Audio

116: How To Rank Any Website In Search With Brian Dean Of Backlinko

How To Rank Any Website In Search With Brian Dean Of Backlinko

Today, I’m thrilled to have Brian Dean on the show. Brian runs the incredibly awesome site Backlinko.com where he teaches others how to get their sites ranked in search.

And unlike other SEO gurus out there who make ridiculous claims, Brian totally walks the talk. He’s got an amazing array of articles (and by array I mean 30 or so) that go into incredible depth and he ranks for super competitive keyword terms on the front page of search.

For example, just now, I typed in “how to generate backlinks” and guess who popped up? Now I actually have never met Brian in person. And usually I don’t interview people I don’t know personally but Brian is so awesome that I knew I had to have him on.

What You’ll Learn

  • Why Brian decided to start a blog about SEO
  • Brian’s main strategy when ranking a site in search.
  • Where Brian promotes his content.
  • Brian’s view on removing bad links and using the disavow tool.
  • What’s working in terms of search engine optimization today

Other Resources And Books

Transcript

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 to simply 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.

Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email. Now on to the show.

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 Brian Dean on the show. Now Brian runs the incredibly awesome site backlincko.com, where he teaches others how to get their sites ranked in search. Unlike other SEO gurus out there who kind of make ridiculous claims, Brain actually walks the talk. He’s got an amazing array of articles and by array I mean like 30 or so that go into incredible depth, and by incredible I mean these posts are ridiculous. He ranks for super competitive keyword terms on the front page of search.

For example, just now I typed in how to generate back links and guess who popped up in the top 3? Now I’ve actually never met Brian, but we were introduced by our mutual friend Divesh. Usually I don’t interview people I don’t actually know personally, but Brian is so awesome that I knew I had to have him on. With that, welcome to the show Brian, how are you doing today man?

Brian: I’m well. Thanks for having me Steve.

Steve: It’s funny, I actually meant to interview you last week, but we ended up just chatting for like an entire hour, and we had to reschedule this whole thing.

Brian: Yeah I know, but it was good because we got to know each other and then now we can just jump right in.

Steve: Now I can actually ask you the more difficult questions that I probably wouldn’t have asked you before.

Brian: Right.

Steve: A bunch of people in the audience probably know who you are already. If you wouldn’t mind just giving a brief intro about how you got started online, and the history behind Backlinko, that would be awesome.

Brian: I got to started online in 2008. I had just quit graduate school because I didn’t really like it, and I wanted to get a job. Unfortunately I quit in 2008 and this was right when the financial crisis was happening. Unfortunately because of that, I couldn’t find a job. I was leaving in my parent’s basement. I had no job, no money, no nothing. I think because I had so much free time, I came up with my first business idea. So I was like, wow I actually have an idea for a business.

Basically what it was, was sort of a search engine, but instead of typing in a keyword and getting 10 blue links, you type in a keyword and you’d get the answer to your question. For example, if you typed in something like how many calories are in an apple, it would just say 293 or whatever. I studied nutrition in school, and that’s what I wanted to make the search engine, a nutrition search engine where you just get your answers. This is basically what Google has now with knowledge graph. And to show you how naïve I was like Google just came out with this like 2 years ago, the biggest most valuable company in the world, just 2008 and I thought I could come out with it, do the same thing. Obviously it wasn’t going to happen.

So anyway, at this point I was still pretty naïve and thought I could do it. I went to a bookstore and I just grabbed my first business book off the shelf that I saw, because I knew nothing about starting a business, called the 4 Hour Work Week which is obviously very famous now. It was like a mind-blowing experience to read that book. It was crazy. It totally changed the direction of my life. Basically in between 2008 and 2013 from when I started Backlinko, I did a combination of things like freelance writing, affiliate marketing, a lot of black hat SEO, and I sort of learned the hard way from a lot of failures, how not to do SEO.

In 2012, that summer, I put the pieces together and finally created a site that ranked well and was way high, and it was a real branded site and made legitimate money. At that point I was really into white SEO. I had sort of dabbled in, in the past, but I never really had success. I always end up going to broadcast stuff. And it was my first time white hat SEO was working. I was like, this is cool. Let me learn more about it.

When I went to read more about white hat SEO, I couldn’t really find anything. Everything was all, things like create great content and you get links, and just basically create great content and phrase a million different ways. I wanted some good, actionable stuff and I couldn’t find it. I decided to create Backlinko basically to create the blog that I wanted to read. That’s why I started it.

Steve: It’s interesting though. Did you have luck with the black hat stuff in the past?

Brian: I had mixed results. I had some luck, but it never lasted long. I was really late on all the trends. Like whatever trend was happening, by the time I heard about it, I got in and it lost like a month. Whatever kind of loophole worked for a while, people were gaming it, the word finally spread, I heard about it and got in at the wrong time. Kind of like the stock market. By the time you hear of stock that you should invest in the stock, it’s probably too late. It’s the same thing with me and black hat SEO.

Steve: So just curious, those other sites that you used black hat on, are they still around or did they get killed by like the different algorithm changes?

Brian: They got killed. I had– I built over 200 sites during that time.

Steve: Holy crap, wow!

Brian: And they are all gone I think. I don’t even know, maybe not. But I haven’t checked.

Steve: That’s like one a week.

Brian: It was pretty prolific. At one point, I had like 150 active sites going. That was in 2010 and Google Panda wiped that one out. That was like one day all gone.

Steve: Oh my goodness. That’s crazy. Why SEO of all the possible topics that you could have written about because you are going up against like Mars [ph], Search Engine Land and some of the big guys and yet you outrank them today.

Brian: Well I think it did– I didn’t go into Backlinko thinking like I’m going to beat these guys because like you said, I’m one guy, running this blog on my home office. Mars for example has 200 employees. It’s like, wow, how could I ever compete with these guys. I didn’t really go in as I’m going to go head to head with Mars and all these guys. Instead I decided to focus on one little thing that I could write about better than they could, which at the time when I first started Backlinko I wrote all about link building. That was the one topic that I really focused on. Everything was about link building; the site was about link building.

That way I was remembered for one thing, and that was my differentiator. That’s really what made me different than other blogs because like I said, they did a good job with some things but when it came to link building, they were really lucking. I come in and fill that need. I didn’t think today that for a lot of these terms, a lot of these topics, I’ll also be competing with them outside of link building, but when I first started, I decided to focus on that one thing.

Steve: Let me ask you this, so you got Backlinko and it actually ranks for a lot of keywords related to search. Do you feel like now that if you wanted to expand into different topics now that it will be difficult on that particular blog?

Brian: That’s a really good question Steve. I think that it’s not that I’ve dabbled in it, so for example I actually see [inaudible 00:08:00] someone is on my door.

Steve: Okay, you want to go grab it?

Brian: Yeah.

Steve: If you are listening to this at six minutes 50 seconds, edit this whole section out because someone is at the door.

Brian: Steve, sorry about that. I do everything, put the phone on silent all that stuff, but that’s the one thing I don’t know how to shut off. All right, so I think– oh my god, hold on a sec. I don’t know what the person wants. What is that honey? No I looked them in already.

Brian: Steve? Sorry dude, I don’t what’s going on, someone keeps ringing my door bell, I’m getting like ding dong ditch over here.

Steve: You are a popular guy man.

Brian: I guess so, I think actually it happened kind of during the questions, so I think you just ask the question, right?

Steve: Yeah, so we were just talking about whether you could expand beyond back linking and SEO with your current blog, or we just start from there.

Brian: Okay so I’m going to just…

Steve: Yeah just start talking.

Brian: Okay, well Steve I actually have dabbled in this and tested it. And recently or no it wasn’t recent, it’s about a year ago, I started writing about conversion optimization. It was something that I was really interested in because SEO is great, but I also wanted to convert these people. And I realized I didn’t have a lot of knowledge about conversion optimization, especially when it came to conversions for blogs, so basically building your email list.

And I just started to test a bunch of different strategies and write about what I was experimenting with on the blog. And in terms of reception because there is a lot of overlap with people who are interested in SEO are usually also interested in building their email list, it was very well received and I do rank for some competitive key words in that space like list building.

Google doesn’t really care if you branch out into other topics. Of course for your core competency on your site I think from what I have seen you definitely rank better for the keywords that are more closely related. But if you created a single page that’s outside of your niche a little bit, and it’s really well received and has those signals that Google wants to see, they don’t really care what the rest of your site is about. That page is going to provide a good user experience for their users, so they are going to show it to a lot of people.

Steve: And do you plan expanding the number of posts on your blog to significantly higher than what you have right now?

Brian: Not really, so I mean I’m obviously going to expand it as I publish more stuff. But I don’t have a plan to switch to some like a weekly schedule or anything like that, because this really viewer post, but in depth has worked a lot better for me, so I’m just going to stick with that.

Steve: Yeah I mean just for all of you guys listening out there, Brian’s post, he doesn’t have a whole lot of them, but each one is like equivalent to like 10 blog posts in terms of depth. So that’s how he’s been able to just kill it in the white hat SEO world. So I want to get this question out of the way first, because a lot of — I have been approached by SEO agencies, a lot of my students get approached by these guys. What is your opinion on having someone else do SEO? Just curious what your opinion is?

Brian: My opinion is don’t do it, because it’s a mine field, it’s literally like a mine field. Like you can get to the other end okay, but the chances are very slim.

Steve: Yeah and I have a couple of stories to share too, like I have had buddies who’ve used outside SEO agencies and they worked in a short term, but then once Google changed the rankings their site basically tanked. And you never really know exactly what they are doing.

Brian: Exactly and if you don’t understand SEO, even if they show you everything they are doing you don’t know whether it’s good, bad or in between. So I think even if you are going to hire someone I recommend trying to do a series out that way. If you do hire someone down the road you can say, okay they are doing a good job, they are doing a bad job and you can separate the leaf from the chaff.

But if you’ve never done SEO and you are just like I don’t want to learn it, I don’t have time I’m too busy, I’m just going hire someone, it’s a recipe for disaster, because unfortunately most — not most, 90% plus of SEO agencies are just bad in the sense they’ll actually do more harm than good. There is about 7% or 8% that will give you a short term boost, but they won’t do enough to make it worth your time, energy, and money that you are giving them.

Because the agency models basically they don’t want to give you too good results in the first month, because then you are going to expect that for the next few months. If they double your traffic on month one, you are going to be like, wow this is amazing these guys are great. And they can’t follow that up with all the other months. So what they do is they purposely will kind of drip value so that you are increasing your traffic 10% month every month instead of getting a huge boost. That’s like 7% or 8% will do that which is good, it’s better than getting hurt, but it’s not really what you are looking for. And about 3% in my experience will care and they’ll actually do a really good work for you, so and yeah.

Steve: You used to work for one, right?

Brian: I used to run an agency.

Steve: Run it okay, yeah okay. So I’m just curious like can an agency really take the time and depth necessarily to produce awesome content that will actually get your site ranked? Like I can’t imagine an SEO agency writing the post that you’ve been writing.

Brian: It’s a good question, I have seen it done, but like I said it’s the 3% of the whole group that can do that, because what it takes is basically is a couple of things. One you need an expert onboard, so for example you run ecommerce site that sells some sort of high end coffee. You might be really knowledgeable about coffee, so the agency will actually have to work with you to extract your knowledge about coffee to create a piece of content about coffee that’s going be really unique, and it’s going to bring a lot of value.

If they just try to do it in house and use second hand sources and information it’s possible they can create something great, but it’s very unlikely. So you either need to have the knowledge or have them work with someone where they can hire an expert to consult with them on every piece of content. Because like you said one of the reasons people tend to enjoy the blog posts at Backlinko is because they are written someone who does a lot of SEO. I do SEO all the time. So I can write about that.

If I all of a sudden try to write about health and fitness, I know little bit about it, I eat healthy and exercise, but no means an expert, and I would have a hard time writing something that would stand out. It would just be like another blog post that will get lost in the sea. And if I hire an agency that wasn’t going to work with the expert, they are not experts, that’s type of content they’ll produce. So you definitely want an agency that’s going to be like, look we are going to work together and create something awesome, or we are going to hire an expert to create something awesome.

Steve: Yeah, and that doesn’t sound inexpensive either, right?

Brian: No, it’s definitely not cheap, so that’s the thing for everybody. I mean the agency is expensive for them. It’s not only do they need to get this expert on board which isn’t achieved. They need to hire someone to extract the knowledge from you if you are the expert or get an expert, then they need to write something amazing, edit it, sometimes have a costume designed, promote it, it’s really expensive for them to even do with their stuff. Plus they need to make money, right? So their margins need to make sense.

So I think for a good SEO agency to even talk, to even get a meeting with them, it’s only at least $3000 a month. And that’s just like the base, I mean that’s if you want to think out like one great piece of content a month, and they promote — create and promote it for you.

Steve: Okay, yeah that actually probably puts it out of the reach of a lot of small business owners I would imagine.

Brian: It definitely and that’s why I recommend doing it yourself because the problem is that three grand also is going to the 97% most of the time. That’s just you find the 3% that’s great, you can do well with the three grand assuming you have it to spend, but if you don’t definitely do it yourself. And even if you do I recommend doing SEO yourself.

So here is something I have sort of changed my mind over the years, I used to be like yeah agencies are good, they definitely come with their risk, but they know what they are doing. They know SEO and most small business owners just don’t have time to learn SEO. I have since changed that stance, I have just seen so many hurt stories of people who just hire agencies and have a bad experience. I mean it’s literally three out of 100 that say this worked out well. So that’s why I recommend doing it yourself even if you don’t have time.

Steve: So can we talk about what is and what is not working in terms of search engine optimization today. It sounds like you’ve done black hat and white hat, so it would be interesting to hear what you had to say?

Brian: Well you know what it’s funny Steve, I would say in April 2012 is when Google rolled out their penguin update. And that update basically targeted sites that had– that used manipulative link building. Basically people that used exact match anchor texts. So if you had a ecommerce product category page that sold coffee mugs, you would want to get all the anchor texts in every link saying coffee mugs, and that was really good for SEO.

And actually I just ran the biggest search engine ranking study ever of a million Google search results. And we found that the anchor texts still helps with SEO. So having that exact match anchor text still can boost your rankings. The problem is if you do it in a manipulative way, or you do it on purpose you can get penalized by the Google penguin update. I would say from that day forward SEO changed very little.

After that it’s pretty much all about creating the best resource that you can create, and getting links to that resource. For an ecommerce site it’s a little bit different, because very few people are going to link to product and category pages. I do have strategies for doing that, but for the most part with e-commerce sites what I recommend is they create an awesome piece of content and promote it, get links to it and then use that authority to funnel to their products and category pages and get those to rank.

That strategy works really, really well and it’s underutilized by ecommerce sites because most of them if you look at them they are just 100% product and category pages. And just no reason anyone would run a link to something like that unless you use some stuff we can talk about the moving method which is what I use for product and category page link building.

But even then you can only get a couple, this is not happening on a mass scale. So that’s why I recommend that piece of content and that’s basically what it comes down to in terms of what’s working is getting a lot of links to your site from really high quality sources just like it was back in the day. The only thing that changed in that 2012 was the links have to legit, they can’t be built in the sense like you can’t build profile links or blog comments or article direct to your links, all that stuff doesn’t work anymore. So it’s really hard to build links now, it’s tricky even if you have a great piece of content but if you don’t its next to impossible.

Steve: So let’s say you get a back link, do you even try to get your anchor text in there since you said it still works?

Brian: No, it’s not worth the risk. If I get it, the difference is when I get one I say great. Like I know that’s going to help me. But if I don’t get it, I just say I think it’s not — it’s better to look natural than to have anchor texts that’s really over optimized.

Steve: Okay, and so I would imagine then that you don’t really pay attention that much anymore about the links that you get, like how they kind of structure the link, right?

Brian: No, because they are more or less naturally, either someone links to me just spontaneously or I reach out to someone on email and say, you have this page that lists resources, I have good one, do you want to add it? That’s really over simplified, but that’s basically how outreach goes, and they add my link. And I don’t ask them to anchor texts or put it anywhere, I just recommend the resource and they put it in on the page however they feel like. And over time you’ll get some anchor texts in there that’s exact match, and overall look natural because it is.

Steve: Okay and so let’s talk a little bit about just in the context of ecommerce once again. So it sounds like your strategy is to write articles that kind of rank and build up your domain strength, and then that kind of just pushes the tide for all of your product and category pages naturally on your ecommerce store?

Brian: Exactly Steve, there is a little bit more strategy involved, but that’s the basic gist. But it’s not really articles because for ecommerce site it’s really difficult to get those links directly to products and category pages. So you have to create these ridiculously awesome guides, that’s what’s going to generate enough links that — the domain authority increase where you can rank on domain authority alone.

That’s basically how Amazon ranks, if you look at Amazon and you go — almost any keyword in Amazon and you grab one of their product pages that are ranking and you put it into a tool to look at how many links are pointed to the page, it’s almost always zero, almost always zero. But they are always ranking right for everything, annoyingly enough they are always there and it’s because of domain authority. But instead of just posting the resource, another extra step I recommend is to internally link from that resource to your product and category pages.

And here is where you can use exact match anchor texts it’s okay because of the internal. So if you have this category page for coffee mugs, that’s where you can have a resource, it’s like 50 things you never know about coffee. Inside that resource you can link back to your — whatever you mentioned like coffee mugs, just put a nice link back to your category page. That will send users directly to that category page, and it will boost the rankings for that category page and the product pages. Assuming you have all the other factors Google looks at, but that’s the most important one.

Steve: I actually take that a step further and I actually put a physical add to cart buttons on my content pages.

Brian: Wow, that’s cool so you close from the content?

Steve: I try to close, hey so I’m curious actually. So a lot of these fully hosted shopping carts, I don’t know if you are familiar with them like Shopify or BigCommerce. They basically if you run your own separate blog they force you to put on a different sub domain. So it sounds like this whole domain strength doesn’t work as well in that context right, you want everything in the same domain, right?

Brian: That’s true so yeah, sub domain is not ideal for that reason, because I mean Google is much smarter than it used to be. So I think they understand that the sub domain is part of the site and they treat it not like a sub folder. But it’s not which is a forward slash, so like if you had mywifequitherjob.com/blog is better than blog.myquitherjob.com. So I think now they are getting so sophisticated that sub domains are treated similar to sub folders.

But they are not really there yet because they are in a lot of ways usually some separate entity, that’s why they exist. Besides www, and that’s why people make them is because they are so different than the rest of the site, they need their own sub domain, that’s why people use them. So actually it does signify to Google and people that this is something that’s really different. So from an SEO standpoint Goggle views them the same way.

