Today I’m thrilled to have Ian Schoen on the show. Ian runs the popular blog and podcast, the Tropical MBA, and he’s one of the guys behind Dynamite Circle, a private community for location-independent entrepreneurs.
A while back, he also built Two Tree International, a global design and manufacturing firm to 4 million in revenue before he sold it for 7 figures in 2015. Ian has a wealth of experience when it comes to ecommerce and entrepreneurship and there’s a lot to talk about today.
What You’ll Learn
- How Ian came up with the idea to sell valet boxes
- How he grew that business to 4 million in revenue
- How he validated his products before manufacturing them
- Ian’s main traffic and sales channels
- Why he decided to sell his company
- How his experiences led him to start the Tropical MBA podcast
Other Resources And Books
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Right now, Payability is giving away $1000 in gift cards to three lucky Amazon sellers. Click here to enter The Ultimate Amazon Reseller Giveaway today. Rules apply. Giveaway ends on February 28, 2018.
Klaviyo.com – Klaviyo is the email marketing platform that I personally use for my ecommerce store. Created specifically for ecommerce, it is the best email marketing provider that I’ve used to date. Click here and try Klaviyo for FREE.
Privy.com – Privy is my tool of choice when it comes to gathering email subscribers for my ecommerce store. They offer easy to use email capture, exit intent, and website targeting tools that turn more visitors into email subscribers and buyers. With both free and paid versions, Privy fits into any budget. Click here and get 15% OFF towards your account.
SellersSummit.com – The ultimate ecommerce learning conference! Unlike other events that focus on inspirational stories and high level BS, the Sellers Summit is a curriculum based conference where you will leave with practical and actionable strategies specifically for an ecommerce business. Click here and get your ticket now before it sells out.
Steve: You’re listening to the My Wife Quit Her Job Podcast, the place where I bring on successful bootstrapped business owners, and delve deeply into what strategies are working and what strategies are not in business. Now today I’m excited to have Ian Schoen on the show. Not only is he a successful ecommerce entrepreneur, but he is also the founder of the popular TropicalMBA Podcast, which you should all check out.
Before we begin, I want to give a quick shout out to Klaviyo who is a sponsor of the show. Always excited to talk about Klaviyo because they are the email marketing platform that I use for my ecommerce store, and I depend on them for over 20% of my revenues. Now, Klaviyo is the only email platform out there that is specifically built for ecommerce stores, and here is why it is so powerful.
Klaviyo can track every single customer who has shopped in your store and exactly what they bought. So let’s say I want to send out an email to everyone who purchased a red handkerchief in the last week, easy. Let’s say I want to set up a special auto-responder sequence to my customers depending on what they bought, piece of cake, and there is full revenue tracking on every single email.
Klaviyo is the most powerful email platform that I’ve ever used and you can try them for free at mywifequitherjob.com/K-L-A-V-I-Y-O, once again that’s mywifequitherjob.com/K-L-A-V-I-Y-O.
I also want to give a shout out to Privy who is also a sponsor of the show. Privy is the tool that I use to build my email list for both my blog and my online store. Privy is an email list growth platform, and they manage all of my email capture forms. In fact I use Privy hand in hand with my email marketing provider.
There is a bunch of companies out there that will manage your email capture forms, but I like Privy because they specialize in e-commerce. Right now I’m using Privy to display a cool wheel of fortune pop up. Basically a user gives their email for a chance to win valuable prizes in our store, and customers love the gamification aspect of this. And when I implemented this form email sign ups increased by 131%.
So bottom line, Privy allows me to turn visitors into email subscribers, which I then feed to my email provider to close the sale. So head on over to Privy.com/Steve, and try it for free. And if you decide you need some of the more advanced features, use coupon code MWQHJ For 15% off. Once again that’s P-R-I-V-Y.com/Steve, now on to the show.
Intro: 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’m thrilled to have Ian Schoen on the show. Now Ian runs the popular blog and podcast the TropicalMBA, and he’s is actually one of the guys behind Dynamite Circle, which is a private community for location independent entrepreneurs. And also a little while back, he built Two Tree International, a global design and manufacturing firm up to four million in revenue before he sold it for seven years in 2015.
Anyway, Ian has a wealth of experience when it comes to ecommerce and entrepreneurship, and there’s a lot to talk about today. And with that, welcome to the show Ian, how are you doing today man?
Ian: Hey Steve, thanks for having me man.
Steve: Yeah, so for all the listeners out there who aren’t familiar with your story, I’d like for you to start by telling us about the ecommerce company that you started and sold in 2015. So what did you sell, how did you come up with the idea?
