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Edwin Veguilla: Welcome to the Malibu C podcast. I am your host, Edwin Veguilla. Today we're with Mr. Tom Porter as we continue our journey. And Tom, Total Oxidation Management part of our session. Mr. Tom Porter, good morning. How are you today?
Tom Porter: All right.
Edwin Veguilla: So today we're going to go into the journey of the initial part of the company, how he actually founded it and started it out of his garage. There are a lot of things that happened there. So, Tom, tell me you guys get the $5,000, you start the company. Where did you actually get the product? Who manufactured your product?
Tom Porter: Let me start with that. That goes back to the story about Doctor Ault. Doctor Ault, a chemist at Ball State University. A professor went out and started his own company called Vida Chlor. And I mentioned to you in a previous session where Deb, actually, Deb and I went our first time together after we met, on the Friday night previous, we went to hear Doctor Keith talk about his discoveries of ascorbic acid on the external body. To my knowledge, no one had ever provided research specifically on the benefits of ascorbic acid for the external body. I'm still confident we were the first company to use ascorbic acid on the external body. And now people think vitamin C has been used in skin care forever. And unfortunately, most every company that's coming after us to try to copy us, they're trying to make it easy. They're trying to make it convenient. They don't think the consumer will mix. They don't think. The reality is, if you're using ascorbic acid and you're not mixing it yourself, then you're not getting the benefits that you can get. Knowing that our company is 34 years old now, from that early, those early years of Doctor Ault making our products. To answer your question, because he set up a company and that's how that happened.
Edwin Veguilla: So, walk me through how it actually was built in your garage. Because a lot of the companies are like actually the majority like the great American companies, Harley Davidson, Apple Computers, Facebook is in the dorm. But a lot of these companies were actually started in a garage. So, you got the product from Keith.
Tom Porter: That's right. What we did is Doctor Ault made the formulas with myself and one of our current chemist, Dilip Vyas, who was his assistant, who is now our chief buyer of chemicals, and one of our cosmetic chemists that have led this entire, Dilip was actually part of that from the beginning and he's still with us. So, Dilip and Doctor Ault for four years, we're making the products in their garage. It was in an old, old building that that he started a company in. He had his offices there and he started making products in barrels. Our product started in barrels. Our garage was the warehouse. I took the garage and built myself two by fours and sheets, four by eight of plywood. And I built a warehouse and our garage was solid shelves. That became a warehouse. And this was in Malibu, California. I was renting the house. I didn't have any money. $5,000 is all I had in my bank account. So, I didn't own a house in Malibu, California. However, when I left the YMCA in Bloomington, Indiana and took over leading to develop that same kind of concept in Pacific Palisades. A resident of Indiana, Bloomington, contacted me and said, I've got a house in Malibu that if you want to lease, we're having problems with the current renters. And so, we'll rent it to you.
Edwin Veguilla: What can you afford?
Tom Porter: So, we were renting a house at that time. It was expensive, but it was only $1,100 a month, which was affordable for me on my salary. And it was a four-bedroom house with a view of the ocean. So, we were really blessed. Coincidentally, they wanted someone in there that would take care of the house and pay for their share. And they knew they'd get paid because they weren't getting paid by the previous renters. So, they just needed someone that would take care of everything. And that's where the company started. And that's how Malibu, because it sounds like Malibu, California. You'd start a company. That'd be a stupid idea. But we were in a very unique situation.
Edwin Veguilla: So why do you think it's a stupid idea to start a company in Malibu, California?
Tom Porter: Because the cost of living is so high in Malibu, California. You don't want to be, you know, just like you don't necessarily want to spend all your money. When you start a company on advertising full page ads. I've watched a lot of companies that come on the scene with some money, and they spend it all to get themselves feeling like they look successful and they're out of business a year or two later, so you don't spend your money upfront on frivolous things if possible. I remember spending very valuable money because then we went out and started selling some shares of the company after that $5,000. And here's my message. Unfortunately, I took an investor's money stupidly and went and bought an old desk, a roll top oak desk that became my desk for the company. But that's the kind of thing in the beginning, as a person who's starting a company, sometimes the priorities are a little, not necessarily the best idea when you get further into the company. So, starting our company, you know, the fact that you thought that we owned the house, owning a house would at least been an asset if you could borrow money against. Right? I had no asset.
Edwin Veguilla: So, all you have is a $5,000.
Tom Porter: That's all I had. I had $5,000. Two cars that had car payments and both corollas, both of them were $7,000 vehicles. A baby that was one year old. And I remember standing at the grocery store in the diaper aisle. It would take me 20 minutes to have two. They cost so much that I just had the most difficult time spending money on these diapers. You know? And yet it made sense at the time. It was a priority. So that's sort of how it started in the garage. And that's where we the warehouse, in fact, Deb, who you know, is my partner in this, she often says that Trevor's best friend as a baby was a corrugated box because there's so many boxes everywhere. Not just that she would build the corrugated box because she was out there doing shipping. She understands that tape gun. She did the shipping.
Edwin Veguilla: So, you guys got the product from Keith's? Put it in the warehouse, you guys are putting in your garage and you guys are shipping doing everything. They're taking calls. I remember in the actually the last episode, if you guys watch it, you talked about that on a like literally after you built that on a Saturday, that first Saturday. What was the place you took your son? You took your son recently?
Tom Porter: Marina del Rey I went by there the day before yesterday. It was just a beauty supply store that I walked into. It was. I just know the first street I went to the first day I went out and fortunately sold product.
Edwin Veguilla: So how did that go?
Tom Porter: Fortunately, they needed it. Features and benefits. And it filled a need that knew they had customers that were asking for something for that. This was about water. This was about the effect that the water had on their hair.
