Jason T. Ray on Decisive Leadership: Why Indecision Costs Job Shops More Than a Wrong Call
Manufacturing Happy Hour
Jason T. Ray, co-founder and CEO of Paperless Parts, is a recurring guest on Manufacturing Happy Hour. He has appeared roughly every hundred episodes, including around episode 20 and again at episode 120. This conversation was recorded in person in late April 2025 at the Tip Tap Room in Boston, which Ray describes as the restaurant where he and his wife went on more dates than anywhere else in the city. The theme that runs through the whole discussion is decisiveness. Ray's position is that during uncertain periods, such as tariffs, reshoring hype, CMMC deadlines, or AI, the leaders who hesitate fall behind. His summary: experienced CEOs usually already know the right long-term decision, and the real question is whether they have the conviction to get through the short term while it pays off.
What Paperless Parts does, and why it stopped trying to do everything
Asked to describe his company as he would over a beer, Ray first says the answer keeps evolving. Paperless Parts builds a front-office platform for job shops and contract manufacturers. It covers estimating, managing RFQs, sending quotes, and collaborating securely with customers and outside vendors. He organizes the platform around four pillars.
Workflows. In Ray's account, estimating has become "a team sport." A shop used to rely on one person with 30 years of tribal knowledge who priced parts by gut feel, a feel built partly from living with past mistakes. Ray sees more shops now pulling expertise from each area of the shop into estimating, so Paperless Parts built collaboration tools for a centralized quoting process.
Costing and pricing automation. Ray calls this the company's core intellectual property: analyzing 3D models and 2D prints and automating as much as possible so that pricing is consistent. His co-founder describes it as "guardrails," meaning automated limits that let estimators move fast "without driving off the road."
Customer experience. Ray describes the quote as often being a shop's first impression. The goal is a quote that arrives quickly, communicates clearly, and offers different buying options, creating "the biggest strike zone you can to win that work."
APIs and connectivity. Paperless Parts integrates with ERP, CAD/CAM, and CRM systems. Ray says this pillar comes from being honest about how hard software is to build. Early on he had what he calls a "wet behind the ears founder mentality" and imagined building everything in a shop from front to back. He later concluded that doing so does customers a disservice, because a company can't do all of it well and ends up making compromises. The company decided to "nail this piece of the value stream" and make it easy to connect with everything else.
Is the skills gap still a leadership gap?
The host, Chris, says he regularly quotes a line from their previous interview in his keynotes. Ray had argued that when a problem has persisted for as long as the manufacturing skills gap has, it may really be a leadership gap. Asked whether that gap still exists, Ray says it is closing, though some gap will always remain as businesses change hands.
He gives the main credit to how much information now reaches shop owners. Owners used to have to seek out thought leadership themselves, by joining organizations like NTMA or finding a local manufacturers' network where peers were willing to share ideas. Ray says manufacturing has never been "so online," with podcasts, articles, and other resources delivering best-in-class information directly. When he asks his customer advisory board what they read and listen to, the answer used to be paging through The Fabricator or Modern Machine Shop now and then. Ray calls that good content, but he says today's content is more accessible, and owners are investing time in consuming it and putting it into practice.
He sees a newer problem, which he calls an experience gap. As owners exit, people who have never run a job shop are taking over. Ray describes job shops and contract manufacturers under about $25 million in revenue as "a unique beast": extremely complicated, always changing, and unlike other manufacturing environments. Leaders from general manufacturing sometimes assume they can run one of these shops, or a roll-up of several, using the lean and operations skills they already have. Ray cites Mike Tyson's line that everybody has a plan until they get punched in the mouth, and says this industry "is definitely a punch in the mouth sometimes."
Young people in positions of responsibility
Chris asks what else leaders are doing to close the gap. Ray says owners are increasingly giving real responsibility to people in their early or mid-twenties, often college-educated professionals. Before, many owners would have refused, reasoning that it took them until age 40 to earn that kind of authority. Ray argues that new ideas, plus the information now available, plus actual authority to make decisions, produce good outcomes.
Chris adds that early in his own sales career he was handed the accounts nobody else wanted. He sees recent graduates, including those coming out of trade school, as having fresh knowledge, ambition, and energy that deserve more responsibility.
Ray then describes a second effect of the flow of information, which he calls "softening the ground." It is hard for an owner to introduce an idea such as a profit-sharing incentive model or a new approach to team building when the workforce has never heard of it. It is much easier when employees have already encountered the same ideas and see themselves as working in an industry many people consider "very sexy and very cool." Ray says the people attending Paperless Parts webinars and clicking on its content are not only owners. They come from across the shop.
Leading through crisis: "I may be wrong, but I'm never in doubt"
The conversation moves to tariffs, which manufacturers were trying to navigate at the time of recording. Chris notes that COVID was a similar moment and that more will follow, and he asks how to lead through unpredictable times. He points Ray back to his Navy background.
Ray repeats something his stepfather told him when he entered the military: "I may be wrong, but I'm never in doubt." In Ray's view, uncertainty pushes leaders toward indecision. Indecision wastes people's time and can "shatter your team's confidence" in the leader's ability to make calls. The most successful crisis leaders he has seen act decisively. He clarifies that this does not mean sticking with a wrong decision until the company fails. It means picking a direction and following it until data or signals show it is wrong, then pivoting without hesitation.
He cites Elon Musk, who, as Ray recounts it, said in the early days of Tesla and SpaceX that the average Fortune 500 CEO makes one major decision every six months while Musk made one a month. Ray explains the reasoning: over six months, the faster leader makes six decisions. Even if three are wrong, three months remain to make three right ones. That leader ends the period with at least three confident, correct decisions, while the typical leader has made one.
His Navy example comes from leaving port in Dubai. The ship was moving through fog when the crew looked over the side and saw the bottom, which Ray says is not something you ever want to see in the Navy. They called "all back" and reversed engines. When the fog cleared, there was an island directly ahead that the ship would have "T-boned." It was new and not on the map. Ray connects it to land reclamation in the region funded by oil money. The point, he says, is that you make the decisive call in the moment, in this case reverse to avoid running aground, and then reassess and set a new course. You don't leave the ship going backwards. People looking to a leader are looking for decisions, and part of that is being willing to say, in effect, "I was wrong, not because I'm stupid, but because we didn't have all the data, and now we can pivot."
What job shops should watch, and the cost of waiting
Applied to job shops, Ray says the industry faces both massive tariff uncertainty and "an enormous hype cycle" around reshoring. He mentions surveys, attributing one to McKinsey, projecting half a trillion dollars of work returning to the US, and other agencies estimating it would take four years just to tool up for that work. Owners have to work out what these conflicting signals mean for their own business.
The leading indicators he would track as a shop owner are RFQ volume, broken out by existing customers and new ones. He would also go to every existing customer to understand their thinking. The question he would ask is less "will you keep ordering from me" and more "how can we be the best partner to you through this?" He would put his cards on the table about available capacity. Making these decisions in isolation, he says, "will do you no good."
His second point concerns long-term conviction. Many owners know the right five-year decision, such as expanding the shop, building a new building, or adding machines, but get nervous and decide to wait. Ray's argument turns on lead times. Every capacity investment, whether production, estimating, or sales, takes time to complete. A building started today won't be finished for a year. Owners who wait for a signal instead of trusting 30 years of experience end up deciding too late. Then the orders or RFQs arrive and they lack the capacity to handle them. The people he has seen succeed through uncertainty are those who don't waver on decisions they know are right, whether that means expanding capacity, training the team, or investing in a fix for a known problem. They are better positioned when the pendulum swings back, which, he says, it always does.
