117: How To Create A 20M Dollar Company With Only 2 Employees Selling Vacuum Filters With Chad Rubin

Intro: You are listening to the My Wife Quit her Job Podcast. And if you are new here, it’s a show where I bring in successful bootstrapped business owners to teach us what strategies are working and what strategies are not. Now I don’t bring on these famous entrepreneurs simply to celebrate their success, instead I have them take us back to the beginning and delve deeply into the exact strategies they used early on to gain traction for their businesses.

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Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. Today I have Chad Rubin with me on the show. Now Chad is an ecommerce veteran who has been selling online for quite some time now. He is the founder of Crucial Vacuum which is a company that’s actually worth $20 million, but he only has 2 employees which is pretty impressive. He is also the creator of Skubana, which is software that will pretty much manage your entire ecommerce operation. It’s been a long time, Chad and I had been communicating via email, but I finally was able to get him on the show and with that welcome to the show Chad, how are you doing today man?

Chad: I’m doing great, thanks for having me on.

Steve: Tell us the back story for Crucial Vacuum because like me who sells handkerchiefs, I think vacuum stuff is pretty random also, how did you get into this industry?

Chad: Yeah, completely non sexy niche. So my parents when I was growing up, I used to work in my father’s vacuum store. So he repaired vacuums, he sold vacuums, I was the under paid child. I would be working for him and I saw them struggle through the years and thought to myself I’m never going to be an entrepreneur, because if this is what an entrepreneur is like, I don’t want to do it.

So I decided to work for the man I went to college, I was first generation college grad. I went to Umass Amherst and went on to Wall Street right after college. So I majored in finance which was a deficiency my parents had. Then I got fired from the Street in 2009, early 2009 I was covering internet stocks. So I was giving advice to hedge funds and social investors to buy, sell, hold, Amazon and eBay and all other different internet stocks.

And my parents had a vacuum store; they were going out of business, so I said, “Mum, dad you guys need to be on the internet.” And they said son no one is going to buy vacuum parts on the internet. And I was like, I wouldn’t be too sure about that, and I started my own direct to consumer vacuum company called Crucial Vacuum, selling replacement parts and accessories direct consumer.

Steve: Was your parent’s store like the source of your products, or were you working together?

Chad: No, we weren’t working together. So initially I actually — I took their products and I listed it on a store front called Volusion, a really bad store front, but it was all that was available at the time. And then I also listed their products on Amazon. And when I went to go buy them from the distributor and sell them, I couldn’t get them at that same price.

Steve: Wow okay.

Chad: Because I was buying for 20 and selling for 24, I thought to myself wait a minute, this thing is made of like plastic and paper, why does it cost $20 and why can’t I make money on it? Why is there no margin? I started– really this was before direct consumer was the in vogue or the cool thing to do.

Steve: Okay.

Chad: So before Bobobos or Warby Parker or Dollar Shave Club, like the direct consumer game erupted yeah.

Steve: So for your parents though they were selling these same filters and such right, were their margins that low as well?

Chad: Well they had a brick and motor store, and they are located in a Wal-Mart shopping center. If you think about where do you buy a back TV, you buy either Target, Wal-Mart or you buy it on Amazon. So it wasn’t really a need to have a brick and motor like sell Mom and Pop store anymore. Well so my parents, their store was struggling to exist, and nobody was really shopping in a Mom and Pop vacuum store to buy their vacuum anymore. When was the last time you bought a vacuum at a Mom and Pop store? Likely you would probably go to Amazon or you go to Wal-Mart or you go to Target.

Steve: That’s true yes.

Chad: So they were struggling and like they just didn’t — they didn’t want any piece of the internet game. And I saw an opportunity to go direct to consumer, nobody was doing it, and the market was ripe. And I think there is a lot of naysayers in my life, they were like wait a minute, so your parents own a vacuum store, they were struggling and you think that you could actually make money doing this and be successful? And I was like yeah, I think there is a massive opportunity that nobody has conquered yet.

Steve: Okay so you noticed the margins were pretty low, and so I guess you just went straight to manufacturer?

Chad: Yeah, so the margins were low and I started sourcing products in Asia kind of– well initially I went on Alibaba and I started looking at — I compiled the spreadsheet. I had all these factories, I started sending them samples and comparing prices. And the goal of course is to get as close to the manufacturer as you can get. So there is trading companies out there, there are agencies, but I started building relationships and really started weeding out different factories in the process. It was based on price; it was based on the time to get the product, the lead time, the price and just I would ask them questions, like a great question is this– so I mean a simple question I started — I asked early on in the game is who do you sell to?

So if they tell me who they sell to I already know there is a trust factor. They tell me what they sell to the person, or hey here is the catalogue or here is the invoices we sell to the– that we give. Here is the invoices from this company that buys from us in United States. I immediately know that they are not the most trustworthy company to buy from. Well I’ll get like pictures of the factory and make sure they are a factory. I was really starting to build a relationship and Skype with them.

Steve: Did you ever have to fly over there at all, or you just everything would be on Skype and email.

Chad: Oh yeah, flying over there is fantastic. So you spend time with– like going to KTV to karaoke with the factory manager, it’s probably the best thing you can do in business. It’s like the ROI is tremendous.

Steve: Okay, we never did the karaoke thing, but we did go to dinner and lunch with our vendors and you are right. The quality of our stuff drastically improved after we did that. Cool, so okay so you got your vendors and so you started creating your own stuff, and then did you sell in your own website in the beginning or?