So it’s definitely not a deal, it’s something that’s a bit frustrating with Shopify because to create really nice looking content that’s awesome you need WordPress, there is no way around it. So at some level you need to install WordPress. If you have to do it on a blog self domain, it’s better than not doing it at all. If you can somehow hack Shopify or Magento or whatever you use into making the content look great, then go right ahead, I have seen it done, but it’s tricky. So that’s why WordPress is great because it’s out of the box, you can do a ton cool stuff to it, easy to optimize all that stuff that you can’t really do with a lot of the big ecommerce solutions.

Steve: Okay and so let’s talk about just ranking an ecommerce site or ranking an article. Like you’ve gone over several strategies on your blog that I have read through, but for the people who are listening what is like your – it’s still all about back links for most part, right?

Brian: Yeah, I mean well really it’s all about keyword research to start. So we’ve put the cart ahead of the horse a little bit because…

Steve: Okay, yeah let’s start from the basics yeah.

Brian: Okay yeah I mean link building is everything because the problem is even if you do all your keyword research right; you optimize your pages perfectly, if you don’t have links you are not going to rank. On the other hand if your keyword research is just okay, the optimization is so, so and you get a ton of great links, you can still rank. It’s like this old SEO saying, most SEO problems can be solved by getting more links. So that’s like technical SEO problems, on page SEO problems.

I think people shouldn’t rely on links to solve their problems, but the point is that it’s so powerful that it can help you overcome any deficiencies you have in other areas. So basically SEO comes down to three things. There is keyword research, there is on page SEO, and there is link building. And there is a fourth thing that’s becoming more important which is user experience signals, which we can talk about later which directly impacts ecommerce sites.

So keyword research is basically find the keywords as you all probably know that people search for. It’s an art and a science, it’s pretty — it’s almost as tricky as link building. And with ecommerce sites it’s especially important, because you need to know not only what products are people searching for and what volumes, but also things like the commercial intent, the domain authority, the competition, all that stuff, it’s important.

Steve: Well, let’s talk about that a little bit because you kind of tackled back linking for your blog which is a super competitive keyword, right? So what were your thoughts about going for that particular set of keywords I suppose to something that might be easy to rank for?

Brian: Well, at first I went for the easier keywords, so I think when you are starting out and you don’t have a lot of domain authority and other signals like Google may look at like your brand, how big your brand is online. That’s when you definitely want to go with this the longer tail keywords or less competitive key words, because it’s better to be number three for a long tail keyword than number 12 for a really competitive keyword. Because number 12 is basically number 80, it’s the same.

So when I first started I went over these kinds of longer tail keywords, and as the site built up authority I was able to tackle these more competitive keywords. And that’s basically the strategy that I also recommend that ecommerce sites and blogs do. So if you have a product that could be called a few different things or category that could be called a few different things, I do recommend going with the less competitive version if you are just starting out. If you have some domain authority already ranking for stuff, that’s when you can switch in to something more competitive stuff and see how it goes. You can always switch back later.

Steve: What tools do you use to determine keyword competitiveness?

Brian: I just use the moss bar [ph], so using the mass bar you can see the page authority and domain authority of the competition on the first page. And that pretty much tells you all I need to do; especially when it comes to ecommerce you can pretty much throw out page authority, because most of the pages will have hardly any, it’s a domain authority game.

Now that being said if you are somehow able to get a lot of page authority, it’s a competitive advantage for you. You can get that by getting links directly to the page or using that funnel link technique that I talked about earlier. That way you are the only guy in the first page with a lot of page authority, and that’s an advantage for you. But for most part I look at the domain authority as like how hard is this keyword going to be.

Steve: Let’s say you have no domain authority whatsoever, you are just starting out, what are some good guidelines for keywords that you should go for like in terms of number of searches and what you see on the mass bar?

Brian: That’s a good question; it’s hard to get specific numbers because every niche is really different. So for something like a B to B company, or let’s say even like something life insurance. Life insurance keyword that’s really profitable could get 100 searches a month, because every lead is worth a lot of money and every customer is worth a lot of money. On the other hand something like pillows probably gets a ton searches, but your margins on a pillow probably aren’t going to be that great.

So it’s hard to be like it needs to have like this many searches and the competition needs to be domain authority of this, it’s just impossible to say. Basically when you are first starting out…

Steve: Well, let’s just take a pillow example though — for example yeah.

Brian: Okay, in general the lower the better when you are first starting. If you could find the keyword in the pillow space that’s getting like any searches and has any commercial and it’s done in the sense that there’s AdWords advertisers bidding on that keyword which is a sign people buy when they search for it, then I go for that key word. If you find that it’s even a little bit competitive, I’ll try and stay away.

Steve: Do you have like a low threshold for the number of searches that even makes it worth your while at all?

Brian: No, especially for — and today because now Google is basically able to understand the intent behind their keywords. If you target a key word that say only gets 20 searches a month, you may say, well that’s not really worth it, but not only will you rank for those 20 searches, but you might also rank for several other keywords that are related because Google is smart now.

For example if you have like black throw pillow, that used to be considered a separate keyword than like throw pillows that are black. Now Google pretty much consider those the same keywords. If black throw pillows only get 20, you can also rank for this other keyword like throw pillows that are black that might be 10, another one that might be 30, another one will be a 50, and then all of a sudden can add up.

It also depends on the commercial intent of that keyword and how well if fits with your ecommerce site. If you sell pillows and you guys are like amazing at creating pillows and selling pillows, 100 visitors a month directly to a product page, someone who’s basically got their credit card in their hands, I wouldn’t shy away from a keyword like that. It may not seem like a lot, but it can convert really well for you.

Steve: What about in terms of using synonyms for your products in like the title tags or your H1 tags?

Brian: You can definitely do that stuff for on page. For the title tag I do recommend just going with the exact keyword as your targeting. Google will kind of take the synonyms from there; you don’t really need to do it. In terms of the on page stuff, yeah, that’s definitely a great place to use synonyms, and in the content especially in the H1 as a way to reinforce what the topic of the page is about in a way that’s not being spammy in trying like keyword stuff.

Steve: And what’s your view on just like category pages. Typically category pages on ecommerce store is just listings of products. Do you recommend some content in there also or it doesn’t matter?

Brian: I do, I definitely do because it doesn’t matter if you are Amazon, if you are the Amazons of the world or the Best Buys or the Zapples. But if you are just trying to have on your ecommerce site that can be a competitive advantage for you because most of these big commerce sites have too many category pages to even think about writing content for it. It can be an advantage for you to actually put some content on every category page. The flip side of that is that the point of getting — embedding the content is to get higher rankings which is to get more traffic, which is to get more customers.

And a lot of times putting content above before this is the last thing you want to do, because that’s actually going to hurt your conversions. You have to also kind of balance the two things. That’s why I do recommend putting content below the fold about that category. If you have the pillows, black pillows, on the bottom you have a little blurb about black pillows or something you put in a couch [inaudible 00:33:14]. That will help Google understand the topic of that page a little bit better.

Steve: Interesting. Okay, do you recommend like hiding half of the content with like JavaScript?

Brian: No.

Steve: No, okay. It sounds like if I can just summarize you, you want to just start out with easier to rank keywords even if they have lesser amounts of searches. And just kind of gradually build your way up to some of the more competitive stuff once your site starts getting more domain strength.

Brian: Exactly, and you start ranking for stuff. The domain strength, domain authority is a way to measure domain strength using Moss’s tools. It’s a great number; it’s usually pretty reflective of how well you rank. But it’s not an official Google number. You can have a domain authority of 100 out of 100 and not rank for anything. The most important thing is, is that number going up, but more importantly are you ranking for stuff. Are you getting organic searches that are around the keywords that you are targeting, are your pages high priority pages, are you are building lists, are you getting more traffic?

That’s shows that Google is starting to recognize your size, starting to show you to the users. Then after that happens for a while and you start having good success with those keywords, then you can start moving onto the more competitive stuff. But I wouldn’t just be like looking at this semi arbitrary number versus the number that matters, which is like how many people from Google are coming to your site.

Steve: Okay, I’m going to link to that article that you recently wrote about what’s working and what’s not. But it seems like from that article for the listeners who haven’t read it yet; long form content is what’s working the best these days, right?

Brian: Definitely.

Steve: What are your recommendations? So any post on ecommerce site should just go into great depth on whatever the topic is about?

Brian: Yeah, I do recommend that.

Steve: Okay, so for an ecommerce product though, it almost seems like some of the choices might be limited. Is it okay to start writing kind of tangentially about what you are selling?

Brian: That’s a really good question. It’s tough one, yeah you are right. Product pages are tricky, because the point of the content is to make the sale, not really educate as an SEO. Fortunately there are ways that you can do both with the product page. Now, one is to give more information about the product right off the bat. I feel like a lot of sites do this well and some don’t. If you go and you want to buy a pair of shoes, all the information you really want above the fold is like the size, and how it looks right and the price. You don’t really care much about it.

But for other products like a laptop, you want actually more content above the fold describing what its features are, why it’s different, not just a list of how it compares to other laptops, but really like what’s the deal with this laptop. Like why is this laptop around. Like is this Samsung the gaming laptop is for hardcore video gamers, because it has a really great graphics card and fast processor and all the stuff. That’s really good content for the user but also for Google. Then as you get below the fold which is usually what people are trying to learn more about the product, they are not going to buy right then if they scroll past that.

That’s where you can educate them and that’s where you can provide user reviews as a great way to add content to a page. You can add more information, you can add reviews from around the web as long it’s not duplicate content. You can write maybe some quotes that other people have said along with your own commentary. There’s a lot of opportunities with product pages, but the key is to know where to put it to not hurt conversations. Generally that’s just like with categories pages, that’s below the fold.

Steve: So it sounds like you are advertising like you are advocating the Amazon model, right? To have bullet points like right at the top and then in the add the cart button. At the way bottom there’s the description where you can get more in depth information about what you are buying.

Brian: Exactly, and I think Amazon does it pretty well. The only issue is like I mentioned is that for some products like a laptop, I would appreciate actually more information above the fold and they don’t always do a good job with that, or books. They are also don’t do a good job with that, just usually a blurb and then you have to scroll down to learn more.

A lot of times, maybe not for a laptop, but for some products where there’s some impulse buying, you can actually convert them right then and there. But you need to give them enough information to do that. And it’s also good for SEO.

Steve: It sounds like though that the long form content that’s basically how you’ve been able to get Backlinko to rank is really more fit for like a blog, right?

Brian: Definitely, but for product pages you can apply some of those principles and turn your 200 word product page into a 800 word product page for example.

Steve: Okay, but in the grand scheme of things, the product pages and the category pages are going to be harder to rank. And your overall strategy should be to put out really comprehensive post on a blog and link them over to your product and category pages.

Brian: Exactly.

Steve: Okay. All right, let’s talk about back linking which is your specialty. How does one –like what’s your best strategy today for getting natural back links. Let’s say if you run an ecommerce site.

Brian: It’s actually the same for an ecommerce site or a blog or a service based business. The first step is to create something on your site that’s worth linking to. That’s number one. So a lot of people– this is a mistake, I made one when I first started. I would try to get links and I didn’t have anything that was worth linking to, and of course I didn’t have a lot of success. So I emailed people, and say, “Hey will you link to me please, because I have this great article,” that wasn’t really that great compared to what was out there.

I think the first step is to create something on your site that’s worth linking to. I have a lot of students in my course that run ecommerce sites or work for ecommerce sites, and that’s how they’ve had success lately is creating great resource that’s like best in the world on that topic. Emailing people, and the right people and asking them to link which we can talk about more details in that. And then getting links to that page and funneling that authority to those product and category pages. That’s basically the step by step that works really well enough for ecommerce.

Steve: Okay, let’s talk about the outreach part, because I get emails like that almost every day and I don’t link out to anybody no matter how good the resource is usually, unless I know the person.

Brian: Yeah, that’s– luckily not everyone is like that or else…

Steve: Like I would link to your stuff because I know you, but if it’s just someone random approaching me, like I wouldn’t even consider it.

Brian: Yeah, there’s definitely two ways to overcome that problem. One is to actually build the relationship with the person or the people in your industry that aren’t direct competitors, which they are — in every industry there’s plenty of people that aren’t competing, that are for example bloggers that write about your topic. So if you have a site about coffee or ecommerce that sells coffee stuff, there’s tons of blogs about health, and there is coffee [inaudible 00:40:01] blogs and all that stuff that you can get foodie blogs, that you can get in touch with and build relationships with.

Then when you do down the road ask for a link, or a lot of times you don’t even have to if they like you enough, you can get the link pretty easily. The other is just to go the numbers game approach which is fortunately there are enough people that aren’t as picky about handing out links, assuming the resource is amazing. There are enough people locally like that. That’s how I build most of the links to Backlinko when I first started. I didn’t build relationships with everybody, it wasn’t impossible. I built relationships with the people that I thought were cool and doing cool stuff, and I got some links that way. But I also got links just from emailing a ton of people and saying, “Hey you have this page that links out to great resources, I have a great resource here.”

The key is really to make it a natural fit and find a way where your link adds value. For example, if I go to mywifequitherjob.com, and I look at one of your blog posts, and I’m like this is a great blog post that has a lot of comments, it has a lot of links, it should be perfect for my link. And I ask you to add my link to your blog post; you are going to be really reluctant to do it. It doesn’t really make sense for you to go back to an old blog post and find a place for my link and add it, even if the resource is great. The key is really to find pages where they exist to link out.

For example, resource pages, there’s tons of these. These are pages where the point of the page is to curate content that’s really good, and they link out to other content. That’s the whole point of the page. When you email them basically say, “Hey you have this list of resources, I have a resource that’s really good, you might want to consider it.” It makes a lot more sense and they are much more likely to do that, because that page exists for that exact reason. You are actually helping them by sending them your content because your link adds value to that page and makes it a better resource, because it curates another piece of great content.

Steve: I see, so on Google do you actually search for like resource pages?

Brian: Yes exactly. So there’s search terms you can use like, your topic in quotes plus resources plus useful resources plus helpful resources. They bring up these exact pages. They are in SEO main step because these pages have been around for like since the web started. People have been curating content, because right away when the web got big like there’s just so much content. People are like, well we have to find out — find the best of it and put it one place.

Even more now today, there’s so much more content even though search engines can solve some of the problems, people do want hand curated content. Content curation is really big for that reason is because there is so much, they want experts to be like, okay, here’s the best stuff about this, here’s the best stuff about this, here’s the best stuff about this. These pages are all over the place in every industry. If you reach out to them with an amazing resource and you ask them in a non pushy away, a lot of times you get your links.

Steve: Can you give me an example of a non pushy way of asking for a link?

Brian: No problem, so say you found — you have a great guide on your blog. You just published about 50 things in about coffee. And you find a coffee related resource page, actual real one that recently went down on my course that some post in the Facebook group was about tea. So they had a tea resource and there was some tea resource page. And they reached out to the lady who ran it and they were just like, “Hey I know you run this resource page about the best tea resources online, I just published this thing about tea, do you want to check it out?”

So by not even asking for the link right away, you are respecting them. You are not pushing anything, you are not throwing your content in the face, you are just saying, do you want to see it. That way, I like to do that because if they say yes, you can send it and if they ignore you, you can move on. And you never even ask them to do anything. If they say yes, then you send them the resource, they look at it and a lot of times naturally, they’ll put two and two together, like, wow okay he sent me this resource after looking at my resource page, maybe I should add it. That way, it’s kind of like inception. Like they thought they thought of it. You know what I mean? I don’t know if you saw the movie.

Steve: Interesting, watched the — I did today, awesome.

Brian: It’s kind of like inception, like they thought it was their idea. On the other hand, you can be a little bit more direct and say something like, “If you would add it to your page, it would make my day. I’d be thrilled if you added it to your page,” something like that if you feel like the message won’t get across that way. I’ve found both approaches work. You will be surprised how many people think of it themselves, but when in doubt you can always ask.

As long as you ask like that, you didn’t really push anything, you basically left it up to them, respected their decision yes or no. And you didn’t go, hey, you never had him before, add this fizzy content, can I have a link. There’s a little bit more of a back and forth and then you are leaving it up to them up saying, “Hey if you wouldn’t mind, if you would add it to your page, I’d be thrilled.” So it feels like their decision and there’s nothing pushy going on.

Steve: Just curious, what are your percentages when doing it to a cold person like the way you’ve done versus just building the relationship first?

Brian: If you’re really good at it like you have enough resource that’s really amazing which I think a lot of people underestimate how like crazy good it has to be for people to want to link to something. Because when I first started Backlinko, my first couple posts weren’t very good. Actually a lot of my earlier posts were really bad, but in my mind, they were great. When I showed them to people and try to build links, they would be like this is pretty good, but not really worthy of my page. In so many words they would say something like that.

That’s when I learned you really have to step it up for this sort of link building to work, which is the only link building basically that exists that works. You need to go and step it up. So I had to learn the hard way like really step up the content game. Even if you have like the best resource on that topic in the world period, like not just you saying it because you wrote it, but like really people think that. And you find exactly the right people, that’s a perfect fit. That resource page is exactly about your topic. You wrote about coffee, this is about coffee.

Then you find the person’s email, you find their correct email address and you email them the exact time they are going — they are likely to open it which is a whole another game. People that do a lot of link building, they focus on like when the email goes out to when they are awake more likely to open the emails [inaudible 00:46:27]. You don’t have to worry about that, it doesn’t make a big difference. We’re saying even if everything is done right, you are looking at about 11%, 10% conversion.

Steve: That’s actually not bad.

Brian: Yeah, and everything that goes that isn’t perfect after that chips down the percent. But if you just like blast, you don’t even worry about the page, if it’s decent fit, it’s about tea, and your thing is about coffee, and you think you have the right person, but you just send it to the contact form. You didn’t use their name, all that stuff; you can still get like 2-3%. But obviously the more you do in terms of the work beforehand to get to know the person and get to know everything, it’s going to be a lot higher. You can definitely get to 10%.

Steve: Okay, what about some other ways of getting your content out there. Do you use like social media, Reddit [inaudible 00:47:11], do you pay for ads?

Brian: I’ve experimented that stuff, but I haven’t had a ton of success with it. I think like anything in marketing, you kind of have to be good at it for it work, and I’m not good at it. I never really had a lot of success. The most– the best I did for content promotion is just building your email list. Because then every time you publish a post, you can email X amount of people however many you have in your list and they are going to open it. And that’s what even ecommerce sites a lot of times; they build the list that’s specific to their blog. Maybe these people will buy from them, maybe not.

