turner Novak:
Sophistication. You gotta sound like you’ve really thought about this. You gotta be legible to the capital holders.
Jim Belosic:
I think Sandy asked me that at one point. He’s like, “What’s your go-to-market strategy?” I’m like, “What are you talking about? How are we getting customers?” Our strategy was based on what I know, which is I’m not a great salesman. I don’t know how to get into enterprise accounts. I know nothing about talking to procurement departments. But what I do know is people in their garage trying to make stuff: makers, fabricators, car guys, people doing model rockets.
So what we did was make sure the product was really incredible, really easy to access, and very, very fast. Then we just showed off what people are making. On Instagram, we’d post, “Hey, check out these parts we made. Check out this robot this guy made with our parts.” What happens is all these people with hobbies usually have a day job too, and the day job is often just to support the hobby.
In the early days, we had a guy making an electric skateboard in his garage. We made a bunch of parts for him and he sent us photos, like, “Dude, check out how cool this thing is. I’m going to tell all the guys at work about you.” We said, “Cool man, if they can use us, great.” It turns out he works at a very large American electric car manufacturer. Now we have 400-some engineers inside that company using us. I guess now they call it bottoms-up adoption. I didn’t know that’s what it was. I just thought, have a cool product, let cool people use it.
Turner Novak:
Product-led growth, right? People at these companies started using the product individually and then onboarded the rest of the company. Even though they didn’t use it for work initially, they were basically selling your product internally. The individual became the champion who brought the big enterprise on board.
Jim Belosic:
Yeah. Your customers can sell for you better than you ever could. We put a big focus on that, though it wasn’t some brilliant strategy. We didn’t sit in a boardroom and say, “We’re going to do product-led growth.” It was just, what do I want as a customer?
Another part of our culture is that we are our own customer. Probably 50% or more of the people who work here use SendCutSend for their personal projects. We have Slack channels where people just post everything they’re making. All employees get a hefty discount. Using your own product, eating your own dog food, it makes it better and better over time. When I order stuff, I’m always pissed it took so long to get to my house, or maybe a part wasn’t high enough quality, or the candy was stale. So we’re always trying to make it better. If we make it better for ourselves, we make it better for our customers, and our customers are happy and tell their friends.
Turner Novak:
I think you have this concept called “fun coupons.” What are those?
Jim Belosic:
Usually $100 bills, but it could be other stuff. What I’ve learned is not everyone is motivated the same way. Some people like cash. Some people like PTO. “You want a day off? Do this thing for me.” Some people only need praise. Finding out what motivates people is important. A lot of guys are motivated by whiskey too, so a $70 bottle of whiskey has the same effect as $100 bills usually. And a lot of the young kids don’t know what to do with cash. “Can you Venmo me?”
We recycle all our scrap metal, and scrap guys, for whatever reason, love to pay in cash. Most of it goes to the accounting department, but we keep a little petty cash in our pockets. If we see something outstanding, or we need to say thank you to a vendor, a FedEx driver, someone like that, we hand out a fun coupon. It builds rapport and people appreciate it.
Turner Novak:
Continuing on this topic about building a manufacturing company. One argument someone might make is that there’s no moat. A listener could just go do exactly what you’re doing and sell it for a lower price. How have you thought about that while building SendCutSend?
Jim Belosic:
It’s a commodity. I’m buying steel, I’m buying aluminum at commodity prices. Anyone can get them. Anyone can get the lasers and equipment that we have. We make modifications to them with a little secret sauce to make them run a little better, but I don’t think that’s moat-worthy. Our software was a moat, briefly.
I’m not sure there’s any moat anywhere, really. There are so many smart people who figure stuff out. If you think you have a moat, you’re assuming that no one being born today is going to be smarter or more driven than you. It’s going to happen again. With us, our moat is continuing to deliver and exceed expectations. And really, it’s speed. Even if someone can sell cheaper, if we can get it to them faster and they can complete their project faster, that’s the most important thing. Speed, capacity, quality.
Think about Chick-fil-A. Popeye’s sells a chicken sandwich. McDonald’s has a chicken sandwich. But people love Chick-fil-A because it’s high quality, it’s consistent, maybe the location is convenient, the drive-through is fast even when the line is long. I don’t know if that’s a moat, but they’re running a really good business. We try to do the same thing.