Chad: I did a mix, I did — so I started off on Volusion. Before Volusion I was using FrontPage, but Volusion…

Steve: Hilarious, okay.

Chad: Yeah, I guess I’m dating myself now, but Volusion I started playing around on Amazon and noticed that I would be just competing — when I was re-selling I was just competing for the buy box. And I didn’t really see an added strategy there. I just thought I was like — I was playing musical shares on Amazon with different sellers for different listings. I really wasn’t interested in that game.

So right out of the gate I literally immediately built a brand, and I always viewed selling on ecommerce like playing monopoly. You want to be on every part of the board to win, and that’s the flow I’ve always used. Now I sell online now, and I’m on 15 different channels.

Steve: Okay and so what was your first channel? You said Volusion, how did you drive traffic to your Volusion site in the beginning?

Chad: Volusion was a lot of AdWords, so I bought my first — so I started really small, I always started scrappy. I bought my first min, minimum requirement from the factory was one filter and I loaded that up on Google AdWords and I sold that right away. Then I did a couple of cases, and then I did a pallet and I did 2 pallets. I started with Volusion on Google AdWords.

Steve: Okay, and how much was your ad spend in the beginning?

Chad: That’s a great question. I was tracking at the time; I don’t remember what it is or what it was now.

Steve: Are you guys using AdWords still today?

Chad: Of course yeah, we do a lot of Google AdWords; product listing ads of course has taken over from text ads.

Steve: So in terms of your ads spend, do you do Facebook ads as well like what’s your — like what do you spend your ad dollars?

Chad: Ad dollars is really on Google AdWords, just on sponsored ads, now Amazon has something called Amazon spon [ph] like did plus I believe, where you can bid on certain keywords which is fantastic. But if you think about it with social media nobody really wants to go on Facebook to see a deal for a filter.

Steve: Yes, that’s why I was asking yeah.

Chad: So and I read Gary Vienna charts book back in the day, [inaudible 00:09:48] which I think set my perspective correct on social media. You just have to pick the appropriate channel. So for us like people who go to Twitter, and they yell about their vacuum all day long. Those are great opportunities for us because they are like, “Oh my vacuum smells, oh it stinks, or it doesn’t pick up anything,” and those are ripe opportunities to go in and talk to the customers.

Steve: So that’s interesting, so how do you find these complaints? You just do searches on Twitter or?
Chad: Yeah, you can search for vacuum sucks, vacuum cleaner, of course now we got like I mentioned before when we were chatting before the call, I’ve moved into a lot of new products. So I have moved into vacuums, coffee, air purifications, humidification, marijuana filters, pool filters, you name it, like we are just nailing every vertical possible, repeating that same success.

Steve: So back to Twitter, so it sounds like — I’m just trying to get an idea of what your main channels are. So you said AdWords which is a large portion. And then let’s not talk about Amazon yet, we’ll get to there in a little bit. And then you have Twitter, does that mean you have just like someone full time monitoring these Twitter channels or?

Chad: No, we just — I think we — Okay so if I have to break it down it would be Google AdWords, Fixya, which is like a repair site where people go on to ask repair questions. So we come across as a thought leader. We do a lot, we did a great job with YouTube videos, and YouTube videos ranked really well on Google, so it’s like free …

Steve: So videos like how to replace your filter and that sort of thing or?

Chad: Yeah, the whole bay. Yeah, with very keyword dense titles, playful videos and conversions are fantastic.

Steve: Interesting, so how do you get the person from the YouTube video to your site? Is the link underneath the video or a call to action with video?

Chad: Yeah, so the link is underneath the video. We did a couple of videos where the link is actually in the video itself. So it’s just like anything else. Like we are trying to provide value to people, and when they see that you are a thought leader and you are a fun company and they respect you, they are going to want to buy from you.

Steve: Okay and did you — have you …

Chad: So it’s no different on YouTube.

Steve: Have you run any YouTube ads or is it just straight organic?

Chad: Straight up organic, no YouTube ads.

Steve: Okay, and the way you got those videos to kind of rank was just through keyword research?

Chad: Well, no one’s doing it. So we do keyword research, we obviously already manufacture the part and we just, we invested in all the equipment. And we started just doing — we also had an actress come in and then we had an internal employee do it. So we just had fun with it, we bought the vacuums, we tested the filters, we threw them around, we catch the bloopers and we — and flew them in the video.

Steve: Kind of like the Will It Blend videos right, so to speak?

Chad: I don’t think I’ve seen those.

Steve: Oh well it’s just like shove an iPad in a blender and it blends.

Chad: Oh really.

Steve: You haven’t seen those?

Chad: No.

Steve: Okay like they shove like random things into a blender, they sell blenders obviously, and those videos started going viral because they were blending like all sorts of random stuff.

Chad: That’s cool.

Steve: Okay, so we got YouTube, any other channels that we haven’t talked about?

Chad: Affiliate marketing.

Steve: Oh okay, let’s talk about that. So do you use a standard network like ShareASale or?

Chad: Yeah, so we use ShareASale.

Steve: Okay.

Chad: And it comes back for a vacuum — like no one really wants to promote vacuum filters on their blog.

Steve: Yeah, exactly okay.

