Today’s guest is COO Alliance member and COO of Canopy Management, Haley Burt.
Canopy Management is an e-commerce brand management firm that sees an 84% average YOY profit lift for our clients. The company was built from scratch, with no external funding or investments, and is now working with over 150 brand partners across the globe and with over $1B in annual managed revenue. Primarily they work with other brands to help them sell on Amazon and Walmart.
Haley was born in Connecticut and raised in Houston, TX. She got her Bachelor of Science in Biochemistry at the University of Texas in Austin before becoming a Canopy member. While Haley got her degree, she worked in labs synthesizing carcinogenic proteins and testing small molecules as potential inhibitors. She also worked in a computational biophysics lab simulating conformational changes in protein structures using supercomputers.
In This Episode, You’ll Learn:
- How has Canopy managed an incredible 84% year-over-year profit growth for its brands?
- How the company adapted and grew during the pandemic and why it chose to be a COO Alliance member.
- The complexities of dealing with a huge organization like Amazon
- How do they balance customer needs with the reality that everything can’t be done their way?
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You’re going to love this episode. We have a great guest, Haley Burt, who has been the COO for Canopy Management. They only had 6 employees but there are over 100 employees now. She’s going to talk about why she chose to be a COO Alliance member to help her with her growth, how the company Canopy Management focuses on growing people, and how they document all their processes. They’ve got 1,400 pages of documented playbooks, which has helped them with their growth.
This is a brand that helps bigger brands sell on Amazon and Walmart. She’s going to talk to us about some of the insights of dealing with an organization like Amazon and being able to help brands scale and sell. She’s going to talk about a concept called Rhino Lining, which I love. We’re going to get into how that’s helped toughen her up and allow the company to scale also.
Also, how they work on setting goals with their employees, setting monthly goals, and taking the goals of the company down to the individual and team layer on a monthly basis. Even some of the thoughts around people, some of the frustrations of having to deal with people that aren’t where they struggle with that as an organization, and some of her thoughts around that side of the business as well. I hope you’ll love the episode. We’ll see you on the inside.
Haley, welcome to the show.
Thanks, Cameron. It’s great to be here.
I’m looking forward to learning from you as well. This is also a great episode because you’re also a COO Alliance member. Why don’t we even start with that before we dive into what Canopy does and how you got there? How did you move into the role of COO and even your five years with the company? Tell me a little bit about what it was about the COO Alliance that had you join. What were you looking for in your growth and how did we make that fit?
When we started Canopy, we were five people and we were looking for mentors. We found some groups, but they’re all CEO-focused. It’s always the entrepreneurs and they’re much louder than the operators generally. There’s not a great space in those groups for us to collaborate and talk through the challenges of the detailed part of building a company, the processes and managing the people, and all of those topics apart from the vision. I went out searching for groups that were more operationally focused and I’m excited to find the COO Alliance. It’s been great to learn from other COOs out there that might be a little more reluctant to speak in those entrepreneur groups.
I totally get it. I resonate with that. I used to go to a lot of entrepreneur events, and at times, I wanted to sit and talk about recruiting and interviewing. I wanted to spend 3 hours on it, but in a 3-hour conversation, entrepreneurs talked about eight different things. It makes a lot of sense. Why don’t you tell us a little bit about Canopy? What does the organization do? What was it that kept you engaged and how are you excited about being their COO?
Canopy is an eCommerce brand management firm that helps brands on Amazon and Walmart. Amazon is a tricky platform. They change things all the time. We found that larger brands didn’t have the expertise, and they didn’t want to devote a team to learning it and keeping up with it, so the demand is high there. On the other hand, operationally, to build your business around something that’s constantly changing, you definitely have to be creative. There’s always a new challenge. There are so many different ad types and ways to succeed on Amazon, from the listing to trying to establish and drive traffic from off Amazon and on Amazon to get your ranking going. That’s where we step in and help them succeed. It’s been fun.
There’s been a huge trend over the last few years for entrepreneurs to start selling stuff on Amazon. These are the companies that are buying off Alibaba, flipping it over, and selling it into the US for a profit. You guys are working with real brands with other companies. Are you also selling some of your own products?