Turner Novak:
If I’m thinking through this as a competitor. Say I’m an overseas manufacturer with a lower cost structure, so I’m passing all those savings to the customer. But I’m across an ocean. I have to figure out how to get things to American customers faster than you can when someone places an order on your website. The software is cutting the piece the same day. How fast does it actually go? Then you ship it and it gets to their house in a day or two?
Jim Belosic:
We have an option right now called “noon by noon,” order by noon, get it by noon the next day. That’s difficult for offshore to compete with.
But internally, we always run what we call the teleport model. Let’s say China could teleport. As soon as they put it in a box, it magically crosses the ocean and gets delivered. All of a sudden, yeah, there’s no moat. What does our business look like then? Our answer is it has to be the entire experience. The look and feel of the product. The support before the sale, after the sale, during the sale. With manufacturing, the tough thing is DFM, designed for manufacturability. Just because you can design something doesn’t mean it can be made, especially for people with 3D printers. Just because you can 3D print something doesn’t mean it can be CNC machined or injection molded. You have to make adjustments in your design for it to be manufactured.
We invest significant resources into helping our customers understand how to make their design better, cheaper, faster. That’s something offshore has challenges with on the support and partnership side.
Turner Novak:
I’m putting myself in the mindset of someone trying to compete against you. To your point about the teleportation model. I don’t know, I could see with all this rocket technology launching, you manufacture on the other side of the world and a rocket launches and delivers it in an hour. I know some people maybe accelerate the timelines on adoption of new technology, but I could see it happening eventually. But then you get to the point of trust. Do they trust you? Do they feel like they’re getting the best experience? That level of excellence where you’ll never let them down, the product always works, they can trust that you’re going to get things on time and at high quality.
Jim Belosic:
I’ll call it the rocket ship scenario, because that’s actually way more realistic than teleportation.
Turner Novak:
Or drone. But yeah, rockets. ICBM delivery.
Jim Belosic:
Yeah. ICBM delivery, hopefully just the launching part, not the full ICBM experience. I want submarine-launched sheet metal parts landing anywhere within six hours.
If we run that scenario. Let’s say we know that’s coming because the cost to launch is dropping like crazy. Maybe that is a threat. Well, the thing we can do is continue to scale. With scale, there are economies of scale. People say China has cheaper labor, cheaper equipment, cheaper commodities. Yes and no. On really good, expensive equipment in the US, you can actually output more. Good labor that’s making a good wage cares more. They put more quality into it. They’re looking for ways to improve the process. The real thing American manufacturers need is scale. A robust supply chain where they’re buying millions of pounds of raw materials. 24/7 operations. Distributed geographically so transit doesn’t really impact their cost structure.
Even if that moat completely goes away, I’m confident we can compete, not just on quality and service, but on price too. And oftentimes we already do today, especially in larger quantities. We start to get really close with offshore pricing.
Turner Novak:
One thing I’ve heard you talk about is how you launch new products and capabilities to customers. There’s this trend in tech and software where you do a launch video, a lot of fanfare, you announce it. I feel like you do not take that approach. What is your approach to rolling out new capabilities?
Jim Belosic:
We call it the gaslight launch. We say nothing. We just turn it on and wait for customers to discover it. You’ll turn it on and for a day nothing happens, then the next day you get one order, a couple days later you get five, and it starts to snowball. What that does is allow you to understand the demand and start to learn where the process goes wrong. We test everything first. We do test orders, make a bunch of people in the company order stuff, and beat it up like a soft opening. But everyone has a plan until they get punched in the mouth.
When you open it to the public, the public is endlessly creative and they will find ways to break your stuff. The worst thing you can do is announce, “Hey, we have this new process. Go try it.” If a thousand people decide to try it the same day and you only have capacity for a hundred, you’re going to disappoint a lot of people.
So with the gaslight launch, we turn it on, let it run, iterate, get good at it. Then our favorite thing is when a customer writes in and goes, “Oh my God, you guys do welding now?” And we’re like, “Yeah, where have you been? We’ve been doing welding for months.” Once you’re really good, once you’re six months in, then you start telling people about it, because you know your capacity, you know what goes right and wrong, you know what kind of customers are going to be a good fit.
