FRIDAY, MARCH 24, 2023
Q&A With Jonathan Shults, Co-Founder/CEO SilencerCo.

Since its beginning in 2008, Silencerco has made a lot of noise in the previously quiet business of building suppressors. Not all the hubbub has been positive, but Shults has been there through it all. In this Q&A, he talks about the early times, the rough patch that nearly put them under, and what he -and the company- have learned from those experiences.

Jonathan Shults, Co-founder/CEO Silencerco, has led the transformation of the firearm suppressor industry. He’s not done yet.

Jim Shepherd
Alright, Jonathan just start talking…Silencerco’s first product in January 2009 ? Have you changed since then?

Jonathan Shults
Some things have changed and some things haven’t. We’ve gotten a significant amount of maturity, that's for sure. We have learned, I think that the difference between those two things is so vast, we might want to get closer, a little more…

granular? Okay. When you first started, how did you make your original suppressor? And how has that process changed?

Jonathan Shults
Some of it's the same. So the first one?

Well, really, the reason that I started the company is I discovered that no one really understood the science. That really, building silencers it the Edison method.

And I'm a hyperfocus er, so I knew that I could beat most people at that game.

And that's actually how the company started - I went to different partners and said, If I can get a machine tool, I'll learn how to machine. I'll learn how to engineer. And I think we can beat people at this.

And so it was trial and error. So we got that first machine working and started machining parts. Then, because we had our own equipment, we could make one, test one…make one, test one.

And along the road, I had to learn about tolerancing and engineering. I'd always been an inventor, but never a machinist, right?

Today, it's not too different. We make what we call Legos kits, when we're trying to do something innovative, something that hasn't been done before. Then, we’ll go and tinker. Then go to the machine and make one, test one… make one, test one, we know a lot more now. So we get to get to the end a little quicker.

Back then we knew nothing. And a lot of systems weren't in place, we talked earlier about sound testing software, no one had that back then. That was a laborious process. So we invented our own testing software, and then that sped us up.

And the process is pretty much the same. You know, we have dedicated equipment to r&d and build one, test one, shoot one…

You're also a big believer that you're not just building a product, you're building an organization…give me your vision for what you want this company to be.

Jonathan Shults
Yeah, I mean, it's about the long play. It's about the people. You know, if you look at our, our motto, you know, that’s: People, passion, and precision. People's first on purpose. And those people, you know, it's our consumer, it's our dealer network, it's the distribution channel. And it's the people that make it, right.

And we do most things in house. We like to control the process, because we want to provide the best product, but also, you know, I like employing people, like people learning. And yeah, it's super important to me that this company is about the long play. When you build the man, they'll build the company. So we focus a lot on that.

You have a different take on automation and robotics than most people… share that take if you will…

Jonathan Shults
Sure, you know, any automation or robotics program, you know, we're, we're just trying to not replace jobs. We're trying to replace the jobs that no one really wants to do.

You know, we want all those tendinitis creating jobs and those tedious tasks to be done by automation or robotics.Then have the human do the human job. You know, have them use their brains troubleshoot, brainstorm, things that robots can't do.

You like the software platform?

Jonathan Shults
Yeah. Yeah, we're, we do a lot of things with software for automation, for sure. And you know, I was a software developer before I got here. So any place I can use software to automate I will.

Silencerco also changed the way you configured your engineering departments, and that’s engineering departments plural.

Jonathan Shults
Yeah, we had manufacturing engineering, we called it ame: advanced manufacturing engineering. We had research and development. They were separate, and that caused silos, and we've united those together so that, you know, we can be the fastest to market on a new idea. They can work on what it’s going to take to get something to the production floor while we're creating it instead of separating those processes.

So that again, streamlines your efficiency even more. How is the manufacturing process truncated? Over that the time since you started robotics, machining, whatever…how has it shortened your time to market

Jonathan Shults
We always had that in mind. At the beginning, technologies obviously helped us. But we bought, we've been purchasing machines that were automatable, from the beginning, adding robots was a lot bigger deal back then, than it is today. Now you can add robots that are called Cobots. They can be in the space of a human and not hurt the human. That's knew.

Early on, we always tried to buy equipment. We bought the finest equipment we could afford -that could run the parts as close to what we call lights out as possible. That's always hard to attain.