Edwin Veguilla: So, at that point, you already knew you were going to go into the beauty industry. What made you guys choose the beauty industry?
Tom Porter: You mean the salon and the salon industry? It wasn't where we chose. It was actually. It evolved. I went out what I knew best as a swimmer and, someone that had been around athletics all of my life. I knew pro shops. So, my first sales were beauty supply stores and pro shops in gyms and fitness centers. Because we were solving problems for swimmers as well. And a hairdresser from Beverly Hills called the phone number on the back of the bottle. She had bought our products in one of the pro shops in Santa Monica, California. And she asked me if she could start selling the products. She wanted to sell it in her salon. She wanted to use the products in her salon, and she wanted to sell the products in her salon. Because she had a demand. She knew what they were asking her for and she was using it herself. And so that's when that was our first entry into understanding the salon in specific. And the value of it. And what we learned is we needed heat for our treatment. If you want to solve a problems with most of the conditions that we're solving problems for, for the hair, most often you need heat to open the cuticle so we can really get down in there with all of these wellness ingredients, right, that do the job to revitalize that hair, to be sure that there's nothing on that hair that's actually foreign, that's usually attached on like a magnet, just mostly from water, you know, keep in mind, 50 years ago, women didn't really have much of a problem with this issue because they were only shampooing once a week. The issues are current because women and men, our lifestyles changed. We now are shampooing so often and we're experiencing twice a day, sometimes three times a day. And every time you're standing under that showerhead, that warm water is forcing in warmth. The heat opens the cuticle. So, if there is something in that water that has a positive charge that can attach on to the hair, because that hair is usually charged negative, especially hair that's been in a salon, because if it's oxidized, I get the oxidation peroxide color bleach, all those words. It's all about oxidation, all right. That causes the charge of the hair to go more negative. And so, when those minerals that are in the water attach on, they actually start covering the protein of the hair. Well then if you start trying to color, you're not coloring the protein, which is what you want to get down to your coloring minerals. And this is, over 80% of the United States according to governmental statistics, have hard water. Or water with calcium. Magnesium. The other metals that affect copper ions. Most of it's going to attach on to the hair. Well, if you're trying to color, if you're trying to perm, so that's the reason all of a sudden we realized, oh my goodness, the salon we have to be needs us. But we need them because they have heat. So, it's a combination of heat, friction. It's the friction is to be sure that you're working through those layers of rock because, you know, think about.
Edwin Veguilla: If you had a sidewalk and you were trying to remove something from that sidewalk, you put a solvent on there, just left it, like a star or something like that. You put it on there and just walked away. It's going to take a long time to work through it. But if you get on there with a little bit of friction, like you said, yeah, you're going to be able to get those ingredients to work it down faster. So, you're absolutely right the longer you work it. And so, when we say friction, it's not friction. You're not going to rough up the hair.
Tom Porter: Yeah, it's friction. You just want to work it in. Because you're going to work through those minerals without all of our wellness ingredients. So, the first place was a beauty supply, first beauty for salon supply and also pro shops. So, combination of dive shops okay. Because those people are in pools. Those people are in the ocean. It was a water issue. I built this concept on the water issue.
Edwin Veguilla: Walk me through that. What did it look like when you where you have built, you have products everywhere. And I'm trying to get a visual. Are you talking about a warehouse? The garage? And then, like, what did your schedule look like when you were? Because I remember you were working within one of our conversations like it was 24 hours a day.
Tom Porter: It was just no schedule. It was also not so deliberate that I could tell you a formula. It was more figuring out as we went forward. I will tell you, the biggest break I mentioned, the dive shop. So, I mentioned the gal who called and that got me into understanding the salon industry. The owner of the dive shop actually wanted to invest money in the company. So, he became an initial investor. So, Bill and then. Well, this gentleman there is about, there ended up a period of time after that $5,000 probably. I'm going to guess. Months later. I realized I needed additional money. We're only talking about $30,000. In hindsight. Yeah, these people that put in 1000, they have already most of them experience their return. And it was significant and I'm really proud of that. That's very important for us. And the company was at a time when we could actually acquire those back. And we set up a trust for the employees. So, our company now, Malibu Wellness Incorporated, is owned by the employees through a trust called an Esop or employee stock ownership. So, when individuals are buying products of Malibu C or any of the other products that we make, it's the employee is getting the benefit that are getting benefit. That's important to Deb and myself.
Edwin Veguilla: And to add to that, the stuff is made here in the US. If you haven't caught up to some of the other episodes, we're right here based in Indianapolis, Indiana, maybe we could some time do some video, maybe you could share.
Tom Porter: And when people do come to our operation and want to see the operation and when we can actually periodically we do tours. And show how product is actually made. It becomes real and the vats we're cooking, we're actually making product in large vats instead of a blender. It's nothing more. The week when we interview a cosmetic chemist, one of my very first questions is do you like to cook? And I will promise you that not one cosmetic chemist has ever been hired here. That said no, they didn't like to cook. Because if you don't like to cook, you would not really make a very good cosmetic chemist. You got to like to essentially build recipes yourself to be a really good cosmetic chemist. Otherwise, you're just following a recipe. I like the cooks that like to create their own dishes. Because that's what's made us so innovative. Is your own creativity put into that. We take the information we have, get creative when companies come to us because we also have the division where we private label many of the largest companies in the beauty industry. We do that because people come to us. They understand the integrity. We understand compliance. Which has become a global in our world and we're a local. So that's compliance because we have to be compliant all the government. So, we're the creative ones, you know, the old, I've heard a lot of good phrases, you know, we don't necessarily imitate. We innovate anyway, but we can imitate. We understand how to do that. People will bring us other products and say, we want something like this. So, we go at it and try to provide them and then let them customize it to make it more to them and what they're looking for.