His example is his co-founder Jay Jacobs, who built Rapid. In 2008, when everyone was tightening spending, Jacobs bought a machine shop, betting that prototype machining work would come back strongly and wanting to be ready to catch it. Chris suggests the purchase was probably a bargain, and Ray agrees: being decisive when others hesitate lets you capture those deals.
Data versus information
Ray adds a distinction. Manufacturing, in his view, may have more data than any other industry, but there is a large gap between data and information. Data sitting unstructured in an ERP, a CRM, and email, and never analyzed, doesn't become information. He thinks many shops conflate the two and believe they run on data when they don't.
He uses RFQ traffic as the example. If RFQs arrive in five different inboxes and nobody logs who sent them, how many line items and what quantities they contain, how fast they're coming, and what the turnaround times are, the shop has scattered data. It cannot tell, for example, that one sector's RFQ traffic is rising as semiconductor work returns to the US while another has slowed sharply. Without that pulse, Ray says, owners can't make informed decisions, and that is what leads to indecision. Chris notes that AI has come up on the show as one tool that may help turn data into information.
CMMC: what to demand from software vendors
Chris recalls that CMMC was "coming" in their first conversation, delayed in the second, and is now here. He summarizes it as the security requirement shops must meet to do government work. Ray first gives context: his customers in the defense industrial base "have never been busier," with a wave of funded defense-tech startups, such as Anduril.
His core advice is that shops need to know the right questions to ask. They will rely on software vendors and managed service providers, but they have to be able to cut through the noise. He says vendors often claim "we're on GovCloud," and that claim "means nothing." A software solution can sit on GovCloud and still not allow its customers to reach CMMC compliance.
Ray lays out his view of the requirements. Cloud-based manufacturing software, which describes most modern tools, makes the vendor a cloud service provider, and in his account such providers must meet NIST SP 800-53. He says that when a software company talks about NIST 800-171 in this context, it is "the first indication that they actually don't know what they're doing," because that is not the standard that applies to the vendor. He tells manufacturers they have the right to demand two documents from every vendor: an attestation letter, which shows the vendor has been audited, and a site security plan, which shows how the vendor is addressing what the audit found. The risk he wants shops to avoid is spending heavily on compliance inside their own four walls and then failing the audit because a vendor fell short.
On whether CMMC will actually be enforced, Ray says there has been a lot of talk that it might be cut or removed from the budget. He reports that about two weeks before the recording, the DoD CIO told a conference that the train is coming and everyone had better get on board, that there had been plenty of time, and that the department would not pull punches with primes whose supply chains weren't compliant. The audience, he says, included supply chain heads from GE Aerospace, Northrop Grumman, Raytheon, and Lockheed Martin. His conclusion is that "it all rolls downhill." Shops should make a decisive choice either way: decide not to take on ITAR or CUI work, or commit to compliance to win aerospace and defense business, and in that case push their vendors to prove they'll support it.
The tiptoeing, and a lost Northrop RFQ
Asked whether shops are actually deciding, Ray says there is "a little bit of tiptoeing." Some were waiting to see whether the program would be cut, which he believes is decisively not happening. Others are waiting to see whether something like student loan relief will appear: a government subsidy, or OEMs deciding to pay for their suppliers' audits.
He frames the choice as a comparison. If compliance costs $70,000, the most a subsidy could ever return is $70,000. Not complying carries fines that he describes as now uncapped. And there is the work a shop gives up. He tells of a customer who had to walk away from a large Northrop government RFQ because they weren't CMMC certified. It was a chance to land a new customer and potentially generational long-term-agreement (LTA) work. The owner told Ray they had delayed while waiting to see what would happen. The RFQ stated that CMMC compliance was required even to access it, and they didn't get the work.
Chris calls it a simple ROI calculation. Ray picks up on the term. He finds that very few manufacturers know how to calculate ROI outside of a machine purchase. They can reason well about how many hours a machine will run, how fast it will cut chips, and how much extra revenue, perhaps $250,000, it will bring. For less tangible investments they stall on whether the benefit will really materialize. His advice: if you know there's a problem, you have a way to solve it, and you've done the work to evaluate the solution, "pull the trigger."
AI: pick the low-hanging fruit and use it as a thought partner
On whether job shop leaders are focused on the right things with AI or caught up in hype, Ray says everyone is talking about it, as they must. Some are wasting time on problems the technology can't yet solve. He compares it to an orange tree with no ladder: some people struggle to climb for the fruit at the top when they could pick what hangs within reach. His advice is to deliberately capture the low-hanging fruit and use the technology for what it does well today.
In his view, AI today will not produce estimates for you or program a part for you, though it might help. It can help draft a more effective email to a customer, organize data, and help you understand what is happening in an industry. The most effective users he sees treat it as a thought partner. His example: tell the AI you run a job shop with 40% aerospace and defense work, 20% semiconductors, and the rest a mix of medical devices, industrial work, and "cats and dogs," then ask what it would be thinking about if it ran that shop. It might come back with tariff considerations and five variables to watch, and you can keep questioning it, about specific materials for example, and use it as a counterbalance that helps you develop your thinking faster.
He compares it to the move from calculating by hand to using a calculator. The calculator didn't remove the need to know what to enter. Likewise, the questions and prompts you give AI determine the quality of what you get back.
"Your business is making parts": the Lego lesson
Ray adds a point about partners, drawing on a favorite case study from his MBA. As he tells it, Lego expanded into theme parks, restaurants, movies, and "Lego everything," was losing money in many divisions, and was going under. A new CEO slammed a plastic brick on the table and declared that this was the business. The company divested everything else, returned to its core high-margin product, and in Ray's telling grew exponentially from there.
The lesson he draws is that a contract manufacturer's business is making parts, not software. Building your own ERP or rigging up AI to create your own scheduling boards may be appealing, but the total cost of ownership is far higher. He says prospects who ended a sales cycle years ago by deciding to build their own solution or stitch tools together to replicate what they saw in demos come back at what he describes as almost a 100% close rate, because building scalable, secure software is so hard. Just as a job shop wouldn't build its own CNC machine, it shouldn't build its own software. Shops should become good at identifying the best partners, not at integrating emerging technologies themselves.
He describes that integration work as his job. He says there are clear cases of software companies adding AI without anticipating the computation and server costs and then having to double their prices. Ray says Paperless Parts is not changing its pricing as it adds AI, because it is doing so intentionally.
Scaling from prototype to production: the shift math
Chris asks how job shops can scale, particularly from prototype to production. Ray says the question comes up often as customers move from one shift to two or three. They land what he calls "shift-making opportunities" and ask how to price them, because all their pricing assumes equipment running eight hours a day, five days a week, with overhead (perhaps 30%) allocated to those hours.
He walks through an example. A laser cutter costs $1 million, and the owner wants to pay it off in five years, so it must generate at least $200,000 a year. Add roughly $50,000 a year for cost of capital and maintenance, and the machine needs about $250,000 a year. One shift without lights-out running gives at most 2,000 hours a year at 100% utilization, which nobody achieves. Ray uses 1,200 hours, about 60%, which he says some might call overly conservative but he doesn't think is. Recovering $250,000 over 1,200 hours yields a laser rate of roughly $200 an hour. He adds, "I think that math is right."