The point is they are on the email list and you can send it to them. You can get really, really quickly potentially if your email is big, thousands of people to your content in an hour. And they’ll usually take it and spread the word, because they are committed and interested in you and your topic. So there’s no need to even promote your stuff, because even if you spend a lot of money on Facebook ads, just the numbers of people that are actually click on the post and go to your site compared to an email list is insane.

Steve: Sure.

Brian: You’d have to spend like a couple of grand per post just to get as many people clicking. Those people aren’t going to be as engaged as someone who’s on your email list. So for me the biggest thing I did for content promotion is like get my email list used to hearing from me especially about blog posts, and also writing the blog posts, writing the newsletter emails in a way that gets them enticed to click through and read the blog post. And then when they are there, it’s the content job to convert them, at times they’ll write comments and sharing and all that stuff.

Steve: Let’s talk a little bit about just user behavior in terms of factoring into the search rankings. Are there any particular things that you do with your blog post to kind of keep them on your site long? First of all what are the factors, and then what do you do to promote them?

Brian: So it’s basically two factors. Like I mentioned Steve, there’s the keyword research and then there’s on page SEO optimization. Which is basically just have your keywords a couple times in a page and like you had mentioned using synonyms intelligently in places like your H1.

Steve: I meant like the user behavior.

Brian: No I know, I’m just saying, then there’s link building. Even if you just do those two things you are going got be good. But there’s this fourth user experience signals that Google is using more often. It’s becoming more and more important because it’s a great way for Google to determine if a piece of content is quality.

All this stuff that they are looking at with links and keywords and on page; Google’s job is basically saying this person is searching for this thing, we want to show them the best result for this search. How can we do that? What’s the best page? If you can make their job easier, they are going to rank you. If you can be the answer to that question, they are going to show you. That’s the real secret to SEO. Now, well there’s other ways of using that to do this now.

For example user experience signals, the number one is the click through rate of your result in Google organic search. So if someone is searching for like searches for black throw pillows and you rank number one, and no one is clicking on result, they are all clicking on two, three, and four, usually everyone clicks on number one. Google will say this page must not be a good fit for this keyword; we are going to drop it.

On the other hand if you are ranking number seven and you are getting a lot of clicks more than the typical number seven result, Google will say, hey people are really — they want to find this number seven result, why is it number seven? We need to make it easier for people to find, and they’ll give you a boost.

Steve: Does that imply that you should write your titles in a clickability sort of way?

Brian: It does imply that, and in fact I’m not going to imply, I’m going to say you should do it. So it doesn’t have to be the buzz fees style like and what happens next will blow your mind sort of thing, especially for ecommerce so it doesn’t make sense. But even things like an ecommerce title tag like say 25% can really dramatically increase your organic click through rate.

And if you are in doubt and want to put in your title tag or description tag, you can just get the AdWords ads around that keyword. That usually tells you everything you need to know, because those guys know from back and sideways what gets clicked on. And you could just take the elements that make sense for your page and put them in your title and description tag and you’ll usually get more clicks.

That’s a big one yeah, that one is used – I’ve seen case studies where it can make the difference between ranking seven and one, and I have my own experiences and experiments where I’ve ranked for keywords that just didn’t make sense. So for example, I had a page about a year ago that was ranking, targeting the keyword high quality back – no, yeah high quality back links, and the tile was how to get high quality back links. And because the page got a bunch of links from the links I was building, it started to rank for all sorts of stuff, not just back link related key words. It also ranked in the top 10 for the keyword how to get high.

Steve: Yes, I think I saw — you wrote about this I remember, yeah.

Brian: Yeah, I wrote a newsletter, wrote the same as email ones. And of course people that clicked on that result were like what is this? I mean I cannot and they would click the back button, people were searching for how to get high. And even though I was building more links, all the signals that Google wants to see like especially more links to that page, it dropped like a stone for the keyword how to get high.

It went from six to 12 to like 33 and 35; I think it’s on the fourth page now. And from my target keyword high quality back links is number one. So Google basically just based on that one user experience signal which was how long people spend on the page and the click through rate, they dropped it. So we don’t really talk about spending time on the page, that’s the other thing, it’s when someone clicks in your result how long do they spend there.

If they spend a long time on that page even if they hit their back button which is technically known as a bounce, you are still in good shape because it says, hey that person was reading, they spent some time there, maybe they got what they wanted and they hit their back button. But if they click on the result and hit back right away, that’s a clear sign that this isn’t a good fit. Despite all the other 200 signals a year, that one signal is enough to really show them this isn’t a good fit and they’ll drop you.

And that’s what happened with the keyword how to get high is that I ranked for that for a while. People were clicking on it probably less often than usual, because it said something about back links instead of the other keywords that you would expect to be around that keyword. And then when people did click on it they left really quickly, and Google dropped me. So that’s another thing you definitely want to keep in mind for product and category pages, but also for content pages is to really maximize the clicks you get, and then the people that stay on your site.

If you can do that, it’s a huge competitive advantage to be on the first page, because you don’t need as many links to rank and you compete against some of the big guys. In fact that’s one of the reasons that for a lot of keywords I can outrank these bigger brands, because they ignore these signals. They have all the other stuff in their favor, they have domain authority that’s way higher than me, they have page authority that’s way higher than me. They have brands that are huge that Google recognizes as big brands, and I’m this one man shop. And one of the reasons I’m able to do that is because I really focus on getting clicks on my result and getting people to stay there. Which is basically a lot of it is no real tricks, a big part of it is providing value so people want to stay.

But there is also things you can do like copy writing to keep people on your page, so compelling writing, so they’ll continue scrolling down the page, so basically they don’t get bored. If you could do those things you can have a huge competitive advantage over the people that traditionally you wouldn’t have a chance against.

Steve: Does that imply then that you should put in some sort of like podcast or video content on there to keep them on the page longer?

Brian: I’ve seen mixed results from videos, because the problem with videos is that it’s a big commitment for someone to watch. And a lot of times when they are searching Goggle they are not searching for videos or they would be searching on YouTube. So when they land on a blog post and they see a video, I’ve actually seen it hurt time on site. Because what happens is people start watching the video, they weren’t in like a video mood, and they’ll just hit the back button when the video gets displayed. They won’t stop the video and keep reading. On the other hand I have seen other people use it and have great success with it, especially with videos above the fold.

So a lot of people have the videos straight away, so they see it and they are like, wow, okay so this is a video and they can just scroll down and read the rest of the content or watch the video right away. That’s something I haven’t done, usually I have tested it like kind of half way down, put a video there and I haven’t seen that work. So it’s definitely very specific to like a million different variables, but I’ve seen people have great success with adding video for that exact reason.

Steve: How much work do you put behind your meta descriptions?

Brian: I put quite a bit just to optimize that click through rate.

Steve: Okay, and so you make it kind of the description sound really enticing for someone to click?

Brian: Exactly, so the never way of doing that it’s like AdWords ads for that keyword. Those people have really tested it to depth. So I just say okay so for example I had this post about list building that I didn’t have a good ton of description tag, my click through rate is really bad. And I was on the first page, but you know your page doesn’t have good user experience signals when it hits the first page and drops back to the second. Like if you go from like 8 to 12 or 13, then back to 8 and back to 13.

Now a lot of times I could just be like Google turned their dials on the algorithm, but I’ve also found a lot of times it’s because it’s just not a good fit for that keyword and they are trying to — they are kind of testing it out see how it performs at number 8, number 9 whatever, and then putting it back. I noticed that was happening with this particular post about list building.

So when I looked at the actual result in Google it was a mess. Like the title tag was cut off, it had too many characters in it, so it got cut off. And the description tag I didn’t put a description tag, so Google just pulled a random text out of my content, and just looked terrible. So I decided to strategically add content to my title and description tag that would get clicks. And I noticed that even though my content was about list building, and I know and you know that’s about building an email list, I dint have the words email list anywhere, it didn’t have the word email in the title or description tag in almost every AdWords I did. So I made sure to include the word email list in the description tag. I also noticed to use the words like build and grow and I didn’t use that.

So I threw those words in there. And I also just put words that I know people just loved to click on which is anything that’s going to promise fast results. So if you can say it works quickly, today, step by step, all those things that make things sound really fast, you can put — you’ll get a better click through rate. So I put these are strategies you can use today, so people understand this, it doesn’t sound like esoteric. Have a great newsletter and people will hear about it and they’ll sign up for your list, so like a real strategies you can use.

And when I did that my click through rate went up by a lot, and now it’s in the top five for my target keyword. Of course I build links and all that stuff, it’s not the only reason, but it definitely helped.

Steve: There is always this fine line between putting keywords in your title tags versus making it really clickable, can you comment a little bit on that?

Brian: Yeah it’s tough, honestly it’s an art. Because basically it gives you this constraint that you have to put your keyword in there, but you also have to write a title that’s compelling. The best marketers that do SEO really well can do both. But it’s definitely tricky, because in some keywords it doesn’t even make sense to write something good. A lot of times that’s where you just want to throw the keyword out of the window and write a title that make sense.

Steve: Interesting yeah, because when you said like keywords like step by step or quickly, I mean those stick a valuable characters in your title tag, right?

Brian: Definitely and that’s why a lot of times you can do all this stuff in your description tag. So you can have your title tag just — if you have a title that already has your keyword in it, that’s like for example this link building post, I don’t think I — I think it’s exactly the same as it was. It was cut off so I just cut it down so it fit within the limits, but it didn’t add any of this AdWords stuff to it, it was just as the title was and description is where I added all that stuff. But luckily the title was already compelling, it was designed to get clicks already from people tweeting it out on social media and stuff like that, it was designed to get clicks. So it’s just a matter of cleaning it up so it fit within the character limit.

The description tag was sort of just like didn’t make any sense, so I could do whatever and that’s why you put it in there. It’s definitely a tricky thing especially the title tag if you don’t have a lot of real estate there; you want your key word there. You probably want something else just to describe what the topic is, what you are writing about. And then you also may not have room for all this other stuff, and that’s where a description tag can come in handy.

Steve: Okay, this is actually something that I do not do very well. I should probably go back and re-write a lot of my description tags for all of my posts and make them more clickable actually.

Brian: Yeah, I can help you with that, it’s really especially helpful if you are on the first page because that’s where Google can get a lot of data to see how many people are clicking on it, and if they are — yeah and how long they stay. But especially how long they are clicking on it, how often they are clicking on it. And if you are on the first page they’re saying they get tons of data. If you are on the third page they don’t really know how many people are clicking on your result. But for those first page keywords, the ones you are already kind of like 9, 8, 7, I’ve seen that make a massive difference.

Steve: Awesome Brian, hey we’ve been chatting for almost an hour now, I didn’t even realize, the time kind of flew. I want to be respectful of your time, where can they find you, do you have any product offerings that can help people with SEO, just tell me where they can reach you?

Brian: Okay cool, so the best place to get more helpful actionable tips about SEOs is to head over to my site backlinko.com, and sign up for the newsletter. That’s where you get updates about new blog posts, but also exclusive strategies and case studies.

Steve: Awesome, and just a quick warning if you end up going to backlinko.com, you’ll probably stay there for a couple of hours just based on the content that Brian puts out there. So and his general mind tricks work, because I’m actually going to link to his blog even though he didn’t explicitly ask me to, so his techniques work.

Brian: Inception technique, it was your idea Steve.

Steve: Well, I like how you had these terms like that you use that are memorable. Like skyscraper technique or moving man technique, so this is like a new one, inception technique yeah.

Brian: Yeah, it’s a new one.

Steve: Cool man, well thanks a lot for coming on the show, it was a pleasure.

Brian: Sure, thanks for having me Steve.

Steve: All right take care.

Hope you enjoyed that episode, there are actually a lot of people out there who think SEO is dead, and it’s definitely not dead. You just can’t game the system anymore, and it’s to your advantage to follow Brian’s techniques, to get a source of free traffic in the long run. I know for our store SEO makes up about 30% of our sales.

For more information about this episode go to mywifequitherjob.com/episode116, and if you enjoyed this episode please go to iTunes and leave me a review. It is by far the best way to support the show, and please tell your friends because the greatest compliment that you can give me is to refer this podcast to someone else either in person or to share it on the web.

If you are interested in starting your own online business, be sure to sign up for my free 6 day mini-course where I show you how my wife and I managed to make over 100K in profit in our first year of business. Go to mywifequitherjob.com for more information, sign up right there on the front page, and I will send you the course via e-mail 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.

I Need Your Help

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115: How Ankur Created Teachable, An Easy To Use Platform To Create And Sell Online Courses

How Ankur Created Teachable, An Easy To Use Platform To Create And Sell Online Courses

Today, I’m really happy to have Ankur Nagpal on the show. I met Ankur after being introduced to him by my buddy Jeff Rose who recently started his own online course.

Anyway Ankur runs the company Teachable.com which is a platform that allows you to create your own digital courses online without any technical hassles whatsoever.

If you’re into ecommerce, you can think of them like a Shopify or a Big Commerce except for digital courses. Anyway, since I make a lot of money off of selling digital courses online, I thought that I’d bring in Ankur today to talk about the digital course landscape and why he created Teachable. Enjoy!

What You’ll Learn

  • How Teachable works and what it does.
  • How Ankur came up with the idea for this platform.
  • What Teachable offers that the other platforms do not.
  • How Ankur developed his unique value proposition.
  • How Ankur generates recurring revenue.
  • How he got his early customers
  • How he markets his business.

Other Resources And Books

Transcript

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 to simply 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.

Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email, now onto the show.

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 really happy to have Ankur Nagpal on the show. Now I met Ankur after being introduced to him by my buddy Jeff Ross who recently started his own online course. Anyway Ankur runs the company teachable which is a platform that allows you to create your own digital courses online without any technical hustles whatsoever.

If you are into ecommerce you can kind of think of them like a Shopify or a Bigcommerce. Anyway since I make a lot of money off of selling digital courses online, I thought it would be interesting to bring in Ankur today to talk about the digital course landscape, and why he created teachable. And with that welcome to the show Ankur, how are you doing today man?

Ankur: Thanks man, I’m really excited to be here.

Steve: Yes so give us the quick background story regarding teachable and how you decided to get started with this, because it is a pretty competitive market.

Ankur: Yes, so it’s funny. I started this literally as a project for myself. I was doing a little bit of teaching on Udemy. For people that aren’t familiar, Udemy is a market place for online courses. I started doing a little bit of teaching on Udemy about two years ago and I liked a lot what I saw with Udemy, like I liked how easy it was to create a course that looked good.

It kind of made me believe in the power of online education, and how this could be something we could all do five years from now. What I didn’t like is as a teacher I had no control at all, like I couldn’t control the branding, I couldn’t get paid on my own terms. Every time I worked hard to bring a student to my Udemy course they would cross over to another course. So there is a lot of stuff I didn’t like.

So I ended up creating, at the time it was not called teachable, it was Fedora. But I ended up creating this platform to sell my own online course with my buddy Conrad, to create some platform just for ourselves. So it’s something that we did for ourselves first, and a few weeks into it we were like, okay if you find it useful chances are other people will find it useful too.

So it kind of organically evolved into a company which is something that I think is really funny because a lot of people talk about, oh I want to start a startup, I want to build this. For us it was almost incidental, it was just like a side project that then kind of became something much bigger.

Steve: Did you code that up from scratch then?

Ankur: Sadly I did, I say sadly because I’m a terrible, terrible developer. But it was enough to kind of validate the idea as soon as later in the year we ended up kind of becoming a real company and hiring developers. The first thing they did was throw out every line of code I wrote.

Steve: So just curious what year was this?

Ankur: So this was in the fall of 2013, fall of 2013 is when we started this, we kind of we incorporated it in May 2014 and that’s sort of when we became a real company.

Steve: So here is the thing, so I started my class in 2011 and there were still a whole bunch of plugins out there. So I’m just curious why did you decide to create your own platform as opposed to for example using WordPress and a membership plug-in?

Ankur: I hate WordPress man, what can I say.

Steve: Oh you do, okay.

Ankur: Honestly I looked into it right, and it seemed like WordPress plug-ins is where the market was today, but that’s not where the market is going to be five years from now. We want it to almost set the path for what is to come, and we looked deeply into a WordPress plug-in, we just found there is too many interdependencies we could not control.

It was definitely the path of least resistance. Like if you wanted to get set up quickly, WordPress plug-ins were the most logical choice. But thinking in a longer term time frame like thinking three years from now, five years from now, it was just never going to be where we wanted it to be.

So that’s why we made the decision like it is more painful, but let’s do this the right way, let’s remove all dependencies as you probably know with WordPress there is a lot of kind of madness trying to balance different plug-ins with each other. And like just hoping it doesn’t all go belly up, we wanted to make it just stupid, stupid simple, and didn’t want to — and that’s why we chose not to use WordPress.

Steve: Just curious so what were some of the things that were missing that you found?

Ankur: With word – honestly the…

Steve: Without the WordPress or any other platform?

Ankur: Just the fact that you couldn’t have one solution right, even the best WordPress plug-ins might need you to have a shopping cart, they might need you to have a video hosting platform. They might need you to have an email client. Like there are some people and granted these are– this is not the majority of users, but we have a substantial percentage of our users that only use Teachable. That means they don’t even use MailChimp, they often use anything for email delivery. So we wanted to provide something that of course we can plug in to more advanced tools as per needed, but it should be self contained if necessary.

So right from video hosting, payment processing, it’s a fully self search solution for someone that literally starts to use one tool, upload all their stuff and go. Which was not possible on WordPress, on WordPress there is MMS plug-ins, there is membership site plug-ins, there is a lot of different plug-ins that have parts of this functionality. But even then they generally have dependencies on using video for video hosting and just other tools.

Steve: Sure, no that totally makes sense, so does that imply that you guys do email marketing also then on your platform?

Ankur: We do it; we do the minimum viable version. What that means is you can’t do any automation without plugging into an automation provider. But you can do one off email marketing pretty easily, like you can easily say, hey I want to send a coupon to anyone that bought one course, not bought another, and is not logged in five days. You can do that super easily, you just can’t automate it.

Steve: Okay got it, okay and so how did you know that there was actually demand for this platform, because in 2013 still there was probably like a half a dozen plug-ins for WordPress, a bunch o other fully hosted platforms, so how did you kind of know that?