Ian: So we had two major — excuse me we had to main brands. One was a valet parking equipment, and then the other one was portable bars. So like if you go to a conference center, if you go to a wedding, a lot of those bars are movable, and so we started a line of those. And how I came up with the idea was just through experience. In college I was a valet parking, and just kind of took note of the equipment.
So I went to school to be a product designer, so I was always kind of interested in physical products. So I went to school, became a product designer. I got out, got a design job, and realized I wasn’t going to live that corporate life. It just wasn’t for me. I thought back to my time as a valet, started to kind of look at that landscape. I started to look at the products that those guys were making, figured out that I could make a better product, and then I started selling them online.
Steve: That sounds really random. So sorry what was that first product for the valet, was it a box?
Ian: It was a box, so those big black boxes that you see outside of hotels and restaurants that store keys. That is like the main product that valet companies use to organize their company essentially, that’s where they keep all the keys.
Steve: Okay so that’s pretty random, like that’s not…
Ian: Totally random.
Steve: Yeah so how did you know — there aren’t that many valets out there, so how did you get a gauge of how much money you could make with that idea?
Ian: I didn’t really — it wasn’t really like that. So at the time I was like 26 years old, and just so like pinch a picture. I’d gone through college, I’d gotten a degree, I’d spent a bunch of money. And then I landed in San Diego California, and I was living at the beach and life was great. But then I was commuting up to this little town called Oceanside, and I was in some office park, and I was working for people that I didn’t particularly like to work for.
And I just kind of saw my future as a — it was just kind of dismal. The outlook didn’t look great to me. I didn’t want to end up working for the guy that I was working for. I did want to continue to make products. I thought that that was a lot of fun, but a year and a half in I was like this is not going to work for me, I’m going to figure out something for myself.
And I’d always kind of been like a little bit entrepreneurial in some things that I’d done when I was younger. But I just knew that I couldn’t sustain this kind of corporate lifestyle. So I just started to look around. I said what skills do I have, what connections do I have, how can I do something on my own? And my first business partner was actually the owner of that company.
Steve: Interesting okay.
Ian: Yeah, he had a direct line to China, so we were manufacturing in China. And so through that job I got to go to China I think once or twice and kind of understood the manufacturing process there, I had all the contacts there. And so at that point, like I said I kind of started to look back at my previous experiences. Okay I was a valet; they make these big metal boxes. At the job that I was at the time, we were doing some sheet metal work, so it wasn’t too hard to put together on the sourcing side.
Steve: So that implies that you designed the boxes yourself with card software?
Ian: Yeah, so I used SolidWorks at the time. And the first product that I designed was a complete disaster.
Steve: Well let’s talk about that, let’s back up. So the whole manufacturing process, so you design something using the software at your work, or did you SolidWorks?
Ian: So just to get into the nitty-gritty details I guess, I formed a partnership with the guy that I used to work for, the owner of the company. And so at that point we had formed a new company.
Steve: Got it okay.
Ian: So I had a license of SolidWorks and all that stuff.
Steve: Okay, and in terms of just like funding this, it sounds a little expensive, right?
Ian: It wasn’t too bad no. So we took a loan out from that guy, from the CEO of the company for about $50,000 and funded some of my time, and then our first container.
Steve: Okay and did you just order a container right off the bat?
Ian: Yeah, so we went through the sampling process of course, got the samples in, evaluated them, thought they were going to be great. And then we ordered a container. And what happened after that was more of a disaster.
Steve: I want to hear about the disaster actually, it sounds interesting yeah.
Ian: Sure, one of the things about design is it can look really good on SolidWorks. It can really look good on paper, but once you get out into the field you find out different things. And these metal boxes were rolling over a lot of different kinds of surfaces, and valets aren’t the most careful. They’re like I was when I was 20 years old parking cars, they don’t care, right? You just want to get off work so you can go have a beer, so you rolling this thing over cobblestone, you’re rolling it over gravel, you’re rolling it over whatever.
And our first production run, the way that I designed the casters in these podiums wasn’t structurally sound enough. So what was happening was we were setting up these podiums, guys were using them for a month or two, and then they’re being completely destroyed. That was a problem for us because this was a high ticket item, it was like $550 and shipping wasn’t cheap either. I think either way, I don’t know it was $150 to ship these things.
So we had a real problem on our hands, and we had to figure out how to solve that. So instead of crying because that’s what I wanted to do, we quickly developed a new base for these units. And luckily part of our value proposition was to make knockdown podiums. So basically what that means is they assemble. Because what had happened before in the industry was they were just shipping these huge boxes on pallets, and actually that’s what we eventually came to as well.