Chad: So but the interesting thing is that when you think kind of one step or move from what you sell, so for handkerchiefs I think about like Chivalry, right? So I would approach an affiliate blogger and say, “Hey like you are writing a blog on Chivalry or something, somewhere there and like I do handkerchiefs, so why don’t we integrate the two together?” So with vacuum filters it’s when I think about vacuum filters I think about two things. I think about mothers who are nesting, and they are having children at their home and they are concerned that children are going to like lick up dust bunnies, or I think about allergy sufferers.

Steve: Okay.

Chad: So you approach this like mummy bloggers, the allergy sufferers, and it’s a great network and niche to focus on.

Steve: So for your affiliate program, it’s actually quite a bit of work, because I run a small affiliate program and I noticed that you end up with just like a couple of good ones and then you end up with a bunch of crappy ones. Was there a lot of work involved in doing the outreach?

Chad: There is a ton of work on affiliate marketing, it’s not like you build it, you store it up and people will join.

Steve: Yeah exactly.

Chad: Like if you look at who is probably in your affiliate program right now, it’s likely like these deal sites like RetailMeNot who you are probably giving 5% affiliate commissions to, and if you lower them to a half a percent they’ll be fine with it.

Steve: So I was just curious how you got your affiliates. Like do you have like a dedicated person running your affiliate program or?

Chad: Well yeah, I mean we have people that are multi-faceted that are — I mean look I only have two people at Crucial now.

Steve: Yeah I know that.

Chad: So I do a lot of outsourcing too. I want to mention I do a lot of outsourcing on top of it, but higher value activities are kept in house, things that I don’t want to outsource. So on the affiliate program, like have you ever signed up to — do you use ShareASale?

Steve: I am an affiliate on ShareASale, I don’t — I’m not the like the store that runs an affiliate program on ShareASale.

Chad: So you are part of the network, right?

Steve: Correct, yes.

Chad: So that’s great. Actually you are on the other side of the equation which is fantastic, because now you can actually start looking at all of the competitors or all of the other affiliates in your space, and what are they doing and you can look at how much they want as a commission. There is a lot of research you can do on the other side on the back end, not as a merchant. So if you hit it from both sides.

Steve: I was just curious like what it takes to build up an affiliate program from scratch.

Chad: To build it from scratch, well it takes a lot of outreach, that’s …

Steve: Was that something that you outsourced? Like you only have two guys right, and then …

Chad: Well I didn’t always have two guys, so let’s back it up.

Steve: Okay all right, okay.

Chad: I did not always have two people at Crucial. I used to have 15 warehouse employees, maybe a little more and roughly about 10 clerical workers.

Steve: Okay, and so back then you probably had one of them do outreach for a while, okay.

Chad: Oh yeah, there has been a lot of work and there is a lot of cross pollination. So the people that used to be at Crucial that are awesome employees, I’ve now put on to Skubana to help me steer all that business.

Steve: I see, okay, interesting. So how are you able to go from what is it — it sounded like 30 people down to just two then?

Chad: So I would say the first thing is that I outsourced my warehouse to what’s called a third party logistics company, a 3PL.

Steve: Okay which one are you using, just curious?

Chad: One in New Jersey and I’m happy to — if anybody wants to contact me after this they can. You can reach me @chadskubana, also — so I did that. That took care of whatever, 15 employees, so I’d have to deal with managing certain individuals at a different economic status, or people that were smoking weed in the back of my warehouse or slipping like Irish whiskey into their coffee.

Steve: Okay, these things really happen I gather? Okay.

Chad: Yeah they do, there is a lot of things that happen, a lot of interesting things that happened.
But you know that was my core competency right. I was never trained to run a warehouse; I was trained, like for me I just — I thrive on the thrill of building businesses. So to me that was not focusing on what I was good at.

Steve: Were you using FBA at all?

Chad: Yeah, of course yeah we would bring the containers into the warehouse, and I would even be in the back once in a while labelling products. I’d put on the Beatles, my father-in-law would come in and prep FBA stuff and warning labels and suffocation labels on the packages too, like it just wasn’t good use of my time or his time or anybody’s time.

Steve: So can you comment on why you wouldn’t just send all your stuff to Amazon and fulfil from there versus going a 3PL and Amazon?

Chad: Because firstly Amazon is like a gateway drug, and they’ve made it really easy to sell in their platform but they have also made it hard to ever leave. So multi-channels fulfilment through Amazon is very expensive, and I never believe in a one channel strategy. That was never ever my intention to build — like there is a lot of sellers out there, and I was just at the Crossbar show and they have built channels. I call them channels.

They have built channels, they don’t build businesses, so they just are focused on FBA, that’s the only thing that they do, but for me there is a diversification strategy. I come from Wall Street, I always thought to myself they’ll never invest in a stock that has one customer. Hell no, there is too much risk. So why would I ever invest — why would I ever just invest everything, all my eggs in one basket on Amazon.com?

Steve: Okay, so you probably ship everything then to your 3PL, and then from there you ship stuff to Amazon?

Chad: Yeah we do a mix. So we’ll do, everything comes to the 3PL, they unload the containers and then I’ll do some stuff to FBA in the US, I’ll do some stuff to Canada. I have a 3PL in Ireland, and then we have obviously inventory here for our off channel sales.

Steve: Okay, so that sounds like you got rid of like more than half of your employees?