Edwin Veguilla: Okay. So, walk me through is I want to get a clear picture for me and for our audience, for our watchers of that initial period that it's so critical. There's a lot of companies that have been fairly new companies to that are going through that same process right now, and it's probably where most companies end up going under because it's a hard to see the big picture of the future.
Tom Porter: So, I would tell you and I've said this as recently as yesterday, we had a board meeting yesterday and I said to both the shareholders and in the board of directors meeting, I am glad that we're not starting a company now. Because the challenges when we started the company, there were less guide lines, less rules. The world allowed for more opportunity and allowed for more mistakes. Now everything's so visible. Everything is more built around compliance and regulatory. The what's happened in the state of California, for example, which all states are now having to, sort of respect, is that prop 65 is requiring that the retailer that is the salon that is the beauty supply store, that is the department store, wherever your product is being sold, the scuba shop, you know, the dive shop, any shop is now responsible for being compliant on all ingredients or they cannot sell it legally. I do not know that that burden used to not be on the retailer. The burden was just on the manufacturer. The store owner was like, look, I don't know. I'm selling it. They're the ones that have the liability insurance. I'm just selling it. Well, prop 65 said, no, you're not just selling it. You're liable. Also, you're liable also. In fact, you're the one that's the most liable because you're the one selling it to the consumer.
Edwin Veguilla: Oh, I did not know that.
Tom Porter: Yeah. So that's changed our world because now not only do we have every government for every country we sell in for same mandating us to be compliant with their rules, which are all different right now. We have within the United States every certainly the ones that are most concerned are the chains. If you've got a chain of department stores, JCPenney's of the world, for example, Regis corporations, Fantastic Sams, big chains, big companies and distributors. The distributors have to know that we're compliant. So, they've got to have all the documents because they have to provide them to the salons. If the cell line is filling up and everyone has to, and the manufacture the one that takes every ingredient you guys and puts it in, we are the source. It is our responsibility to know everything about that ingredient, everything that happens to that ingredient, to the best of our knowledge, based on our research.
Edwin Veguilla: And you're saying that back in the day, it wasn't out back in a decade ago, that it's gotten more over the past ten years than in the past ten years.
Tom Porter: And in the last three years, it has become. And it gets worse and worse over time. I'm not going to say worse and worse. That's not the way I characterize it. More and more responsibility, more strict. Do I think it's bad? I think it's a lot of responsibility.
Edwin Veguilla: We're doing so many chemicals to the hair now, especially even cutting it too, because if that was to me, it will, where you're cutting through rocks at the moment that you explained to me, I was like, it makes so much sense why everything goes down so quickly.
Ton Porter: Actually, in this area, you work in the central Indiana area, you've got over 500 parts per million in most of your client's water. And when you're cutting, it also affects your cut line. That's where you do a Malibu makeover. You will see the cut line. So that's one reason I tell people, just be aware when you get that hair and get all those mineral cells, if you cut that hair with minerals, you don't even realize really what the natural hair is.
Edwin Veguilla: And so that's part of the reason the concept works. And that's why we are going to be and so proud that we're going to be the first in the men's market actually doing that before every single hair salon. Every single haircut. We will be doing Malibu treatments before to make sure that we have a flawless clean canvas every time. It just makes so much sense. It's it just it's so, to me, logical that you would want to know every hair types, different, different conditions. They come from different conditions. Their lifestyle is different medicine. I mean, there's so many components to that and ideally you want to do a profile on every person. What do you do? What do you take?
Tom Porter: They're not going to tell you most of it. Or are you taking recreational drug. They're just not going to, you know. But it could be in that hair, or they may be on blood pressure medication. They don't want to tell you that. They don't want you to know. You need to not worry about having to know their lifestyle. Do they swim once a week? You just need to know that you are preparing that hair all right for every service, including the cut. You don't have to do them too well if it benefits their results. Yeah, they don't know why you're better. You may not be the best colorist in town, but the color you put on there is going to take better. It's going to be more deliberate. And they're going to love their hair afterwards. And I've seen it time and time again.
Edwin Veguilla: So, let's go back to that journey of the garage I want to and I keep saying I really want that really clear and, more for me and our audience. But because that's the stage I'm at right now in a way, and eventually probably even deeper into that stage of actually having products laying around in a garage at some point when I when I get ready to cross that bridge. But how often do your week? Because I remember the one thing that was stuck with me and I still reference that is when you were telling me that, every single night, after a long day of working and going around and basically meeting people and what that looked like every single night, you would look at them and every night turn into it.
Tom Porter: Be sure that everyone understands. Because Deb and I were partners. And because she was such the support system, to be sure product got out the door. If somebody called because you're right, I would be out and we'd be lying in bed and all of a sudden instead of falling asleep Deb did you get it? Did you do this? Did you get, and it became a curse word. Just the sound of did you. Yeah, no, I did, I did not, so did you. We try to avoid that sound now, you know it is. We use it so much in my house that now I even do it just to get my wife's attention. Did you? What? Did I miss something?
Edwin Veguilla: So, yeah, that part was like the moment you sound like. Oh my gosh, I can relate with that so much. And I'm sure those of you who are watching this can relate with that too. So, through your week, how often were you like getting up early, going and meeting people like you would just walk into places making cold calls out of that? How did that function? Like how were you managing all that? All of the above?