And then, through the middle of the company, we grew so fast, we lost that line of sight to that, we threw labor at it.

Now, we're really focused on the automation side again, and great equipment. Having great equipment, especially if you're using similar equipment to develop on, your transition to production is very, very rapid.

That's controlling that process from the beginning to the end. From the creation, where the prototype parts were made, where the pre-production parts are made, to where the production parts are made. It's all right here.

And the engineers are part of that process- especially now with those teams united in the equipment that we're purchasing and bringing in, it just amplifies our ability to bring quality fast.

You talked about having lost sight a little bit talk to me a little more detail about did you get off the trail at one point?

Jonathan Shults
Sure. I think that any young entrepreneur that starts from nothing, has nothing, and then all of a sudden has the world is gonna get off the trail a little. I don't think there's a way around getting off the trail. In fact, I think that's an important part of that process. Right? You know, by 2016, we were the gorilla in silencers, we've done something no one else had done.

We’d dominated the market and that dominated our egos. We made decisions that put us - almost - out of business. In 2018, we rebuilt, and I took the helm as the leader of the organization at that time. We kind of had to find ourselves again, and find the things that we did really well, and find the things that we didn't do really well and redefine and mature.

Okay. Now that insight, gives you the ability to speak to some people who may be several years behind you in the process….share what what do you tell them to keep them from picking up the hot bolt?

Jonathan Shults
Learn from those that have already done it… You know, what's interesting is, we as we went into the surge in 2016, there was some legislation going down that caused a surge in the silencer world. And I remember being in executive conference, and actually around this table. And I said, “look, let's learn from the AR guys, when a surge comes, we can farm out some work. But be careful, don't buy too much equipment, don't buy it.”

And then one of the mistakes I made is I said “unless we're going to use it in the future.”

People heard that.

So we bought all of the equipment. We filled the whole building with equipment.

That really hurt us when you know, things turned the other way. We had these fixed assets.

Be careful with how much fixed fixed cost you have, versus your variable costs, right, be somewhere balanced.

The fixed assets - for us - create that speed to market, they create that nimbleness to move and to change and we control all the processes. So it gives us that great advantage.

But the disadvantage to that is is that when you're not making money, you still have to pay those bills. Whereas if you're using a outsource, manufacturing or contracting and turn it off, to a degree, there's a freight train that has to slow down, right, but then it's turned off, you're not responsible.

But then you don't have as much control.

You're not controlling your quality as tight. You can, but it's harder, right? You can't move fast. You're the mercy of their ability to move.

And so one of our mistakes was just thinking it was never going to end.

Actually, you hear that a lot when the gun industry is crazy. It's like we forget every time.

“That this is the new normal, it's never going to change. It's going to be way up here.”

It's going to change.

Be ready.

It will come back down. So manage wisely.

It's kind of hard for a manager who's never seen a valley to appreciate a peak though. You agree?

Jonathan Shults
Meaning somebody that's never seen it before and never seen, never written the curve?


I think for me, what was interesting is we rode that curve up. SilencerCo grow grew 100% year over year, all the way into 2016. And I remember in 2012, looking at the management that we were building, and said, you know, it'd be awesome…25% year over year, because then I could build the infrastructure to support it. I could build that foundation.

Once you get to those bigger numbers, the foundation isn't present, you're not able to build it. Really, we're building a lot of that today.

We grew too fast. So we knew how to go up. We knew how to manage that. That's what we learned.

And then when we fell, we'd never seen that before. We didn't know.

And you're right, until you have that experience. There are a lot of rules in place nowadays caused by going down fast, right?

And that kind of goes to that fixed asset/variable. So fixed cost/variable cost. And I have rules around that now. Because I need to be able to flex both ways right.

Now, you ever get frustrated is your own rules?

Jonathan Shults
Sure, yeah. We break them occasionally. But we break them wisely. It's actually - I think- really important to have an open mind and to look at those rules and know which ones you need to break.

There's a saying, “You need to know the rules perfectly to break them.”

And oftentimes, like when we were growing 100% year over year, we knew none of the rules, we knew none of the consequences. So we were breaking them all over the place, and then paying the consequences for that, for what we didn't understand.

When you set the rules, and you learn things thoroughly, then you know them perfectly.

Guidelines versus guardrails?

Jonathan Shults
Yeah, that's a good way saying that I like that.