We have an arm Canopy Brands that owns brands and manages those. That is like our testing ground. It’s amazing for the team to try out new strategies and cutting-edge stuff, and test new ad types and beta programs that Amazon is putting out without putting someone else’s products on the line. We do test and have our own brands that are doing well too. We do a little bit of both.
In the franchising world, I’ve always encouraged franchisors to own some corporate locations as well as to franchise. It’s irresponsible for them to go out and franchise their business and not own a number of locations in a number of different markets. Own one in a very urban, wealthy, or expensive market. Own one in a tertiary or a small city like a 30,000-person city. If a company can do that, it makes it work. Is that an expensive part of the business in terms of you guys making those decisions and learning? Are you always on the bleeding edge, and you’re winning there as well because you’re testing stuff out and you’re able to do it before the competition comes in?
I would say we’re winning there. Luckily, we are generating revenue. It’s not only a test where we’re throwing money into a black box. We do find a lot of traction and success. Our team has been in Amazon since its inception when it was getting out of its bookstore phase. They find success pretty quickly with the new programs.
You also mentioned Walmart. How big is Walmart for some of these companies? Let’s say a brand is doing $50 million a year on Amazon, what percentage are they doing typically on Walmart?
Walmart has been an up-and-comer in the last few years. If you even asked me that 1 or 2 years ago, I would say it’s not a giant player yet. The platform wasn’t super sophisticated, and they’re getting up to speed quickly. They definitely have a leg up as far as distribution with all their locations compared to Amazon’s fulfillment centers. It’s an amazing up-and-coming channel that’s going to rival Amazon. Brands will be missing out if they don’t hop on the train before it takes off there in the Walmart front.
I heard that from a company a couple of years ago that Walmart was starting to kick in but they didn’t explain the whole distribution point, which makes a lot of sense. Are they running distribution from their stores? Are they doing online orders, and then somebody comes, picks up from a store, and delivers them?
Because they have stores in every location across the country, every state, and almost every city, they do use those as hubs too. They have a major advantage compared to Amazon for sure.
That makes a lot of sense. It’s huge. I also heard something a couple of years ago, and correct me if I’m wrong, that Target was coming into the online space as well. Is Target far behind third place, or are they even anything to worry about or consider at this point? Are brands starting to look at them as well?
I don’t even know if they’re a true marketplace. It’s so gated. It’s still invite-only. It’s hard to get your products listed there. They’re very selective. It’s not an open avenue for brands to explore at this point, especially the smaller brands that are gaining traction on Amazon and Walmart.
You’ve got Canopy Brands and Canopy Management. I’m not going to ask you for direct revenue numbers. I know they’re big, but what would the Canopy Brands percentage of your revenue be, and what would the Canopy Management percentage of your revenue be?
Management is 90% and the Brands is 10%.
You are dipping your toe in it and playing with it, but making money off it as well.
What brands do you manage and where do you find them?
We manage everything from skincare, health and wellness, furniture, wall art, and any category except fashion. We find brands. We owned an educational course. There were only three ad types back in the day, but nobody was teaching brands how to manage those ad types on Amazon. We had an educational course, called Sponsored Products Academy that taught brands how to manage it, but we had a handful of brands coming to us saying, “We don’t want to train our people to do this. You know how to do this. Can you please manage it for us?”
That’s how Canopy was born in 2018. Once we started the firm, we opened the doors and had a lot of brands coming to us. Now, referrals make up our biggest influx of new brands. We have 84% year-over-year profit growth for our brands because it’s so hard to scale and manage spend there effectively. We find we can spend a lot less and get them a lot more revenue. Word of mouth is huge for us.
Eighty-four percent year-over-year growth is crazy. Why is that happening? What are you doing that is working?
First of all, the traffic on Amazon is there, but if you’re not competitive with your listing, you need to have the videos there. You need your storefront built out. You need to showcase your product in the best light. That’s step one or step zero. Besides that, there are a lot of strategies to get your products to the first page. If you’re not on the first page or two, you are not ever going to have the traffic that you need to generate a lot of revenue.