Tom Porter: I can't tell you. Again, I cannot tell you the regiment because it never was consistent. What I will tell you, though, is pick back up to give you an example, because things just happened. I mentioned the scuba shop, the dive shop owner that became a shareholder. We went off and talked about a little bit about shareholders. He sold the swimwear under the brand name of arena. Arena was the number two in the US behind Speedo as swimwear for competitive swimmers. He got to know the marketing director of Arena, who decided they wanted to make products specifically for swimmers and sell it. They approached me and we ended up making products under their label, Arena, which became my first big account. So, my first big account was not even my own products. What arena came to us and that became a bigger volume. At that time, I had no idea. What unfortunately, what happened is, arena got sold. And the new company did not want to. They couldn't take that aspect of the because of some agreement they had in their laws. So, they couldn't take the personal care products. But that was years of volume and revenue. That's one of the breaks through our journey. There have been both breaks and tragedies. Both have been significant. And both we've had to maneuver through and both we've had both the opportunity and challenges to maneuver through.
Edwin Veguilla: What was the name of it? What was the first when you guys not arena, the first name, when you guys actually made the company? What was it? C?
Tom Porter: C-Free enterprises.
Edwin Veguilla: I see that was the name of the corporation, C-Free Enterprises. And this was what was branded under in your garage.
Tom Porter: And the problem was when you put a big C and the word free next to it and you're selling it, people pick it up and ask, is this free?
Edwin Veguilla: You're lying.
Tom Porter: I'm not lying. Have you ever tried to sell something that screams free? Not the best move.
Edwin Veguilla: And you had everything branded already.
Tom Porter: It's the name of the corporation in 87, 88, we introduced Malibu Tanning Sorbet. It's what led to Australian Gold's formulas. Malibu Tanning Sorbet is our lotions and potions for tanning and managing tanning. But what was happening is in those years, because tanning beds were such a rage, what was selling the most were tanning, accelerators. So, I was making products to accelerate the oxidation with Malibu C technology.
Edwin Veguilla: Not the ascorbic acid part.
Tom Porter: No, just the opposite.
Edwin Veguilla: So, you created that yourself?
Tom Porter: Yeah. But what was happening is the accelerators, which were line extensions not using the vitamin. So not an antioxidant and oxidant. It wasn't oxidizing, it just sped it up. It was oils, rich oils go back to the old days of mineral oil and yeah and then being in the sun. So it accelerated how much rays you would get. Well, it took me about that long to realize this is just the opposite of what I'm trying to do. The products that are being sold the most are not the protective ones, and this is really pretty much before sunscreens. Sunscreens were just coming onto the market. So, we were selling and making money on was accelerators for tanning beds. People were just buying it up. And I literally decided, I can't do this. And we were selling a lot.
Edwin Veguilla: It goes against everything that you like. The company is everything against you, like everything.
Tom Porter: Well, we know it's good for the skin, but what we didn't realize is the amount of acceleration it would do if you used it and went in a tanning bed. It would speed up the process. So that's how it became used. So that's the reason we got out of it. And that's when Australian Gold, exactly the same year that we decided to back out Australian Gold discovered our products and discovered Doctor Ault and his company, Vida Chlor, started making products right here in our headquarters. Vida Chlor started making products for Australian Gold, and that's who made all of their products in the early years.
Edwin Veguilla: So Australian gold was born because of your smell that, if you smell the early Australian gold.
Tom Porter: That was my orange sorbet. But what's interesting is they started selling much more. They started selling much more, obviously, because we got out of it. They were the biggest distributor of tanning beds in the United States, European tanning systems. Trevor was brilliant. He saw that he was selling the bed. He needs the products to go with it. And he did an excellent job. But it all started, you know, at Vita Chlor in our original formulas, it was all the R&D was done on my products. I paid for that R&D because bottles would, start paneling, as you call it, because some of the ingredients that wellness ingredients we used, it just caused the resins to change a little bit in the pages. So, I spent a lot of money learning to get to the best products to sell it. And Australian Gold benefited from all of those. Opportunity. You know what I mean? There it is. Now you can find it in oh gosh, at Walmart. All major, but here's the part of that story that tracks back. The name is Malibu Tanning Sorbet. Well, the phone started ringing more and more and more. They remembered Malibu. But they didn't remember C-Free. And all of a sudden, it was like a light bulb went off. And it's like people remember Malibu and we're in Malibu. We started the company in Malibu. And so, we have now acquired many trademarks that have the name Malibu.
Edwin Veguilla: So that's why you name the Malibu?
Tom Porter: That's how it led to Malibu. But again, I think what you're bringing out of me is realizing, I think you may have made the assumption that a lot of what we did was deliberate.
Edwin Veguilla: Yeah, I in my mind, I thought you guys incorporated as Malibu C and just started building from there. Yeah, I had no idea how many bumps and changes and downs and like, you guys went through even crazier.
Tom Porter: C-Free got changed in Malibu 2000 because 2000 was, in my mind, a long way. That was futuristic in those days when it had 2000 attached to it. That was like Star Wars, because our generation 2000 was a big you know, it just sounded like the future. Far away. So far away. Well, we got there pretty fast, and all the stuff in Malibu 2000 sounded like a has been in 2004. And so that's what's interesting is we had trademarked the name Malibu C back early on in 1989. It went from C-Free to a big C to Malibu C. So, and then Malibu 2000. And then we created a brand called EC Mode. EC Mode happened because quite honestly, the Sally Corporation, who had bought most of our distributors around, especially in the Midwest, which were very key distributors in the beauty industry for us, they wanted to put Malibu C in their Sally division, and so we agreed that we would create a new brand for the hairdressers called EC Mode because it's easy. It's very mini vitamin C, it's you want to get in the mode. And Jane Seymour, who you would probably not recognize her name, but she was Doctor Quinn, medicine woman. Yes, she lives in Malibu. We had a friend that we shared, and they put us together and she became a spokesperson for EC Mode. Well, I learned two big things during that attempt for transition. Sally's and I both learned the hairdressers wanted Malibu C, they did not want an EC Mode, so it was already branded and we didn't know it.