But our initial value proposition was, hey let’s sell these things to these guys and let’s do it knock down so they’ll save 50% on the shipping. So in doing it knockdown we actually had replaceable parts. And so we were able to actually replace and service those bases in the long run.
So the knock down part didn’t work out for us, it turns out that valet companies, they don’t want to assemble products, they’d just rather spend $150 to ship it. But the replaceable parts, that actually worked out for us in the long term, and that’s something that we continued with that product line for seven years, and it became a real good value proposition for that industry.
Steve: It seems like the stuff that you guys had sold in the past are all pretty big, the portable bar is pretty big also, right?
Ian: Yup. So and that something — like most of this wasn’t intentional, so keep that in mind. I was 26 years old. I was just trying to figure out a way to get out from underneath my boss, I just wanted to go to the beach and hang out and travel and make some money and not have to go to an office all day. It came from my experiences, but a lot of what we did in the beginning wasn’t intentional.
Now, we became more intentional as we went along, and as we learned. But yes, a lot of the products that we sold were big products. A lot of the products that we sold could be manufactured at many of the same factories, so there was a lot deficiency there. A lot of the products that we sold were expensive too. So one of things I figured out early on in this business was one thing was I wanted customers, I didn’t want clients. And I wanted to sell expensive items, and I wanted to sell B2B.
Steve: Interesting, can you elaborate on that, so why B2B, why customers not clients, what was your rationale?
Ian: Sure, so customers not clients. Customers, they pay you money, you give them the product, the experience is over, or hopefully they buy from you again. Clients it’s like an ongoing. It’s an ongoing situation; you’re constantly trying to please them. There is a thing about client work is that I had seen in the job that I had. They were doing client work, and I had seen all the hoops that they had to jump through for these people and how little money they made.
I just thought I just want to make a product, and I just want like push it out to people. I want a customer to just pay me money. I don’t want to have this ongoing conversation. What was the other thing that you asked?
Ian: B2B, so we actually experimented with some B2C so business to customer and products. And actually not B2B, it was a lot more my style. The thing about B2B is like these people especially in the valet industry and the bar industry, they really wanted the best equipment, and they really wanted to talk to somebody about how to develop the best equipment, and we were really good at that. So in terms of like product development, it was very easy for us to develop the best products in both of those industries because we’re engaging with our customers.
And these customers aren’t like not picky consumer customers. They are like leave your review and they don’t say anything. They’ll actually call you and say, hey man, like this is it working out, you guys should design this or develop this. And for like a middle manager at a valet company to be able to have that kind of power to say like, hey man, you got to change this so it really be nice we would order more of these products from you, that’s like super empowering for that guy. And for us there was a winner because we got to make the best products.
Steve: I would imagine B2B, once they buy from you, they’ll buy from you over and over, and over again, whereas a consumer customer like their memory is a little less, it’s shorter memory.
Ian: Right, you’re absolutely right. So once you can get in with these companies, and it wasn’t always easy, we had to fight for it. But once you’re in, a lot of times you’re in until that purchasing manager is gone, or until a better product comes around which never happens. So yeah a lot of times we need to sell the first time and then seven years later we’re still doing business with them without any additional marketing costs.
Steve: Okay let’s — I want to talk about the manufacturing process because very few of the people that I deal with actually go through and manufacture a large product from scratch, which is what you guys did, right?
Steve: So you put together your SolidWork’s design and then you get a prototype, the prototype looks good, and then you ordered a container. And it sounds like only after selling it did you discover these problems. I’m just kind of curious what the process was like to iterate over your product.
Ian: Yeah so in terms of the design process, it was just sad, it was SolidWorks. It was send it over to the factory, the factory says hey we can do this, we can’t do that.
Steve: Did you have to fly over there to deal with this stuff, it seems like doing this remotely would be quite difficult?
Ian: Yeah I was over there all the time.
Steve: Okay, all right.
Ian: Sometimes I lived there for weeks at a time just like sourcing new factories, visiting factories and things like that.
Steve: How did you find the factory?
Ian: I had a sourcing agent there, and he found the factories. And a lot of times like once you find — like in China, once you find where the manufacturer is for the zipper, then there’s like a whole bunch of other zipper factories right around there. So it’s just the way that China is organized. So for me we’ve kind of found some metal manufacturing, and then in that area we found other suppliers.
So finding factories wasn’t too tough because I had an agent. Now there’s a lot that goes on with those factories. So was my agent like taking a kickback from this factory, it’s like absolutely. So whenever I wanted to like switch factories or find a new product or something like that, it was always a struggle because he’s got these relationships.
So this is a small insight into China, but in terms of the manufacturing process, we would design on SolidWorks, we would find a factory or we’d have an existing factory that would make a prototype. They would send it over to us, we would send back changes, and then eventually we would go to production.