The dilemma is what happens when a shop is about to double capacity with a second shift. Should it lower prices for all existing customers, or only for the shift-making job? Ray says this is where many owners get stuck in the move to production. Production buyers expect high asset utilization and return on assets. They expect the laser to run 20 hours a day, and if it doesn't, they take a "shame on you" attitude. Shops then hear that they're too expensive and don't understand why. Ray says it comes back to understanding this math.
His view is that adding shifts is the cheapest way to scale, but he stresses that cheap is not easy. Scaling in manufacturing is human- and capital-intensive. Still, doubling capacity on one shift means buying many more machines, while running the same machines twice as long gives a shop a chance. He sees owners experimenting with schedules: four 10-hour days, which frees Friday through Sunday for a separate crew working three 12-hour shifts, or hours like 10 a.m. to 10 p.m. for parents who handle school drop-off. Structuring shifts around people's lives, he says, helps attract the talent needed to staff them.
Getting the team to buy into growth
Asked how to bring the rest of the team along, Ray says every decision requires buy-in and points to "what's in it for me." The underlying cultural message he describes is that the business is everyone's ship, or "life raft": if it sinks, all the jobs go away, so everyone should want it to be better. Beyond that, a better business can mean higher pay, easier or more interesting work, new responsibilities and skills, or something as simple as a weekly team lunch.
He says he sees these approaches working. The old model was an owner checking the bank balance at year's end and handing out Christmas checks with a handshake. More owners now see that as a lost opportunity to build momentum and buy-in throughout the year, sharing both wins and downsides.
Citing Jocko Willink's ideas on ownership and retrospectives, Ray says the best shops sit down with the worst parts they made and "live in it." They talk openly about why they misquoted a job, why it didn't run well, and whether they can take on similar work in the future or what they'd need to be ready for it, raising the whole shop's level so the mistakes don't recur. Shops that just grit their teeth and promise to remember next time lose that chance to build culture.
Ray says the focus on culture and team building has changed "night and day" since he entered the industry. He acknowledges he may be seeing this through his own customer base, and Chris notes that Paperless Parts customers likely skew proactive. Still, Ray believes culture is becoming table stakes for attracting talent, which ties back to the leadership gap discussion.
What Ray does differently now: written plans
Asked what he does as a leader today that he didn't do two to five years ago, Ray says the company is scaling toward a goal of a $100 million, highly profitable business, so it can reinvest faster in value for customers. The biggest change is that he now asks people for plans. In the early days, the team fought fires all day. Plans were loose and went out the window as soon as they were written. There is still plenty of firefighting, but he now asks his leadership team to step back and write intentional plans for their goals. Not "we're going to sell more," but how.
His metaphor is an orchestra: as it grows, it needs conducting so everyone reads the same sheet at the same tempo, because larger groups are harder to keep in unison. He calls this a completely new challenge for him. He sees himself as the forcing function: "We're following the plan until it's not the plan, and then we're going to write a new plan," but there will always be a written plan. Chris links this to the earlier theme of deciding and pivoting, and Ray says plans are what give a company long-term conviction to weather storms that are likely temporary. That leads back to his claim that experienced CEOs know the right long-term decision. The question is whether they have the conviction to see its benefits, the ROI, come to fruition.
International supply chains and "Cutting Through the Noise"
Asked what they hadn't covered, Ray mentions that Paperless Parts had just launched in Australia and New Zealand, and he raises international supply chains. He argues that everything moves like a pendulum and that globalization swung "a little bit too far," past the point of healthy collaboration into dependence. Chris mentions he is heading to MIT that day to discuss the topic. Ray says the key question is the right level of global collaboration without falling into dependence. He expects the country to "figure that out over the next 12 months" and thinks it could be a good reset toward focusing on what must be done domestically.
Finally, Chris asks about Ray's video series Cutting Through the Noise. Ray says it started by accident: he and a co-founder were "ripping on a topic" during a recorded call, and the company's CMO suggested sharing it on LinkedIn, which drew a strong response. His reasoning for the series is that manufacturers are busy and don't have time to synthesize the flood of content. CMMC is his example of a noisy topic. He wants to cover only the most important thing at a given moment, and "if there's nothing to talk about, we just won't talk."
I would argue that every CEO that's been doing this for a while knows the right long-term decision to make. And the question is whether they have that conviction to weather the storm in the short term to see that long-term decision come to fruition.
Jason T. Ray of Paperless Parts returns to Manufacturing Happy Hour as we discuss what decisive leadership looks like in modern manufacturing. We'll explore how CMMC and artificial intelligence are currently impacting job shops, how to lead through crisis and uncertain moments at any time. And we'll be having this conversation in Boston, Massachusetts at the Tip Tap Room, one of Jason's favorite spots. All this on Manufacturing Happy Hour.
Well, you have to describe to our listeners where we're hanging out right now because this was a very intentional venue that we picked for today's conversation.
So, this is a place that my wife and I have commonly referred to as our local kitchen. So, this is the Tip Tap Room. It is a Boston anchor. No question about it. If you are going to a game at TD Garden, if you're looking for a place to check out the beer selection, awesome food meets great beer selection, cool venue, and I mean, geez, my whole time with my wife was formed here. I mean, geez, we went on more dates to Tip Tap Room, sit at that bar right there, order dinner, than anywhere else in Boston. So, it's very exciting to be back here.
And you've said you've since moved neighborhoods and you're still looking for that, you know, local watering hole that fills the void.
That's right. It's so hard to find that place. It's like, it's corny, but where everybody knows your name and, you know, you just have your usuals. We'll figure it out. We're in the South End now, so there's no shortage of restaurants.
And I'll set some context as well. It is a beautiful spring day out right now.
Oh, it's gorgeous. They got the doors open. The horns are blaring.
I was going to say we'll probably hear some of that in the podcast. I hope.
It's great.
So, no, great to have you on. Great to do an in-person interview with you. I mean, you're a regular on this show. You're on about every hundred episodes, give or take.
I feel honored that you are that interested in what I have to say and that people actually keep coming back and listening. It's awesome.
Well, there's a specific reason for this. We'll get into it in one of the first questions, but you know, you were on probably when we had just done like 20 episodes or so. I think this is it. I think it was episode 120 that you were back on as well. But you know, I'm not sure everyone listening today will have listened to those episodes. So, let's do this Manufacturing Happy Hour style. First, a proper cheers. Good to be doing this in person.
Cheers to you.
Always fun. And now, you know, I know it's early afternoon. We're having our non-alcoholic IPAs right now, but how do you describe what Paperless Parts does if you're having a beer with someone?
Yeah. And I think I've said this numerous times on our conversations. It is constantly evolving. So, Paperless Parts, we have built a front office solution for job shops and contract manufacturers. It's very focused on helping our customers navigate the estimating process, managing their RFQs, sending their quotes back out to their customers, securely collaborating with customers, outside vendors.
The platform is built around four key pillars. The first is workflows. What we found is in most manufacturers, estimating is a team sport now. So, it used to be you have that 30-year person with all the tribal knowledge. They put their finger in the air. They know exactly how to price parts, and it's just a gut feel from years of doing it, but also years of living with the consequences of making mistakes.
Now, what we're seeing is as the industry continues to evolve, more and more shops are getting groups of people involved in the estimating process. So, you can pull from expertise in each individual area of the shop. So we built out a collaboration workflow solution to allow those folks to work inside of a centralized quoting process.
Second pillar, costing and pricing automation. That's our core intellectual property around analyzing 3D models, 2D prints, automating as much as possible to drive consistency. My co-founder likes to call it guardrails. We like to put automated guardrails in place that allow you to move really fast without driving off the road.