Ankur: Honestly, honestly this what’s funny is like we didn’t. The real truth is we got super lucky, we were being very reactive, we were taking what the market gave us. And the truth is what the market gave us for the first six to 12 months was mostly just Udemy and other market place instructors.

So it’s not people that even heard of WordPress or ever used a WordPress plug-in, or early on it was almost entirely people on Udemy, or Skillshare, or other platforms that had, had success, but realized that they were also being held back by Udemy, or being held back by Skillshare because they didn’t own their audience.

So our early audience was just people using kind of a self hosted — going self hosted route for the first time ever. I think the point at which we raised our seed round just yeah May 2014 about half the people — we had about half of Udemy’s top 20 instructors at the time. And that was all for a real attraction just like people on these other platforms that wanted to run their own business and own their own audience.

Steve: So does that imply that — so I’m just curious how did you get those people, did you poach those somehow, or did you take their class and contact them? Okay.

Ankur: So again I think we got so fortunate, I look back, what happened about a few weeks after we launched this platform and I hit up a few people, being like hey you want to try us out? No one replied like people just didn’t care at all. But then Udemy changed their revenue share structure midway through.

I don’t know if you remember this, there is a point and I want to say October and November 2013 where Udemy said, hey guys we’ve been paying you 70% so far, but guess what, we changed our mind you are now only going to get 50%. And that pissed a lot of people off. I think what all — and the other part that really pissed a lot of people off was not the fact that their revenue share was being reduced, the way Udemy tried to spin it with as a positive for them, it’s like guys you don’t know why this is better for you, and that just made people feel insulted.

And it just created this exodus of teachers or instructors that wanted to look for an alternative, and guess what we just happened to be there. So that was one of the very significant points early on when this wasn’t a company, this was my side project to kind of get us our first wave of instructors just disgruntled teachers from Udemy who just felt slighted by the system. Who felt that we’ve invested in building our business on this platform, but you just changed the terms right under us, that was the first realization that, okay I need to do this my own way.

Steve: How did you get these people?

Ankur: So it started off slowly. It started off with people that had never replied to my email starting to reply. But what happened is Udemy instructors always self congregate online, it might be Facebook groups that have discussion forums. Word started to spread that hey three of the top 10 instructors whatever are using us. And then it was all inbound. Our system was so bad then, for the first six months you couldn’t even sign up directly you had to email me and I had to create an account for you.

Steve: Okay. So you– it sounds like your strategy was to get the top guys who would then spread the word for you.

Ankur: Yup, and even then it was small. In the first, after 6 months, we maybe had 15 to 20 people making money every month. It was still tiny.

Steve: I’m just curious what the outreach kind of looked like. You would take their class and then reach out that way, or how did you get even amongst these people to actually email.

Ankur: Lots of different things. One was yes outreach wherever we could find an email address, we would reach out to them directly. The second thing was obviously inbound from people seeing what other teachers are doing, and the third thing is because they self congregated in Facebook groups which was not possible at the time, but by very targeted advertising to all Udemy instructors. There was just like– I mean we probably couldn’t spend more than literally $5 a day because it was such a small audience, but everyone who was in that small audience found out about us.

Steve: Interesting. Let’s talk about that. You targeted a Facebook ad to just like a handful of people and groups?

Ankur: Yup, which worked so well. It’s super sad that Facebook now has made it completely illegal. But yeah with $5 a day we could reach everyone we wanted to.

Steve: Can you just kind of describe that ad and like what the copy was like just…

Ankur: Yup, basically I think, I’m trying to think of what these ad copy was. It was predicated around the idea of like in very direct response like “Hey you know post your Udemy course here to control your audience.” That was– it was super, it was just super targeted and it was amazing because we were spending five bucks a day, and we tried to see like okay, can we spend 10 dollars a day, but there was no difference. Like at five dollars a day we were hitting absolutely everyone in our target group.

Steve: Interesting. Once you got those top guys, did you do anything special then like any special deals with them to kind of influence them to spread the word, or did it happen organically.

Ankur: We just went out of our way to be amazing to them. For instance for a lot of people, I personally uploaded all of their course content. They would literally just send me like access for their course. I would manually download everything, re-upload it to ours because we were small, and we did this kind of stuff.

We just went above and beyond in just being incredibly responsive. I’m using the word we out of habit, at this point it was me. I was sales, I was customers support, I was developing, I was product. It was a one person– it was a one person shop that pretended to be this entire company.

Steve: Interesting, so you didn’t have your partner at that time.

Ankur: Conrad was my, so he and I were teaching together and he went on to become the first customer. Our relationship, he eventually joined the company full time, but only after funding. For the first nine months, our relationship was primarily of a customer and service provider.

Steve: Okay, interesting, then he just joined on. Actually before we go too much, I’m very curious why you decided to get funding as opposed to just continuing on. It sounded like you were tagging along in the beginning just fine.

Ankur: Yup. I think there was a point where I actually realized, for the first few months I was never sure like is this a real business or is this my side project? As soon as it became abundantly clear that this was a real business, we had to hire developers, we had to do things to make– because as I mentioned earlier, the code I wrote was terrible. I’m not an engineer. We had to hire real developers, get a team in place and that cost a lot of money.

We could have tried to bootstrap it because we were making some money from what I remember. I was not paying myself anything. When we raised money we were making I don’t know 5, 6K a month. It was just so painful to kind of– we actually could have hired contactor and help with that and eventually try to grow that up. But the fact is after a few meetings, we were offered money at terms that were completely reasonable. Bear in mind this was early 2014 when the fundraising market was about as good as it’s ever been.

Steve: I see. So did you hire people after funding or before funding?

Ankur: After funding.

Steve: Okay, got it.

Ankur: It was the right balance where before funding. But before funding we still had enough traction that this was more than an idea. Because I remember at the time we’d– the month before we raised the money, we processed close to 50 grand in core sales that month which bigger picture is nothing. For a seed company, it’s like okay, these guys still– there’s still some kind of dollars entering their account every single month.

Steve: Yeah, so basically that translates into the five or six K, right?

Ankur: Yup, correct.

Steve: You guys, okay. I’m just curious, how much upfront investment did it take for you guys to launch Teachable or Fedora I guess.

Ankur: Honestly, it’s a rounding error outside the fact that I didn’t pay myself anything. I don’t know I would have probably– on the assumption that I’m not paying myself and my time as working on it I would guess I don’t know, a thousand dollars. Nothing really– it was just the value of my time.

Steve: Wow, so this really was like a small scale project from the beginning. You literally were just trying to use it for yourself.

Ankur: Yeah, I had no idea this would become what it is today which is what’s super cool, because I just get annoyed with the Silicon Valley narrative of people that always wanted to build an education company. No, things happen and as they evolve your thinking evolves and then you finally crystallize the vision for the company.

Steve: Just curious, did they approach you, or did you go out specifically looking for funding.

Ankur: I went out specifically looking for funding.

Steve: Okay, and at what point, this was at your 50,000…

Ankur: In monthly sales. This was, I went out in May is when I think I went, I made the trip to San Francisco, May 2014 and we closed mostly around during 4th of July weekend is when– by 4th July weekend we had closed it around.

Steve: Just curious, how many customers did you have when you asked for funding, and how many do you have now?

Ankur: So in terms of– then it was interesting because people couldn’t pay for a plan. I guess we’ll define our customers by the percentage of– by the number people making money every month which at the time was mid ten, so I would say 40, somewhere in that range.

Steve: Wow, that’s not a whole lot. Okay.

Ankur: And right now we are at about 2000 paying customers. In addition we have some customers in the free plan that still pay our transaction fee, excluding them we are at about 2000.

Steve: Okay, and then I’m just curious how things had changed once you got the funding and then how do you market your business now?

Ankur: So for the first six months it was painful, because we were in technical debt. I had built this version of Fedora at the time that worked, but no other developer could be productive on it. As soon as we hired real developers is like we have to discard this now. Then, that was very painful because our customers are still using a version while our development team was building it from ground up.

From about July till December was an incredibly probably the most frustrating time in the history of the company, because yes we were marketing it, but there was no active work being done on the software we’re marketing. Our marketing was good and we still kept revenues growing slowly, very slowly but it was just frustrating because the entire team was working at something else. Most of 2014 kind of went in that. It was only starting in 2015 that we really started growing.

I want to say the end of 2014 we probably– we had gotten to making few hundred thousand dollars in monthly sales, but it was just driven by a couple of strong customers. We were still as the company making 15 to 25K a month. Starting 2015 is when things started growing. We finally rolled out this new version that was substantially better, and we actually had an active development team working on it.

Steve: Just curious, what was– so after you got your first couple of Udemy people to talk about you and word of mouth, what are some of the other advertising methods that you used?

Ankur: We never, we still like to date have not figured out how to spend money to grow, which is kind of our big project for 2016. Word of mouth was the big thing. The other thing was basically people would use us to sell courses. Their students would come to the site, some of their students in turn would be like, oh powered by Teachable, or powered by Fedora, come to our homepage and then sign up again.

There’s an inherent kind of very small organic loop inside the product that were done really well. Then we also did a lot of like unscalable kind of outreach. I’ll give you a couple of examples. One is we went to Ryan Holiday who had a book launch, and we convinced him to put it– and we built an online– we helped him build an online course version off his book and ended up mailing out over a thousand copies of his book to anyone that bought the course.

We would go to people on YouTube with a large audience saying “Hey can we kind of re-factor your YouTube videos and make it into an online course?” We did a lot of these kind of very unsustainable outreach type of things to convince people who already have an audience to start selling courses. Very soon that we found all of those efforts kind of were rendered not– were rendered kind of useless relative to just the organic that started picking up.

Oh, another thing we did is we partnered with Y Combinator, they had a how to start a startup class. We hosted a version on Fedora and that in turn drove many thousands of students signed up. So it created a small trickle back effect for people like, oh what technology powers this, and then them signing up for the product.

Steve: You actually went out to I guess influencers and you offered to create a course for them based on the content that they had already put out.

Ankur: Yup. We also went to, even though it didn’t work out, we would literally go to conferences, and, “Hey can we take your conference and package it into an online course?” The other thing we did that worked out amazingly well is we had an automated import from Udemy button. That was a technological thing. So technological thing and that just helped us grow so fast. Well, because in the past what would happen is if someone’s interested in coming on board from Udemy it would take them days, maybe weeks to re-upload everything. This is a one click solution. They just pulled all your content over.

Steve: Wait, so Udemy lets you export everything in a nice format?

Ankur: I mean we had to be a little bit creative.

Steve: I mean are you scraping them or?

Ankur: Basically people entered their credentials then authorized us to act as their agent. So we effectively automate the process of downloading everything and re-uploading it to our server.

Steve: I see, yeah that’s ingenious. That was a huge driver then I would imagine.

Ankur: That was a huge driver. That was a definite very, very big driver. It helped a lot, it didn’t help with acquisition because it didn’t help us get new people, but it helped us activate people really fast.

Steve: Well, yeah, if I’m on Udemy and you are trying to get me into your platform, it has to be really awesome for me to go through the painstaking of transitioning, but with this one push button thing I might actually hedge my bed and sell on both platforms.

Ankur: Yup. And we always had a free plan too which made it easy for people to try us.

Steve: Let’s talk a little bit about that because I’m kind of curious. I was just looking at how you do your pricing. How did you decide– so first of all what are you pricing plans and how did you decide on those plans in first place.

Ankur: Yup. So right now we have a free plan where we charge 10% plus a dollar of every sale. Then we have three plans. Basic at $29 a month, professional at $99 a month and our kind of high volume plan at $299 a month. Each of them have varying transaction fees, the $299 a month having no transaction fees at all. In terms of how we came up with our pricing plans, I will be the first to admit like dude we don’t know.

We’ve literally– we modeled our original pricing plan a lot based on what Shopify had kind of their tiers, since then they’ve updated it. Right now one of my grievances is I think we are long overdue, some kind of intelligent test on our pricing. Like I’m not 100% happy with our pricing as it stands right now. I’m not sure which direction we’ll go in, so chances are when someone is listening to this our pricing might a little bit different. Whenever we do it we will obviously grandfather everyone in.

There’s a couple of things that concern me about our pricing right now as it stands. One of them is I think our free plan is almost too good to the duty that one of our biggest reasons, well our biggest reason for churn right now is people dropping down to our free plan, could use indefinitely. I also feel like, we also have a few people sensitive about the transactions fees on the $99 plan because they feel like $99 is still enough, I want to give up marginal kind of share which we get, but the other side is we also have a lot of fixed cost because we pay for unlimited hosting and video band.

Steve: And the video too, yeah.

Ankur: Unlimited band which is some people are technically losing money. There’s a lot of kind of weirdness on our pricing, but we decided very early on to try and keep it simple, so have people not worry about bandwidth, have people not worry about hosting. Don’t worry about number of students. We have no traditional limits. So no limits on students, courses, hosting, bandwidth whatever. That’s all unlimited in every single plan including the free plan.

Steve: Just curious what are the break even points from the free plan to the next highest plan?

Ankur: So, it depends on how much your average course price point is because the free plan is a dollar plus 10% on every sale. While in general a few hundred dollars and the basic plan makes sense. The basic plan is also where you get a custom domain. For most people for $29 bucks a month like it’s just worth it to have your own domain name.

Steve: I see, otherwise it’s what? Just something.teachable.com?

Ankur: Yup. The professional plan breakeven is about couple of a thousand dollars, a little less actually a few hundred dollars and the high volume breakeven point is $4,000.

Steve: So here’s kind of a complicated question that just popped up into my head. You mentioned that Udemy pissed a lot of people off when they switched around the pricing. Couldn’t that essentially happen with your platform as well? We were just talking about pricing and how things might change.

Ankur: The reason that wouldn’t happen with our platform is we would always grandfather people in. When I say we’ll change our pricing, it would apply to people moving forward. Anyone who signs up before we change the pricing will always the choice of do I want the old pricing or the new pricing. No one is going to have their pricing changed. They will always have their original pricing. It’s more of what we do for people who come after.

Steve: What kind of influenced your decision? We chatted earlier but Udemy is like a market place. If you put something on Udemy they’ll find customers for you, but on your platform it’s not like that, right? What specifically kind of influenced your decision to do it that way because it seems like you could drive some customers to other people courses, right?

Ankur: Yup. The primary reason was the fact that as I said, we were teaching at Udemy and we didn’t want our customers to be driven to other people’s courses. Our goal is to allow people to make that choice. Technically every Teachable school comes with an inbuilt affiliate program. We do have people cross marketing courses, except now it’s something to think about versus something that happens automatically.

Steve: I see, I see. So I might not want like my customers to know that there’s a competing product out there. That’s kind of your rationale.

Ankur: Yup. And there’s well if you are building a premium brand selling a premium course, like you want it to be your brand. You don’t want them to be destructed with– like if you are selling a thousand dollar product and they see a five dollar product next to it, in the market place that might not be the best.

Steve: No, no that totally makes sense. So in Teachable when you have your own domain, no one even sees anything about Teachable at all, right?

Ankur: Correct.

Steve: Okay.

Ankur: Yeah, Teachable does not have– any of the students we have no rights over them. We are just a technology provider. We can’t contact your students. We don’t even own the data. You own that data.

Steve: You mentioned these problems on the free plan people dropping out on the free plan not wanting to pay, can you just kind of comment on what your distribution looks like between free and paid?

Ankur: Right now in terms of the active customers, we have about a little over 5000 active customers. Off that, about– and we have like 2000 paying customers. Of course we have a segment of paying customers that are not monthly active, but in general on any given month about 75% of our active customers are not paying.

Across the entire lifetime of Teachable accounts created, there have been about 45,000 accounts created of which 2000 are paying us right now and about 2400 to 2500 have paid us at any given point. In general we convert about, hopefully we’re converting about 7% of people from free to paid.

Steve: So 2000, does that include like the free guys who’re actually selling stuff?

Ankur: That does not include them.

Steve: Okay, so 2000 on the monthly plans.

Ankur: Monthly or annual.

Steve: Okay so the remaining 3000 are just people that might occasionally sell something.

Ankur: Or they could be people in the process of setting stuff up. We also have a customer segment. It’s not super common, but from people that have no intention of ever charging money for their course, and also don’t care about a custom domain, for them they effectively have unlimited everything for free.

Steve: Yeah, except they have to pay a dollar, right?

Ankur: Yeah, but if you don’t want to sell anything, you don’t have to pay anything. If a course is given away free right now, you pay zero.

Steve: Okay, but meanwhile they are sucking up your video bandwidth, right?

Ankur: Exactly.

Steve: Okay, so how is that sustainable in the long run?

Ankur: For now we just kind of let it be as the cost of doing business, but that’s what we are thinking about. Basically what it comes down to is we are not profitable on a per customer basis, but we are still profitable across the entire spectrum of customers, but yeah, so right now for instance, and it’s slowly starting to happen. Right now we don’t know, we’re spending $7000 a month on video bandwidth, and that’s already because our marginal bandwidth cost has become super cheap.

Still we’ll see how that goes up or down as a percentage of our monthly recurring and then decide what to do. For now, a lot of people do stay, just the fact they don’t even think about it is worth so much more than even if they were paying for what they were using. Just a fact it’s one less thing to think about.

Steve: Here’s something interesting. I offer a free course with my class, and it’s driven via email mainly, but you are saying that I could take this course, package it nicely in Teachable and offer for free and not have to pay anything?

Ankur: Correct. If you want to put it in your own brand and stuff, then you can do it on the basic plan, but that’s it.

Steve: That’s sounds very appealing.

Ankur: Yeah, and there’s a lot of people that do that. Bigger picture, I want more of that to happen. Like, as I said, we are venture bat. We are the only venture bat company in this space. If we lose a little bit of money because too many people use us, because our bandwidth costs are free, I think that’s a long-term battle, we are okay with it.

We are okay if we are marginally unprofitable on some customers, but say you– for instance you are a great example, imagine new users for your free course, I bet you someone in fact more than one person in your course is already targeted towards people wanting to make a side income. Some will be like, “Steve this is in Teachable, that’s kind of cool, I wonder if I should use Teachable and we’ll get paying customers through that.

Steve: How do you quantify those people?

Ankur: We have ads [inaudible 00:30:23] we have no great metrics on it right now.

Steve: Okay, so let me ask you this question, how many people who are on your free thing eventually go on to paying?

Ankur: Right now that is more of the bigger improvements is it used to be about 2, 2.5 % but of late we have gone up to about 7 %. We would love to get it to 10.

Steve: So what are specific things that you are doing to encourage that to happen?