Taking advantage of the ad types, all of them, having a great offensive and defensive strategy against your competitors, and finding those sources of traffic within Amazon is pretty nuanced. We spent a lot of time perfecting our process. As diverse as the brands are, we can have a great minimum viable process that we build upon and make unique to each brand and get those results. Eighty-four percent year-of-year profit growth. We’re extremely proud of that.
That’s a solid number. When the brands are selling on Amazon, I know that one of the things that they are frustrated with is the third-party sellers of their products. Sometimes, it’s selling to those people wholesale, and then the wholesalers are selling it at a discounted price. Sometimes it’s third-party people buying it and selling it. I don’t know how they’re doing it cheaper, but how do you prevent that? Is that part of your strategy for helping brands out by preventing others from selling?
We absolutely help out on that front, and we can successfully get, I would say, over 90% of those sellers removed. There are always going to be a few that maybe pop up, but a few years ago, there were a lot of brands that said, “We’re not going to sell on Amazon. It’s not in our model. It’s not a channel we want to explore. Amazon takes too big of a cut,” but as you said, if they’re not selling, someone else is selling their product.
They’re likely not doing a great job maintaining the listing and the customer experience the way that the brand wants. It’s not an option to ignore the Amazon channel anymore because people are going to find the product there. We do have a strategy. We get with our legal team and send out letters. Unless the third-party sellers have an agreement with the original brand, they are not authorized to sell on Amazon. You can go back and forth between Amazon and those brands to get them removed.
What size does the company typically need to start working with you? Is there a certain revenue number or a certain number that they need?
We typically work with brands that do a minimum of over $1 million a year on Amazon. We need the budget for renovating listings, doing all that advertising, putting the work into the backend, and getting those other sellers removed as you mentioned. That’s where we find we can move the needle.
Are you taking a percentage of the revenue that you generate for them or are you only getting a fee for service? How’s your revenue model work?
I do love our revenue model because it’s based on year-over-year profit growth. If we take on a brand and we’ve not grown them, we’re only taking a cut of where we’ve moved the needle for them and grown them. We do have a small flat fee to cover our hard costs, but we are a performance-based model, and we like to win when our brands win. That’s part of our mission statement. Partner success is Canopy success. We want to win when they win.
There’s a guy who does that in the radio advertising space. His name is Roy Williams. He’s called the Wizard of Ads. He builds such a huge trust between his brands that he manages the radio ads that they never want to leave. If they leave, they’re never allowed to use his model or his systems. They don’t even know what his buys are. He doesn’t disclose the buys. They’re so wrapped up. When you’ve done all this work for a brand, you’ve grown their revenue and profitability, and they’re on autopilot, how do you prevent them from leaving? Not prevent them but how do you build loyalty?
I know what you’re saying. We’ve got things running. Theyâ€™re optimized and efficient on the ad front. We like to work with brands and give them homework too. We love to see brands expand their product line and succeed. We are great at analyzing the data about Amazon and finding those gaps in the market, and saying, “This would be great with your product line. The traffic is already there. You should launch a version of this with your product line.” We’re giving them that homework.
Also, expanding into other channels like Walmart. We’re happy to set up different channels, and once we’ve perfected one, we can move on to the next one. There’s always something to be said about sitting ahead of the content game. Content is king right now. You have to have amazing content and keep it fresh and relevant. Those are the brands that are really succeeding right now. We love helping out on that front, and we’ve won a bunch of awards for our creative work. There are always ways to move the needle there.
What about your growth in the organization? You’ve been with the company for under five years now since 2018. How many employees does the company have now and how many were there when you started?
I was employee number 6, and we have over 100 now. That’s a lot of growth. We’re coming into our fifth year right now. It’s been amazing. When you’re a six-person team, everyone has to be good at a lot of things. We’re wearing a lot of hats and being extremely agile. Now, over 100, we’re finding we need experts at very specific things. Watching that transition has been cool. Also, joining COO Alliance, I’m trying to specialize more myself as I’ve gotten out of the operational processes and more into managing efficiency and managing the people in the team and the outcomes for the brands. That’s been my personal growth journey in Canopy as well.
What was the growth of the company like? Not in terms of revenue growth, but how did you need to evolve and grow as a company during COVID? A few years ago, we got hit with this. Were you a remote company at that time? Are you remote now? What things did you have to go through in that period?