Chad: Yeah roughly, and then — I then kind of this opportunity with Skubana fell in lap. So I’ve automated, I took care of another seven employees with technology.

Steve: Okay, let’s talk a little — I’m sure the listeners don’t know what Skubana is. So you want to just give brief intro and how that came about?

Chad: Brief intro would be it is a software to manage everything after the checkout. We sit in the center of a market place or shopping cart and the customer, and we do everything in the middle to run your entire business. So any way or just quickly any way you fulfil like printing shipping labels, drop shipping, 3PL connectivity, multichannel fulfilment, FBA etc. Inventory, purchase orders, vendor management and analytics, and we do it all in one unified place, so you don’t need to use unbundled fragmented apps to run your business.

Steve: So while you had all of your employees you were silently creating this system on the side?

Chad: Actually it all happened at the same time. So obviously like there is a very rich history here, right? Like that’s what business is all about. You go through the struggle and the negatives become opportunities over time. Anything that’s painful becomes an opportunity. So I got rid of my warehouse. I had a lot of warehouse issues, warehouse employee issues. We got rid of that and at the same time I was unloading my warehouse. I couldn’t find technology to run my business.

So there is a lot of entry level software that’s out there, but I do a lot of order volume. I do about 60,000 orders a month. So for me I’m an enterprise seller, but there is these fragmented software that exist out there, entry level software that exist out there, but nothing that could actually run my business. I tried a lot of software, there is a lot of noise, and it’s kind of like — it’s all into — it’s like getting into a car and realizing there is no engine.

So I lost a lot of money, I lost a lot of hair and time using these shitty solutions. So and of course you can go with a different solution and they cost a lot of money. There is an implementation fee, there is custom development and there is channel advisor that takes a percentage of the revenue, and I’m really against percentage of revenue. So I decided — I just wrote an email to a bunch of buddies, I said, “Guys who can help me find an enterprise developer here in the United States to help me build what I think is the next generation e-commerce operations platform?”

And I found D.J. Kunovac to found the business with me. He came to my warehouse as I was getting rid of it. So he expected, he used to come to my warehouse and he thought it was going to be like Amazon with cranes and like robots. And my warehouse was a freaking mess, it was a jungle. And he was like there’s got to be something else out there, and we tested all these solutions and they all sucked, so we decided to build our own. So this all happened kind of at the same time and just, the opportunity was just too good to pass up on.

Steve: Okay, and so were you kind of debating whether to go with this software versus a 3PL, or were you going 3PL all the way?

Chad: So 3PL was happening no matter what. It was like my wife; she was like, “Chad you need to do something about this warehouse. It’s like it’s coming down to the wire here, and you need to get rid of this warehouse. It’s causing so much aggravation.” So the warehouse was already on its way out, but in the mean time I was using a shipping software, ShipStation to just gather all my orders.

And then from all my channels and I was still missing some channels, and then I have to export the orders to the 3PL. And then I would have to import them into ShipStation, but I would have to import Amazon-UPS, Amazon-FedEx, Amazon-USPS, and then all the other channels. And I had a full time employee just doing that. And yeah so that’s kind of how everything evolved, and that’s how we have 3PL out of the box, 3PL connectivity now for any market place seller with Skubana.

Steve: So you keep mentioning all these different channels that you sell on. So what are some of these channels outside of Amazon in your own site?

Chad: So to break it down Amazon does 40% of product searches, 40%. That means that there’s 60% that’s happening off of Amazon. So a lot of sellers are like well is there life off Amazon, and I’m always like look man the barrier is worth the squeeze, right. 60% of searches are happening off Amazon today. That means you are missing 60% of searches.

So I like to focus on Amazon, I think it’s a great channel, but the second channel I think that is fantastic if you are looking to migrate off of Amazon is building your own website, and leveraging product listing ads with Google. So Amazon off channel, Google which is your own website, you can do Sears, Newegg, Rakuten, eBay, I do all the international properties; Overstock, Wayfair. I think I got most of them.

Steve: Okay and then so managing all those is a pain in the butt and that’s why you needed to develop this software?

Chad: Well, I think managing a business just even if you are just selling on Amazon it’s actually a pain. But yeah so if you are a multi market place, multi warehouse, and you have different fulfilment methods, and you want to accelerate and automate your business, you need to have a software in place, like it’s just not scalable.

Steve: Just curious what is the percentage breakdown for sales for your own site?

Chad: So I would say that Amazon used to do 100% of my sales, I’ve managed to get it down to 60%. So I think that’s a good number. I think that’s a good goal for people to aim from a 100 to 90 to 60. I’d like to get it down to about 50%. If you think about Amazon it’s just massive and they are becoming more and more massive. They are a monopoly.

Steve: Yeah for sure. Okay and then so the other channels plus your site kind of represent 40% then?

Chad: Yeah, but my second biggest channel is my own site.

Steve: Okay, that was important to know. Yeah I was going to ask about — because I think I read some interview that you did where you basically started on Amazon right; for the most part?

Chad: Yeah, I mean there was Amazon Volusion; I’d mix it up a little bit. But I saw a lot of power in Amazon, I kind of used Amazon as a feeder system to build my own stuff and invest a lot more money and time into that.

Steve: Would you say that most of your customers are consumers or businesses?

Chad: Consumers for sure.

Steve: Consumers for sure. Okay so let’s talk about how you reach these consumers and how you get them to keep coming back for more right. Filters– some of the stuff that you sell is consumables, right?