Edwin Veguilla: How did you do so? How did you find that out?
Tom Porter: It took us three years to realize. The sales were not in EC Mode, and they were upset with us, both professional hairdressers and salons were upset with us. They wanted their Malibu C back. And we ended up taking the products out of the Sally Division and putting it back into what is now Beauty System Group, BSG, known as CosmoProf. So that is how that evolved and how the name has evolved.
Edwin Veguilla: So that's crazy to think about how long, we're talking 15, 15 years, right?
Tom Porter: 2004 is when you changed it to, I don't remember the exact year. About 2004, 2005, I went back to Malibu C. So, what happened is Malibu C actually went into the competitive swim industry, swim shops. You would go because we just let that swimmers brand exist under there for years. And Malibu 2000 was sold in the salons. That's what went to Sally's. Malibu C stayed in the swim shops. What's happened is there's not as many swim shops as there used to be used to be. There were a lot of very, very valuable that sold the Speedos, the arenas, competitive swimwear. The competitive swimmer is buying their products mostly online now. And so those poor swim shops that built that whole industry, those mom and pops, there are just not as many of them. So, Malibu C came back to the salon industry. And that's how it's been ever since.
Edwin Veguilla: So, when you guys were first in, in that process, going back to that Deb was working full time because she had a she had to get a job.
Tom Porter: Yeah, she was, if I'm not mistaken, she was a, she worked for a recruiting company. She was a headhunter. She was able to manage her own schedule now. So, she had a 9 to 5 basically. And it was a solid 9 to 5. And then in the afternoons and also we got to where because her wages, we had to not just pay and help us for food. She, we use some of that money for babysitter, so that he had some provisions outside of me taking care of it. But I was available. I'm the one that would often pick him up or drop him off. She tried to do that on the way to work and pick him up back coming back. But one day she came in and just was so clear and said, I don't want to do this anymore. I want to work with the company.
Edwin Veguilla: And what was that moment? What was that part? Well, how long did didn't take or how long? How long did it take from you starting in your garage to her saying that?
Tom Porter: I'm going to say three years, so, so three years probably.
Edwin Veguilla: Wow. I'm going to guess she wasn't doing the recruiting the whole three years?
Tom Porter: Yeah. Because she was an aerobics instructor for fitness. But, she also has a master's in personnel administration and career counseling. She's very good. That's been very helpful to the company. She is better with hiring personnel than I am. She reads people so much faster. I allow people to be whoever they want to be. And I said in an interview and try to talk them into why they would be good for the job. Instead of them talking to you and telling themselves, I'm enabling them and, you know, empowering them because in my mind, I could see why they wouldn't be good. When in the fact she can look at them and pretty fast go, nope, nope. It's not a good fit. Not going to work. And so, Deb's really, you know, that's part of her background. So that was her company career to fit. So, she kept doing that. And with resumes on the side, you know, so there were various ways that we were resourceful.
Edwin Veguilla: So what point was it then because one of my favorite stories, since I started learning more about the origins, as I call it, of you guys starting the company, is her taking calls and changing her voice.
Tom Porter: So listen to this. She would because they needed a theme and appear a lot bigger than what they were at that time frame. Someone would get a phone call, right? And she would get a phone call, and she would answer, you know, how can I help you? And they would, let's say that they wanted to check out an order. I put in an order last week and I haven't received it yet. She would say just a moment, and she put them on hold, and then she would pick up the phone and, completely different voice. Hi. I understand that you're looking for an order, you know, tell me what order number it is. And she how she would play the roles of what if it's customer service? She would put on hold and she would pick it up and because in the beginning, she did maybe not have said her name. So now, hi, this is Deb in customer service. Can I help you? But if she was Deb in customer service and they had a question about orders. Yeah, she could put them on her. I mean, you know, it's part of, it was no line. It's no understanding as best we can how we're being perceived. And it's, you know, the one thing and it's not just the beauty industry. The beauty industry is image business, 100%. And the reality is all business at some level is what image are you projecting? And that's even within an organization. I try to help our team members realize they're all branding themselves smart. So be careful with what you know. I recently had an individual say, I'm going to be me. And, what ran through my mind is sometimes that may not help your image. Because I know what you've told me. The image that you want to be. I heard what you said you want to be, but that behavior doesn't coincide. Helping you brand yourself and even that person, you know, I've watched mature into having so much more control. I don't care what people think of me, you can have that attitude, but it might be a better attitude to try to manage to your best of your ability how they think of you. Because I think we all can become who were labeled to be.
Edwin Veguilla: Yeah, you may not see yourself a certain way, but if everyone else sees you that way, they're going to treat you that way.
Tom Porter: And if eventually you're going to be that way, whether you choose it or not. And perception is reality. Deception is real. It might not be your reality, but in somebody else's mind. And so, it makes it reality on your present day. Reality makes it real.
Edwin Veguilla: So, then what happened after? So, you she's managing all this, you guys, she leaves her job and you guys go full blown full time nowadays.
Tom Porter: Technically, she was the first employee. We were the first two employees. No question.
Edwin Veguilla: Okay, so what timeframe after you guys go full time? What time frame did it take for you guys to get somebody else to help?
