In the current world of infinite choices and instant gratification, I’d like to see more people commit and take some risks. Example: People browse Netflix for 30 minutes, can’t decide on a show, then fall asleep. You can begin to see a similar mindset in their life decisions. I ask people commit to an idea or project for an entire year, see it through and see what it can become. Life’s greatest feelings are on the other side of fear. Try that new job, start that company, ask that girl out. Live life without regrets.
I had the pleasure of interviewing Tom Fallenstein. Tom is the CEO of Fun.com, an $80 million online company that focuses on Halloween and pop culture gifts. They own and manage Fun.com, as well as HalloweenCostumes.com. They currently have 170 full-time employees and hire over 2,000 for the Halloween season.
Thank you so much for doing this with us! What is your “backstory”?
The company began as Costumes Galore back in 1992 when my sisters decided to rent out the Halloween costumes our mom had made for us while growing up. They rented out every single costume during the first year. This became a local rental business that peaked at roughly 500 costumes. My sisters and I would run the store out of our parent’s basement during the weekends in October.
Around 2001, I was going to school for Computer Science and decided to begin building my first website (flappercostumes.com). To get the site started, I borrowed $5,000 from my parents. The site consisted of one costume in three colors and all of the inventory fit in my college house closet. I built a few more sites during college and upon graduation in December of 2004, the business was doing about $40,000 in sales. However, there was hardly any profit due to those funds going solely towards buying more inventory. Following my passion, I decided to try and make the business my full-time career (although my mom was pushing for me to get a “real” job).
The business exploded in October 2005. We went from $40,000 in sales to $250,000, while still operating out of my parent’s house (which I had completely destroyed). I had to unplug the phones because I couldn’t take more orders, while still getting everything out on time.
In 2006 my family came on full-time, we bought our first facility and did $1.7 million in sales. Fast forward to this year, we predict we’ll do over $80 million. Operating out of a 200,000 sq. foot facility in Mankato, Minnesota, we have 170 full-time staff and hire over 2,000 for our seasonal peak.
Can you share the funniest or most interesting story that happened to you since you began leading your company?
The most interesting story is probably around purchasing the domain name, HalloweenCostumes.com. I had limited funds when I started the company, so I focused on small niches within Halloween. These included Flappercostumes.com, wizardofozcostumes.com, and starwarscostumes.com.
During 2008, I realized I needed a costume domain that would be easier to brand and could get people to return year after year. The ultimate domain was HalloweenCostumes.com — however, it was already taken.
When you typed the URL in, it actually redirected you to a competitor of mine. I realized the domain wasn’t actually owned by our competitor and was instead, being leased by someone else. I contacted them to say I was interested but got no response. After throwing in a $100,000 offer, I got a response saying our competitor was leasing the domain for $50,000 per year. $100,000 was obviously not going to be enough, so I took all of our profit from our prior year and offered $1,000,000. They said yes.
I had data behind my decision that showed how we could rank in search engines, as well as how many people were searching for “Halloween Costumes” vs some of my other keywords like “star wars costumes” or “wizard of oz costumes”. HalloweenCostumes.com could do more than $15 million per year, but all of that confidence fades when you have to write a check for $1,000,000. But I went forward anyway. The site launched July 2008 and by the end of the year, it had already paid for itself.
How do you synchronize large teams to effectively work together?
During our peak season, we have anywhere from 500 to 700 people in the building. To be effective, it’s all about simplicity. Our training for picking and packing can be done in under 15 minutes.
The example I tell my team is, if you are at home and you want something to drink or eat, often you will open up the fridge and 90% of the time you will grab something right in front or very visible. You will hardly ever move things to see what is in the back or reach all the way to the back of the fridge. It’s very simple to reach to the back of the fridge, yet we don’t do it. Running your departments has to be that simple, to the point that doing anything else is counterproductive.
What is the top challenge when managing global teams in different geographical locations? Can you give an example or story?
By far communication. We work with a lot of great factories in China who want to make the best product for us and our customers, but the language barrier and simplifying communication can often be difficult.
We recently sent them a sketch of a women’s dragon costume we designed. The sketch featured a big tail and sharp claws, but when we received the sample, we realized our sketch was a little too cartoony and they didn’t quite get the proportions. The tail had the same length as the costume height and the claws looked like fingers that were four times the size we had imagined.
What advice would you give to other CEOs or founders to help their employees to thrive?