Third piece of this is customer experience. You know this better than anybody, but when you go and you provide your customers with a world-class experience, they keep coming back to work with you. So, we wanted to give our customers the tools to look best-in-class all the time. Quote is often your first impression. So, we said, how do we make that the best possible first impression? Not just fast, but it communicates clearly, has all different buying options that you could offer, create the biggest strike zone you can to win that work. So that third pillar is customer experience.
Fourth pillar is our APIs and our connectivity. So we partner with a lot of the best-in-class ERP systems, CAD/CAM systems in the marketplace today. CRM we integrate into. And the goal there is just being really honest with our customers. Software is incredibly difficult to build and we're never going to be all things to you in the value chain. As much as I would like to, maybe in the early days of Paperless Parts I had that wet-behind-the-ears founder mentality. I'm like, oh, we're going to build everything from front to back in a shop. And then I realized you're actually just doing your customers a disservice by trying to do all that because you can't do it all really well. So you end up making a lot of compromises and trade-offs. So we've decided we're going to nail this piece of the value stream, but also make it really easy to connect Paperless Parts into any tool you're using.
I like one of the first parts of your answer where you're constantly evolving, right? And you described that these front-end processes, the quoting, is more of a team sport now, particularly as I imagine some of these 30-year veterans are starting to retire from the business and call it quits.
Now, one question that I have to kick this off is there is actually part of our last interview that I reference all the time in my keynotes. I literally just brought it up last week and I want to get your take on this. Last time we chatted, we were talking about the skills gap and you very eloquently said it's like when you know something has been an issue for so long, is it really a skills gap or is it a leadership gap at this point? Do we still have a leadership gap? What's your take on that?
I think it's closing. I think there's always going to be some part of a gap there as these businesses turn over. I think you're seeing it take two different forms. And I think much due to folks like yourself, we have more really awesome information going to shop owners than ever before. So, it used to be that it was on you to go out and find the right information, to find that thought leadership, seek it out, join organizations like NTMA, try to find that local manufacturers network where you could share ideas if people were willing. I think never before has manufacturing been so online and had so many resources, so many podcasts, so many articles that really help funnel best-in-class information to shop owners. And I think shop owners are taking advantage of it. It's really cool to see.
Like when I talk to our customers or our customer advisory board and I ask them what they're reading and what they're listening to, it used to just be, well, I'll page through The Fabricator when I'm sitting in the john or I'm looking at Modern Machine Shop occasionally when I'm waiting to take a phone call and I'll read some of those articles and it's great. It's all good content, but now content is being delivered in a way that is really accessible. And I think that's helping close the leadership gap because people are realizing you have to invest in consuming that information and then putting it to practice, which is exciting to see.
I think you still have gaps in... I think there's the new gap that I would explain is more of an experience gap as leaders are transitioning out of their businesses. We're seeing a lot of folks that have never come in and never run a job shop before. And I think job shops and contract manufacturers that are sub-25 million in revenue, they're really a unique beast. It is an unbelievably complicated environment that is ever-changing. It is very different than other manufacturing environments. And what we're finding is sometimes leaders from outside the space that have worked in general manufacturing, they're like, "Oh, I can come in and run one of these businesses or I can come in and I can take over a roll-up of these businesses and it'll be business as usual for me. Like I know how to run lean. I know how to drive operations. This shouldn't be a problem."
And what we're finding is some of those folks get kind of, what's Mike Tyson's phrase, right? Everybody's got a plan until you get punched in the mouth, right? This industry is definitely a punch in the mouth sometimes. So, I think there's a little bit of that, but to your question, never before have I seen more information being funneled to owners and never before have I seen them more engaged with that information to drive their businesses forward. And God, it's needed right now.
Yeah. So, I have a question based on that. Your first part of that answer was the information is coming to shop owners and of course the shop owners need to go out there and do their research and look at that influx of information that's coming to them. Is there anything else you're seeing, whether it's a leadership characteristic in the people that are running these shops, or let's say maybe another type of active action that folks are taking to close that leadership gap?
I think they are putting young people in their organizations in positions of responsibility. I'm seeing it more and more often that owners are reaching down to someone who might be in their early 20s, mid-20s and giving them a position that before I think they would have turned cheek to and they would have said, like, I'm never letting a 20-year-old have that level of responsibility in my shop. It took me until I was 40 to have that. I think more and more they're realizing that these young, a lot of times college-educated professionals, they're ready to take on that responsibility and those folks are bringing new ideas in. And when you combine the new ideas and the consumption of information with the agency to actually go and make decisions and drive progress, you see a lot of positive outcome from that.
Yeah. No, I mean that was something I kind of wished I had early in my career, right? I was in sales, but I was calling on the accounts that no one wanted to call on, right? And I just saw an opportunity where it's like folks that have just graduated from school, and I should say or just coming out of trade school as well, right? They've just got a lot of fresh information. They're young. They're ambitious. They have high levels of energy. Like why don't you give them more responsibility to go out there and make an impact when they have the capacity to do that? So, I'm glad to hear you're seeing that shift. Everything you're saying adds up, right? More information coming in. Yes, maybe there's a bit of an experience gap as people, they're either green or they've come from different parts of the manufacturing world than job shops, but when you put someone young into those roles and they're bringing new ideas and they also have that influx of info, it sounds like a wonderful combination right now to be closing that leadership gap.
The influx of info too does such... it's almost like softening the ground for owners because it's one thing for me as an owner to learn something and then go try to implement that with my folks who've never heard of it before, but it's another thing for my folks to realize that they work in an industry that a lot of people consider very sexy and very cool. And oh, by the way, they're also listening to that information. So they're ready to receive it. So if we're talking about, you know, we're going to go put a different type of incentive model in place where there's profit share, if we're talking about, you know, we're going to go try to do team building in a certain way, it's one thing for the owner to go out and try to do that greenfield and it's a completely different thing where all of the people in the shop have listened to it, consumed it, been exposed to it. It just softens the ground a lot. I'm seeing more and more of that. I look at the people that come to our webinars. I look at the people that click on our content. It's not just the owner trying to get better. It's everybody in the shop, which is really cool to see.
Well, I like the optimistic note that we started off on. We're going to switch gears a little bit because you and I were chatting before the conversation, as this is taking place in late April 2025. Manufacturers are trying to figure out how to navigate tariffs, to put it bluntly. But you and I have talked before, like when the COVID pandemic was at its peak, right? You know, so this isn't the first and it won't be the last, let's say, unpredictable time in the manufacturing space. So, to keep it timeless, how do you lead through crisis or an unpredictable moment in time? And I'm going to go back in time with you because in our first interview, we really talked about your Navy background. Give me an example that you might have seen from your Navy days.
Yeah. When I was going into the military, my stepfather said something to me that I've taken with me quite a bit, and it's: I may be wrong, but I'm never in doubt. And I think when you're leading through a period of uncertainty or crisis, that tends to lead folks to indecision. And when you're dealing with a situation of indecision, that can waste a lot of people's time. And it can really shatter your team's confidence in your ability to make decisive calls as a leader. And so I think just at a high level, what I would say is the folks that are most successful at leading through crisis situations lead with very decisive action. Now that doesn't mean make the wrong decision, stick with that wrong decision all the way through to complete demise.
Sure. Good clarification.
But what it does mean is pick a direction and go in that direction until you get data or until you've received signal that it's the wrong direction and then without hesitation pivot and go in the right direction.