Steve: Did you have redundancy in terms of your factories, because I have a buddy who used to make baby strollers, and he said, make sure you have redundancy with all your parts otherwise you’ll get screwed at some point.
Ian: Yeah we had redundancy. We had multiple factories like sometimes if you’d be ordering a couple of hundred products, we do a test run with another factory and say okay you guys do 50 or sometimes we’d split up 50/50. But to have redundancy in products like that like metal products you have to have very tight tolerances. So basically meaning these guys have to be making these products on jigs, and they have to make them so the parts fit together.
So I said, one of our value propositions for all of our product lines is that we had replaceable components. And so that meant if you had A factory build the valet podium, then B factory’s part had to fit that. And that is actually a lot harder than it seems. So we did have redundancy in our factories, but most of what we did was we had this factory make this product line and this factory make this other product line.
Steve: I see and with the parts kind of similar with both product lines or?
Ian: They were similar. I mean it was just metal manufacturing. So a lot of the same processes yeah.
Steve: And in terms of pricing, did you determine the final retail price based on your cost, or did you go in with a cost in mind?
Ian: So we can talk about the valet industry for a minute.
Ian: So when we came into that industry, I think there was like one or two players. There ended up being maybe five or six now. We were always a leader, probably starting year two in the business. And when we came in, I think a standard valet podium was like $549. They were manufacturing in Los Angeles, California which is where probably arguably the most valet parking goes on in the whole world.
Ian: And we came at I think like for 499 something like that, so a little bit cheaper. It was easy for us to be cheaper because we’re manufacturing in China, they are manufacturing in the United States. We found the industry to be somewhat price sensitive, but what they were more interested in was new products and durability. So in terms of our pricing, we kind of anchored around what was already existing and happening.
What ended up happening though is we figured out a way to create the lowest cost product in the industry, no one was able to actually even touch it I think even to this day just because we had so much volume. So as the years went on we drove the price down of that standard valet podium to $399, and then we drove the price up on premium products.
So then we started to develop products that were twice as big, we started to develop products that were made out of wood, we started to develop products that were weather resistant stainless steel, all the things that this company that was currently manufacturing in Los Angeles could not do.
Steve: I see.
Ian: So we drove the price down on their core product, and then we started to offer more expensive products. So we weren’t making a ton of money on that entry level product, but we’re making lots of margin on those more expensive products.
Steve: Interesting. So what were the margins on that low end product?
Ian: They always stayed above two.
Ian: Yeah I tried and everything that I sold I try not to sell for less than two, because we had a decent size operation. And of course we did some marketing and things like that. So it never made sense to sell products for less than 2X.
Steve: It seems like 2X is a little low actually.
Ian: Yeah I guess it depends on the volume. Like I said, we’re doing a fair amount of volume there, but then on some of our more expensive products the margins could be three to five X.
Steve: Okay and that’s where you made most of your cash?
Ian: Yeah it was easier to make it up there for sure.
Steve: Okay and let’s talk about marketing a little bit. So you’re doing B2B stuff, does that mean a lot of it is just non advertising based, it’s like calling these companies and doing a lot of legwork?
Ian: Yeah totally in the beginning, that’s what it was all about. So kind of back to the beginning of the story, when I graduated from college I didn’t know much about the internet. I was focused on product design. And then we got this container and we were just like, okay we had a spreadsheet, we started calling valet companies and they were interested in the product. And so that’s how we initially started selling.
But we started to figure out pretty quickly that that wasn’t going to be enough. Like we could call everybody that we found on the internet, but it wasn’t going to be enough and it was going to be fast enough. So what a lot of these companies were doing at the time was going to these trade shows, and there was like two or three industry trade shows. We decided to just skip those trade shows and bust in internet marketing.
So me and my business partner Dan sat down and we said we’re going to figure out how to use this internet. I think one of the first things that we did was like a Yahoo directory or something like that. And then from there we just started to learn how to do SEO. So we went on the front page, and then all of a sudden, two years later we’re dominating the front page of Google with like three or four listings.
And so while all of our competitors were spending their time going to these local or going to these trade shows, no one was investing in internet marketing.
Steve: Interesting, so what are some of the things that you did to get on that front page of search?
Ian: Oh gosh like back in the day it was much different than it is now. We had like little networks that we did, we were doing link building, we did some content marketing. I did some little clever things, like I went to an exotic car dealership, and I learned how to valet all of their expensive cars, and we put out that concept marketing. But mostly it was link building back in the day.
Steve: Okay, I mean has it changed, you ran this up until 2015, right?