Tom Porter: Oh, Deb actually went back to work at it may be actually, in the period when she was working as a recruiter, we hired a person because she was the first employee, but then she went out, got a job. We hired someone else to be involved because the phone was ringing more. Things were starting. Especially after the arena account. Things are happening. This is four years in 3 to 4 years, and I think at least 2 to 3. I should say 2 to 3 years is our first. Now we had I remember the first employee, interesting story, our first employee. And here we are in our front bedroom. It's our office. We have the warehouse, which is a garage. And Deb would still be involved in shipping when she would come home from work. She still helped do shipping at night. I mean, when we had orders for late nights on a lot of late nights, we spent a lot of nights in the garage. But this first employee, after about 3 or 4 months, one day we received a piece of mail and Deb could tell the story better. What I think is that there was a message in there about a card that Deb just bought about a car or a car automobile. Oh, and that raised red flag. There was either like a car or some major purchase that she had just made. We found out this employee had stolen her identity.
Edwin Veguilla: Your first employee stole her identity.
Tom Porter: That was quite a challenge to unwind. So, you know, I hadn't even thought about that, but that it was our very first employee, so. Welcome to personnel.
Edwin Veguilla: Which in our first meeting that you and I had, I asked, just like Tom, what are some of the ways you hear this? What are some of the things that I should kind of be aware of? What are some of the biggest challenge? And without a doubt your first thing was like personnel, personnel.
Tom Porter: You know, personnel is going to be your biggest satisfaction and as you said, and your biggest, biggest asset and your biggest headache and challenge as well, and it is true. And it's still that way in business. Because we human beings, we are a complex. Groups of characteristics. And to try to create an organization out of so many different variables and personalities with personnel and systems and, you know, though, what's been a real asset for our company is the number of cultures in our company. That's very true. Our company has at least eight cultures represented in the employee base, 40 plus employees that been through the history and been here for years. But we have people from all over the world. And I think that adds to one of the strengths of our company, because it brought perspectives that Deb and I would not necessarily have had a global perspective.
Edwin Veguilla: So makes sense why you guys have been able to go into that. You had visions already from different parts of the world in a way different perceptions to say, and it helps you guys to be able to be relatable in other markets. They, the employees of this organization are the strength of this organization.
Tom Porter: Yeah. And that's the reason Deb and I feel confident that as an Esop, as an employee stock ownership program, that's the reason, you know, I have such confidence in the organization in the future of the organization, because the employees are running and managing the process.
Edwin Veguilla: And that was so inspiring for me because in one of our first conversations when we were talking about business and ideas and you said, what's your exit strategy like, what are your thoughts on leaving? And I said, honestly, my thoughts are now is doing exactly the same thing you're doing is passing it on so that the team that's helped build the business and the vision with you gets a piece of that.
Tom Porter: Also, I appreciate that our government. Nonpartisan program, both Republicans and Democrats support the Esop program. And I'm a big advocate for owners who realize the opportunity to pass it on to employees. And it's a program that just has so much potential. You know, both the owners, the employees the government wins. You know everybody wins. So, it's a program that's worth considering. And some of the best companies are actually employee owned. As the culture is different. You walk in when you walk in here and you talk to someone, the way they interact with you, they feel almost more empowered. In a way. They feel like there's more here. Part of like, this is mine too, and they're more protective, you know, which in a way is a good thing, as we have learned as we're starting our projects, you know, they're protective of how the companies perceive their project. They want it to succeed. Let me share with you, as you say, the words that you just used about feeling like they're owning it along the way. Another employee, what we, Deb and I got to the point where we with the people that were saying, I feel like it's mine, are the ones we found that figured out a way to embezzle because they really thought it was theirs. They started taking themselves seriously. And we had one employee that took that attitude and darned if within one meeting in one hour, I discovered in 2005, wow, I believe that I had lost $1 million in asset on my books, and I owed a boatload of money to a lot of people because this individual that was responsible for that was doing some things backwards. For example, the way they were doing the books, they were making them assets instead of liabilities, which had to be reversed. This person was embezzling. This person was not paying the payroll taxes to the government in spite. And this is what I do know for sure. And I know this is in 2005. So, this is right in the middle. Right in the middle. Lost $1 million I found out in one day. I immediately had to change number one. I had to learn my accounting software I didn't know I was ever going to have to really learn the software of my accounting package, and I could have died, and at that time not cared to. I have to learn that now. Of course, now I can't imagine not knowing my accounting software. But fundamentally, every owner needs to completely understand the accounting software they have because it is the structure of the company. So, I thought somebody else knew it better than I did. I trusted, I'm a real trusting guy. I will let people be anyone they want to be, and I will believe they're doing what they tell me they're doing until I discover different. I think that's one reason. Fortunately, I have so many friends. Because I don't, I'm not one that rejects easily. I'm pretty open and inclusive. So, I've got a, you know, a lot of friends in the world. Because I'll let everybody be who they are, like I told you, or. You know what I mean? I was the worst therapist in the world because of that.
Edwin Veguilla: Okay, so that's hilarious.
Tom Porter: So, what ended up so one thing that I live by that you just mentioned that trust but verify.
Edwin Veguilla: So, what ended up happening to that person?
Tom Porter: I'm assuming I trusted, and Deb verified. So how did you find that out? Because they want to hear your side.
Tom Porter: She left the company. This is when I had a different president. I was CEO. Now I hired a past president of a company called Goldwell.
Edwin Veguilla: Goldwell color?