Turner Novak:
You can control the customer experience that way. And it sounds like the biggest thing for you is that customers trust you to do exactly what you say. So this philosophy rings true. You only do things you know you can deliver on at the highest quality.
Jim Belosic:
Yeah. I’m just so nervous that one bad experience can cause a customer to go away for life. I had a really bad experience at a Chili’s once and I have never set foot in a Chili’s again. I know it’s stupid. It was just a waitress, I could probably go back. But that kind of thing sticks.
So I want to make sure that if we say we’re going to do something, we do it and we exceed expectations. To do a big proper launch with a launch video, you don’t know if you’re going to get 10 people or 10,000. Roll it out slow, figure it out as you go. I remember hearing stories about when Disneyland opened for the first time. It was crazy hot, ladies in high heels had their heels melting into the new asphalt, and the reviews from that first day launch were pretty poor. That’s how I avoid those situations.
Turner Novak:
You mentioned restaurants a couple of times. I know you’ve talked about learning a lot from other businesses, going into a restaurant, a manufacturing company, a car dealership, a store, and seeing how it works. What have you learned and borrowed from other industries? Any memorable things that weren’t intuitive that you’ve brought to SendCutSend?
Jim Belosic:
I’m endlessly curious about every business except manufacturing. And I think you can know too much about something and then you won’t do it. Knowing everything I know right now, I don’t know if I would’ve started this business eight years ago. There are crazy challenges. But if you can leverage the Dunning-Kruger effect and just think, “That seems easy,” you’ll end up doing a lot of innovation.
My wife went to a yoga class that had this really cool app to schedule and pay. Really smooth UI, really smooth checkout sequence. I was like, “Oh, I like that. Maybe we can borrow that.” I went to a packaging trade show. I thought it was about jars and labels and cardboard. It turned out to be mostly about packaging cannabis. But there was crazy stuff we learned. They had ultra-high-precision scales with an API, and I was like, “I can use those to count parts.” They had this vacuum packaging stuff intended to keep the smell out, but it works really well to prevent parts from moving during shipment.
We’ve toured distribution places. Aeroflex Electronics gave us a tour and they had these really awesome modular carts I didn’t know existed, different totes that are designed to go on the cart, super efficient, organized so that when you go through different stops, you can drop off the right totes at the right area. We use a modified version of that. We call it the train, which is just like a baggage cart you see at an airport, and we drive it through the facility to move parts around. We got a quote once for $4 million for conveyors. I said, “There’s no way in hell.” So we went on Facebook Marketplace, found an old aircraft tug, and made it into our $4 million conveyance.
You can pick up stuff like that everywhere. At the frozen yogurt place, the way they market a new flavor. “Tag us, show us a photo of you eating this new flavor, tell your friends.” Just little things I pick up and use what I think is best.
Turner Novak:
I know you’ve mentioned that to run a manufacturing company, you cannot do it from a spreadsheet. You have to be in the facility walking the floor. Can you explain that? Some people might think it’s just a math problem, just a spreadsheet. Why do you think you need to actually be in there? What do you get from walking around?
Jim Belosic:
We have six buildings now, so I can’t be in all of them at the same time. But I have dashboards that show me everything I need to know. I’ll see something like, “Why is bending so behind in Texas?” or “How come powder coat has no work in Kentucky?” When you walk the floor, you actually see what’s going on. The reason bending is backed up in Texas is because one of the machines is down. Or Larry had to go to a family reunion and three other operators are family and they’re all gone. The reason there’s no powder coating work in Kentucky is because we ran out of powder coat and no one said anything.
You can see it on a dashboard, but then you have to go investigate. You have to do root cause analysis, and usually you can figure that out on the floor. One funny thing that happens is I watch almost all of our purchase requests. About once a week we’ll get a request for more totes. We use TSA-style totes to move parts around. You put an order in one and it goes through the process. I get requests like, “We need more totes, we’re running out, we’re so busy.” But when you look at it, we don’t actually need more totes. We need to process more orders. It usually turns out we don’t have enough staffing in shipping, so they can’t empty the tote and put it back to the front of the line. You can’t see that kind of thing on a spreadsheet.