Steve: After all the Google updates and you weren’t doing anything grey hat or black hat, right?
Steve: Yeah correct. So at that time, by the time 2015 rolls around, we had been established on the front page of Google for like a lot of key terms. And we continued to stay there, because yeah we did mostly white hat to get there. So that’s the thing is like once you’re there, we had an established I mean from 2006 or seven, and we had become the industry leader in these different niches.
So yeah Google wasn’t really a problem. Of course there was an update here or there that knocked us down for a few key terms or whatever, but we never had a problem with that.
Steve: Were you guys running pay per clip also?
Ian: Yeah we were running pay per click, and this was around the same time we started to experiment with like Amazon and things like that. But being B2B, there was definitely some need for that, but a lot of it was just honestly like word of mouth, so it was kind of nice, because also we had physical products. Our products were actually like out in the field. And our logos won that, our phone numbers won that.
So even to this day, you walk down the street, I see in Los Angeles or in Chicago or in Dallas, I see our podiums everywhere. And it’s a very visible product like that, and if you’re in the industry you kind of know, because it’s only four or five players. So in terms of like needing to actively market, yeah we did some of that and a lot of our PPC came from people that were maybe new in that industry getting into it and hadn’t heard of anybody before, and searching online.
Steve: Okay and so it sounds like you made the most of your sales through Google as opposed to cold calling and industry trade shows?
Ian: We did a lot of cold calling.
Steve: Oh yeah okay.
Ian: Yeah absolutely. So I mean we learned how to use the internet, but that was in conjunction with cold calling. So like I remember gosh, I remember paying people on Upwork or whatever it was called at the time $50 and they would go out there and scrape the internet, and next day I’d have like a list of 200 valet companies. I’d sit down in the conference room, and I call every single one of them.
Steve: How did you get their attention, like what was your pitch?
Ian: At the time, like I said our pitch was we have replaceable components. So you’re able to service these products, and we have cheaper products, and so he gives us a try.
Steve: And the other companies they never adapted?
Ian: Eventually some of them started to move a little bit faster, but not as fast as we could move for sure. And keep in mind too these like the valet industry is not a very big market, and it’s not a very competitive market. So you better succeed in thinking about that market. Now the bar industry was much bigger and there was more opportunity there. So it was actually a lot more competitive. So some of the products that people were designing were pretty innovative, they had good bar structures etc.
Steve: Interesting, so I’m just curious myself then why did you decide to exit these physical product companies? It sounds like you were the leader and it was a cash cow, and you could kind of sit back and just relax a little bit, right?
Ian: It’s a good question yeah. I didn’t want to solve those kinds of problems anymore. And this is me and my business partner we have like talked about this a lot, and I think that there’s a lot of ways which we could have continued to own this I’d say and been happy at the time. I got myself to a point where I was probably working about five hours a week. We had a team of about 15 people and that was just too much for me.
I didn’t want the liability anymore, I don’t want the risk. And keep in mind there wasn’t a lot of risk or liability, but I just didn’t want the mind share of it anymore. And so we decided to sell it. Now I don’t know if that was the best decision. It was certainly not the best financial decision, but in terms of being able to start a business and exit a business, to me at the time, that was important. I thought that that’s what made a successful entrepreneur. I’m not necessarily sure I agree with that anymore now that we’ve exited.
Steve: It’s interesting, so if it was only five hours a week, that doesn’t sound like a whole lot of mind share, right? Were you just worried that the whole thing would come crumbling down at some point?
Ian: I mean I had at the time when we sold it. So we started the business in San Diego, California. We had offices there, and a warehouse there. I had moved to Austin Texas, and so I was like removed from the team, and I had team calls and whatnot. Did I think it was going to come crumbling down? No, did I think it was going to grow at the same rate that I had in the past? Not really.
I knew that to get it to be a ten million dollar company, I was going to have to actually sit back down in my chair and work for 40 hours a week, and that wasn’t something that I was willing to do. So in retrospect like should I have just kept this little asset that was churning out a decent amount of profit every year for five hours a week? Yeah, the smart financial decision was yes, but what I was thinking at the time was, look I’ve got a boatload of money wrapped up in inventory that I’d like to have in my bank account. I’d just like to take some money off the table.
Steve: Got it, okay.
Ian: I knew that I could start another one of these businesses again if I wanted to, and have some other things going on. And so it was just time for me to take money off the table.
Steve: So after it sold — I did want to talk a little about the sale, but you had some intentions with that money. So how did you invest that money after you sold it?
Ian: I haven’t done a great job of that honestly. It’s a lot harder for me to be an investor than as an entrepreneur. It’s much easier for me to sit down and start a business with very little money than it is to invest. I’ve invested in some things like property and some other businesses and things like that, but I wouldn’t say I’ve put that capital to as good a work as it was doing in that company.