Ankur: The biggest thing we have done so far is a weekly webinar where we kind of go over exactly what the platform entails and generally end with a time sensitive offer to upgrade to appeal to a paid tier.

Steve: Okay, so how do you get the word out? You just e-mail people?

Ankur: Yup, these are people already in our funnel, so this is someone after…

Steve: Oh, I see.

Ankur: Just to our own free users.

Steve: Okay, so you this weekly and…

Ankur: Yup.

Steve: Is it the same exact webinar each time?

Ankur: Yup, it is slightly customized based on what the questions are because the first 40 minutes are like “Hey here” – it’s just a technical walkthrough, it’s not content based. It’s all technical like here’s how you set things up, this is what you do and then the last 20 minutes content is different based on where people got stuck or what specific questions they have, but it’s the same template. We occasionally experiment with what the offer to upgrade now is, and that’s not– there we always try different things, but it’s all around the same presentation.

Steve: Is this a human giving it or is it a recording?

Ankur: Human.

Steve: Human, okay because there is Q&A I would imagine at the end.

Ankur: Yup, and I mean we could do an automated thing, but it’s so high leverage, the leverage on this is we convert 2% more people than normal or whatever, from a lifetime value perspective it’s worth having someone do it– doing it themselves.

Steve: Interesting, I am just curious what your conversion rate is for a webinar to upgrade people?

Ankur: It’s like it’s dropped now and we are trying to figure out why, but we would at one point get almost a third of people to convert.

Steve: That’s amazing, okay.

Ankur: Yeah, it was bizarre but then again you’ve also to remember this is a webinar at a $29 price point at its base level.

Steve: Sure, but it’s recurring.

Ankur: Yup, it’s recurring. Our conversion rates are incredibly high and then there is a lot of people kind of the marketing space that would say, “Don’t do a webinar for a $29 price point,” but for us one it’s recurring and two it’s also gets people activated and gets people excited.

Steve: I imagine your lifetime value on those guys is at least like $300 or something, right?

Ankur: It’s a little bit under…

Steve: Little bit under okay.

Ankur: Then again, that’s lifetime value as measured by monthly billings only, does not include the transaction fee.

Steve: Sure, which is the huge chuck, right?

Ankur: We don’t have a good blended LTV number yet.

Steve: Okay, so let us talk about– we talked about churn like 20 minutes ago, so what are some things that you do to kind of reduce churn?

Ankur: Honestly not enough, like now our best bets to reduce churn are one, provide value, two try and identify what makes people less likely to churn. So far the biggest take away is as soon as people have their first sale, they become absurdly less likely to churn, which follows common sense.

Steve: Sure, sure.

Ankur: So internally we are trying to see what can we do to take people to their first sale as first as possible. So we are trying to surface the right information at the right time. One of the challenges that we are struggling with is there is still a lot of people that don’t succeed at getting to their first sale. I guess it’s true, I’m sure you have seen the same thing with people trying the e-commerce stores as well.

Steve: Absolutely, yes.

Ankur: So that is something that we are struggling with, if you have any suggestions let me know.

Steve: We have an e-mail sequence that kind of walks people through, and I know a bunch of other course people that use intercom.io.

Ankur: Yup.

Steve: Like triggered e-mails, are you guys doing any of that stuff?

Ankur: We used to use Intercom, we just move to HubSpot. We have the right e-mail automation set up, obviously it can always be better, but yeah that’s one of the challenges we are having is like we are investing a lot into education, but we’ve personally found a higher ROI from finding people that do education well, and partnering with them. For instance, anyone in [inaudible 00:34:25] online courses program gets a few months at Teachable. Mariah of course has a signature course on launching course. Partner with people that are doing that training and giving them the software and kind of figuring out how we get paid on the back end has traditionally led to better outcomes because there’s people that are just so laser focused on the training that they are just going to do a better job than we can because our focus is going to be on the product.

Steve: So how do you convince these big guys like the [inaudible 00:34:54] to actually use your platform in the first place?

Ankur: Honestly there is a [inaudible 00:34:58] it’s actually pretty easy; I think we have the best technology and most people that do their due diligence land up there as a logical conclusion. The only people that don’t are those that want a really large kick back, or they want something in addition to the best product for their students, but at the risk of sounding super arrogant it’s not been very hard, it’s often very hard.

Steve: Because they don’t want to deal with any– but I would imagine those guys already probably have something that has been working for a long time.

Ankur: Most people are immensely frustrated though with whatever solution they have set up right now which is the other interesting thing that’s it’s not been that hard to get people to switch. No one wants to switch on a random day of the month, but whenever they are launching a new product I found that people are surprisingly open to switch especially if you ingrate with their current marketing set up. Most of them are pretty set on how they do their marketing, they don’t really– they are not set on what tool they use for fulfillment yet. They are still not 100% convinced.

Steve: Just curious then, what is your kind of on boarding process like? Let’s say I have signed up, do you kind of hand hold me through everything?

Ankur: No, in general for us to be a successful company, as I said we have 2000 paying customers, we try and add about 100 paying customers a week. We don’t have the skill to on board everyone personally. So we try and do as much in-product as possible so everything from kind of contextual pop ups and videos trying to make it as absurdly simple to set up a course as possible. With that said that’s our biggest challenge and will continue to our biggest challenge is how do we do that.

We also offer something; we are experimenting with offering something called [inaudible 00:36:42] on boarding where anyone on a professional plan gets a 2 hour on boarding session. What’s interesting is that it is largely peer to peer. We are trying to identify people that are suited to use our platform and paying them to conduct these sessions. It’s something we used to ourselves in-house and just got like stupidly unscalable.

Steve: Sure.

Ankur: So we are trying to see if we can do this in a scalable way. The jury is allowed, I’m not sure how it will turn out, but if it works out well it’s going to be super promising, because then we can theoretically start offering this to more and more people, and it is the community kind of providing these on boarding sessions.

Steve: Just curious, for a company your size, how do you distribute the resources versus ease of on boarding, versus like a conversion script like the Udemy to your platform, versus just getting more customers. How big is your company?

Ankur: Absolutely, we are 16 people right now.

Steve: Okay.

Ankur: Our growth and marketing team is 6 people, our operations team is 4 people, and our product team is 6 people. Operation support is owned by operations, all growth related activities. Since we don’t have a sales team, it’s right now shared between operations and kind of our growth/marketing team, and 6 people on product.

In terms of how we would like to scale the company moving forward, I think we always want to maintain a similar kind of ratio, and we are going to be probably looking to hire about 2 positions a month for the next 3 to 6 months.

Steve: That is crazy, okay.

Ankur: Yeah, right now it can be argued we are not deploying our capital efficiently, because we’re– we raised 2 million dollars, we still have well over 1 million dollars in the bank and on a per month bases we are– on a good month we are losing less than 20 to 30K, we are almost at brake even with a ton of capital right now, and potentially there is a little bit more. We have room to spend money faster; we just haven’t found smart ways of doing so yet.

Steve: Yes, so on the market, what have you tried? So you mentioned Facebook ads, and those worked out for you, before they didn’t allow you to target groups, what else? Have you tried Adwords?

Ankur: Influencer marketing has been huge, so going to people’s audiences, doing webinars has been massive.

Steve: What’s your pitch for that? Like what’s…

Ankur: We have a webinar that converts roughly on—I mean it’s actually crazy, we’ve actually had times when it’s converted at close to 100 dollars in attendee, but in general it converts about 50 bucks in attendee. Including one time when we had a 6 figure webinar, which was super fun.

Steve: Is this like an affiliate arrangement with the audience?

Ankur: Yeah, it’s an affiliate arrangement, so basically for instance, with Mariah Coz from Femtrepreneur. We had a six figure webinar where she brought me to her audience. We ended up selling a year of software as well as some kind of content from her; we split that 50-50. So it’s a tried and tested webinar that we have done plenty of times, it just works; it’s almost kind of an elite pages play book that works really well.

That’s something we try and do about anywhere from 2 to 5 times a month. The biggest thing for me over the course of the next couple of months is removing myself as a limiting factor, because until now all of these events I do myself which is just not sustainable. The other thing that has worked really well is we had a summit last November where we sold 500 annual plans over a 2 week period, which was super fun.

Steve: Nice, how did that work? So you just had your own conference or?

Ankur: Effectively an online conference brought in a bunch of people we really respect in the online course space, they all taught a free– they offered a free workshop. At the end of the summit we had an offer where each of these people that taught a free workshop gave a piece of premium content to the offers. The overall offer is that if you bought a year of Teachable, you got a piece of premium content from each of these 8 people.

So it was actually an amazing offer too, because for a lot of that just the training itself is worth thousands of dollars, but with an annual plan of Teachable you get all of that included.

Steve: And the people contributing the content, they would get an a affiliate cut of whatever you sell?

Ankur: They would get an affiliate cut to their audience.

Steve: Okay right.

Ankur: If we drove the sale, we pay them a small bounty just for being on the webinar or whatever, but in general they got a real 50% commission of everything that they sold as well as– most of these workshops like the good ones, we got like 700, 800 people live. One of them over a 1000 people live, so it also really helped enhance– it helped grow their audience pretty considerably too.

Steve: That is pretty ingenious. What about the YouTubers, have you had any luck with those guys?

Ankur: Not as much luck as we would like.

Steve: Okay.

Ankur: The big challenge seems to be they want it to be completely done as a service, they want it to be done for them, and we are effectively a self serve platform. So anyone listening, I think there is a big business opportunity if you are willing to work with these YouTubers and do the work for them.

That’s literally the only thing, they are happy to experiment, they are happy to send traffic and a few of them are succeeding, but at large they want you to take care of everything. They are like “I want to send content and tell me where to link, and you do all the work,” which doesn’t work for our model, but it could well work with an intermediary kind of acting in between us.

Steve: Is there like famebit.com is a sponsor of this show, and they provide you guys with– people with access to influencers.

Ankur: Nice.

Steve: Just curious if you– do you guys use any services for anything like that, or is it just all outreach and legwork?

Ankur: It’s all outreach and legwork, also what helps is like the space that influencers want in general are incredibly nice and helpful people, and once you know– it’s a small world at the end of the day. So it has not proved to be especially challenging.

Steve: It just so happens that online course are exploding right now, so it sounds like it’s a really good time for a service like yours.

Ankur: My bet and I could be wrong is like this is still so early in terms of what online courses will become. It seems like exploding now, but my overall kind of bigger bet– maybe you disagree because a lot of what you talk about is predicated on selling physical items, but I think 5 years from now or ten years from now more people are going to be selling information in some from online rather than physical products.

Steve: I believe that.

Ankur: That’s kind of the big bet, big long term bet behind this company that, it’s like we were facilitating the sales information and that is only going to keep growing, and the number of self supported entrepreneurs that sell information for a living will only keep growing.

Steve: Can you just kind of comment along those lines about some of the bigger guys out there, and kind of how you guys are each targeting something different. Like Udemy, Coursera, Lynda.

Ankur: Absolutely. So, Udemy I think is going to be very successful, I don’t agree with their way of doing business because you they have effectively built you know they came out of foreign education, they are like the place to go to get commoditized like $10 courses on any topic.

Steve: Yeah, exactly.

Ankur: I still think they are going to be very successful, because they are solving a problem we are not, which is if you are a student that wants to learn– like if a student wants to learn X topic, we do not help that at all, our platform is not for students. Udemy has cut a nice little niche for themselves kind of being the skill based version to get cheap thrills and like buy 10 courses, watch one, but that’s still a big market and it’s still something they’ll be successful with.

Coursera has gone the interesting route of taking college level courses, so Coursera is different from Udemy because Coursera is very academic focused, not really focused on skill based stuff and making that accessible to everyone, and that’s what we try to monetize at, it’s again a completely different kind of field to play in.

Lynda.com is interesting because I guess Pluralsight and Lynda are about– I can talk about them together, because they are both doing effectively the same thing where you build a really large content library, so you have a content company and then you sell it. Most of Lynda’s business and Pluralsight is driven by enterprise sales versus– they are a sales driven company rather than a marketing driven company.

Steve: Interesting.

Ankur: It is interesting because, personally in the data we’ve seen whenever people are selling courses monthly to consumers; it’s really, really hard. Almost always they churn through consumers too fast. Lynda and Prularsight are the only companies I know that are successfully selling courses on a monthly model, and it is because they are selling to enterprises and larger companies where if you sell to someone on a monthly contract, chances are that will never expire.

When people sell month courses monthly from what I’ve seen, so no payment plans but this course is $10 a month indefinitely, you are better– the data just doesn’t back out, you’re better off generally charging a lump sum upfront or doing payment plans the traditional way.

Steve: That’s an interesting model because once they have one of these customers, it seems like the money isn’t that big of a factor either right, it just keeps coming.

Ankur: And we’re not pricing, it absolutely is not, like Lynda has many 7 figure annual contracts and they even have 8 figure annual contracts.

Steve: Interesting, what about Skillshare?

Ankur: Skillshare is interesting. I think they have definitely missed a couple of tricks in the book, because they first started off as offline classes that were doing really well. Then they moved to online classes except the online classes were less than an hour long, and sold for $120. They would sell one off classes. That created a little bit of early success, one of my friends [inaudible 00:46:32] was a top selling Skillshare instructor.

But what happened there was the same thing as Udemy is all the top guys stated kind of going their own way. Then Skillshare decided, “Okay let’s just try the Netflix model,” where it’s like I don’t know $8, $9 for all of these courses. I’m personally pessimistic on that, but we’ll see how it plays out. I do know for a fact just based on traffic according to any estimate we have, we are substantially bigger than Skillshare, and bigger picture you know, we are not that big .

Steve: Yeah, in the grand scheme of things, because they are also still young.

Ankur: Yup, so yeah, so I think I don’t personally with a lot of decisions Skillshare has made, and I would have made them differently, but I also don’t know what they know.

Steve: Okay, hey Ankur this is really enlightening. I actually did not know that much about just the entire landscape even though I sell my own digital course. Thanks a lot for coming on the show and being so open with your numbers and everything.

Ankur: Yes, it’s been a blast.

Steve: I’m sure everyone is going to find this valuable.

Ankur: Yup, it’s been a blast. It will be fun to see how this year turns out. Thank you so much for having me, and for anyone listening at all. I would love– I just love if more people started creating courses, because I’m such a believer in the future of online education.

Steve: Where can they find you Akur in your platform?

Ankur: Platform is at teachable.com, the best way of finding me is probably on Twitter, I’m at twitter.com/ankurnagpal.

Steve: You’re a Cal [ph] grad right? Is that…

Ankur: Yes, sir, class of 2010.

Steve: So, I wouldn’t hold that against him guys, but yeah, all right. Take care.

Ankur: Have a good one Steve.

Steve: Hope you enjoyed that episode. When I developed my course way back in 2011, platforms like Teachable actually were not available, but similar to e-commerce, putting up a course for sale today is actually a whole lot easier, so there is no excuse not to give it a try.

For more information about this episode, go to my mywifequitherjob.com/episode 115. If you enjoyed this episode please go to iTunes and leave me a review. It is by far the best way to support the show, and please tell your friends because the greatest compliment that you can give me is to refer this podcast to someone else either in person or to share it on the web.

If you are interested in starting your own online business, be sure to sign up for my free 6 day mini-course where I show you how my wife and I managed to make over 100K in profit in our first year of business. Go to mywifequitherjob.com for more information, sign up right there on the front page, and I’ll send you the course via e-mail 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.

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114: The Right Way To Outsource And Scale Your Business With Chris Ducker

The Right Way To Outsource And Scale Your Business With Chris Ducker

Today I’m happy to have my buddy Chris Ducker on the show. Chris is someone who I met at FinCon a few years back and we got a chance to hang out while we were there. If you don’t know Chris, he is the CEO of VirtualStaffFinder.com where he helps business owners get matched up with virtual help.

He’s also the author of the popular book Virtual Freedom. In fact, as many of you probably know from mywifequitherjob.com, the blog portion of my online business doubled in the past year and I was able to hit $700,000 in revenue for 2015.

But now I need help to take some stuff off of my plate. Anyway, I was on the can the other day reading Chris’ book and I was I like, why am I reading this when I can just talk to the real thing?

What You’ll Learn

  • How Chris got his first few customers.
  • How many VAs he employs himself.
  • The early challenges with his business.
  • His leading source of customer acquisition.
  • How his business model works.
  • How he reduces churn.
  • What sets his service apart from competing services.
  • The right way to hire virtual help

Other Resources And Books

Transcript

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 to simply 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.

Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email, now onto the show.

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 happy to have my buddy Chris Ducker on the show. Now Chris is someone who I met at FinCon a couple of years back, and we actually got a chance to hangout while we were there. And if you don’t know Chris he is the CEO of Virtual Staff Finder, where he helps business owners to get matched up with virtual help.

And he is also the author of the popular book Virtual Freedom which instantly right now is probably being displayed in my bathroom also known as the library. And in fact many of you know from mywifequitherjob.com the blog portion of my online business doubled in the past year and I was able to hit 700K in revenue for 2015.

But now I need help to take some stuff off of my plate. Anyways I was on the can the other day reading Chris’s book and I was like why the hell am I reading this book when I can just talk to the real thing. And with that welcome to the show Chris, how are you doing today man?

Ducker: I’m good to be here man, that’s a unique introduction. I have probably done over 300 podcast interviews now, that’s probably one of the more unique ones.

Steve: So I figured I know you and you can take jokes, so I figured what the hell, right?

Ducker: Absolutely I mean if you are going use the can for anything other than what we usually use it for, why not pick up a good book, and read it when you are there as well, right?

Steve: Dude it’s an honor man, it’s an honor to be there I’m telling you.

Ducker: How are you doing brother, how’s everything going with the fam and — I mean obviously the business looks like it’s doing great, how’s everything going with the family?

Steve: The fam is good, my daughter she is selling girls scout cookies right now, so I may hit you up a little bit later. I don’t know how I’m going to get them to you in the Philippines but…

Ducker: You’ll have to send them by FedEx otherwise it will never get here.

Steve: Or I’ll just eat your portion.

Ducker: They’ll seize them, ask them — yeah you can do that too.

Steve: All right Chris everyone out there who doesn’t know you, give us a brief intro of how you founded Virtual Staff Finder, and what you are up to today?

Ducker: Well you know the core things man, I’m just the sales guy. I haven’t sort of given myself any kind of delusions and grandeur on that. I’m a sales and marketing guy originally from London. I came over to the Philippines in 2000, and started my first business over here in 2000 and [inaudible 00:03:31] looking at now 2004. 12 years in as an entrepreneur and there is several businesses under the umbrella.