Chad: It’s all consumables.

Steve: Okay and so what — do you do a lot of email marketing? Like how do you get people come back?

Chad: So we have subscription on our site which was not easy to develop. So it’s subscribed and saved to a degree. So you subscribe …

Steve: Okay, how is that structured?

Chad: It’s structured, you subscribe, you can pick how many months you want to go out and you get 5% upon check out for subscribing. So that’s one way. All of our packaging is driving traffic to our site. We do email marketing; we do have automated drip marketing to our customers with filter reminders to their emails.

Steve: The reason why I’m asking is inherently what you are selling isn’t that sexy, right? As you stated earlier. So these emails, I’m just kind of curious like do people open these emails like for filter reminders and stuff about vacuums equipment?

Chad: So I don’t send people — I’m not like sending them like an info-graphic on vacuum filters right?

Steve: Right.

Chad: I’m literally just– they have a need and I’m solving their need. So you are supposed to change your vacuum filter every six months. So if we email them with a reminder that says, “Hey you purchased from us, it’s about time to change your filter,” like I’m just trying to take a product that’s not very smart at all and make it smarter. So just helping customers change their filter is important, because they need to change it.

It’s either they received our filter in the mail and open up their calendar on Gmail and put in their calendar. but most of them, 99% of them aren’t doing that. So we are just sending them a reminder, and so we have those types of campaigns. We also have win back series of you leave our — if you leave our site it’s likely, and you only halfway went through the checkout, it’s likely you are going to get an email with a deal that says, “Hey by the way …

Steve: Okay, the reason why I’m asking these questions Chad is because I can’t even remember the last time I changed my vacuum filter. It’s like not something that I think about.

Chad: Do you know what kind of vacuum you have?

Steve: I have a Dyson.

Chad: Okay, so every Dyson has two filters in it. And do you vacuum though?

Steve: That’s even a better question. Yeah well we vacuum, yeah.

Chad: Okay I hear a “We” so it’s likely that you are probably one step or move from the vacuum if I had to guess?

Steve: Sure.

Chad: So and likely your clean ladies or whoever is doing is not telling you to change it. So yeah I feel like I built a pretty successful business. I promise you that people in the world, in the United States particularly with — essentially the vacuum penetration rate is higher than internet rate. People are changing…

Steve: No, I believe you, it’s very hilarious though. This makes it more interesting to me because you’ve taken something that’s relatively not sexy, and you’ve made a lot of money doing it, right? So in that respect it makes it a lot more interesting to me.

Chad: I love unsexy businesses. But the thing is that and I think I was mentioning this earlier is that we’ve taken the same success and I’ve moved, like it feels like vacuum, selling vacuum filters online isn’t the most fulfilling.

Steve: Sure.

Chad: But building a business is really fulfilling for me. But like I wanted to move in a direction that would take what I’m passionate about, and then combine it with what I know. So I moved into coffee filter. I love coffee. I’m a huge coffee enthusiast. So I kind of try to like spice it up a little bit, and made things exciting by adding things that I’m interested in into our portfolio.

Steve: Okay, but this is on a separate side obviously.

Chad: So that’s a really good question too. You are asking very good questions though, I’m liking it. So when I started Crucial Vacuum it was a very — my vision, I didn’t like think, like I guess my suggestion to people listening to this would be if you are starting a brand you got to think big.
So when I started Crucial Vacuum I had this myopic vision. It was going to take me six years to disrupt the vacuum space. But I did it in such a short amount of time, and I was always looking behind me to see who is copying me or who is– because I thought I only have like a six month window. So now I mean if you ask me if I would move to vacuum filters now I would say hell no, because there is a lot of imitators in the space.

Steve: Sure.

Chad: Then I was like let me move into the next thing. Okay I need to create another brand which means I need to have another social media strategy, I need to have another LLC, just another layer. So I started Crucial Air which was for air purification, humidification. And then I started Crucial Coffee, and then I decided I was like you know what, why don’t I just create one brand to house it all in one place? So I’m now — we’ve already launched it, but we haven’t launched our site yet. It’s called Think Crucial which is essentially everything that’s replaceable for the home, that’s what we want to sell.

Steve: I see, so if you were to start all over again you would have just started this Think Crucial brand?

Chad: Think Crucial would have been it, yeah.

Steve: Okay, and so how are you going to — are you just going to move everything over and do redirects? Like how is it going to work?

Chad: So I think that’s one of the scariest thing for ecommerce people is re-platform because I’ve done it once already. So I went from Volusion to Magento, and now I actually just downgraded from Magento Enterprise to Community. So I have three properties on Magento and my other property, now I Think Crucial is being built on Shopify.

So right now I’m really just getting unique — I’m building unique content. Really, really thoughtful like I’m putting a lot of money into this venture, but thoughtful content that’s going to end up super, super well with a beautiful sleek design, it’s intuitive, it’s beautiful, it’s going to be powerful. So we are really just building, we are building right now. It’s actually almost done.

Steve: Okay, can we talk about your shopping cart choices real quick? You said you were on Enterprise, Magento Enterprise and then you moved down to Community which I found that the support for community isn’t all that great in my experience at least. Maybe you have a different experience. It seems like they put a lot of their effort on Enterprise and the Community was kind of buggy the last time I used it.