Elon Musk has said this numerous times. He said the average Fortune 500 CEO makes one major decision every six months. He said, and this was early days Tesla, SpaceX, building those companies, he said, I'll make one major decision every month. So what that means is in a period of six months I'll have made six decisions, key decisions for the company, where the average leader has only made one decision. What that does is it allows me to make three decisions. And even if those were the three wrong decisions, I still now have three months to make three of the right decisions. So no matter what, at the end of that six-month period of time, I have confidently made at least three right decisions where every other leader has semi-confidently made one.
And I think there's something profound there. The indecision, the lag. You just can't afford that. You know, when I was in the military, we would be out to sea and you would need to make a split-second decision about how to navigate the ship. Like, I remember pulling out of port, we were in Dubai. And we're going through the fog and all of a sudden we're looking over the side of the ship and we see the bottom. And
The bottom is not something you want to see when you're in the Navy. Like, you just do not want to see that. And so, yell out all back. You know, we put the engines in reverse. We're sitting there for a minute and the fog clears and there's an island that is quite literally like we would T-bone this thing. Yeah. Wasn't on the map. Wow. Brand new island. Could not predict that.
A new island. Yeah. You know, it's really interesting. We can spend a lot of time talking about the Middle East, but they are putting oil money to good use out there building islands. But
You have to make a decisive call or you put the ship on the ground, and that would get everybody fired.
Yeah. So that's an example of you have to make a decisive decision in the moment whether it's the right decision or not, and then you need to take the time to reassess so that you can make another decision. Not going to leave the ship going backwards. Mhm. Right. That's the right decision in the moment. Go backwards. We're not going to run aground. But then it's okay. Let's adjust course. Let's go forward on this new charted course.
Yeah. And sometimes I think it's really important for folks. Make a decision, assess that decision, make another decision. I think when people are looking to you for leadership, they are looking for you to make decisions. Yeah. That's really what it is.
Yep. And being willing to say, "Hey, I was wrong. Not because I'm stupid, but we just didn't have all the data. We have every opportunity to pivot now."
I love the whole way you describe that situation, putting it into manufacturing context with frequency of decisions as well. You know, how does this play out in manufacturing then? How do you see folks bust through the indecision during a time like this, or maybe specifically to job shops? Like how are you prioritizing what to do without just getting stuck right now?
I think there are key indicators that our customers, but the industry, needs to watch.
So we have massive uncertainty as it relates to tariffs, but we also have an enormous hype cycle as it relates to reshoring. Mhm. And we expect that that'll happen. But we've also heard all the major surveys out there, McKinsey, they say, you know, half a trillion dollars of work coming back to the US. Well, that's amazing. But then you also have agencies saying it'll take us four years to tool up to even support that work. Yeah. So there's a lot of different data points that owners need to make heads or tails of and how it relates to their business.
So leading indicators that I'm tracking, if I'm running a shop, I'm looking at what's my RFQ volume, and what does that RFQ volume look like from existing customers? What does that RFQ volume look like from new customers?
Existing customers. I'm going out to every single one of them to try to understand where are their heads. What are you thinking about? Not just, hey, tell me if you know you're going to keep ordering from me, but it's how can we be the best possible partner to you through this uncertainty. Here's, I'm going to lay all the cards on the table. Here's what we have from a capacity perspective. How can we help you? Trying to make these decisions in isolation will do you no good.
Same thing as they're navigating this situation. You see a lot of owners that have the right long-term decisions in mind but do not have the long-term conviction to make those decisions today. So it may be we are going to go expand our shop. We know that's the right decision for the next five years of the business. We need to go break ground. We need to build a new building. We need to put these machines in. But then they get nervous and the indecision kicks in and they say, "Well, maybe we can't do this right now." And it's all right. Well, let's wait. So,
here's how this plays out. If you know you need to expand your footprint or you know you need to build capacity in anything, production, estimating capacity, on your sales team, everything has a lead time to be complete. So, if you start that initiative, you break ground today, that building's not done for a year. Yeah. So now what happens is you fall into this situation of indecision and you hang out and you're like waiting for the signal, not trusting that you've been in this business for 30 years and you know over the next five years that is the right decision to make. Mhm.
So having that long-term conviction is absolutely crucial, because you wait, you make the decision too late, feast or famine, all those orders come in and you don't have the capacity to take them on, or all those RFQs come in and you can't quote them. And so the people that I've seen be most successful through these periods of uncertainty are the people that do not waver in the long-term decision that they know is right for their business. So if they know the right thing to do is to expand my capacity in a certain part of the business, or to train the team, or to invest in a certain solution to a problem they've been experiencing. Mhm. When they pull the trigger and they make the decision, they are always better positioned as the industry pendulum swings back. Yeah.
It's just if you've been around long enough, it always does. And that's what Jay Jacobs did, my co-founder, when he built Rapid. Everybody was tightening the purse strings in 2008. Everyone was afraid. Everyone was saying, "Oh, we got to pull back. We're going to pull back on expending." So, what did he do? He went out and bought a machine shop. Yeah. He was like, "No, we're going to expand because we know that prototype machine work is going to come back roaring when we get through this thing. So, we are best to be ready to catch that work."
And he probably got a screaming deal on it at the time. We probably did, right? And so, but that's the thing. Yeah. Being decisive when everyone else is indecisive allows you to capitalize on those screaming deals. Mhm. Mhm.
One thing I noticed with your answers, you gave a good short-term and long-term action that you can take, right? You talked about looking at the RFQ volume, existing versus new. In general, I would paraphrase that as, hey, manufacturers, look at the data coming in from your customers and make some decisions on what you need to do as a business from there. And then the other piece of that was don't waver on the long-term decisions. A very direct long-term answer. Look, be thinking about what's going to happen five years out when at least this phase of uncertainty is done. Who knows what could come next? We've seen
We're always going to be navigating choppy waters. It is without a question. You made a really interesting statement there. I think in manufacturing we have more data than any other industry. But I think there's a huge gap between data and information.
Okay. Go into that. So I think manufacturers today, they capture, or maybe don't capture, enormous amounts of data that could be in their ERP system, their CRM and their email. Problem is data that is unstructured and is then not analyzed as a result never turns into information. Yeah. And I think people conflate that, like, oh yeah, we have data, we run our business based on data. And it's like, well, no, you actually don't. Mhm.
Like let's take RFQ traffic as an example. Mhm. If RFQs are going into five different inboxes and you're not logging them anywhere and you have no central location to see that, and who they're from, and the number of line items, and the quantities that they're asking for, and the velocity, and the turnaround times. If that's not in one place, you have a lot of data scattered across inboxes. Yeah. But you do not have information to say this sector is increasing RFQ traffic as semiconductors are coming back to the US. This sector has slowed down dramatically as we're seeing X. You just do not have that pulse in a way where you can make really informed decisions. Yeah. And I think that that's what leads to indecision.
Very good point. Very good point. I love the distinction between data and information. It has been a theme that comes up on the show more where it's like artificial intelligence is finally now one of those tools that can help turn some of that data into information. We will get into artificial intelligence a little later.
Before we get there, when you and I have chatted before, I think our timeline has followed when it comes to security for job shops. CMMC was coming the first time we talked. I think the second time we talked it was either here or had been delayed, and it's here now. It is here now. So long awaited. Well, how should small to medium-size manufacturers be thinking about security right now? Particularly when, you know, just to state what CMMC is, it's what allows job shops to do government work essentially now. Correct. The security requirement they need to meet in order to do government work. You might be able to add some more color to that, but that's the very simple way I think about it.