Tom Porter: Yes, the president of Goldwell became the president of Malibu C. And, the person that was the accounting director at the time, she called me one day after years and said, I don't feel I can work with him any longer. And she left. So, we brought in an outside person to tell us, well, what do we need to do? What should be the responsibility? So, this individual reviewed all of our books and saw, well, where are you right now? You know, kind of took and fleshed it out and analyzed where we were and said, I'd like to talk to the two of you. And he talked to the two of us and proceeded to explain the million dollars of adjustments on our books, how much money I owe today the IRS is at the door. She had been getting all the mail. That's the one thing I would have asked of him to do different. Is not allowed her also to grab the mail. Take the mail every day. Warnings were coming in, but she's the one that was seeing them, and she was just tearing them up and throw them in the trash can. So, all these threats were coming in to the company, I guess, if any, if I were listening to myself right now, what the lesson that I learned during that is, you know, because people always tell me, Tom, you always have to have control. Tom, you're such a control freak. You need control. Well, clearly, I didn't have enough control during that time. I learned and probably became more a huge lesson. It's a huge lesson for all of us because I don't think I was a control freak. You know, I never have considered myself a control freak. Now I realize it's not being a control freak. It's taking responsibility. Yeah, that's what it really is. And having awareness because you don't know what you don't know.
Edwin Veguilla: That's right. You know what? You don't know what you don't know. And if you're not aware of what's going on, how are you going to solve that issue? And so, while so that was obviously one of the huge challenges you overcame. So going back to the early years, what point did you guys move out of the garage. And I don't even like I don't know how you guys got here to Indianapolis.
Tom Porter: I can tell you very quickly, the year would have been around 1990 ish. So, the company had been about five years old. And I hired an employee in Muncie, Indiana, where Doctor Ault had his little operation. He was in Muncie, Indiana, and he switched our shipping new product to Ocala, to my garage. Now that's how we have grown.
Edwin Veguilla: So, you were kind of like a distributor at first of the Malibu.
Tom Porter: Which is what most companies in the beauty industry are. Most companies do not make their products or companies like mine. Do I make products for companies that they put in their warehouse and all they really are is a distributor. But you and all the other hairdressers. And even consumers call them the manufacturer. They are not manufacturing anything. They are a marketing company. I had no idea of that. I learned. So, in the beginning I was a marketing company marketing my brand. I hired because we outgrew the garage. The product was ringing off, ringing, and that's where we needed to be hired a shipping clerk and rented space in Doctor Ault's little garage in Muncie, Indiana. And a woman was our first employee in Indiana, and she was our shipping clerk. And we were on the phone with her every day. And that's the early years of fax machines. And that was high speed communication. We had no computers. Yeah, there was no computer communicating. You were faxing orders between each other. Well, and on the phone, explaining it and being sure that everything went out right. Did it go out okay? I mean, this is the way we started the company. And then in 1995, Doctor Ault decided to move his operation to Indianapolis. Do you know why?
Edwin Veguilla: Expansion. He was outgrowing his operation, too.
Tom Porter: We were both growing beyond. And we had reasons to be optimistic. He had more reason. He felt. So, he came to actually the facility where our headquarters are today in 1995, Malibu had our warehouse about three miles away. We weren't part of this plant. This is just where everything was made. This is where we did all the R&D. But I was still just a marketing company. I would come in, I have been very fortunate, and we tried to move back here. We tried to sell our house. We did ultimately buy a house. We were able to buy a house in 1992. Things were cranking. Things were pretty good. And the guy who was our, director of finance told me, fortunately, he said, I think you need to buy a house and take a clump of money. And it was one of the smartest moves I ever made because it became the asset that for the rest of the history of the company, ended up taking care of all of our early loans because the house in Malibu was appreciating. I probably bought the least expensive house in Malibu. Because I couldn't afford a house. I had a big one for the house in Malibu. I just afforded a house in Malibu. We loved our house. Yeah, it was in a fire zone, but we loved our house.
Edwin Veguilla: Is that the one that you guys lost?
Tom Porter: No, that's the one we left because I wanted to get out of the fire zone. So, we bought a house at the beach because we knew we wouldn't burn there because of the water. And that house burned down November 11th.
Edwin Veguilla: So, are you telling me you moved out of the house because you didn't want to be in the fire zone? To be in a house next to the water?
Tom Porter: Oh, right next to the high school where your engines come. We're at the beach. There's no way we'll lose this house. And darned if one just did. One year later, a major Malibu fire and over 600 homes burned to the ground. And we were sitting at the beach. Even had to evacuate. We always thought we could go to the beach if the fire came. It became such a heavy inferno. It was called a firenado came on to the beach and out over the water. Now we went three lifeguard towers down and it was blue sky. We were out because the winds were taken.
Edwin Veguilla: You guys were there when this happened?
Tom Porer: Oh, we were there. We were there. We had pictures. We lived it. I was filming what I thought could be our house burning. And three days later, after we had to get out of there, evacuate. We can go find a place to live when they let it. Well, they didn't even let us back in. A friend loaned me a fire uniform, and I snuck in as a fireman so I could see my house.
Edwin Veguilla: You stuck in as a fireman?
Tom Porter: I had to get through the lines to see what happened. We had also, unfortunately, the fire had come and our car ended up behind the fire line. Deb's car. And so, we had to come back for it. I needed to get in there. I needed to get, my car survived, and I need to see if my house survived. And we had heard different things of people that had gotten in there. Whether we watched the news show in our neighborhood, we thought we saw our house. What we saw was our foundation. We realized that. So yes, we lost everything.
Edwin Veguilla: So, you went and you try to salvage things. You can't find anything. Everything was gone at that point.
Tom Porter: Yeah. That's a podcast in itself.
Edwin Veguilla: So, we'll get to that.
Tom Porter: Yeah. We've kind of moved forward that's current now. And we'll definitely revisit that I want to talk more about that. So, going back to that story. So, they told you they tell you buy a house here. But you bought one in Malibu. Now they told you just buy a house.