Chad: When was the last time you used it?

Steve: It was probably a year and a half ago, two years ago.

Chad: So look Magento is buggy whether you are on Community or not, it doesn’t really matter. It’s written PHP and it’s really — I mean people have built careers around 15 bugs on Magento. So what I would suggest is finding a good developer, but I don’t even think that — I think Magento is a platform of the past if you want my honest opinion. And right now you’ve got really two choices in the shopping cart world. They are both SAS and it’s either Shopify or BigCommerce. It’s Coke or Pepsi right now. So those are the two platforms I would say are the winners in the space.

Steve: So you are moving all of your stuff off of Magento then?

Chad: I am not moving yet right. Right now I have finished building, I’m almost done building the shopping cart, and making it beautiful, but I have not made the decision if I want to redirect right now. I said to myself …

Steve: That’s a huge decision.

Chad: Yes, and it keeps me up at night, so I’m like you know what, why don’t I leave it right now and let’s just see how my site can do on its own. There is no rush, there is no rush.

Steve: Sure. That’s interesting because you’ve kind of done a 180, I think I read some other interview with you where you are really pushing Magento and maybe this was a couple of years ago.

Chad: So I mean like the thing was is that when I left Volusion, Volusion was like burning cash. And I had so much traffic coming to my site that they literally turned off my site overnight, and they said it was D-Dos attack. So I had to re-platform, I said okay never again am I going to a SAS platform where someone can do that to me. I want to own my own store.

So I started hosting my own store from Magento on a server, and I thought that was the direction for me. But now there is like really great technology out there that is disrupting Magento, which is why Magento tried to come out with Magento 2.0, eBay just spun off Magento. So it’s just right now I mean Shopify raised a billion dollars, and they are really focusing on adding features and making their platform number one.

Steve: Okay, and so you’ve found that your feature set of your shopping cart has been falling behind, and that’s why you’ve kind of been looking to fully hosted carts?

Chad: Well, so like if you were to do a side by side comparison between crucialvacuum.com and Think Crucial which is not live yet but will be, you’d see the difference right away in the check out, the seamless checkout, how quick it is, how responsive it is. It’s like a completely different feel. It’s like next generation e-commerce versus I’ll grow ecommerce.

Steve: Okay, all right let’s switch gears a little bit and kind of talk about branding, because I know you talk a lot about establishing your own brand. We are talking filters in this case. So what were some of the things that you did to kind of establish your brand? So like let’s say I want to replace a filter on my vacuum, and from what I understand most people think of your brand these days, right? So how did you make that happen?

Chad: How did I make that happen? So it takes time. So the success you see right now is not an overnight success. We’ve invested a lot in — and we are always evolving. Like we are never staying constant, we are never just existing. That would be my recommendation. I mean that’s always what we are doing. Like I’m ready — I just moved to Magento like maybe four years ago, and I’m already looking at the next platform and the next thing and the next product and the next everything.

We are constantly looking at changing things up a bit, whether it’s our messaging inside of our packaging or it’s our email marketing blast. Like we are constantly having weekly planning meetings, going through what is the narrative that we want our customer to have about our business.

Steve: So what is that narrative? Like what is your value preposition?

Chad: So the value prop is first of all we are free shipping free returns no matter what. Like all day long 24/7. Our phone number is right on our page. 80% and if we are just looking at the vacuum filters 80% of our filters are washable and reusable. We plant a tree for every 1000 filters sold, not that that really moves the needle that much, but it’s just our signature gesture.

Steve: Sure.

Chad: But yeah I mean I think free shipping, free returns, having somebody to answer the phone, an expert to walk you through replacing your vacuum filter on the phone is a classic differentiator. Like you can’t call up Amazon and be like, “Hey I bought this vacuum filter from you, how do I put it in?”

Steve: Right.

Chad: They are not going to help; they are not going to walk you through that. So it’s focusing on like, so when we do these videos for example they are hosted on our own website, they are not on Amazon. So it’s adding more value, more unique content to your own site because when people go to Amazon they are going to a vending machine, do you want paper or plastic. But when you are coming to Crucial you are coming to us because we’re experts, and we’re going to be there. We got your back, and our phone number is right there.

Steve: Do you find that a lot of your phone calls are how to related phone calls?

Chad: I think there is a good portion of them that are definitely how to phone calls, but there is also a good portion and they are like, “Hey I don’t know how to check out online, I’m not like internet savvy. Let me just place this order on the phone.” And then we’ll say, “Oh fantastic, you are on the phone? Perfect where are you from? Where do you live?

Oh you are replacing your vacuum filter? Cool, well you know what while you are replacing your filter you have another filter on there, and by the way since you are touching your slimy vacuum why don’t you replace your vacuum belt.” So there is a lot of like up selling, there is a lot of magic that goes on behind the scenes to like build that relationship with the customer.

Steve: So for your Amazon sales though do you try to steer some of those customers over to your site as well?

Chad: No, that’s against Amazon’s terms of service.

Steve: Okay, so let me ask you this, when people look on Amazon, are they typing in Crucial Filters?

Chad: Yeah, I mean if you actually were to go to Amazon and type in CRU into their search, I’m pretty sure you are going to see Crucial vacuum pop up. So it’s an index, it’s like an indexed word that Amazon is serving to people that are typing in, or trying to recognize what they are typing to help them with their search query.