We employ around 450 full time employees at our three floor facility here in Cebu in the Philippines. One side of the business is a corporate call center working with corporations, many of whom are in the US, but we also are sort of elsewhere in the world as well.

And then there is Virtual Staff Finder where we really focus in on like you said match making busy entrepreneurs with virtual assistance here in the Philippines. And then obviously we have youpreneur.com which is my online mastermind community as well as all the other stuff that I do with the events and everything as well. So it’s all good firm, keep yourself busy.

Steve: I didn’t know about the call centre, is that for like companies that handle like tech support and stuff?

Ducker: Yeah tech support, customer support, we do car abandonment; we do a lot of outbound lead generation. We are one of the very few midsized call centers here in the Philippines that truly specialize in outbound lead generation work and appointment setting.

One of the reasons for that is because of my background in the telesales game. So yeah it’s tough to do that, you’ve got to know how to train people and look after people in that kind of environment from a commission perspective and all rest of it. So we are one of the very few people that can do it properly and we’ve doing it for a long time now.

Steve: So like my business I sell linens, so if I were to — want to hit up like event planners and wedding planners I could use your service and have them do the outreach for me, is that kind of how it works?

Ducker: That’s exactly how it works; I mean as long as you had a big enough requirements we could potentially do it for you. We don’t work with very small businesses because honestly it’s very hard to — this business is all about volume. Volume [inaudible 00:05:27] that’s what it comes down to. So we have a minimum of 10 full time employees required to work with customers, and so we work with a lot of internet firms, a lot of insurance, a lot of education, a lot of travel and hospitality and that sort of type of thing.

Steve: Interesting, so a lot of the people who are listening are actually from overseas, some of them are from China, Hong Kong, and Thailand, a lot of they come up to me and they say hey, it’s really hard to start a business here. There is not a whole lot of ecommerce profits to be made, and here you are starting what I consider a really tough business to start, right? How did you get started early on with Virtual Staff Finder?

Ducker: Well we decided very early on, when I say we I mean myself and my wife. It’s funny how behind it all — or to the side of every successful man there is always a beautiful woman, isn’t that funny, isn’t that how it works?

Steve: That’s true.

Ducker: It’s true it works well, but no I mean we decided early on that if we were going to be living in the Philippines and we wanted to have a lifestyle that we craved that we should do two things. Number one we should truly maximize the potential or the talent of the Pilipino, because they are very, very talented workers, hard workers, really loyal workers, very God fearing, trustworthy etcetera.

So we said that we must get to the point of truly capitalizing on that from a manpower perspective. But secondly we also understood that the local market here in the Philippines is not the most buoyant in the world, it’s very tough to make money if you are selling stuff whatever it is to the local market. So we decided very early on that we were going to utilize the manpower and the strength of that and focus on getting clients and customers outside of the country.

Over a period of time it just developed into the businesses that we’ve created now. Virtual Staff Finder specifically actually came out of a blog comment. So I’m always a big advocate of saying you are going to listen to your audience, and I wrote a blog post back in 2010. I think it was August 2010 where I was talking about working with virtual assistants to help market your business. This guy replied his name is Michael. I remember him because I pulled out the comment and used it in presentations as a specific example of listening to your audience and what it can lead to.

His name is Michael; he had a Johnny bravo at the top in each which I thought was great. And he said I have read the forum, I work, we’ve got a lot of work with VA’s, I tried working with a couple, it’s been a complete disaster. Chris if I’m going to have you as a source that I can trust, that I can genuinely trust to be able to find me good quality VA’s, hey I would pay for that, and four weeks later we launched Virtual Staff Finder.

Steve: So you threw it together in four weeks?

Ducker: Yes, I mean we are blessed to the point where we already had a business up and running locally. We already had the infrastructure, obviously we had the staff to be able to get this out as an MVP and look at it and try it out, and send some — I already had a bit of a following online with my email or rather with my blog and my podcast, there was a bit of an email list there.

So we did it, we just did the MVP, the minimal viable product option; we slammed up a very crud looking website. I mean as I look back on it now I’m probably ashamed, but you do what you got to do. You get it out we validated it, it was very competitively priced, since it has gone up by about 70% in terms of — over the period of time obviously. But yeah I mean we are now five and a bit years in, and we’ve helped over 4000 I think the counts is over…

Steve: It’s crazy man.

Ducker: It’s just over 4000 people, insane.

Steve: So you said you had infrastructure already, what business was that for?

Ducker: Well, it was for the call centre, we had the facility, right? We had the facility up and running, we had the staff onboard already. We had web developer onboard, we had a designer onboard. So it wasn’t like I had to go out and find all these people then work with these people, and then try and release something all in a short space of time. A lot of the leg work had already been done so to speak.

Steve: Okay, so you got your first few customers then I guess based on your blog audience, is that accurate?

Ducker: Yes, correct.

Steve: Okay. Now I’m just curious about the call centre, like when you first started that, how did you get your first customers for that business?

Ducker: Well, I had actually been in the call centre business for a while as a consultant. I was working with pretty large US companies, some of them logo brands like you would know them, which I can’t mention because of nondisclosure and everything. I mean big firms. I was basically working with them as a very, very well paid consultant on the ground here in the Philippines helping them set up call centre facilities.

And so I knew all the local industries, I knew everybody I needed to know. I had all the connections I needed to have. That was kind of how I got involved with that industry. Although at first I was more than happy to just work on the three north projects here and there, and make a good sizable chunk in change for helping people set things up.

The catalyst for me to be able to break away from that was when I was doing consultancy work for a company over in Miami, not in the call centre world, actually in the infomercial world. I have been over in Miami for about a month working with this guy. And he was pretty much my exclusive client at the time. Lovely guy man, like super cool dude to hang out with, multi, multi millionaire, very successful entrepreneur, full seats at the hit games, VIP super bowl ticket, the whole [inaudible 00:11:41].

He booked me up. But when it came to work, he was the biggest pain in the butt micromanaging payment. I mean just the worst I’ve ever worked for. That was really the catalyst. I was on the way back from Miami on an airplane, I said I’m done, and I dropped him an email and let him know that I was going to be breaking the loose, and that was when we set up the business.

Steve: For me at least, your name is like synonymous with virtual staff and outsourcing. It’s kind of interesting how you built that up. Was that based on your blog or? How did you get your name out there, because a lot of the people who listen, they are kind of afraid of being able to actually get the customers in, but you somehow and even though you are in the Philippines and a lot of your customers are in the US for example, you’ve managed to get your word out. What strategy did you use to do that?

Ducker: What I started doing was in January 2010. I started blogging about my own struggles as an entrepreneur, and how I had burned out at the end of 2009, and I was on this year long mission to become what I was calling a virtual CEO by the end of 2010. So I started writing blog posts, I started doing monthly reports on what I was doing each month, month by month to remove myself from the business.

People liked that window. They liked the window and to other people’s world. You bring a room of a thousand people together, they will be way more voyeurs in there than will be exervisionists [ph]. People liked what I was doing. They subscribed to my email list. They listened to the podcast, they commented on the blog, and I just started building up these relationships over the period of the first six months or so.

A lot of those people, they are still clients of mine today. They are still blog readers, they are still in the mastermind communities, they are still ordering conversion stuff. All I really did, I wish there was a magic pill that I could say you could go out and buy and pop, but it’s not that simple. I mean, I related with really just focus on my content and creating relationships. I think relationships are– this is the single most important thing in the business hands down, and not just relations with customers, but also with vendors and suppliers and prospects and your team and everything else.

Steve: You didn’t use any other avenues like advertising, pay per click advertising, Facebook, nothing like that.

Ducker: Nothing.

Steve: It was just straight blog outreach, email list, podcast.

Ducker: Blog, podcast, lots of social media. By the end of 2010, because of what I had done to remove myself from the business utilizing virtual stuff, I had like you say, I’d sort of build up this bit of a brand as the VA guy. It was good timing. The 4 Hour Work Week was still rolling along really nicely in 2010, and people were taking the whole kind of virtual business and everything. It was just good timing from my perspective. It’s been great; I mean we’ve launched a successful business. I got a book deal out of it from Virtual Freedom. It’s been great. It’s been great.

Steve: If you were to start all over again, would you employ the same strategy today, because there’s a lot of bloggers today. It’s kind of little more saturated.

Ducker: Sure. I would. I would employ the same strategy. But what I would do is I would niche down as far as I possibly could. I see a lot of bloggers starting new blogs or starting new podcasts or starting a new YouTube channel, or a new periscope show or whatever the case maybe, a lot of new content creators come along every day.

It is tough. It’s tougher now to stand out quickly in that broader scope. But I think if you niche down as far as you possibly can with whatever market you are trying to attract, you can get the same results. You might be a smaller crowd, but the conversion on this will always be higher than if you were trying to have a global reach.

Steve: Let’s talk about platforms real quick. Blogging versus podcasting, I know you usually do a lot of periscopes; I actually had to turn you off because you kept like buzzing my phone. You do it really often.

Ducker: I was periscoping everyday last year. I went for a round six months where I was periscoping Monday to Friday last year. Going to the last quarter, I took a bit of a break and I’ve been stagnating once a week or something. However that being said tomorrow, literally, I start back with two shows a week format on a Tuesday and a Wednesday every week at 9 pm eastern time.

It will be a 30 minute show but it’s, we are going a little pro with this. We are going a little pro and really focusing in on repurposing the content properly and trying to make it a little bit more interactive and a little bit more pro and everything. It’s going to be interesting to see how it comes together.

See, periscope is all about platforms. Blogging is great, podcasting is great, YouTube videos, everything is great. Don’t get me wrong. You got to do a little bit of everything, but I believe that you should zoom in on those two or three things that you feel bring the most benefit to you, your brand your business. For periscope for me, it just, I fell in love with it immediately. After my first blog cost I knew that this was a platform that I was going to spend time on because number one, I have no problems ad living. I’m happy to ad live.

Steve: Yeah, you are good at that. I mean that’s a talent that you have for sure.

Ducker: Thank you and it’s not something that has come very easily. It is something I’ve worked on, but now I feel really confident ad living whether be on a periscope for a podcast, or even live on stage in front of an audience. Number one, I don’t want ad living. Number two, I have a bit of an ego, right. I built a personal brand. That’s what I do. I do my businesses based around me, my vibe, what I’m all about, my expertise, my message and how I want to serve others. So I’ve got a personal brand.

Anybody with a personal brand is going to do well on periscope, because it’s those p to p connections that you create with your audience, those people to people connections that are just so valuable. And then number three, man, it’s just so freaking easy dude. It’s just so easy. You don’t have to sit and write a 2000 word blog post for four hours. You don’t have to worry about editing a tone of video or audio content, you just click broadcast and you talk, and you interact and then you finish your broadcast and you are done.

Steve: You mentioned you are going to go pro with this, what exactly did you mean by that?

Ducker: The additional lights in the back drop and micing up on the phone and using a higher quality phone and generally spending a little bit more time putting together the show content, and understand we are also going to be recording all of this in HD as well off camera.

You see those cool videos of like DJs in their radio shows and stuff like that, they are being spydom almost. They are not physically looking into that camera, but they are focusing on other things whether it’ll be the mic or another camera in the room or whatever. It’s going to be that kind of fly on the wall sort of type of recording, where we are then going to repurpose that, put it on the YouTube channel, slam it up on the blog for weekly content and [inaudible 00:19:25] as well. So go a little bit more pro.

Steve: Let’s talk about repurposing. So you are just going to take that exact video and then you are going to put it on YouTube?

Ducker: We’ll edit a little bit. When you do a periscope, there’s, inevitably 2 or 3 minutes of BSing right at the beginning, where you’re kind of welcoming people and you are getting people left out, and you are asking people to share. There’s many people in areas you can before you get into the hardcore content. That’s sort of stuff we won’t repurpose. It’s pointless. There’s no value there really. It’s purely for the live audience. That will be edited out.

But you know, there’s other things that we can do post recording that you can’t do yet on periscope, like having text flash up on the screen with a call to action for example. And in that ground music that we want to maybe add or a nice video bumper at the beginning and the end or that sort of type of thing, a few things will be happening in the post.

Where as a scope show itself will probably last around 30 to maybe 35 minutes or so, we’ll probably end up finishing up with like a 12 or a 15 minute version which will be edited down, which will then be like I said up on YouTube and on the blog as well. And we might end up actually turning it into a video or podcast as well at some point, but it’s still early based on that decision. I really thought like you know, we work so hard man, and you know what I’m talking about from a blogging perspective, that’s the toughest kind of content to create because you have to type. It’s very unfluid for a lot of people.

Steve: Dude, the writing is the worst.

Ducker: Yeah, right. If there’s anything we can do to repurpose our content, anything we can do, not only reselling ourselves better, but we are serving our audience better as well. I think it’s very important to keep that in mind no matter what type of content you are creating.

Steve: You mentioned you are going to put it on the blog, does that imply that you are having it transcribed?

Ducker: That’s a possibility. When I said that I mean the video more than anything else, but we will probably, I don’t know whether we will transcribe, but we will do some kind of a show note type of recap I think, a handful of paragraphs, something like that.

Steve: Okay, and then, so the reason why I’m asking all these question because I don’t know if you follow Shailyn Johnson?

Ducker: Of course I know Shailyn, yes.

Steve: But what she does is she does her periscope which turns into a YouTube video. She has it transcribed, and then formatted nicely for a blog post and she also takes out audio and turns it into a podcast as well.

Ducker: Yeah, very, very important to repurpose that, all of them one piece of content. I love it.

Steve: Exactly. I would imagine that she uses VAs for all of these things as you do.

Ducker: I know she does because she’s got them from me. I mean, she hasn’t got her entire team from me; a lot of the team, almost all of that team is based in the US. I know for a fact that she’s got at least two VAs from me. One of them actually lives right here in Cebu. I’ve met her.

Steve: I see, so you are kind of doing, I don’t know who came out with the first, but you are doing a similar thing. You are taking one piece of content and just splitting it as many places as you possibly can.

Ducker: Yeah, I mean, I’ve been doing this for a while. This is not new. I’ve been doing this for a while. What is new, and you can go up to my YouTube channel right now and see scope recordings from four, five, six months ago literally. What I’m doing now is really honestly I’m taking it way more seriously. That’s what it comes down to.

Steve: Okay, just more polished basically.

Ducker: Yes, more polished, more serious in terms of the prep work of the content and that sort of type of thing.

Steve: Okay, and I was just curious, and I’m going to be asking this questions later on, but what is like the going rate for a VA to do all this work that you are talking about for repurposing?

Ducker: Well you got to be careful because there are different types of VAs with different roles. You can’t and you should not hire one person to edit video, edit podcast, run your blog, run your social media, run your kind of– that’s not one person, that’s three, or four people. The analogy I like to use is when you build a house. When you build a house, you have an architect designer, then you hire a head contractor, and that head contractor is there to ultimately oversee the building off the property.

But he will then subcontract the planning, the electrical work, the roofing, the bricks laying, the plaster and everything else that goes along with that. You wouldn’t have a plumber put your electrics in, it will be a catastrophe. Therefore you wouldn’t have a web developer trying to run your calendar and vice versa. You got to be very careful with how you hire people. You’re going to hire for the roles and not for the task, that’s what I always say.

Steve: Let’s break down the task that you have and see– I remember in your book you mentioned that everyone should have a general VA, a general purpose VA, what is the role of that general purpose VA then?

Ducker: That person is really there to help you on a day to day basis with the running of your online business, really focusing with online tasks. This is actually the biggest huddle. A lot of people struggle right here at the beginning, because you’ve got to let go of what you’ve been doing and in your own mind, you’ve probably been doing it absolutely just fine. The fact is should you be doing some of these tasks still as somebody who wants to build a business, that’s the big question.

So, I look at things such as managing my email and filtering my email. I get about 200 emails a day. By the time I’m actually getting to my inbox, for the first time each morning and around, usually around 9 am, my VA Mitchell has been up since 7 cleaning out my inbox for me. So those 200 emails have dropped down to around 30. I only check email once a day. I only go in and check email first thing in the morning.

My business is not going to implode if I don’t check email every three hours like some people do. Day to day organizational work with my team is done by a slack, so I don’t get destructed in the inbox. The email management is just one thing. Mitchell will go in first thing in the morning and she will reply to anything that she can with canned responses. We get a lot of enquiries, a lot of questions covering the same things. These canned responses I personally written so they are getting a personal reply but just not personally sent from me.

A lot of canned responses, a lot of– we follow the three click rule, when you open up an email you do one of three things. With A, reply or forward it. You either B delete it, or you either C, you go ahead and authorize it for later years. We have a rule in our business that you only open an email once. Once you open an email, you’ve got to do one of those three things. It’s the only way to stay super productive. You cannot put your to do list in your inbox. Don’t do that. It’s stupid.

Steve: That’s what I do Chris. I actually– you are going to kill me for this, but I have 26,000 unopened emails in my inbox right now.

Ducker: How many?

Steve: 26,000.

Ducker: Okay, I’m going to give you the biggest tip and the easiest tip for you to follow if you follow it. Declare email bankruptcy. Delete the whole bloody lot and start over again with a few select rules and processes like the three click rule for example, and your email hell will not come back to you, I guarantee it.

Steve: Let’s talk about your VA. How would I go about getting a VA that will go through my emails like yours?

Ducker: Well, I mean obviously understand that nobody is going to come out of the box perfect for you even if it’s like the right kind of skills set, the right kind of experience, the right kind of mindset and attitude to you and what you are all about, they never worked for you before. They don’t know how you want things done. Hiring a VA is not a magic pill. You’ve got to have your processes in place, you’ve got to make sure that you spend a little bit of time on boarding them and training them up so that they know what you want, and how you want things done, and at that point you start stepping back.

These general VAs do a lot more than just manage email. They can handle management of your autoresponders, like Aweber and Mail Chimp for example. They can manage your calendar. They can keep your drop box organized. They can upload videos and audio files for you. They can do small amounts of transcription. I don’t suggest that you spend too much time on getting them to do that because they are not transcriptionists. They can be very slow, but a 2 minute YouTube video, not a problem. That will take them probably 30, 40 minutes or whatever it is because it’s not what they do.

They can prepare simple PowerPoint or keynote presentations for you. They can manage your blog, so keeping plug-ins up to date. Help draft blog posts for you off the content you provide them in say a word format, they can then go ahead and take that, stick it into WordPress, embed some images, embed some call to action, put in some links, that sort of stuff. Real time saving life creating tasks, and that’s why I love the GDA so, so much.