Tom Porter: The company was being run in Malibu. I had my accounting department, my marketing department, all the customer service, everything but the warehouse. The shipping was done in Malibu. And over time, it became clear to me that I needed everything more and more centralized. So that's in 1995 when I started moving employees. Our director of finance, for example, moved his family here to Indianapolis. And that's where we started building the company, even though I stayed with an executive office and kept the marketing in Malibu up until this past year, now everything's here. I no longer have the executive office. We have the academy instead of our executive office. Everything is in Indianapolis as a headquarter, and pretty much all of our employees are based in Indiana and that was just for the simplification of just keeping everything closed. I don't know that I call it simplification. It's efficiency. And it wasn't really about what it was close to Doctor Ault, which made sense because the shipping to ship it three miles away, we could go and put it in a truck. We had a truck. We just come pick it up, take it over there to ship it to California, which was my other option. Didn't make sense when my biggest market was in the Midwest. Why ship hard water? Because of why ship products to California to only be shipped back to the Midwest. So, it became really just, it didn't take a very smart person. I soon realize that that's where it should be. And also shipping central to the US also, people in California, in Los Angeles, especially in Malibu. I'm going to give you a very overstatement, but everybody's on their way to somewhere else in California. Yeah, everybody wants to be an actor. To be a something. They're all on their way to somewhere else. I felt like in California, except for a few employees. People were there just to step up to another something. That was their mentality. You couldn't really retain a good team. It's more difficult to build and retain a good team there. It's not easy in Indiana, but it's a lot easier than there because more people are there and not looking to go somewhere else to be something else. Most people came to LA to be something. There were not a lot of people, there weren't a ton of available people that grew up in Malibu or LA. So, then the company would become like a stepping stone for themselves. And that's not a good employee to have. I need long term. I need to build an organization. We have, you know, 20 years, ten-year, 15-year, 13-year, 12-year. Our team has been here a while.
Edwin Veguilla: Yeah. So then how long? Where you move everybody here. How long did it take before you went? Because that's a part I'm so confused. You went into manufacturing
Tom Porter: Right after that because I told you, in the early days, you need to go into manufacturing but realized I was perceived as a manufacturer. You're called a distributor because I own the brand. Just like most of the brands that, you know, in your salon. They're nothing more than a distributor and a trademark name. They don't make products. They are not a manufacturer. But you call them the manufacturer. Who's the manufacturer? Oh, this brand? No, they're really not. But the industry and consumers perceive if it's a brand that they're making it. Who's the manufacturer? That brand name. Well, so we were the manufacturer. And Bill Cook was encouraging me to be a manufacturer. And even though I had someone else make it, he knew. And I knew that is still the role of a manufacturer. But it wasn't until Dr. Ault passed away. And then years later, that company, Vita Chlor, which became a signature brand, no longer existed. And I had the choice of either making the products ourselves or having someone else make it for us. Bill because it was, he was making everything here. But unfortunately when they went out of business the bank had an auction and sold every single thing in this building. They took the copper pipes, the bank wanted everything from buying a gold dime for whatever reason, the bank had an auction, and this place was stripped and laid empty. For five years, no one even occupied this building after Vita Chlor. We built the products over in our warehouse three miles away. We set up our own little factory.
Tom Porter: Now, I bought some of the tools and equipment at the auction and took it over to my location.
Edwin Veguilla: So, if it wasn't because Doctor Keith had everything here?
Tom Porter: Yeah, but I wouldn't have had our first day meeting him. I mean, so he goes all the way back. I mean, tracing that back right to the very core in the beginning.
Edwin Veguilla: So, then you guys basically now you are busy with high demand, higher, higher demand.
Tom Porter: Now we're a real manufacturer. We're making it ourselves. And Dilip came on board at that time along with, because he was no longer a Vita Chlor. So once Doctor Keith passed, Dilip, joined the company and was the chief chemist. He was left without a job, basically. Well, he could have found a job, and he had offers. He definitely could have found a job. He was part of this. And he's is part of the soul. And he, the reason we're actually in the building that we're in. Because when we outgrew the facility three miles away, Deb and I decided maybe we would buy a building. So, we were either going to buy a building or rent a building and went around and this building was available. It had been empty for five years. But Dileep had told me over and over, don't even consider it. It's not a good building. He had a lot of reasons, but never it was always just, I don't know. But what he left with knowing the Dr. Ault past and knowing the way that it ended. It wasn't a good vibe for him at the time. Well, darned if he didn't have a dream. Doctor Ault came to him in a dream. He told me about it. One day he says, Dr. Ault came to me a dream and said we need to look at that facility.
Tom Porter: I said, okay then let's do it. We went and looked at the facility and as I told you, it was completely stripped of everything. Well, darned if walking through Dilip opened one cabinet. Everything was empty, but there was this tin old tin cabinet and darned if Doctor Keith's apron, his lanyard, was in it. And that was the sign to all of us. This is where we should be. And that's how the decision was made.
Edwin Veguilla: My deepest thank you to Tom for taking the time to share his incredibly inspirational story with us. I am closing this series with a very special song that Tom wrote and recorded back in the 1970s. This is the message that he continues to share with the Malibu Wellness team, his family, me and so many others who've been inspired by him and his journey. This song was written by a driven young man during the initial stages of his journey, when all he had was a will and determination to change the world. Take a really good listen to the lyrics of the song and let them inspire you to make your own dreams reality as they have done for me. And remember, live your life the way you want to remember it.
Music: I live my life the way I want to, remembering I live my life the way I want it to be. I live my life the way I want to, remembering I live my life inspiring memory. My life is becoming routine. Reality once only dreams. It's so good to see that I am indeed living up my mind. To see. I live my life the way I want to, remembering I live my life the way I want it to be. I live my life the way I want to reference. I live my life inspiring them all free I won't run, won't you regret the things that I haven't done yet? I now realize after so many tries go over and that's what I can do.