You have to walk the floor. Or you need really good leaders who are walking the floor and combining gut with data. Just gut alone doesn’t work either. You need data to back it up. It goes both ways.
Turner Novak:
What kinds of things have you done as a manufacturing company with your software background? Are there other things where you’ve invested in building tools to give you more data or automate parts of the manufacturing process beyond the automated quoting?
Jim Belosic:
The physical side is really important. And that’s where I see people go wrong. I get outreach almost daily from people who’ve never been in our building and say, “Use this software and it’ll make your business better.” As an outsider, you’re not seeing where the actual bottlenecks are.
For machine monitoring, for example, we hook up systems to the machines so we can understand exactly what their uptime is, how often they’re in an error state, how often they’re idle, whether they’re running, whether the spindle is moving at the right speed, whether there’s a vibration, what the temperature is. We strap on these little monitors, they’re Arduino-powered, but it gives us additional insight. When you’re walking through the building, you might notice something sounds a little strange or smells a little strange. Then you look at the data and it’s like, “Yeah, that machine hasn’t been maintained in a while.” Use all your senses plus data.
Turner Novak:
You mentioned bottlenecks. In your experience, what have been some of the biggest bottlenecks in trying to build a manufacturing company and scaling it quickly?
Jim Belosic:
It changes all the time. As soon as you solve one bottleneck, the next one pops up. Have you ever played the game Factorio?
Turner Novak:
I know of it. I haven’t started playing it.
Jim Belosic:
Don’t do it.
Turner Novak:
When I play video games, it’s with my kids. Minecraft, RollerCoaster Tycoon lately. Not quite Factorio, but a little bit of that simulation management thing.
Jim Belosic:
It’ll steal days of your life. Basically, you mine ore, turn the ore into metal, take the metal and do something else. It’s kind of what we’re doing. As soon as you fix one thing, it creates a new problem somewhere else. If we can’t ship fast enough, we add shipping staff and innovate the process. Then all of a sudden shipping doesn’t have enough work. We go upstream. How come there’s no work? Oh, we’re waiting on powder coating. Let’s fix that. The bottleneck changes every single day and it changes per location too. All of our facilities have different bottlenecks, and it changes day to day because we don’t know if we’re going to make a million parts in a day or ten. Very dynamic.
Early on, a big challenge was raw material inventory. My lack of accounting knowledge meant I thought, “I want as much material as I can possibly afford so that if we get a spike in orders, we can handle it without disappointing people.” It turns out that’s really bad for cash flow. All that inventory is actually millions of dollars you could’ve deployed. But because we’re quick-turn and self-serve on demand, someone can place an order and wipe us out of a certain material. So we had to get really smart about predicting. It gets easier as time goes on because you start to see seasonality and understand certain customers’ buying behaviors. Sometimes we know they’re going to order before they do.
Turner Novak:
Really?
Jim Belosic:
Yeah. After years of collecting data, you start to see patterns. We’re trying to get better with machine learning so we can get smarter. I’m hesitant to say AI, because LLMs have no place in that. But good old-fashioned machine learning helps a lot.
Turner Novak:
I feel like you also benefit a little from cash conversion cycle, where because an individual is just entering their credit card and paying immediately, you get paid the cash right away versus an enterprise RFP order with an invoice, payment terms, negotiations. So maybe you benefit from that to offset the tricky inventory investments. Or maybe I’m making that up.
Jim Belosic:
We bank with JPMorgan Chase and I just heard that term about three weeks ago. They’re like, “Your cash conversion cycle is the fastest I’ve ever seen.” And I was like, “I don’t know what that is, but awesome.” It was exactly what you said. We get paid immediately, and then we usually have to pay our vendors 60 to 90 days later, sometimes 120 days if we can squeeze it. That’s what’s allowed us to grow without a ton of outside capital.
Turner Novak:
So you tapped into this where you pay your vendors through a more B2B procurement process, but you collect from your customers through a consumer-style “pay on order” flow. That’s basically 120 days of manufactured float you created for yourself, based on the software that made the customer experience fast enough that they’re willing to pay you upfront.
Jim Belosic:
Yeah. We ran into that in the early days with some very large companies. They’d say, “We don’t pay by credit card. We pay on net-60 terms.” I’d say, “Hey, our system is set up to take credit cards. I don’t know what to tell you. Do you need the parts or not?” And then the engineers would go to procurement and say, “For the love of God, give us the parts.”