Steve: So I’m a big believer in outsourcing, but I’m a little hesitant just about outsourcing to the Philippines. What are some of the main differences between getting someone over there versus an American? Under what circumstances would you choose one over the other?

Ducker: I don’t think there’s any differences. I don’t think there’s any difference for anyone based anywhere in the world. I believe that we are at a time as entrepreneurs where we can truly capitalize on the global economy. I mean this is [inaudible 00:29:31] at its finest. You are no longer constrained by geographical areas.

For me it’s not a matter of necessarily hiring somebody in the Philippines over the US or vice versa, it’s about hiring the right person for that role, for that job, for that project, for that task. My web designer for example is based in Australia. My web developer is in Slovenia.

Steve: Interesting okay, how did you find those guys?

Ducker: I found them through a combination of online searches; mutual contacts and people that I know, like always look to hire people through your extended network first and foremost. Because after our own opinions we’re way more likely to believe the opinions of the people that we know, love, and trust. That’s the reason social media is so damn good; all right for recommendation and referrals, some things like that. We try to find something through your network regardless of how small or big it is.

Then you can go to websites like Upwork or Freelancer. If you’re just looking for quick tasks to be done 99 Designs is where you want to go for anything graphic wise, don’t waste your time going anywhere else, it might be a little bit more expensive but you’re going to have such a massive collection of designers you can potentially work with, all of them with different levels of varying experience, and it’s just going to be just so much easy for you to find somebody to truly do the work you need done.

If you don’t want to have to go through the hustle of posting job descriptions, going through all of the arc rotations to come your way, getting on the phone and interviewing all these people, and doing all the additional work involved you come to some like the Virtual Staff Finder, and we do it all for you, and then we’ll present 3 final candidates after we’ve done our IQ tests, after we done background check, work through down referral checks and all the rest of it. We’ll present you with the 3 best people, you get on the Skype, and then you view them 15 minutes, pop and boom, hire the one you like the most.

Steve: The intention here is to hire them like for a consistence basis right like a full on employee of your business? Okay.

Ducker: Yeah, Virtual Staff Finder only works with full time requirements. We’re not the place to come and find somebody to design 100 social media images for you, or to find somebody to change certain content on your optic landing page or something like that. They are run off tasks or projects, that’s where you go to places like upwork.com, freelancer.com. If you’re looking to bring somebody on fulltime as part of your team, virtualstafffinder.com is where you want to go.

Steve: By fulltime you mean just consistent work, not necessary 40 hours a week work, right?

Ducker: No, exactly. I mean 40 hours is kind of classified as fulltime position, but if you’ve only got 20 hours worth of work for them on a weekly basis, but you’re happy to pay them a fulltime wage which is on average a 1/3 of what you will pay domestically, then everyone is a winner. The average starting salary of a general virtual assistant here in the Philippines is around anything between $600 to $800 for the month…

Steve: That is crazy.

Ducker: Yes it is. Now it is going up with every passing in, it goes up obviously the rate of inflation is what it is. 5 years ago that number was 400 to 500 dollars, so it is going up, but so is the experience level of the Filipino over the years as well. You can quit easily find somebody with a couple of years of really good quality, online work and experience under their belt for 700 bucks a month.

Steve: That sounds really attractive because like I’m just looking at my business right now, and I work fulltime still, and I’m doing my blog and ecommerce store course and all that stuff. I think I just haven’t really experienced what the possibilities are in, just even talking you about email. Email is like a huge time suck for me, if I can just outsource that, that would be like major relieve for me.

Ducker: The reminder that is not what I will class as a simple outsource task. That is something that needs to be created, that you need serious processes in place. Real step by step stuff, and you can’t just turn it over one day and then be free of it the next. You need to work on that VA, you need to fine tune processes, you need to see what works and what doesn’t work, and you need to expect them to screw up because the going is not simple.

Once they screw up a couple of times and learn by those mistakes that they make and things like that, but ultimately if you got 26,000 already emails in your inbox, the chances are you’re only paying attention to the ones that you want to pay attention to that you know you need to pay attention to.

Steve: Absolutely.

Ducker: The others can only be managed by a VA, and I’ll tell you right now the 26,000 there is probably stuff in there right now that has missed your eye balls that are everything from business opportunities to speaking opportunities to affiliate partnership and JV opportunities. You’re probably sitting on a spring fold area, you’re probably sitting on like 100 grand in your inbox, and it could be even higher.

But no, but that’s the whole reality of it. I mean, how much work do we do via email every day? Everybody is on email. It’s the first thing that we check every day. It’s the first thing we check every day. The chances are you probably lost out a little bit of business because you are not on top of it. And that’s another reason why you should be on top of it.

Steve: Let’s talk about low hanging fruit. I mean, email is obviously going to be more involved, but what are some simple things that everyone should outsource in your opinion?

Ducker: Social media. Social media is a massive time suck. I hate Facebook. I think Facebook is evil. I wouldn’t trust Mark Zuckerberg as far as I can throw the guy. I’m sure he’s a lovely guy in real life. Honestly just social in general is a big time suck. I’m not necessarily talking about the interaction side of things, but what I am talking about is the publication of your content on social media.

For example, I don’t work Fridays. I haven’t worked a Friday for three and a half years and my wife is very happy for it. I work Monday to Thursday from around 8 in the morning through to around 4 o’clock in the afternoon. That’s my working time. That’s it. On Thursday after lunch time, one of my other VAs Marie, she will come to me with 10 Facebook status updates. They’re just very simply in a word document and she sends them through to me on slack. I open them up and I tweak any wording that I want to tweak, and then I send it back to her.

These status updates are things like just plain images to links that hold content to links to upcoming podcast content for example, maybe there’s a YouTube video, maybe there’s somebody else’s eBook I want to promote, or whatever the case maybe. 10 status update, Monday to Friday, 2 updates each day. That’s it. What happens is once they are approved, Marie goes in through our business page on Facebook, and she will schedule those out for the coming week. I don’t have to worry about it.

Steve: What is Marie’s contact information?

Ducker: That is 100% classified.

Steve: It’s a deal. The rate you said is $800; I will give her 2,000 and see what happens.

Ducker: I mean, these are people that are– I want to clarify, these are people that have been with me for a while now, okay? But it doesn’t mean that you can’t find somebody to help you with this stuff. Twitter, meetedgar.com, one of the best pieces of Twitter auto generation or whatever you want to call it out there. We use Meet Edgar. We love it. I gave the task to one of my VAs about six months ago to go through my Google analytics, and to pick out my top 20 blog posts, my top 20 podcasts episodes, and my top 20 video embedded blog posts as well, so something with my YouTube videos on there.

She picked them around, and then we wrote tweets for them. Then, she scheduled them all into different categories inside of Meet Edgar and every day, six or seven of those get tweeted out automatically on my account. My blog traffic has increased by almost 30% in six months, because I’m driving traffic back to my older archived content. Again, talking about repurposing, we work so hard on our content, why are we publishing it, promoting it for a week or two max, and then forgetting about it? I’m sure there’s content in your archive from 2 years ago that is incredibly helpful and incredibly ever green. You should be promoting that content Steve.

Steve: I’m a big fan of Meet Edgar as well. I use it. In fact when you mentioned social media VA, Meet Edgar has essentially replaced that position.

Ducker: To a certain degree you’re right yes, you are absolutely right. But the thing with Meet Edgar is the time consuming part is inputting all the updates. It’s inputting all the tweets, inputting all the updates. I don’t have time for that. I pay someone else to do that for me.

Steve: Yeah, yeah, I actually sucked it up and did that for all of my blog posts podcasts and everything because I saw it like a onetime thing, but yeah. So you haven’t answered the question yet for me. How do I get one of these and how long is it going to take, and how much is it going to cost me. You mentioned 800 to 1000 general VA, low hanging fruit is social media, what else?

Ducker: Man, managing your blog, managing your calendar, setting up podcast interviews, filtering your blog comments, getting rid of spam, doing research for blog posts and podcasts episodes. Booking hotels and your flights from when you travel to events, all that sort of stuff.

Steve: It’s interesting when we booked this podcast interview; I think I got you directly, didn’t I?

Ducker: Yeah, because we are buddies. You sent me an email and said, hey, I want you on my podcast. And I said hey, let’s do it. But the usual process will be that you will go to chrisducker.com/contact. There’s a link on there, if you want to interview Chris, click here. You click there; it takes you to a separate page, a little form you’re going to fill out.

Then you fill out the form and that goes to one of my VAs. We have a number of different criteria that we need to match for me to take time out of my schedule to become the guest on somebody’s show. Simple things like you are going to have a minimum of 50 episodes. You’ve got to have X amount of people following you on Twitter and all this sort of stuff.

Because, look, the way I accept podcast interviews is this, if I already have a good relationship with that person, regardless of how many episodes they’ve got, regardless of how many followers they’ve got, I’ll do the show, because relationships are more important than anything. But if I don’t know you from [inaudible 00:41:06], if I have no idea who you are and you are just another podcast host, that you feel like I can bring value to your audience, I’m pretty thankful for that.

But unless you have a certain number in that audience, unless you have a certain reach with that audience, I cannot put 40 minutes or so of my time to one side for you based on somebody else coming to me who does have the following, who does have the audience. I’ve got to go to where the audience is.

Some people might see that as little pig headed. I just see that as being extremely time valued focus. I only do 3 podcast interviews a week. So it’s 12 a month I do. They’re booked out now right all the way to the end of quarter two. I’m doing just fine with this system, and it’s something we’ve been following for a while and it worked very well. Again, you come to me directly, we’ve already got a relationship with each other, and I say yes right away because relationships are more important than anything.

Steve: Of course I threatened to expose that photo I have of you.

Ducker: Yes, you did that too.

Steve: I did that too, that helps guys if anyone is listening out there. Actually I’m the same way and in fact I think I have a whole bunch of podcast interview requests buried in that 26,000 somewhere. Like if I don’t recognize…

Ducker: Yeah, and some of them are probably for big show this week if you can. I want to try and do my best to make you feel as bad as possible man.

Steve: You already sold me on Maria; I just need to get her digits now. All right, let’s switch gears a little bit, talk about You Preneur. What’s up with that because I feel you just recently rebranded that or at least relatively recently, or it used to be just chrisducker.com.

Ducker: Yeah, I mean, chrisducker.com kind of reshaped and reformed as a personal brand show, or just a hub really in the middle of 2012. I started to do a lot of these one day mastermind events as always travelling around the world.

Steve: Yeah, we’ve heard of it.

Ducker: Well, myself in part one where we had the one day business breakthrough event. I actually was doing ones on my own for a few years even before we impacted that for the first time. It would be me and sort of 10 or 11 people in a conference room in a hotel or whatever co-working space or whatever. We would sit and it was very high level, very intimate business discussions.

I would charge royally for a sit at that table up which was $1000 a day and I would always sell out and I’ve done them in– I mean everywhere, London, LA, New York, I’ve done one in Miami, I’ve done one in Melbourne, I’ve done one in Sydney, I’ve done one in Frankfurt, allover. I’ve been travelling and speaking. I’ll just set another day on the trip and do one of these. It’s my way to be able to build those P to P relationships even further, make a little bit of money, and help people.

There was two things that were coming out of these masterminds that obviously over and over and over again. Number one, nobody’s got monopoly on good ideas, zero, nobody. You put a group of entrepreneurs in one room, someone somewhere is going to drop a value bomb on you and vice versa that you’ve never had before. It’s very important to surround yourself with the right people, like minded people, people get, you know what I mean.

The second thing that I saw was that even though at first people were a little shy and a little meek and a little slow to work, by the end of the day, it was like they’ve known each other their whole life, and they were helping each other solve problems. They were switching phone numbers and becoming accountability partners, and they will be doing all this other really exciting business stuff. They were no longer lonely in their pursuits as an entrepreneur.

It is a very lonely journey sometimes. That’s what I saw, nobody got monopoly on good ideas and we were killing ultimately entrepreneurial loneliness by putting these events on. It was July 4, I remember like it was yesterday, it was July 4, 2014, I was in San Diego at [inaudible 00:45:07] having a water balloon fight with our children as you do on July 4th. That was the day where I pelted April Flynn in the face with water. Pat got it on video and decided to turn it into slow mode.

Steve: I need to see that video, okay.

Ducker: I’m happy that he’s never launched it publicly, because I would be hated instantly by flynnatic child there. Let me tell you something, she got me back good and proper. She got me back good. After that whole kind of shenanigans and back home, we went in and the kids heard that we were coming down from the sugar lashes and the ladies were chatting in the living room. Pat and I made a cup of coffee and went to his office.

And we were sitting down and he said something what do you want to do for the next ten years? What’s your deal? What are you all about? Within an hour or so, the idea of You Preneur was basically born. This is what I really enjoyed doing. I enjoy helping business owners that want to be able to build business based around their personal brands, solo preneurs, creators, speakers, authors, coaches, consultants, experts, bloggers, podcasters, people that are building businesses around them and what they stand for and those that they want to serve, that’s what I want to do for the next 10 years.

That’s when the idea of an online community was born. I never even given one [inaudible 00:46:33] to that point to run a membership community. It was born right there in Pat’s office. It shows you how long we were planning it. That was July 4th 2014, we launched September 1, 2015.

Steve: Sept 1st?

Ducker: Yeah. But a good amount of planning in there. We did it right, we launched right and it’s become very successful very quickly.

Steve: Would you say that Virtual Staff Finder and your other businesses are kind of playing second fiddle? Like you are more passionate about this aspect of your business over what you’ve already created?

Ducker: I mean I’m passionate about all my businesses. I’m just smart in the way that I’ve set them up. I’ve processized them as much as I possibly could. I’ve hired people to come in and ultimately run them for me, so I can go on to the next project. I must say that youpreneur.com for me right now is my focus, it would be my focus for quite some time, and it’s honestly something that I have very long term aspirations for.

Steve: So on that note, for people out there who are trying to get started as a solo preneur, what is the best piece of advice that you can give them on how you get started?

Ducker: You got to be you. That’s it. That’s honestly it. You got to be you all the time. Don’t hide behind any smoking mirrors, don’t hide behind another voice, don’t try and be something that you are not just because you think that’s what society wants from you or what your clients want from you. Be you all the time. And understand when you do that, something very, very magical happens. I mean that. That’s the right word to use. Something magical happens when you are you all the time from a business perspective.

Number one, you attract the absolute best of your tribe into your life. You attract the absolute best members of your audience into your life. They become friends, they become clients, they become your raving fans. Number two at exactly the same time, you are repelling away the people that will bring you down, that will waste your time, that will never spend any money with you let alone share a piece of your content. What you are doing, and the analogy that I use is that you are marketing like a magnet. You are attracting the best and you are repelling the rest at exactly the same time. That is absolute gold. Just be you, be you all the time.

Steve: That’s great advice Chris. I would also add that just pick one platform and just focus on that until you’ve mastered it before branching out to a whole bunch of other things.

Ducker: Hey man, totally agreed.

Steve: All right, dude, Chris. It was a pleasure having you on the show.

Ducker: My pleasure.

Steve: Next time I’m in the bathroom, I will be thinking about you. Yeah, I will probably be hitting you up for some virtual staff. Our conversation really kind of got me excited about the whole thing.

Ducker: Good well I’m glad. You should be excited. It’s really where the true business growth that every entrepreneur is aspiring to achieve. I explain what really happens is when you start really truly delegating is when you stop being a micromanager, when you stop drinking your own coolaid, and understand ultimately that there are people out there that can do things just as well as you if not sometimes even better than you. They are waiting to help you build and run and support your business and you are a fool if you don’t go and chase them down.

Steve: Awesome. All right Chris, you call me a fool, so I guess it’s time to sign out.

Ducker: What a great way to end the show.

Steve: All right dude, take care.

Ducker: Thank you man.

Steve: Hope you enjoyed that episode. I’m getting a lot better about outsourcing but mainly only tasks that I already know and understand how to do pretty thoroughly. If any of you are feeling swamped or burned out, I highly recommend that you go and pick up Chris’ book as it actually helped us with hiring our physical employees as well.

For more information about this episode go to mywifequiteherjob.com/episode114, and if you enjoyed this episode please go to iTunes and leave me a review. It’s by far the best way to support the show and please tell your friends, because the greatest compliment that 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 6 day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business, so go to mywifequiteherjob.com for more information, sign up right there on the front page and I’ll send you the course right 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.

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113: How Andrew Warner Created Mixergy And The Secrets Behind His Successful Show

How Andrew Warner Created Mixergy And The Secrets Behind His Successful Show

Today I have my buddy Andrew Warner on the show. I met Andrew at an entrepreneurial mastermind in San Francisco last year run by John Corcoran.

And then he had me on his show Mixergy where he grilled me, asked me all sorts of tough questions, made me uncomfortable and basically tried to make me cry.

Fortunately, I held it together and now it’s payback time. Anyway, I’m really excited to have him on the show because while he does a ton of interviewing of other entrepreneurs, he rarely gets interviewed himself. Enjoy!

What You’ll Learn

  • If Andrew were to start Mixergy all over today, what would he do differently?
  • How Andrew marketed Mixergy early on
  • How Andrew got his first listeners
  • The traffic sources that Andrew focused on
  • Andrew’s business model for his interviews and how he morphed it into courses.
  • The revenue breakdown between sponsors, mixergy platinum and courses
  • Andrew’s paid ads strategy

Other Resources And Books

Transcript

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 to simply 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.

Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email, now onto the show.

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 my buddy Andrew Warner on the show. Now I met Andrew at the entrepreneurial mastermind in San Francisco last year. I don’t know if it was last year, run by John Corcoran. Then he had me on his show Mixergy where he kind of grilled me, asked me all sorts of tough questions, made me uncomfortable and basically tried to make me cry.

Fortunately I held it together, but now it’s payback time Andrew. So I’m really excited to have Andrew on the show because he does a tone of interviewing of other people, but he actually rarely gets interviewed himself. With that I want to welcome the Howard Stan of entrepreneurial interviewing, Andrew Warner. How are you doing man?

Andrew: Good, did I really ask you stuff like who you slept with? Is that where the Howard Stan stuff comes from?

Steve: You know what’s funny is I forwarded that interview to a bunch of friends and they were like, “Wow Andrew really grilled you in the beginning.” He was really trying to crack you is what they felt. I didn’t actually really notice it, because I’m kind of used to your style. You tried to ask questions that are a little bit more uncomfortable I feel, right, on purpose, right?