Steve: Are you selling to Amazon as a vendor or FBA?

Chad: I sell to Amazon as a vendor and I sell on Amazon, so I sell on the 1P, which is as a vendor and sell 3P, I sell on Amazon.

Steve: Can we talk a little about some of the pros and cons of doing that?

Chad: Yeah, absolutely.

Steve: Okay, so, I have had other people on the show who are vendors for Amazon, and they were always conflicted, right? They were conflicted at Amazon, like if you didn’t agree to sell to them, they just find someone else, and then your ranking through existing products are lower. So, what was going on through your head when you were approached?

Chad: So firstly, I had been suspended on Amazon, and I have been suspended twice, so I sell replacement filters to feed brands and if Dicing [ph] complains to Amazon, which probably it does; I don’t know, probably close to a billion dollars with Amazon maybe more, I have no idea.

If Dicing says,”Hey, these guys Crucial Vacuum are making replacement filters and they’re knock offs of ours, take care of them,” Amazon in India is not going to think twice about it and do something about it, right? So, we’ve had like complaints before and I went away with my wife, we were on vacation. We were going on our way to Greece and my account was suspended, and I was freaking out.

Steve: That sucks.

Chad: It sucked really bad, because I was like finally taking a break and my mind was preoccupied, it was painful. So, by that point I was never again am I going to be so tied to Amazon that they can take everything away in seconds. So, that was– so in my mind I was like, “How am I going to diversify?”
So yeah, I condone multiple market places which I have done, but also I can start building a relationship with Amazon and sell two times since I’m the brand owner. And they have to approach you, but luckily I have really nice relationships in the Amazon world that I was able to get in with the entire management team there. So that was what was going in for me, so I gave them a handful of excuse and I used it as a hedge.

Steve: Now that makes sense. With the idea that if you’re selling to them as a vendor you’re probably not going to be suspended based on product alone.

Chad: No, you can always get suspended, but the idea is and Amazon can make it themselves; which they are doing with Amazon basics, but the idea here is that I have someone to talk to in Amazon, that’s not in India and 3P and 1P are kind of like the congress and the senate, like they are meant to compete with each other. They are kind of like a check and balance, so if God forbid something happened to one, I have a hedge, I have a back-up.

Steve: Okay, that makes sense. So, I was just, when we were chatting before this interview, you were talking about some pretty killer growth numbers like double digits year after year. How have you managed to do that? Was it introducing more products, or just selling in more market places over the years?

Chad: I think it’s a combo, the combo of both so going deeper in our product price, going to different categories, thinking outside of the filter space, and going on other market places and going internationally.

Steve: Okay, let’s talk about international. Was that kind of scary, did you do that early on or?

Chad: Actually I think it’s still early on, most sellers are like, they think that the US is where it is at, and there is a lot of things happening internationally and nobody is really focusing on.

Steve: Okay, and so was that something you did right away then, with your business or?

Chad: I was always thinking international, but I think I have been getting more heavy in our approach probably in the last two years or so, really thinking about how to sell overseas because there is different expectations, there is different fulfilment rates.

Steve: Taxes, yeah.

Chad: I mean there are taxes, there is a lot that goes into it, different languages, different brands are in the US versus in the UK or Germany for that matter, but…
Steve: I guess what I was trying to get at was, is international like your biggest place of growth right now?

Chad: The biggest place of growth right now is coming from all over, I would say that they’re posting higher growth numbers because there is a smaller part of my business, so there is a lot more room for growth there, but I was recently reading a Reddit, someone on the Amazon community just had a Reddit. They asked him, “If you were to do it all over again, would you start in the US or would you start intentionally?”

And he wrote, “I would start in the US, there’s not really a whole lot going on, the international doesn’t excite me right now.” And I actually commented in the post and I was like, “That’s crazy, if I was to start right now, actually I would start where the pack is going and there’s so much happening internationally, like you don’t really need to play with the heap in the United States, you can literally have a whole market to yourself internationally where nobody is focusing on, because it’s hard, because it’s harder.

Steve: It’s harder for someone in the US; presumably it’s not hard for somebody who resides in that country, right?

Chad: So, the second biggest channel internationally for Amazon is Amazon Germany. People actually think it’s the UK, it is Germany. So, is it that much hard to take your product, to take it and translate it on Fiverr, or one of these other translation services, and to post it on Germany and to get your product FBA there, or to– I found a warehouse in Europe that has been helping me significantly, but it’s not so hard, right? It’s just you are faced with…

Steve: It is just leg work.

Chad: Yeah, it’s just leg work, it’s just business, it’s just obstacles and there are challenges and you overcome them.

Steve: So, let me ask you this, a lot of the listeners of this podcast are people who are just kind of trying to get into ecommerce, and so for these people who are kind of starting out, what would be your advice on how to just kind of gradually grow into a thing Crucial.

Chad: Well, hopefully there are no other vacuum filter companies that are listening right now. Come up with their own thing, but to grow into, when you are starting, you need to have the proper foundation, for sure and I think a lot of sellers focus on the top-line without thinking about how is this going to scale. So, it’s not like building a house, but realizing there is no foundation, you build it on sewage. Now that works in New Jersey…

Steve: You are from New York, right?

Chad: Actually, one of my offices is in New Jersey, but it’s not built on sewerage, so I have an office in New York, office in New Jersey. So, I would say building a proper foundation, so getting your infrastructure set up correctly and professionalized from the onset. So, for me I probably wouldn’t start again ever, in my doing my own pick and park for my FBA prep ever.