Over time that’s changed. We’ve been able to support payment terms and invoicing. But a good chunk of our business is still that credit card, instant payment model, which works really well. The larger the company, the weirder their procurement cycle is. If they have to use Coupa or PunchOut or EDI systems, it starts to get really complicated.
Turner Novak:
Slightly different topic. What do you think is the hardest part of running a manufacturing business that someone who hasn’t done it before wouldn’t see coming? If I told you I was going to start a manufacturing company, what would you say I’m probably not thinking about?
Jim Belosic:
The hardest thing is doing many, many things at once. We were lucky because we started by just cutting sheet metal. A lot of people told us that was never going to work because sheet metal fabrication really needs a hundred more steps, bending, painting, anodizing, whatever. I said, “Nope. I’m just going to cut it.” Then we slowly added over time.
What I see now is people saying, “I’m going to build a factory and make bicycles.” It’s incredibly complex: raw materials, cutting the tubes, welding, managing supply chain for gears and sprockets and pedals and all the little parts, then assembly. Doing all of that at once is really challenging. It’s almost overwhelming. And what people try to do today is automate it all, and that’s where things go really sideways. You can over-automate. We’re very sensitive about when to use people and when to use robots. We put robots where robots make sense, but we also have great people who can adapt within seconds and move all across the factory to where they’re needed. Automation is very difficult to set up accurately the first time.
A long way of saying, doing everything at once in manufacturing is hard. If you have the luxury of a slow ramp, start with one very simple product. If I were going to make a humanoid robot, I’d start with just winding copper around an armature, then make it into an actuator, then maybe make some PCBs, then make the cameras, over months and years, before I had to do the whole humanoid. People with much more ambition and resources are doing the whole thing at once, but it’s very, very hard.
Turner Novak:
So do the most simple thing, do it manually, get really good at it, and then automate around the edges as you expand.
Jim Belosic:
And we were able to do that because we were mostly bootstrapped. We had no pressure to deploy capital fast. That seems like one of the bigger problems with venture right now. They’re throwing a lot of money at people without a ton of experience, with the expectation that you figure it all out very quickly because they need to make their money back. And it takes longer than that. Where you start and where you end are often different. You might start out trying to make toasters and it turns out you’re really good at the electrical components, so you become an electrical component manufacturer instead.
The path is very winding. Sometimes there are better opportunities you discover along the way. But if you’re forced to do it all at the same time, you’re going to have a shitty toaster factory putting out garbage toasters and nothing works, and everyone’s money is lit on fire.
Turner Novak:
Yeah. When I put on my VC hat, the darling right now is Anthropic, right? It’s supposedly the fastest growing company ever. I think they went from something like $1 billion to $30 billion in revenue in just a couple quarters. An investor looks at that and thinks, “That’s what you have to do.” But the path Anthropic went on was long and winding. They probably got lucky in some cases, like OpenAI actually tried to do an ICO back in 2017, a crypto token launch to raise money. All these companies we benchmark everyone against were not perfect from the beginning. There’s an element of timing, of luck, of the right environment. And investors don’t always know as much as they like to pretend. A lot of it is being positioned to get lucky and then taking advantage of it when it happens.
Jim Belosic:
I agree. That’s probably why you hear investors say they’re backing the founders or the team more than the product. That makes sense to me. We’ve had to pivot and add services I never thought we would have. Being able to adapt and overcome is probably the most important thing, because yeah, the market changes. We’re always wondering, what’s the next black swan event?
Turner Novak:
What was COVID like? I’m assuming that was an eventful time for you guys.
Jim Belosic:
COVID was actually really good for us. We got lucky. I remember gathering everyone in the parking lot, arms out, socially distanced, and I told them, “We have about six weeks of runway to pay you guys. If we don’t have a lot of orders, we’ll do painting, clean up the shop, and get ready for when the work comes back.” Then the next day we started making parts for hospitals, ventilators, sneeze guards, all that stuff.