Steve: I mean the reason why I ask is I have buddies who’ve sold their businesses and then they get this money and they’re like okay now what do I do? I’ve been spending all my time on this company, and now I’ve got nothing to do.
Ian: I have plenty to do, I have a lot of hobbies that I enjoy, and I have another business. But in terms of like making that money work for me as good as it did, and perform as well as it did in that company, I haven’t found another vehicle for that yeah.
Steve: Okay and how do you sell a company, how did you find someone who wanted to buy like a portable bar company and a valet company?
Ian: So the first thing you don’t do is you don’t call your competitors. That’s one of the things that I did. I ended up calling one of like our competitors, he wasn’t a direct competitor, they were making similar products to us, and I started to show them what we were doing. It got to the point where I started to sign the NDA, just didn’t really feel comfortable about this guy, and of course what happens six months later is he ripped off a bunch of the products.
Steve: Uh man okay.
Ian: So number one unless you’re already engaged with your competition, I wouldn’t recommend calling them, because things like that happen all the time. The second thing I did was I figured out what I wanted to sell the company for, I figured out what a number for me would be where I would feel happy, and it would be a meaningful number. And I think that’s important because you go to these brokers which we eventually did, and they’re going to tell you whatever makes sense for them.
So, oh I think I have a buyer for this company, some million dollars. Well I’m valuing it at five million dollars. Well we’re not going to represent you well; we don’t think the market can bear that whatever. So figure out what number is right for you. And then we went to the brokers and try to see if they thought this might be something that would sell.
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What are the multiples like on an e-commerce physical products company, are they on the order of like 3X or?
Ian: Yeah I think it’s anywhere between one and five.
Steve: One and five.
Ian: Or something like that yeah. For us we had a couple of advantages and a couple of disadvantages. One was that we were growing year over year like crazy. So that made it a little bit hard to value the company, but it was good. Now it was bad because a lot of buyers came to us and they said, you guys are doing great, I’m not sure I can really offer anything to this situation.
So in retrospect like looking back, I’ve talked to a lot of buyers, people that have sold their company, and a lot of times companies get sold when they’re either flat or on the downturn because people feel like they can come in and actually do something. People were looking at our business thinking like, oh I don’t know what I can do. The other thing about our sale was it took 18 months. So it was a very long process. That wasn’t something that I was prepared for.
So at the time when we started getting ready to sell, just coincidentally our GM who had helped me grow the business through the years, he had enough, and he was like I’m ready to go. And I said, just stay on for like three months, I’ll pay like 50 grand, that will be great, we’ll sell this thing. And he was like no; I’m ready to do my next thing or whatever. But that’s what I really thought, I was like, oh three months we’ll sell this thing. It ended up taking 18.
Steve: Why did it take so long?
Ian: I think it just takes that long a lot of times. This was a financial sell; this wasn’t like a strategic acquisition or anything like that. So we went through probably five or six suitors, five or six people that dug into the business, that took a look at everything that we’re doing. And it turns out a lot of those people weren’t actually even qualified to buy the business. So that was a mistake on our part, on our business progress part is that we didn’t qualify them properly.
Steve: I see.
Ian: So at the end what I started doing — this is now talking to brokers, they say yeah this is what you do on day one. I asked for a personal financial statement from people that were interested in buying my business, and that helped me to qualify them to see if they’re actually able to buy that business.
Steve: Interesting. I imagine you get a lot of tire kickers that just want to see your numbers, and then don’t do anything about it.
Ian: For sure yeah. And this was not — this was a seven figure sale, so like you have to imagine who’s actually going to buy that business, right? And for us like we weren’t at the point where it’s like a strategic purchase for like a PE firm or someone like that. This was going to be somebody and ended up being someone with like that kind of money in their bank account and able to buy it.
So when you start to think about like how many people do you know with that kind of money, I don’t know. I guess it depends on the circles that you run in, but in and that will also be interested in buying a valet parking equipment company that does design work. So I wouldn’t say that we got lucky. For sure I think there’s a lot of people that are kind of looking for a “retirement plans,” and the person not bought our business, that’s exactly what they were up to.
Steve: I see, so it wasn’t a competitor or anything like that in the end?
Ian: No, and I just want to mention this about like the buyer profile. The person that bought our company was looking for a retirement plan. In retrospect like one of the things that I think about after selling this business was this could have been my retirement plan.
Ian: I spent seven years of my life plus building this business and then I sold the asset right when it got sweet.
Steve: Well I mean you moved on to better things. Let’s talk about TropicalMBA a little bit, when did you guys start, was that actually before the sale?