Now we'll move to a hard question. You went through a hard patch. And you said just a minute ago that it was it was tough. But you came out of it. Yet you still hear “What about Silencerco -you know..they’re in trouble…”

How do you deal with that? Any ideas on how to defuse that?

Jonathan Shults
That's a good question. When you're fixing it, the rumors are the worst. Right?

The hardest rumors, particularly for leadership to hear are the true ones. Like, I've seen people react over the years.

They don't react much when it's totally false. But when it's true, we really take offense, especially when it's not good. Right?

I will say that it was like getting kicked in the nuts every day trying to recover the business. You know, we formed a board, and I'd have to go to that board and say, “Hey, I uncovered another pretty big skeleton, no one knew about” you know, and then as we were getting close to digging ourselves out, you'd be like, “Yeah, we did it. We did it, we did it.”

And then somebody would make a phone call and be like, “Hey, you owe us a million bucks.” And I’d be like, “how?”

And then they send the docs and it would be like, we do indeed. We didn't have the records, that’s just great. Those would just keep popping up. And it's just very discouraging, right?

Now, that being said, that was probably the hardest part.

The rumors didn't matter that much. Because you had a situation.

Yeah, you had bigger, there were more important alligators closer, what people were saying, right? As you start to recover, sure it’s, frustrating.

I've always kind of had a philosophy…you don't want to get in with the swine, like, you're gonna get pulled down and filthy. You need to stand confidently where you are and be okay with some of the things people say.

But also, it should be in the fruits. Right? Like, our company makes good product.

It's always made good product, and we're going to continue to make great product.

And did we fail at some of that somewhere in the middle? Sure.

But the fruit is what we're producing. Product quality is high. And that's one way.

The other way is to talk more, right? I'm an introvert and I don't talk a lot. I mean, if you get me talking, I'll talk a lot but….so… we're actually kind of learning how to do that.

You know what I'd say we're not not the best at quelling that stuff - yet. We're learning how. That's what I'd say.

You told me earlier about a problem you had with the product - and how you dealt with it. You remediated it and answered it, and met the deadline and guidelines you'd been given by the customer. Talk to me about the things that you see as most important - the way you explained it to me - about your word, your product and your time.

Jonathan Shults
Time… time isn't money, time is time. And, you know, obviously, I'm not perfect at this. But I think that the world has kind of lost the idea that you're only as good as your word.

And I believe that we you should do the things you say you're going to do.

Whether the documents that you signed, say that you're going to do them or not, like you do the things you say you're going to do.

And when you say you're going to deliver, you want to figure out how to do that. When you tell a customer you're going to make a product at a certain quality and deliver at a certain time, you have to do that. It’s challenging to do, no doubt.

But time is more valuable. Delivering that in the time that you said will be more valuable than the money it brings to the organization, no question.

We've added many processes in place to help do that over the years. We're vertically integrated. We have black oxide. We have heat treat. We have the anodization process in-house.

When we launched the octane many years ago, we just brought anodizing in. And we were just learning how to make that product.

And we found a blip in some of the tubes which, you know, we want to be perfect.

Our old process would say you got to rerun those tubes, which we could do quickly.

But then they'd have to go across the country to turn black and come back.

And that would be two to three weeks. The day that line was up, we discovered that flaw. But we were able to get that line on- in less than five days -and get the whole batch of tubes anodized and perfect. It only happened because we had that line ready to go. But that reaction time is priceless. The time was more valuable than the money that the product created- no question. It let us keep our word.

A final thought?

Jonathan Shults
You should probably have it. It was a roller coaster ride. We wanted to be as big as we could. We didn't know better, right? We weren't thinking the long play. We weren't thinking, really, just moving.

But when you look at what we built, we built a house of cards, just a big mess.

During this recovery process, I think one of the neatest things that I can say is today would have never happened without the path that we took.

Because of that, we are a net debt zero company.

Like all that equipment on the floor. It's mine, right? Like, we do have loans. We were smart like that, you know, but at any moment, I'm net debt zero and we have a lot of cash in the bank.

We can be wise with that cash. We could never be in this place unless we’d ridden the wave wisely as we were coming out.

That put us in a really strong place- so we can weather any storm. We can climb and grow as much as we want.

It's just a really nice place to be. And yeah, I’m grateful to be there. For sure.



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