A lot of other manufacturers shut down during that period. They were deemed non-essential or whatever. But we kept running and came out of it stronger than ever. We had so much demand, and the supply chain was completely screwed. Trying to get clear plastic to make a sneeze guard was nearly impossible. If you called an aluminum vendor, all their salespeople were working from home for the first time and everything was sideways. But we got through it. And I’m glad we had that experience in recent memory, so we always kind of prepare for whatever the next one is going to be. Being able to pivot and adapt is in our culture now.
Turner Novak:
Thinking about pivoting and adapting on an individual labor level. There’s a lot of talk about a skilled labor shortage in America. Even if we do bring back manufacturing, people don’t know how to run some of these machines. You mentioned you have 450 employees. How have you approached that?
Jim Belosic:
Starting a company in a small town is a huge advantage. You don’t think so at the time. I’m buying ultra-high-tech Japanese fiber lasers, million-dollar machines, and there were maybe two guys in Reno, Nevada who already knew how to run them. Maybe one. I knew that was unsustainable. So it forced us early on to build our own training program. Learn about the maintenance, the operation, best practices. We innovated our own best practices. I didn’t know it at the time, but we were trying to create an academy company. I want people to learn skills here and apply them long-term and build a career. And if they get poached away, I think the biggest compliment would be someone saying, “I’m looking at your resume. You worked at SendCutSend. You must be amazing.”
We think about Pepsi a lot. I think Pepsi has created more CEOs than any other company in history. They have this incredible leadership program that generates awesome people who go on to become CEOs elsewhere. So we try to do something similar.
In CNC machining, you traditionally have to be an apprentice. You go through a whole journeyman process. Becoming a machinist takes years. I knew at the scale I wanted to operate, there’s simply not enough machinists to hire, especially in a small town. Instead of spending energy trying to find skilled machinists, we invested in creating them. Over at our machine shop, I think the average age is about 26. We have 19-year-old kids running multimillion-dollar machines and doing it better than peers who’ve been doing it for 20 years.
Turner Novak:
I saw a post where you listed the previous experience of some of your newest hires: donut shop worker, accountant, janitor, bartender, call center rep, nurse, school custodian, graphic designer, AI data analyst. All over the place. How do you train people? Is it an internal apprenticeship program, coursework, classes?
Jim Belosic:
It’s very hands-on. We have designated trainers and programs, standard operating procedures, but those are kind of BS. No one actually looks at them. It’s learn by doing.
My daughter just started at Cal Poly San Luis Obispo, and that school’s model is learn by doing. She’s a business major and the first thing they did was say, “Alright, you’re going to create a business. Go run it. Let’s figure this out.” We take the same approach. Hey, let’s go touch and feel the machine. Let’s understand what a normal sound is, what a bad sound is, what the safety is, what the maintenance looks like when it’s running good and when it’s running bad. That’s where we start. Then there are additional levels. Now you want to get advanced? Let’s dig into the electronics, the programming. We have a sizable classroom and do breakout sessions. But we just don’t know any different, and it’s become second nature for us to train people.
Turner Novak:
That’s a good point. I went to school for accounting and finance. The first accounting class I took, I was so confused. Then I did an accounting internship and everything made sense because I was actually using it. And even with my finance classes, I made a paper trading account with a fake million dollars. Then there was the Greek banking crisis and all my stocks were down 20%. You learn very fast how to invest when you’re actually in it. Luckily not real money, because a 19-year-old buying stocks is going to make a lot of bad decisions. But hands-on is just really the best way to learn things.
Jim Belosic:
And they have a huge safety net. They have leads and supervisors and managers and trainers and coworkers. We also have a no-assholes policy. The reason we hired the donut shop person and the Dollar Tree person and the nurse and the bartender is because they’re friendly. They’re used to dealing with people. Customer service is kind of built into them. Even if they’re not talking to our customers, they’re talking to their colleagues.
In skilled trades, there’s often a hesitation to share knowledge. “If I teach this guy, what if he becomes better than me? I’m going to lose my job.” We don’t have any of that. Everyone wants to help everyone else be the best they can be. And that’s because we’re hiring people who are cool to begin with. I can’t teach someone how to be cool or friendly. But I can teach them how to weld. I can teach them how to become a machinist. For sure.