Ian: No, TropicalMBA I started, gosh TropicalMBA started 2009 I think.
Ian Yeah basically what was going on was me and my business partner — it was like two years into this business, we were super lonely. We didn’t know anybody that was up to the same things that we were doing. Two young dudes trying to grow an ecommerce physical products business while traveling. It was kind of like we were on an island.
So what we did was we were having basically daily calls with each other for two hours because he was living out of the country and I was living in San Diego. And we said like why don’t we try to record some of these calls, why don’t we try to record some of the problems that we’re going through and see if anybody else is having these issues? And so that’s what we did is we flipped on the mics, we were both super in the radio markets. So we thought it’d be cool to make a radio program.
And yeah seven years later now it’s turned into the TropicalMBA Podcast. It wasn’t that initially, but that’s what it is today.
Steve: What’s funny about that story is that I started in 2000, and also same issue as you. I had no one to talk to; it was just my wife and I, very lonely. And instead of doing a radio show, I started just writing about running our business. And I guess we’re in similar positions today. I had this like whole troll of posts about all the struggles that I had bringing up my e-commerce store.
Ian: Yeah it’s like we’re on opposite sides of the globe trying to find each other and I hop into the internet. Yeah I was like desperately searching for people like you too that were like writing about what was going on, because it just felt like nobody was doing it at the time.
Ian: And then how did that evolve into Dynamite Circle? Did that start shortly after?
Ian: Yes, Dynamite Circle is our community of entrepreneurs that are doing business online. So the way that the DC started was we had the podcast, we were talking, and then we decided to do an in person meet up. And so I think 20 or 30 of us met up in the Philippines, and it was like on the back porch of our buddy’s resort. And we thought like, hey this is like really cool, how do we stay in touch? And so we started a forum.
And so eventually that forum turned into about 1,500 people what it is today, and we have events all over the world. So this year our big event was in Bangkok. About 300 people showed up, and then we have another event in Austin in the summer, and then we have member hosted meet ups throughout the year. So it’s basically for us it’s trying to solve this problem of entrepreneurial loneliness.
And a lot of the problems that we were solving in the beginning might be loneliness and things like that, but the problems that we’re solving now are bigger as we’ve grown too. So now it’s how do I — like you said, how do I reinvest his money that I made from selling this company, how do I acquire other companies, how do I manage my 15 employees? So it’s kind of cool because as we’ve grown, the community has also grown.
Steve: So I’m just curious, are you monetizing like TropicalMBA and Dynamite Circle? Where is your revenue coming today?
Ian: Yeah. So TropicalMBA that has always been like a passion project, we have always just focused on telling our story initially, and then now telling the story of other entrepreneurs. We have just recently started to monetize that through ads. When I say monetize, I mean not even cover the cost. So we’re almost covering the cost. And like I said, the idea behind that project is to share stories. And so I never really imagined that turning into a business, it is just something that we love to do every week.
The Dynamite Circle is a profitable business. It’s a community, there are properties to use and then we charge for people to come to the conferences. But I don’t want to paint a picture that we’re making millions of dollars or something like that. Again the idea of the of the Dynamite Circle like for me I have a network of 1,500 people in that community, and like these are people that I do business with. These are people that I trust; these are people that I learn from. So I’m not sure if we’re ever going to really monetize that business.
Steve: Okay and I’m just curious, any thoughts about starting another ecommerce business, or are you done with physical products altogether?
Ian: I take your question. I’d never say never, and like it’s funny like I walk around all the time and have the same on the internet all the time and I see opportunities everywhere for physical products. So I think people can get kind of down, it’s like with Amazon these days. So it’s like oh I’d like to get into physical products, but everybody is already selling them on Amazon, and there’s a million other products out there.
I see opportunities every day from million dollar businesses. I don’t know if I’m just too lazy, or I just know too much. But the next physical product business that I do if I do one is going to be much bigger than the one that I did. And most of the ideas that I have are still in that one to five million dollar range. So for me it’s like it’s a lot of effort over and not a lot of money.
So the next time I do it it’s going to be big. But I want to say this about people selling on Amazon and getting disgruntled about something on Amazon and things like that. I still think today in 2017, the best way forward is to build a brand. I know guys that are selling seven figures a month on Amazon with arbitrage and things like that, and then I’ve seen guys that are selling seven figures a month arbitrage on Amazon and their business just goes away like that. That’s not a risk if you build a brand, that’s not a risk if you have real customers that you own. That’s not a risk if you’re actually developing good products for people.
Steve: Do you think that you can actually build a brand on Amazon without having your own property?