I would immediately outsource that activity. I would have the right technology to automate and run my business, one that actually can take me multi-channel, so if you’re going to invest in a software, you don’t want to invest in a software that’s may give you a glass ceiling, or be what I call, a one trip pony, because it limits…

Steve: It’s hard to predict though early on, but I guess you just have to go with what you think is the best at the time.

Chad: Well, is it hard to predict that you are going to want to expand to other channels? I mean if you really want this to be a serious endeavour, you have to treat it as one.

Steve: Yeah, that’s kind of hard to do for some people though, right? Because if some of the enterprise stuff or some of the better stuff, cost a lot more on a monthly basis, I guess you’d have to be willing to put a lot more money upfront to invest in that then, right?

Chad: Well, luckily Skubana starting price is 500, so…

Steve: See, I led you right there.

Chad: So, the thing is, actually when I started Skubana I had this dream of democratizing ecommerce, so I did not want to leave any fellows behind, but what I quickly realized was that there are entry level software for people that are just casual sellers, that don’t see this as ever becoming a full time thing, that are there for them, to help them. But, if you really are serious about growing your business, you got to get into the right technology from the onset, it’s an investment.

It’s like investing in a stock, and so enrol like if you’re going into the gym, you have different choices when you are at the gym, you can go to Equinox since you are in New York City or you can go to wherever, some sort of cheap fitness club yeah, Gold or Retro or Barleys. So you have choices, but you can choose to– first of all you have to go to the gym, that’s half the battle.

Steve: That’s the hardest part, yeah.

Chad: That’s half the battle, but also if you really want to up the game you can go to a serious gym, so I guess I call Skubana like the Ferrari of operation software. It’s really a one stop shop. It’s really meant for high value merchants, but we’ve kept it a low price point to allow other people to enter in. So now people can access, and so a lot of our customers are top 200 Amazon sellers, but now for the first time ever, smaller sellers have access to what the one percent only had.

Steve: Okay and just be to clear; let’s say I’m selling in all these channels like Sears, EBay, Amazon, Wayfair, Skubana just manages all that, and all the inventory as well. Is that accurate?

Chad: Inventory, yeah any way you want to fulfil whether you add it through EPR or you print a shipping label, so we take care of– like there is no ERP system out there that combines shipping with ERP, we do that, so you don’t need a ship station or another shipping software at all. So, any way you fulfil, but the nice thing, the huge differentiator, that’s the word, so it’s commodity shipping, inventory, purchase orders, but by unifying everything together, you now have data, business intelligence that you have never seen before. Sellers know more about their car than they know about their own business, and our software changes that in a drastic way.

Steve: Because all the analytics across everything is stored in your platform.

Chad: Everything is stored, so you literally have every touch point after that person checks out, including all the hidden FBA fees as well. All that stuff is coming into our software and being sucked in, and now on the analytical section, you push the button and boom! You can see every street you have, which one is profitable, which one is not profitable, which channel you’re not profitable on, what’s dragging down your profitability. It’s really the holy grail of what we do.

Steve: Okay, cool and if there is a platform that you don’t support, you guys will code that up or?

Chad: We have an API ,we support the major market places, but we have an API, so we can communicate with any platform that has another API, but back to your question, so it’s A Foundation, B I think thinking about what your core competences are, and having a– everyone has a to do list, but I encourage everyone to have a don’t do list, like things you don’t want to be doing, and to make sure you find somebody to do that what’s their core-competency.

Steve: Right, it makes a lot of sense. Chad, we’ve been talking for quite a while. Where can people find you, and get in contact with you, or if they are interested in Skubana?

Chad: So scubana.com, you can email me if you have questions at chadscubana.com. I’ve really become more of an educator and helping sellers. E-commerce Renegade is my new property that I just launched, so I’m really trying…

Steve: Is that a blog?

Chad: It’s a– I’m doing videos; I have a book coming out. I’m really trying to cut through a lot of the noise in the Amazon group, and not just Amazon, just ecommerce space in general. People are taking suggestions from people who haven’t been there and done that, and they’re leading them down the wrong path, so I’m coming in to change it up and to remove the noise. So yeah, so I’m launching that so you can find me on E-commerce Renegade, you can sign up for a newsletter where I drop a lot of golden nuggets and things that I think are going to change the way you do business.

Steve: Sounds good Chad, thanks a lot for coming on the show man, it was good.

Chad: Thanks for having me.

Steve: All right, take care.

Chad: All right.

Steve. Hope you enjoyed that episode, Chad really knows his stuff and his entrepreneurial path is kind of what I want to be going forward. Run a successful ecommerce store, understand the problems that ecommerce store owners face, and then write software to solve their problems.

For more information about this episode go to mywifequitherjob.com/episode117, and if you enjoyed this episode, please go to iTunes and leave me a review. This is by the far the best way to support the show, and please tell you friends because the greatest compliment you can give me is to refer this podcast to someone else either in person or to share it on the web.

Now, if you’re interested in starting your own online business, be sure to sign up for my free six day mini course where I show you how my wife and I managed to make over 100 k in profit in our first year of business. So go to mywifequitherjob.com for more information, sign up right there on the front page and I will send you the course via email immediately. Thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job podcast, where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com.