Turner Novak:
One thing I really like about how you think is that when you talk about employees, you’re thinking about supporting their families. You hired this guy, 28 or 32 years old, married, has kids. You’re basically paying his mortgage, paying for the kids to play sports, the vehicle, the vacations. You’re supporting the entire wellbeing of the family. It’s not just turning a donut shop worker into a machinist. You’re really taking them on as part of an extended community. Not a lot of companies think that way.
Jim Belosic:
The way I rate how well the company is doing is by what our parking lot looks like. Does everyone have a decent car? Or are there people taking the bus because they can’t afford a car? How many SendCutSend babies are there? We keep track. We send out SendCutSend onesies to newborns. I like to see that stack go down, because people are saying, “I have a good enough job that I can have kids and start a family.” That’s really important to me.
Selfishly, I think about it like this: let’s say I’m on vacation in Mexico and I get abducted by the cartel. If I make a phone call, how many dudes in a van are driving down to come bust me out? I think I have a few. I think there are a couple van-fulls of people who would come to the rescue, because I try to treat them right and I think they’d treat me right in return.
I don’t like to think about it as family, because that gets weird and it’s tough to hold people accountable when you treat them like family. We use more of the sports team analogy. We’re all high performers. We all want to win the Super Bowl. Let’s all kick ass and do it.
Turner Novak:
I saw that you hired a college ambassador at Florida Tech. Why hire college ambassadors as a manufacturing company? How does that compute?
Jim Belosic:
We have the means to give back. I don’t even know if it generates any customers. It might just be a test we’re running.
Marketing attribution is the most bullshit thing in the world. It’s all vibes. We throw money at a bunch of different things, and if it feels right, we keep doing it. The reason we have college ambassadors is because there are so many kids trying to learn and do really cool stuff: Formula SAE, college rocketry programs, concrete canoe teams.
Turner Novak:
A canoe made out of concrete?
Jim Belosic:
Canoes made out of concrete. Engineering students, usually civil engineers, develop cool concrete mixes, make a form, and at the end they float them and race them. Anyway, there are all these programs, seismology labs, mining labs, whatever. These kids have great ideas but sometimes don’t have access to the parts they need to do their experiments. Some colleges have machine shops but they’re usually backlogged or you don’t have access. So I just want everyone to know, “Hey, we exist. Use us if you want.” We sponsor their efforts. All we ask in return is, “Send us some photos. If you win a competition, take a group photo.” They never do, because engineering kids are really bad at marketing, but they’re great engineers.
It just feels good. It’s cool to see those projects. When I was in software, especially marketing and Facebook integration, my kids had no idea what I did all day. In this company, especially with the sponsorships, you can point to something. “Our company made those parts for that rocket. See that go-kart those kids made? Those are our parts.” That’s kind of cool. They know what dad does. And it makes me happy. So the whole thing is probably just selfish.
Turner Novak:
That’s fair. Sometimes when my kids ask what I do, it’s like, “He just likes bananas. He eats bananas all day. That’s it.” I try to explain it. But when we play games like RollerCoaster Tycoon, I can say, “It’s kind of like that. I help give people money to start their businesses.” We did a lemonade stand once, and by the way, as a kid, highest margins ever. Your parents buy everything, they help you for free, and you keep all the money. Best business ever. I help people get their lemonade stands going.
Jim Belosic:
My dad did it differently. I had to pay him back for all the Country Time mix, the sugar, and the cups. I learned about margin very early.
Turner Novak:
Maybe I should make that adjustment. I’m teaching my kids there’s unlimited free money.
Jim Belosic:
They’re going to start watering it down. All of a sudden it’ll be almost-clear lemonade because they figured out how to stretch that margin.
Turner Novak:
Yeah. We do chores where if you unload the dishwasher, you get a dollar. If you clean the house, you get five bucks. Maybe that’s just teaching them a job where you get paid, rather than running and managing a business. But they’re pretty young, so we’re teaching, “You do something, you get money.” Try to create that habit early.
Jim Belosic:
They have to spend that money back into the ecosystem though. “I’ll pay you a dollar to do the dishes, but a plate of dinner is 25 cents.” That might get CPS called on you, but still.
Turner Novak:
Mine just buy stuffed animals. They’ve got about a hundred stuffed animals. Well, this was a lot of fun.
Jim Belosic:
Yeah, this was super fun. Thanks for having me.
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