So, underlying all this, what I would say is our customers that are a part of the defense industrial base have never been busier. Yeah. Okay. Never been busier. It is incredible the number of defense tech startups that are getting funded, à la Anduril. They, it's booming.
There's a lot of activity, a lot of press around it, too. So, I think our audience is probably familiar with some of that. Yeah, I'm going to give them the benefit of the doubt here.
So, with CMMC compliance, I think the most important thing to realize is the right questions to ask. Yeah. Because you're not going to do this alone. Just like anything else, you're going to rely on software vendors. You're going to rely on managed service providers. But I do think it is the requirement of any shop thinking about doing that work to understand how to cut through all the noise. Yeah. So there's a lot of companies out there, and I was just having a conversation with my co-founder about this. A lot of people say, "Oh yeah, we're on GovCloud." Okay. That means nothing. Yeah. That doesn't mean anything. You can have a software solution that you're providing your customers that's on GovCloud that then does not allow them to meet CMMC compliance.
Okay, so I'll just lay it right out there. If you are leveraging software solutions, your software solutions must meet NIST 800-53. Okay, if those software solutions are in the cloud, which most modern manufacturing software solutions are today, Paperless Parts is now a cloud service provider. We are providing you a service in the cloud. Right? So anytime a software company talks about NIST 800-171, it is the first indication that they actually don't know what they're doing. Okay? Because that is not a requirement for us. Okay. Okay. We have to meet NIST 800-53. So if I'm a manufacturer, what I'm asking for from all of my vendors, and you have the right to demand this: show me your attestation letter. Yeah. And give me your site security plan. Those two key documents show that the software company has been responsible and getting audited, and the second shows that they are taking action based on the results of that audit.
Okay. So, no, no, keep going. Keep going. I was going to say just the checklist so far. NIST 800-53, I will have a link to that in the show notes, by the way. You need your attestation letter as well as a site security letter. Those are some of the concrete actions that demonstrate you are meeting the requirements. Am I missing something?
Attestation letter is the audit. Site security plan is how to fix those pieces of the audit. That's what you need in order to feel that your vendors are providing you with the security that you expect, that you're relying on as you run your business. Because the last thing you want to do is spend an enormous amount of money taking care of inside of your four walls, have your auditors come in, and you fail the audit. Yeah. That's just wasted money. It's wasted time. Cannot afford to have that happen.
Now, a lot of folks have said, and CMMC has always been this pendulum of, "Oh, we're not going to do it, or we're going to do it, or it's delayed." There's been a lot of rhetoric around, oh, this isn't going to happen. It might get cut. It might get removed from the budget. Yeah. DoD CIO stood up in front of a conference two weeks ago and she said, "Freight train's coming." Yeah. "So, you better get on board." She said, "We've had plenty of time. We're not going to pull punches if your supply chains are not CMMC compliant." Now she was talking to the large defense primes, GE Aerospace, Northrop Grumman, Raytheon, Lockheed Martin. All of their heads of supply chain were sitting in that room.
So what does that mean? It all rolls downhill, right? So if you are not considering CMMC compliance, you need to either make the decision, again, decisive, that you are not going to take the risk in your shop to go make ITAR parts, controlled unclassified information parts. If you are making the decisive decision to go after CMMC compliance because you want to feast on the aerospace and defense work, great. But go position your business to do it. Yeah. And don't pull punches. Force your vendors to step up and prove that they will support you through that.
Is that decisiveness there right now? Are the folks that should be taking the action taking the action? I'm just curious, what's your general feel of where these job shops are? Maybe some have decided I don't want to have anything to do with this. We're going to do other types of work, right? Maybe some are dabbling in the idea and they're the ones that really need the message right now. What's your general sense? Are people making the decisions or are they tiptoeing around it right now?
I think there's a little bit of tiptoeing for people waiting. They were initially waiting for, is this program going to get cut. I think that's pretty decisively not happening. Yeah. I think there's a little bit of tiptoeing waiting for, is this going to be like college loan relief. Okay. So, wait a second. I got to spend $100,000 to be CMMC certified and I got to get all these audits. Is the government going to kick something out at some point soon that helps us pay for this or subsidizes it? Are the OEMs going to get bent over the barrel way too much to a point where they're like, "Oh, you know what? We'll just pay for your auditor's supply chain." So, I think there's a lot of folks that are kind of waiting to see. Yeah.
Those folks may very well. And here's the way I would lay it out for you. If you're going to spend $70,000 on CMMC compliance and you are sitting around waiting for whether that might get subsidized, the maximum subsidy you will get is 70 grand. Okay, very good point. So now let's step back for a second. If you do not do that, the maximum fine is now uncapped. Interesting. So that's one. Second piece: the potential work you could get if you did have it.
Right. We just had a customer walk away from a massive Northrop Grumman RFQ because they were not CMMC certified. Yeah. It was an opportunity to break into a new customer. Opportunity to take on generational LTA type work.
They couldn't do it. Quick acronym check. LTA. Long-term agreement. Long-term. Got it. Okay. But the opportunity to take on that type of work, they couldn't do it. Yeah. I talked to the shop owner, like, "Yep, we're just" He's like, "We delayed." Yeah. "Because we were waiting to see what was going to happen. We get the RFQ. It states clearly you must be CMMC compliant to even access this RFQ." And what happened? They didn't get the work.
Yeah, I mean that makes a lot of sense, right? It seems like a simple ROI calculation if that's what it is.
I love that you bring up that term ROI, return on investment. Yeah. Very, what I'm finding is very few
manufacturers know how to do that outside of a machine.
Interesting.
Which is a really, really interesting challenge.
Yeah.
So they know how to do it from the perspective of, I know this thing can run for x number of hours a day. It will cut chips at this rate. I can probably make an extra 250,000 for this investment. They can do that so well.
It's a very engineering mindset, right?
It is. But then when they're trying to build an ROI around other investments in their business that are less tangible, they really end up in a situation where there's that, like, but is this actually going to happen? What I would say to people: trust your gut. If you know there's a problem and you think you have a way to solve that problem and you've done all the work to evaluate the solution, pull the trigger. Go.
Yeah. I'm going to switch to another topic now, and that's artificial intelligence. I told you we'd be talking about this at some point in the conversation. I am very curious, again, decisiveness, right? That feels like the theme to our whole discussion. Have you seen machine shop leaders, job shop leaders continue to focus on the right things or get caught up in the hype? Like, what's kind of your vibe on seeing how job shop leaders are navigating this right now, and do you have an example?
Yeah, I think obviously everyone is talking about it, because you have to not have your head in the sand. I think there are folks that are trying to solve problems that the technology is not yet ready to solve, and they're wasting a lot of time trying to do that.
Whereas it's almost like, I'd give you the analogy of an orange tree. So we have this orange tree, and there's fruit all on the orange tree that you can reach up and you can pick the oranges. We don't have a ladder, and it's a tough tree to climb. There are some people that are wasting a lot of time trying to climb the tree to get to the fruit at the top of the tree, whereas they could have just reached up and picked the low-hanging fruit. So my advice for anybody that is considering AI is be intentional about capturing the low-hanging fruit. Use the technology for what we know it to be really good at today.
So I'll give you an example. Today, AI is not going to come up with estimates for you. AI is not going to program a part for you. Can it help? Maybe. Can it help you draft your email back to that customer in a way that makes that email more effective? Can it help you organize data? Can it help you understand what's going on in a specific industry and help you... I find that the people that are using AI in the most effective way use it as a thought partner.