We were one of the lucky ones. We have always been virtual. We’re primarily in Texas and the US, but we are global. We have everyone from Singapore to Spain, everywhere in between. When COVID hit, it was not a super big impact for us. The supply chain is what hurt Amazon the most, but Amazon thrived during those years. The revenue on Amazon was accelerated, corrected afterwards, and back to its original trajectory of growth, which is still extremely strong. I hate to say it, COVID was not a bad time for us. It was okay.
Talk to me a little bit about the complexities of dealing with an organization like Amazon. That’s massive. My understanding is that we often don’t even have direct access to a person, or maybe there’s one person that you’re entirely reliant on and they’re now dealing with these supply chain issues. How do you navigate around that when you have such a limited pipeline into the organization? Am I correct that it’s like you might have 1 or 2 key contacts there, and otherwise, you’re praying that they don’t change much?
For a lot of brands, that’s the case. If you’re one brand on Amazon, you have a few reps that you’re in contact with. That’s one of the biggest things we hear and that we manage and help control for our partners is communication with Amazon. Luckily, between all our brands, we have so many reps, and we create templates for how to solve certain issues like suppressions and things so that our team knows. A lot of times, you have to send the same message to them over and over and then it finally gets through.
We do all the very tedious heavy lifting to get the response and the listings unsuppressed to move the needle, but it is hard. I don’t know that the departments within Amazon talk to each other very well. They have a lot of silos. They’re obviously a massive company so we try to hit it from all angles and maintain relationships with as many reps as we can.
I’d like you to speak to something about the growth of the company and your business. I often talk that companies change when they go through the 1s and the 3s, from 1 employee to 3, from 3 to 10, from 10 to 30, or from 30 to 100. I’m curious how many evolved. Can you roll the camera back when you were 10 employees and you went to 30? What started to change there? What’s very different now that you’re at a 100 from certainly when you were at 10, but even at 30?
When you’re at 10 employees like you’re saying, you think, “If we can only solve this problem, we’re going to get to the next level. We’ll never have problems again.” There’s almost this feeling like, “If I hit this revenue number or solve this one problem, it’s all going to be better.” You’re solving one problem and creating another. At ten people, we were still trying to nail down the best MVP for bringing brands under the Canopy and getting them to succeed. Brands are so diverse. They have different seasonalities and different categories. We were still ironing out our operational processes to get the best results. By 30, the challenge has changed.
We got the process in place and got great at training our team, so we were able to scale our operational team to handle the management of many more brands. Our challenge became, “How do we get in contact with more brands?” We’re ready to go from 50 brands to 100 brands under management. It became a sales and revenue operational challenge at that point and then finding people who specialize in helping us solve those kinds of problems.
You mentioned the sales and marketing problem. When companies get focused on sales and marketing, that’s where the trajectory can grow because you can start to buy your way out of every problem at that point. When you’re truly focused on growing revenue and gross margin, then you can start buying people and systems and you can put the infrastructure in place. Was that the balance for you in that growth? Is it doing both until you could focus on revenue?
We had to stop selling for a while. In 2019, we told our sales team, “Sit on the bench.” Luckily, it was a small two-person team. We’re like, “Let’s maintain the pipeline, but we are not closing any new deals.” We are maxed out on the brands under management. We did pause, but that was the last time. Now we have over 1,400 documented pages of procedures. Tettra is like the Wiki that we use. We’re like, “Bring it on. We’re ready to go.” It’s the idea of buying your way out of problems. I don’t know if we’ve found success with that yet. We’re still pretty hands-on with the sales and marketing process, but we’re making progress.
You’re probably past there. When you deal with brands, and I would imagine some of your clients are some of the larger brands out there as well, often these enterprise-level companies want things their way or they want things done differently. How do you balance the need of the customer with the reality that we can’t do everything their way? You sell them what they want, but you give them what they need. How do you balance that and say no to some of these bigger brands to show them that you know what you’re doing and you have to do it your way as well?
With our largest brands, we try to solve their problems. Coming back to their success is our success, we are going to do everything we can wherever the roadblocks are to make sure that their revenue is growing on Amazon and Walmart. At the same time, setting expectations and also letting them know what they need to do on their end. Sometimes they need to go back and need to fix something about a product. If there’s a flaw with a product and it’s getting negative reviews, they need to research and design, solve the problem, and come back out with it.