Ian: Probably, yeah I think you probably can. I’ve seen it a couple of times. Actually there’s some — I’m into cars and racing and stuff like that, and there’s some shop products that I bought on Amazon and they have a brand on Amazon, but they don’t have a brand anywhere else. So yeah I’ve seen it a couple of times being successful sure.
Steve: So for the people — I mean you obviously talk with a bunch of entrepreneurs, do you recommend that people start on Amazon? What flow would you recommend for someone wanting to sell physical products today?
Ian: I guess it’s where you see the opportunity. Like for me the opportunity was to design and develop physical products because that’s what I had a degree in. So if you’re a person that has a degree in creative writing and you want to make physical products, like what’s your competitive advantage? Do you know more about Amazon than most people, do you know more about design than most people, what’s your competitive advantage?
I don’t think it’s a good idea to just get into anything whether that be physical products or information products or what not unless you have some kind of competitive advantage.
Steve: You know so I asked you that earlier question for selfish reasons, you’re a product design major. I was an electrical engineer. Recently I quit my job, and all those years of doing electrical engineering, I feel like went kind of down the drain. Are you using your product design experience right?
Steve: Oh you are okay.
Ian: Yeah so like I said I like to race cars, and so a lot of that is like problem solving. And actually a lot of that is sheet metal work which is what I was doing with valet parking equipment and with the portable bar. So yeah I’m still actively designing and developing products, but mostly for myself and for the cars that I work on. So, in that way I kind of get to scratch that itch in my own head.
But in terms of like waste, I’ve thought about that a lot too, because I went to college and it was really expensive, but I got that money back through that company and through those experiences, I got that money back. And you and I wouldn’t be able to have this podcast right now and be talking about this if I didn’t go through those steps.
So for me it just feels like a progression. Can I go back and do product design, can you go back and do electrical engineering anytime you want? Yes of course but I feel like for me like that stage of my life is kind of over. I might revisit it, I’m happy to advise people on it, that’s really fun for me now. But I actively I’m not pursuing that to make money anymore.
Steve: Okay yeah fair enough. I know I looked on your Twitter feed just for kicks here today. It looks like just recently you decided to try to drive a car on two wheels.
Ian: Yeah, this is what you do when you’re part time retired is you find fun things to do with your friends yeah. So it’s called car skiing, so we built a ramp and we tried to see if we could learn how to drive on two wheels, and it’s actually like a lot harder than it looks. And is actually like a lot more modifications to the car that need to be done for that to be easier and effective job.
Steve: And is really random, like you had a Jeep Grand Cherokee I think, right?
Steve: And of all cars you chose a jeep to run on these two little wheels, right?
Ian: Yeah. It was fun so yeah that’s what I do my off time, it’s for my Twitter and Instagram and hopefully you don’t watch me.
Steve: So it sounds like right now you’re just enjoying life and doing what you want to do?
Ian: Yeah enjoying life, working pretty hard over at the podcast over at TropicalMBA to tell better stories. So two years ago we brought on a producer, producer Jane. She is a professional producer, she has worked for the BBC, and I credit her with like most of our success lately. But she has really helped us to build better stories.
So we actively work on that every day and we actively work for the DC every day and trying to figure out what do these people want, where do these people want to meet, how are these people going to grow their businesses, what kind of resources can we provide these people? So that’s a big focus for us is the DC and also the TropicalMBA.
Steve: Okay, and Ian if people want to find you and learn more about DC and the TropicalMBA, where can they find you?
Ian: Yeah I’d say just go over TropicalMBA.com first and check out a couple of podcasts, and see if that makes sense for you. And I’m on Twitter @anythingian.
Steve: Cool. Well Ian thanks a lot for coming on the show. I really appreciate your time, and hearing about your experiences.
Ian: Cool Steve, thank you and take care.
Steve: All right man and take care.
Hope you enjoyed that episode. What I love about my guests is that they all have their own unique stories. And I love how you can make money by selling very random items like Ian did. For more information about this episode, go to mywifequitherjob.com/episode196.
And once again I want to thank Privy for sponsoring this episode. Privy is the email capture provider that I personally use to turn visitors into email subscribers. They offer email capture, exit intent, and site targeting tools to make it super simple as well. I like Privy because it’s so powerful and you can basically trigger custom pop ups for any primer that is closely tied to your e-commerce store. If you want to give it a try, it is free. So head on over to Privy.com/Steve, once again that’s P-R-I-V-Y.com/Steve.
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Now, I talk about how I use all these tools on my blog, and if you’re interested in starting your own ecommerce store, head on over to mywifequitherjob.com and sign up for my free six-day mini course. Just type in your email, and I’ll send you the course right away, 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.