So they actually sit down and they say, "Okay, I am running a job shop. My job shop does 40% work in aerospace and defense, 20% work in semiconductors, and then the rest is a mix of medical devices and industrials and cats and dogs."
Yeah.
So I tell it what I'm doing, and I say, based on what you know about the world right now, if you were running this shop, what things would you be thinking about? So it comes back and it's like, well, given the tariffs, this is what we're seeing here. Given this, knowing the nature of job shop work, I'd be watching these five variables. And it's like, okay, well, let me ask you some more questions about that. What are you seeing in this type of material? What do you... and you can go down an entire path with AI as the counterbalancing thought partner to you, to help you cultivate your thoughts faster.
So it's just like people who were initially doing shorthand and were trying to do math calculations by writing them out by hand. Then all of a sudden, people started using a calculator. It didn't change the fact that you need to know what to enter into the calculator to make the equation come out properly. AI is in the exact same place right now. The questions you ask AI and the prompts you send it are going to dictate the quality you get back out of that system.
Yeah, I like that you described it as a thought partner. It's like artificial intelligence right now is like another peer that you can consult for ideas on, hey, here's what I'm seeing right now, here's where I'm thinking of going. And like you said, if you do the inputs correctly, you're going to get better outputs. That's the answer I heard in this case.
100%. And I also think it is back to the people you partner with. So when I went through my MBA, one of my favorite case studies was Lego.
Okay.
And I think Lego is just such an incredible...
You don't have to sell me on Lego.
But the company went through this growth phase kind of like an accordion. So they went out and they effectively got their hands into every pot. So there were Lego theme parks, Lego restaurants, Lego movies, Lego everything. And then they brought in this new CEO because Lego was going under. They were not performing well. They were losing money in so many of their different divisions. And that leader came into the room and he took one of the plastic blocks and he slammed it down on the table and he said, "This is our business. We make plastic blocks. That's what we do here." And he basically told everyone in the room, "We're getting rid of everything else." And they divested everything, and they brought it back to the core. And they grew that business exponentially from that point forward with their core high-margin business of producing plastic blocks.
If you are a contract manufacturer, your business is making parts. It's not making software. And as much as it is cool to have your own ERP system, or it is cool to go and try to rig up AI to build your own scheduling boards, the reality is the total ownership cost of that technology is dramatically more expensive.
The number of customers that we will end up winning where we go through a sales cycle years ago, they say at the end of the sales cycle, we are going to try to build our own solution, or we're going to hack together a few things that we're doing and try to replicate what we saw during your demos. And we say, okay, that's totally fine. Those that end up coming back, it's almost a 100% close rate, because building software is unbelievably hard. And building software that is scalable, that is secure, it is so, so challenging. So just like I wouldn't go out and build my own CNC machine if I'm running a job shop, building software is the exact same thing.
So I would encourage folks, as they're thinking about taking advantage of AI, become the best at identifying the best partners. Don't become the best at trying to understand how to incorporate different new emerging technologies. That's my job.
My job is to make sure that as we bring AI into Paperless Parts, I'm not inflating the cost of Paperless Parts, because there are very, very clear case studies that show companies, as they bring AI in, they don't realize the server costs. Computation is so expensive that all of a sudden now they need to charge double for their products. We're not doing that. We're not changing our pricing at all as we bring AI in, and that's because we're doing it in a very intentional way. But that's our job. We spend all day long thinking about how to provide our customers with the best solution so that they can provide their customers with the best solution. So that's how I think about it.
I like that you started getting into the concept of scaling, right? Because we're talking about, let's say, a current trend with artificial intelligence. Let's get a little more timeless as we're here in the final throes of this interview. How can job shops scale right now? Let's discuss this in the context of maybe going from prototype to production, and feel free to reference any current events that are taking place in this day and age, as well as things that are just tried and true.
Yeah, so this is a really interesting topic that I have with a lot of our customers as they're thinking about going from one shift to two shifts to three shifts. So they will get larger and larger opportunities, and I would call these shift-making opportunities. But they will go in and they will say to me, well, how do I price this? Because the way I built all of my pricing is based off of an equipment or an asset utilization rate of eight hours a day, five days a week. So I've basically allocated my overhead to those number of hours, and that overhead might be something like 30%. Now I'm about to double my potential capacity by adding an additional shift. How do I quote that work?
So let's really break it down for folks. Let's say I've got a laser cutter, and that laser cutter cost me a million bucks, and I want to pay for that laser cutter in five years. That means I need to generate at minimum $200,000 per year, right? Five times 200,000 is a million bucks. Now, there's a cost of capital, there's a cost of maintenance. Let's just say 50 grand a year. So now we've got a quarter million dollars a year that we need to go and actually execute on one shift, without running lights out, at a maximum of 2,000 hours, right? Maximum. And that's 100% utilization rate. No one gets that. So let's knock it down. Let's say it's 1,200 hours.
Okay.
That might be overly conservative at 60% utilization rate, but I would say probably not. So at 1,200, if I have 1,200 hours to make up $250,000, that's just math. Where a lot of shops struggle as they think about scaling is, I've now built out what my laser hourly rate is. I have 200 bucks an hour that I've got to hit on my 1,200 hours. I think that math is right.
I'm trying to follow along. There's a lot of math.
Yeah, a lot of math here, right? But now I'm stepping back and I'm saying, "Okay, well, normally I would charge 200 bucks an hour for my laser, but I'm about to double my shift. So do I decrease my pricing for all of my existing customers? Do I just decrease my pricing on the shift-maker jobs, that million-dollar job that's going to allow me to expand a shift?" That's where I see a lot of shop owners getting caught up as they think about making the transition from prototype work to production work.
Interesting.
The buyer expectations for production is that you have a really awesome asset utilization, your capacity utilization, your return on assets. They expect you to run that laser 20 hours a day. So if you're not doing it, they take more of a shame-on-you approach. So then a lot of our customers say, "Well, oh my gosh, I can't win this work. I keep hearing I'm too expensive. I don't know why I'm too expensive." And it all comes back to understanding that math for how to scale.
So I think the easiest way to scale is scaling through additional shifts in your business. It is the cheapest way to do it. Now, that doesn't mean it's easy, so I don't want people to conflate that. It is very, very hard to scale your business in manufacturing. It is human- and capital-intensive, without a question. But if I need to go double my production capacity because I'm only going to run one shift, that's a lot of machines to buy. If I can take my same machines and run them twice as much, now I've got a chance.
So we're seeing shop owners take on different types of shifts. So they might run 4-10s. Well, that's really interesting, because now I've got Friday open, and Saturday and Sunday. So I could run a shift of just Friday, Saturday, Sunday and run 3-10s, 3-12s. So there's a lot of different ways to get really creative while also working around people's lives. So if you have kids at home, you need to be there for school drop-off in the morning. Great. Come in at 10:00, work till 10 o'clock at night, and then you can handle all morning with your kids. So there are ways to structure your schedules to allow you to attract the talent that you need to run those shifts.
So scaling based on shifts was the large portion of that.
Yeah. I'm sorry I went into the math.
Well, no, I'm glad you went in there. I know some folks are going to appreciate the details. How do you get the team on board with a growth mindset? I wouldn't be surprised if we've touched on this before, but since we're on this topic, I feel like we've got to bring it around to the rest of the team as well, versus just the person who's making the decisions on the shifts.