No matter how many ad dollars we expertly deploy, they’re never going to hold their ranking because there’s a fundamental flaw with the product. Besides that, giving them homework on their end and saying, “Go research this other product we want you to launch. Go do your work to get approved for this other channel on your end so that we can help you manage it.” We try to form a partnership with them, and it comes hand in hand. We’re not there to solve all their problems. We’re there to work with them to get the best possible results. Framing it that way has helped as well.
It sounds like there’s a bit of an education part, and there’s a bit of a seldom don’t tell them. You said 1,400 pages of documented systems playbooks. How do you know when you’ve got too many? How do you balance out not having enough, and how did you get to the stage where you are good as a company of documenting systems? How do you get people to follow them? It’s a lot there, I know.
There is a lot there. We always get feedback when we’re training new people, and then we refine the process from there. We’re very careful to ask every new tribe member who’s gone through their training, like, “What did you like about it? What was necessary, and where can we improve?” It’s getting that continuous feedback to refine the processes. It’s a part of our core values that we reiterate every week in our company-wide huddle. If it’s not documented, it doesn’t exist.
If you’ve done something more than once, you need to update that process. It’s getting everyone to have that extreme ownership feeling around our processes and knowing that we’re tech-enabled. We’re not a software company, so our process is our magic sauce. Our special sauce gets the results and that ensures that we’re doing everything in a similar fashion for all our brands and covering all our bases. It’s something we’ve tried to instill deeply into the core values of our company.
You said you’re documenting all the processes in a Wiki?
It’s called Tettra. It’s like a Wiki.
You talked about scaling your team, and you were talking about scaling the skillset of the team as well as scaling the actual numbers on your team. What does scaling the skillset of your team look like?
We are big into professional and personal development. Sometimes it goes hand in hand. We try to give as many opportunities as we can to set people up for success. In our finance team, we say, “What’s one conference you can attend this year? What’s one course you can get this year or the certification that’s going to help you grow to the next level?” In encouraging our sales team, we give them books to read and do a book club thing to make sure that they’re staying up to date. Encouraging them bi-annually on their reviews, it’s a part of their review. How did you professionally grow this year? What was the result? What do you want to do next year to grow professionally? That’s helped a lot.
I’ve always believed that a leader’s job is to grow people, their skillset, and their confidence. I launched a course a few years ago called Invest In Your Leaders for the purpose of giving managers and leaders the core leadership skills to scale. What about your growth? You mentioned looking for a group like the COO Alliance and getting involved in that, but what specifically have you worked on over the five years to allow yourself to scale from being employee number 6 to being COO of the 100-person company?
Some of it in business is growing your rhino lining. There are always problems as I alluded to, but you learn that you are going to find a solution to whatever problems are coming up in the company. Also, eliminate those bottlenecks so you gain confidence in your ability to tackle that so they don’t become daunting. At first, it was a six-person company. You’re super hands-on running the process and working in the team. Now I feel like my role is more about stabilizing the company, absorbing any bottlenecks, and making progress on that for every one of my managers and everyone else on the team to ensure that they are getting the outcomes that we’ve all agreed upon that we’re going to hit as a company.
I like that you said the rhino lining. Is that how developing a thick skin that you don’t take everything too personally? What do you mean?
Rhino lining is what our CEO calls it. That’s the ability to keep your cool and not be phased and say, “This is a big problem and we’re all going to come together and solve it as a company.” We’ve seen a lot of great progress that way. We have quarterly goals. We do a waterfall system like annual, quarterly, and monthly. We pick quarterly goals and assign every department for finance and HR. We have the same quarterly goal, and we’re like, “We are going to solve this problem. We’re all going to be thinking and talking about it, and we’re all going to find a way through it.” We’ve been able to move the needle and grow as a company with that strategy.
For the rhino lining, years ago when I was building College Pro Painters, we were talking about the entrepreneurial bobbing and weaving culture. It’s like if you want to make God laugh, tell them you’ve got a plan because that plan is going to change and shift. You have to be good with it as long as you’re pointing in the right direction. Do you assign the goals and the rocks to each person in each business area? Do you let them select what their goals are and help nudge them in the right direction? How does that process work?