1. No one will do it as well as you. This isn’t actually true, but as a leader, people often feel this way and this will really stunt you and your team from growing.
I hired my first employee to alleviate some of the tasks like customer service, shipping, etc. I also taught him web design to help me create more sites as well. The site designs weren’t quite up to where I wanted to see them, but at the same time, they were getting done. Completion was actually adding more value than perfection.
Over time you will find people will actually get better than you are at those skills, but they have to learn some of it for themselves. Coach them along the way and allow them to make some mistakes.
2. Find people’s unique abilities and put them in positions to use them. Getting people into the right seats is a main focus of mine. One position I struggled with for years was our head of human resources. I was always inspired by Google, Facebook and Zappos, and wanted to create that kind of environment in a rural Minnesota town.
The people I hired to lead HR were from traditional companies and weren’t able to replicate the culture I envisioned. I went through three different HR Managers before realizing I had the person in my company already.
My customer service manager was someone who I always connected on culture with. He also seemed to be the guy everyone would naturally go to with their problems. He didn’t have any HR experience, however, it’s much easier to learn the rules and regulations than it is to learn vision and passion.
He now sits on our executive team and has turned the company into a culture to envy. In fact, we had some representatives from Google out last week and who took pictures of our office space and said they wish their office was this fun.
Most times when people quit their jobs they actually “quit their managers”. What are your thoughts on retaining talent today?
I put a lot of emphasis around making sure people have opportunities for growth. I was struggling to get noticed at my job in college. I was learning new skills during my off hours, but my manager wasn’t giving me opportunities.
Seven years later, that company had downsized and was almost out of business. Meanwhile, we had just moved across the street from them into a building three times of theirs.
Every quarter, the execs meet with our new hires and talk through how to succeed here. There are six-month, as well as yearly reviews by the manager. We also distribute company surveys to see which departments are having issues. If a department is unsatisfactory, this often means a manager needs more training.
Based on your personal experience, what are the “5 Things You Need To Know To Successfully Manage a Team”
1. Help people find their passion. If you help people achieve their goals, they will ultimately help you. Give, give, give, then ask. Don’t expect things in return. If you give your all to people, you will find your return eventually. Spend your time learning the unique skills each person on your team has and then give them the opportunity to excel at it. If they are great communicators, give them tasks that require great communication to succeed. If they don’t know what they are good at, let them test a variety of things and you’ll find out quickly.
2. No one can do it as well as you (not true). I see lots of managers get stuck in this idea that they can do it better, so they often stunt their employee’s growth because they won’t pass things off. In reality, managers with this mindset end up stunting their own growth. Be okay with something being done 90% of the way you would do it. Over time, you will find that your team will do better than you expected and truly excel at it. Give it time and be patient.
3. Your value isn’t maintained by keeping the most important tasks and decisions to yourself. This is another problem I often see in managers. They will hold the final decisions on everything, carry all of the big projects, big clients, etc. Again, this is a place where the team can lift, as well as benefit you. Managers often won’t get promoted because they are overloaded with trying to do everything themselves. You create more value by building a team around you that can do all of the work. This will leave you room to discover new opportunities, which is what executives really want to see.
4. Examine with empathy. We as managers need to question things. We need to look at if there is a better way to do a process, a cheaper way, etc. Be careful when asking your team questions and use your words carefully. Examine the process and ask why things are done a certain way. “Why do you do it that way?” is never a good way to ask. Better ways include, “Is there an opportunity to save you some time somewhere, or reduce rework?”, “What if we did it this way? Would that save time? Am I thinking about that correctly?” Include them in the process and they will appreciate it.
5. Give away all praise and take all blame. I’m sure everyone has heard this before, but this one has to be done. Humble leaders will win the day, every time.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be?
In the current world of infinite choices and instant gratification, I’d like to see more people commit and take some risks. Example: People browse Netflix for 30 minutes, can’t decide on a show, then fall asleep. You can begin to see a similar mindset in their life decisions.
I ask people commit to an idea or project for an entire year, see it through and see what it can become. Life’s greatest feelings are on the other side of fear. Try that new job, start that company, ask that girl out. Live life without regrets.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“Feel the fear, and do it anyway” — Susan Jeffers.
When I decided to run a costume company full-time, my biggest fear was everything I’d miss out on if I didn’t go for it. I granted myself a year and figured if it didn’t work out, I could always go back and get a regular job. It’s scary to try something new, but realize that it will be worth the risk. Feel the fear, and do it anyway.