I think every decision you make requires getting the team on board. And WIIFM, what's in it for me, is such an important acronym for folks to remember. At a core, if the business is stable, everyone's job is stable. So that is an underlying cultural tone that I think is really important. We are fighting a ship. Our business is our ship. If that ship sinks, all of our jobs go away. So we need to have the best ship in the world to navigate all the seas and take care of rough waters and blah, blah, blah. All the analogies, right? So underlying it is, we should all want this business to be better, because this is our life raft.
Now take it one step further. When the business is better, what happens? Does everybody get paid a little bit more? Do their jobs get slightly easier? Do their jobs get more fun because now they're able to take on new responsibilities, or they're able to learn and go try to elevate themselves and build new skills? Is it we just have a lunch for everybody once a week? I mean, it could be anything.
Are you seeing all of these strategies work for the folks that you work with? So it could be they're picking and choosing from this list of examples you just...
100%. And it used to be very much, at the end of the year, the owner would look at the bank account and say, "All right, I'm gonna write everybody a Christmas check." And everybody gets an envelope at the end of the year and a handshake and a thank you. I think more and more owners are realizing that that's a lost opportunity to build momentum and buy-in throughout the year.
Throughout the year.
So how do we build everybody around that? And how do we share in the wins, but also in the downsides? I think the best shops I see, and this is Jocko Willink...
Oh yeah, Extreme Ownership.
He talks about retrospectives. The best shops look at the worst parts that they make, and they sit down and they live in it. They talk about it constantly. This is where we made a mistake. This is why we misquoted it. This is why it didn't run well. This is why we can't take this work on in the future, or what we're going to do to be ready for it in the future. And they bring the whole level of the shop up to not make those mistakes again. The people that just kind of take it on the chin, grit their teeth, say, "Oh, well, I'll remember that for next time. This screwed us." That is such a lost opportunity to build that buy-in and that team culture.
I will tell you, since coming into this industry, it is night and day, the level of culture focus and team-building focus. Back to your very first question, the leadership gap, I'm seeing, and I don't know if it's just our customer base that I get to see it from, but more and more I think it is becoming table stakes to attract the talent that you need to be successful. And it is so inspiring to see how these shops are really building a lot of cultural momentum and goodwill.
I mean, you've been seeing this play out for a number of years now. And I think just the change in demographics, the attitude in the manufacturing space, all the stories you're sharing, and also, I'd say, your customer base, right? If they're working with Paperless Parts, they're probably going to be on the more proactive side, the more forward-thinking side of the manufacturing industry. But
Everything you're saying shows that manufacturing is going in the direction it needs to be to be a more sustainable, attractive industry. So one of my last questions for you, what's something you're doing today that you weren't doing as a leader like two, three or five years ago? I want to maybe see something that's changed since the last time we've talked.
I think the biggest difference in our business is we're, because we are scaling. Our goal is to go out there and build a $100 million business in revenue. We want to build a super profitable business so we can continue to reinvest at an increasing velocity to keep building value for our customers.
And the cops are coming to get me.
Oh yeah. No, we've got a lot of background noises popping in here at the end, but that's what I would expect here in Boston. I didn't want it to be like a sterile environment here.
So I think the biggest thing to answer your question that we are doing differently, or that I am doing differently, is I'm asking people for plans.
Okay.
So in the early days running the business, we kind of fight fires all day long.
And people do the best they can do to navigate the environment, achieve a top-level goal. And there are loose plans in place, but the second you write the plan, it goes out the window.
Right? We're in a position in our business where, yeah, there's still a ton of firefighting. There's always things going on. There's always problems to go and solve. But I'm asking our leadership team to step back and think about the goals and write really intentional plans to execute to. Not just a, oh yeah, we're going to go sell more, but no, how are we going to do it? Because for us, as the orchestra gets bigger, you really have to conduct that orchestra and make sure that they're all playing the same music, they're all reading off the same sheet, they're all on the same tempo, because the bigger the group of people, the more difficult it is to get them to work in unison.
Yeah. Yeah. And that, I'm finding, is a completely new challenge for me as a leader as we've scaled up. But to drive that level of efficiency, I really think it comes back to writing good plans, communicating those plans to your people, and then executing to the plan, not just a, oh, we went through this planning exercise, great, now we're back in the fight. Let's throw the plan out the window and do what we got to do. So, it's up to me to kind of be the forcing function to say, "No, no, no. We're following the plan until it's not the plan, and then we're going to write a new plan." But no matter what, there will always be a written plan going forward.
Well, it's in line with your earlier comments about making decisions and then being able to pivot, right? It's the same thing that goes with a plan. You got to have a plan. You got to make adjustments as it goes.
It allows you, though, to have an enormous amount of long-term conviction in what you were doing and weather some of these storms that are likely temporary. So to tie it all back in together, right? We talked about the indecision. We talked about people being decisive. I would argue that every CEO that's been doing this for a while knows the right long-term decision to make.
And the question is whether they have that conviction to weather the storm in the short term to see that long-term decision come to fruition, like the benefits of it, the ROI, come to fruition.
Well, you've had a lot of good through lines in this conversation today. Like, I love that long-term conviction to weather the storms. Great way to end this conversation, but I do want to mention, you know, we've covered a lot of ground today: artificial intelligence, CMMC, navigating turbulent times. Is there anything we didn't cover yet today that you're like, gosh, Chris, we're finally hanging out at the Tip Tap Room, how did you not ask me this question?
We hit most of the big topics. We have our user conference this week, which is epic.
Yes, there is a lot going on in Boston.
Boston. I would love to say that the GDP of Boston is going up this week because of us, but I don't know that it'll be felt. Maybe someday.
I think the only other thing is international supply chains.
Okay.
So we just launched in Australia, New Zealand.
Oh, congrats.
Thank you, going international.
But I do think everything is a pendulum, and I would argue that the pendulum swung a little bit too far from a globalization perspective. We kind of passed that notch of dependence.
I'm actually going to MIT to talk to them about that today. That'll be the topic of probably the interview that'll come out right after this one or shortly thereafter.
I think it is such an important understanding of what is the right level of global collaboration, where you have not fallen into dependence. And I think we're going to figure that out over the next 12 months. And I think it'll be a really good reset for the country to focus on the things that we have to do.
Well, by the time folks listen to this, your Power Conference, at least the 2025 edition, will be in the past. But you do have a new video series out called Cutting Through the Noise, which I'm going to link up to. Tell us quickly about that before we finish off our beers.
Oh, well, so we talked about this. And this was totally on a whim. I happened to be on a recorded call with one of my co-founders, and we were just ripping on a topic, and our CMO said, "Well, geez, why don't you just like share that on LinkedIn?" So, we did it.
And the response was awesome, too.
I just, I tend to find that
I like that it happened accidentally. That's fantastic.
I tend to find that there's a lot of noise in the space. CMMC is a great example of that noise, but there's a lot of noise in the space, and I just want people to get to the point. Yeah, manufacturers are busy. They do not have time to go and synthesize and try to distill everything that's going on. So, you got to pick your resources that you want to go to. Use those resources, but don't get bogged down in like the thousands of different articles and noise out there. So, my thought was cut through the noise a little bit. I don't want to put out a lot of content. I want to just make it: what is the most important thing we can talk about right now? And if there's nothing to talk about, we just won't talk.
Yeah. Well, hey, just keep sharing those accidental insights that show up during your regular recorded calls. It sounds like you got a good series that can come right from that. Great content advice for everyone out there, by the way. Steal that idea. So, well, Jason, I'm glad we got a chance to do this in person. Thank you for inviting me out to one of your favorite watering holes in the world. Always good having you on Manufacturing Happy Hour.
Cheers.
Cheers.
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