We set the annual and the quarterly goals, and then we work with each department to set their monthly goal thatâ€™s specific to solving that quarterly goal and hitting our annual goal together. Our annual goal is the one number, keeping it simple. Our quarterly goal, along with that annual number, will be a little bit more tactical. We’re like, “We’re going to get our churn below 2%. This is what we’re going to do. This is the strategy.” We’ll have everyone pitch in to work on customer experience for that quarter and change whatever flaws we’ve seen.
That’s where you get the alignment in the organization, but you also get people excited about what they’re working on because they see purpose in their work. It shifts on that monthly basis. Do you use any software to organize all of this? Are you running off something like Ninety.io or what are you doing internally there?
We use monday. We love that it has time tracking. It’s great for project management. We all have our weekly work manager in there for a management level. Monday is where the process and accountability happen.
Let’s talk about some of the highs and lows of growth. I’m sure that it has been easy. Growing from 6 people to 100 is easy every single day.
The highs, we go back to bringing our brands the best possible result we can. Watching them grow as we grow and having that mission statement partner success is Canopy’s success. That’s the high. When we hear we had a bunch of supplement and health and beauty brands, have the best February ever, so best revenue numbers they’ve ever had in the company’s history. We love hearing those stories. We love sharing that with our team and saying, “Look what we did together. Look how we move the needle from this brand.” Those are the highs. For winning awards, we won two awards for our creative services and videos. Our team lives on those wins for our brands.
What about some of the lows?
The problems and challenges you face don’t go away. They get bigger and more complex as the company grows. Again, that rhino lining is critical to help the team align and move through those problems without feeling shaken. You’re going to break things when you’re growing quickly. As quickly as we are, things break. Sometimes you solve one problem and another one will pop up. Some of the lows are keeping that in mind and not letting the issues phase you and demotivate you but using it as an opportunity to align the team, come together, and get through it.
In this trajectory, you guys have built a strong company culture. You clearly care about people and the culture of the organization, but every once in a while, we have those people that we have to let go either because of results or culture fit. How do you balance that? I don’t get the feeling that you’re one of those people that are quick to fire the bottom performers, and you’re very Machiavellian about it. How do you balance that, the need to, at times, remove that, either cultural cancer or the low performer, and also still care about them as a person? Do you have systems for that?
We do. If somebody is not hitting their numbers or there’s an issue, we always try to fix the process first. If it’s a core value issue, we try to coach them through that. If it’s a results issue, we try to look at the process and figure out if the expectations are in line or if something else is preventing the result. We’ve been making progress there. It is hard. When do you say, “I can’t. This isn’t a good fit,” and when do you keep trying to develop that person? Everyone is capable of making progress professionally to get there. I don’t know that we’ve completely figured it out, but we’ve gotten better at it. We are very careful about hiring the right culture fits. That helps. We’re very selective.
It is one of the tough ones. Michael Gerber, who wrote The E-Myth Revisited, would be happy with your focus on going back to the systems and processes all the time. He always said that people don’t fail. The systems fail when you take that approach. I was coaching the CEO of Sprint years ago. He was frustrated about some people’s stuff, and he said, “When are people not going to be the issue?” I started laughing. I said, “You’re the 82nd largest company in the United States. If people are an issue for you, they’re always an issue.” That’s the hard part of the business. That’s the art. Let’s go back to the 21 or 22-year-old Haley. You’re getting started in your career. What advice would you give the younger you, advice that may be to be true now?
I would say try not to be too serious and enjoy the ride. Maybe, in the beginning, we were so focused. We lost the fun aspect, but the fun makes everything go faster. Also, do not take yourself so seriously to get the results. Sometimes that can hold you back. Especially in business, like you’re saying, it’s always about the people and experience. Making sure that you’re making progress while having a good time. That would be probably the advice.
Haley Burt, the COO of Canopy Management, thank you so much for sharing with us on the show.
I appreciate it.
- Canopy Management
- Sponsored Products Academy
- Invest In Your Leaders
- The E-Myth Revisited