Andrew: I want to get really personal. I want to get to know the person, but I do sometimes, I wonder if sometimes I walk over the line because Alex from WP curve is a guy who lives locally and I asked him to do an interview, and he wouldn’t do an interview with me. Then, I asked him why we hadn’t gotten together more and over dinner he said to me, “You asked me really personal questions, and I don’t like to talk about this stuff.” I said what? “You asked me who I slept with first, like who I lost my virginity to.” I realized all right maybe I wasn’t fully paying attention to how sensitive he was to that stuff, and I thought maybe he was okay with it.
I’ve been more cautious lately. The reason I want to know that stuff is I feel like we are shaped by more than just our drive. I think our drive is incredibly important, but I feel like what drives us, where the drive comes from is personal issues, like how long did it take you to lose your virginity, or were you a dock in high school? Were you like me where at first I will say I wasn’t a dock in high school, but second I grew up in a city where everybody was freaking rich. Of course that is the direction you want to go to.

Steve: It’s interesting. I mean, I tend not to go on to anything personal. I’m more like interested in like the how-to-gets sort of thing, but you are right. The psychological aspects do come into play. I’m sure we’ll find out some of the reasons why you did what you did. Let’s start with that actually. You first business Bradford and Reed, it did 38 million in revenue, then you sold off for a pretty decent payoff, right?
Andrew: We did okay. What we did is we sold it off in pieces, and yeah it wasn’t as great as I hoped it would be, but it was good, the bigger the … Yeah.

Steve: Well I mean the point was you started Mixergy; you already had a pretty decent windfall of money at that point, right?

Andrew: Yeah, I did well.

Steve: Yeah, so most people would take something like that happening and just kind of relax a little bit, but then you decided to start Mixergy and so kind of what was going on in your head at that time?

Andrew: You know I did want to relax. For a while there I didn’t want to do anything else for the rest of my life. I really enjoyed reading. I love reading anyway, so I had a lot of time to read. I enjoy that. I really enjoyed the coffee that I got when I lived in Venice Beach. It wasn’t especially good coffee, but maybe because I had no care in the world it was a great walk two blocks in the sun to go get my morning coffee. I didn’t think I ever want to work again. You really could live pretty decently in parts of the world. I was living in Venice and I could live there for maybe forever unless I screwed up somehow.

Steve: So why did you start Mixergy then? Did you start getting bored or is that …?

Andrew: At some point I saw myself start to inch back into business. I saw myself saying, putting posts up on Craigslist saying I want to just coach people for free. If you are interested just let me know, and I will get on a call with you. I started just inching my way towards it a little at a time, like an alcoholic who would say, you know just one drink after dinner with friends is okay. Just one drink on my own to go to sleep is fine. And then go and then you get got caught back in it. So that’s what happened.

Steve: So the money wasn’t really the intention then?

Andrew: No, for the most part it wasn’t, but at the same time I remember saying, I got a dog and I remember saying I should name the dog Billy to remind me that I’d like to be a billionaire. There must have still been some of that financial drive.

Steve: Okay, interesting. I don’t think Mixergy is going to take you to billionaire status, or maybe it would along the way I guess. Okay, you were again bored, you had this itch, you started Mixergy, what– so your purpose really was it to meet people or was it to make money?

Andrew: My purpose initially with Mixergy was to create a movement. I thought all right, I did business, the next thing after that is you just live your ideas behind. The people who I admired, Andrew Carnegie is the guy who I named myself after out of very weird fine names I said I needed a better name. I said I really admire Andrew Carnegie. I read about him for years. I took his name. Then I said, one of the things I learned about him was he built up his business and then he wrote a bunch of books that I was moved by.

He left– beyond the books that he wrote himself, he didn’t write that many books, but beyond the books he wrote himself, he also inspired other books because of the philosophy that he put out there. I thought that’s the path I would like to follow in my life too. I would like to make some money, and then I would like to live a legacy and books I don’t think are the ultimate answer, because they kind of disappear in a world of lots of books. I’ll start a movement and I started it, but I was never clear about what the movement was about. It kind of fizzled out. Then I said, all right this thing fizzled out, I’m a little more humble now. Why don’t I learn more? I think the best way for me to learn is to bring on people who I admire, ask them questions and just get the things that I’m curious about answered.

Steve: I’ve actually been a fan of your work for sometime even in the early days I think when you were just audio only, then you kind of evolved to video and now you are doing courses, communities, masterminds. There’s a lot of people who’ve kind of tried to follow in your footsteps, and I don’t really think that a whole lot of people have actually achieved the same level of success.

What I kind of like to cover today is, I don’t know if you listen to a podcast, just like a tone of interview shows, my show is like an interview show. If you were to start Mixergy all of over again, in today’s age, when everything is kind of saturated, how would you go about doing that?

Andrew: I wouldn’t pick start ups as the topic. I think I went too broad. I think I needed to be a lot more targeted. If it was about how to build a business, then maybe what I would do is say this is me over the next year going to work together with everyone listening on a framework based on the interviews that I’m doing. And I’ll just keep reporting back on what I learn. It’s a podcast about creating a framework for starting a business.

I’d even get tired of that what kind of business I wanted to start, what kind of framework we were looking for. I would do it because I wanted to have ultimately a movement and a framework that comes from that. If I was doing it for money the way that other people are, I would pick a much narrower topic and obsess on that. I think the idea of just start ups is just way too broad. Then if you think about it, it is.

Steve: It is.

Andrew: What am I selling to this audience of people? Some of these people have businesses already. Some don’t. Because they are just listening to other entrepreneurs tell their stories, that appeals to people who have big companies and also people who are just starting out. Some of them are really into marketing, others have people who do that and don’t care about marketing. Some people are really into a software, some of them just don’t have any software experience. Some of them are coaters. There’s not any one group of people in there that is highly represented and that needs one thing.

If I would start over, I might say to myself, I’m going to focus on just let’s just build something out there, community. It’s going to be a podcast about how to build communities online and using specific kinds of tools. I’m only going to interview people who host communities, and I’m only going to reach an audience of people who want to start their own communities. Then there’s a natural product that you can start creating from that. People who need communities start to need things like maybe a course on how to create a community, or how to get people to talk more in the communities, or how to hire people to run those communities.

Steve: So I’m just curious then, with Mixergy, have you kind of gone that route a little bit with the people that you interview, or is it still just anyone who has a business who’s successful?

Andrew: I feel like– I was just talking to someone on my team today about how we are going way too broad. We are allowing too many different kinds of people on. We should narrow more. I don’t think that we could narrow down to one specific thing like community leaders at this point. I think it’s too far.
What we need to do instead is having done over a thousand interviews, do a better job of curating, so that if what you are into is just educational products, you should find just interviews that relate to that and just the courses on the site that relate to that. Almost not see or know that the others exists, almost.

Steve: Actually what is your curation process like, just curious?

Andrew: What we do now is we have two different ways to do it. One is called tagging or standard tagging. We have a team that helps tag up the old posts. It’s hard because in an interview, I could be talking to someone about how he started both a software company and then how he moved to an information company. It’s very hard. We would tag it as both info product and software company, which would make it hard.

Steve: Then like in terms of getting new people on, how are you screening people?

Andrew: That we have gotten really good. I will say just the other way that we are curating the content on the site is we’ve also created collections and now anyone can create their own collections, and those collections will be public. So if for example you wanted to start an ecommerce collection, we would allow you to easily create an ecommerce collection for yourself and you could share it with other people if you wanted.

For us, the way that we do it is we started out by writing out the steps that it takes to book someone on the site, and then created this flow for it in software called Pipedrive. Each one of our, we had at the time five steps to booking a guest, you know you find a guest, you find their email address, you invite them to do a pre interview, you invite them to do the interview and then you do the interview.

We had those laid out in columns in Pipedrive and then anytime we had a suggestion for a guest, we would lay them in, we would put that guest in the first column, and then we just keep moving them through a process. Very much like a sales team would. If you operate in a really good sales environment, they would have a multistep process for closing a sale. Find your prospects, turn them into interested clients, then sell them etcetera.

Steve: This wouldn’t be something that you would do early on, like when you are first starting out.

Andrew: Oh, I will tell you what I do when I started. I would ask my friends to do interviews if I knew that they were good fit. Then in the interview itself, I would say to them who else do you know that I should be interviewing. At first people would say, well I know Donald Trump. You should have Donald Trump on.

Then I changed my language and you could hear in the other interviews me saying, “Who do you know well, like a well enough that you can contact and you admire that you think I should be doing an interview with?” Then they tell me and I’d invite them. Again, that goes back to old sales techniques, that a salesman would close a deal and then soon after say, who else do you think should be buying this? I interviewed Sky Hal Elrod who used to close tones of…

Steve: Is that the Miracle Morning guy?

Andrew: Yeah, right. He used to be an ex salesman. I asked him how did you become a top night salesman where you just go into people’s home and sell them at night? He said every sales man would ask for referral, so I had this sheet that had 20 lines on it that were blank.

The assumption was we were going to have 20 different people that you were going to recommend for me. And I’d say who do you know that I should be asking and talking to about these knives, and then he said, and he filled out this list of 20 referrals with them. The fact that it was a page with 20 gave people the sense that they have to come up with 20.

Steve: So you had that side of the equation down, but how did you actually get the listeners. Was just kind of natural, or did it gain traction all the way.

Andrew: The best way to get listeners is to have guests who have big names, or guests who are in the news. I’m looking at your list, who are some of the biggest people that you have on here?

Steve: Good question. Let’s see I have had Noah Kagan, Emmy Porterfield. I mean these are just friends.

Andrew: Yup, so Noah Kagan would be good. You can ask him then to tweet afterwards and ask him to post it on Facebook. Ideally he might even promote it to his mailing list and say here, this is the story of how I build up my business. But there are people who are even bigger names than that who draw in a much bigger crowd. Like, Barbara Corcoran for me. There was a period there where she was doing interviews and I had her on. Actually John Corcoran is her friend, no relations.

Steve: They are not, yeah, okay, I was about to say they are not related, are they?

Andrew: He is the one who introduced me. But she’s a much bigger name. I feel like the bigger names are the ones that bring in the biggest audiences. I used to spend a lot of personal time doing it, and I never created a system for how to get the bigger names on. One of the things I’m doing this year is I’m working with someone on the team who can own that, and start going after the bigger names for us.

Steve: Interesting, but you have to have to actually have something established in order to get the bigger name, right?

Andrew: Yes, that’s not hard. You don’t necessarily have something established. I didn’t have something established when I asked Tim Feriss to do an interview for example.

Steve: Okay.

Andrew: What I did in the early days was, I went to Mashable and said, “If I get Tim Feriss to come do an interview with me, can I write a post for you about his seven tips for working four hours a week or something?” And he said yeah, because he’s a good name for them and so I go to Tim and I say Tim, can I do an interview with you, it will also be the next update for Mashable.

Steve: On Mashable, okay.

Andrew: And so there are people who have huge followings. I’ve actually seen the e-mails that Product Hunt, if you look at them, they have really big names for their podcast, so I went to Eric’s office and I talked to him about interviewing. I told him– I gave him some tips. I gave him some feedback on his process, I told him it worked for me and then I said, “Can I see how you get guests on?” He has guys like Tony Robinson; he has huge venture capitalists on. I saw the email he sends out; it’s– do you want a reach?

Then he has a number of people that he has in his audience and then he says, “Here is the site, you want to come on and do an interview?” He has huge audience. Product Hunt is huge, and so people say yeah, so you may not when you are starting out have a huge audience, but if you can partner up with someone who does and create an interview for them or accept their blog post based on an original interview, they’ll be open to having you do it.

Steve: How did you get Barbara Corcoran?

Andrew: It was just John. That’s another great thing that helps us. John is an incredible friend for doing that.

Steve: Yeah. One thing I’ve noticed, and the reason I started my podcast wasn’t for money. It was just to reach out and meet people, and then the money just naturally comes in, like people want to sponsor you and what not, and so is John someone– actually how did you meet John?

Andrew: I have no idea.

Steve: I don’t either actually.

Andrew: I have no idea. I think he was in the audience; I know he was in the audience. I know that he was a member of the sayeed [ph] I think that must be how it was, but then I think we’d discovered that we were in the same city, and so I invited him over for a branch at my house. He and his wise came over, then his son popped in and that helped us connect.

Steve: Okay, and so outside of just getting big names, did you do any advertising or some …

Andrew: No.

Steve: No advertising? Any other sources of traffic?

Andrew: Oh wait, I’m looking at my inbox to see who else is referring me to people and suddenly John is inviting me, here’s one of John’s great technique’s.

Steve: Okay.

Andrew: It says, “Do you want to get together with me and Zvi Band of Contactually for dinner?” He’s coming to town. He’s done this before. So then I say yes, and then he goes to the next three people and says, “Do you want to come to dinner with Andrew from Mixergy, Zvi from Contactually and me?” And yeah, then you end up in this great group of people who are all getting together for dinner. It takes some effort, he’s good that way.

Steve: You know what’s funny about that is, sorry to interrupt, but yeah, so with my conference, when I was trying to get speakers, I started out with one guy. I did the same thing as John did, and then once you have like critical mass, like getting the last speaker is a lot easier than getting the first couple.

Andrew: Yeah, and the cool thing is that he’s saying to me, this guy is only going to be in town for this one day or for a short period of time, so now I’ve got some deadline that I have to jump on.

Steve: Yeah, a sense of urgency.

Andrew: I can’t say it right.

Steve: That guy is genius.

Andrew: He’s good. Actually, there’s nothing in here that is brand new. He’s not creating anything that wasn’t in the Never are you Alone or other books. What’s impressive about him is that he does it, that he actually uses it, and I’m finding that a lot of the ideas are really out there. I can talk all day about how to find get great guests; I can talk all day about how to build an audience.

Ideas are out there, but most people don’t end up using it, and using it consistently and improving them to small degrees that most people won’t even know exist, until it actually works. I can tell you, our booking process was a standard salesman booking process. We laid out our steps for booking guests, we started putting a lot of people at the top of our funnel, we kept adjusting the way that we ask people to come and do interviews, we kept adjusting the way we found peoples email addresses. It was a small twist and nobody would ever discover. That nobody would ever pay attention to, that made all the difference for us.

Steve: Such as? You can’t make a statement like that without revealing something,.

Andrew: I’ll give you a really good example. We had to start this five step process that I described earlier, and we still were losing people, so we wanted to see where we are losing people? It turns out we would ask them if they want to do an interview, and then they wouldn’t respond and that’s where we stopped, so I added a sixth column to our steps. One is, ask them to do a pre interview.

Then if they don’t respond, the next step is, send a reminder. That little thing made a huge difference. It got us from, I forget the exact numbers, but it was something like 20% of people would say yes to doing interviews to suddenly 60% said yes, because the follow up email almost makes them feel a little guilty for not responding to the first one, so it has an outsize performance.

It delivers outsized performance, so that’s really big. We then did the same thing for people who did a pre interview with people on the team, with Jeremy Wise, so the mastermind that you did. They did a pre interview, then they wouldn’t book the interview because stuff comes up in life, so we had a reminder calling them to that. Suddenly, our numbers improved even more.

Steve: Wouldn’t it be more effective to cut out all the steps and just have just one step instead of the three or four or five that you have?

Andrew: No. I’d love to cut out more steps, but I can’t cut out steps like the pre-interview for example. You don’t do pre-interview with me, I feel like that’s one of the best parts of doing a Mixergy interview. For example, I just interviewed a founder, Graham Cochrane, he runs the Recording Revolution. He’s doing six hundred thousand…

Steve: What’s with all these Cochrane people? Yeah sorry, go on.

Andrew: Yeah right? It’s interesting, he spells his name differently– and he had the story where, usually when I ask people what did you do before you started your business, there’s some exciting thing that they did. He was talking about how he worked for three years at Rosetta Stone, and the more that Jeremy was talking the more– he got the story, but I don’t think that’s interesting, that’s completely left out of our interview.

I don’t think that’s interesting, it’s completely out of it. There is one thing that he didn’t mention until much later in the conversation with Jeremy, because you can see even before the interview when I brought it up to him, I could see that he was a little embarrassed about it. He was on food stamps. He’s a proud guy, Christian guy, feels like he has a responsibility of his family. He didn’t want to go on food stamps. His wife urged him to do it and he did it back then.

He’s not especially proud of it. That came out at the second to last or third to last question that we asked him. I made that the focal point of the intro, how a guy who…

Steve: Oh my goodness, okay.

Andrew: So now there’s a hook, and so the pre interview process is where we discover that. Where I neglect things that people think are really interesting, and where I hit on stuff that really is going to be fascinating.

Steve: Was he uncomfortable that you revealed that or …

Andrew: I wasn’t sure and what I did was I test the waters before the interview starts, and I also know what am I going to ask him before the interview. I wanted to see, did you go on food stamps after you started the business, so that maybe the business led to that, right? I checked it out and then I looked at him because we were on camera, to see how uncomfortable was he about that, and I saw he was okay and if not I would have had a way of getting him to feel more comfortable with it.

Steve: I see, interesting. From what you’re telling me here is that Mixergy just kind of took of on its own.

Andrew: No.

Steve: Okay, all right, so you didn’t pay for any advertising, you got great guests, so what’s the missing link here?

Andrew: The guests are where we get our audience. We are paying for advertising now. We tested a few different ways last year, 2015 … for advertising to get people to listen to the podcast specifically is something that…

Steve: Actually I just saw a Facebook ad where you were advertising your Barbara Corcoran interview essentially.

Andrew: Yeah.

Steve: And so how do you quantify the return on that? It’s just landing straight on an interview, right?

Andrew: I actually don’t know how you can quantify podcast listeners. I’ve seen people do things like by cheap clicks. They go to their sites, auto play their audio and then they get it counted as a listener. And that you can actually quantify because advertisers are paying per listener now, and if you can get your clicks cheap enough, then you could increase your numbers and then hopefully you said something that would get that person to also listen again in the future.

Steve: Is that your goal? Like what’s your Facebook ad goal? Is it a newsletter sign up, a listen or…?

Andrew: A subscriber, so I’ve never really paid much attention to the podcast audience, not enough. We’ve done podcasting; I’ve been podcasting for years, since 2008. I didn’t pay much attention to it. Then last hear, 2015, this guy [inaudible 00:24:26] said, “Andrew, can I sell ads for you because I think can do a better job than you’re doing,” and then I said, I think am going to stop selling ads because I don’t care about that revenue, I don’t care about it and it’s a distraction.

He said I think there’s more here. So I said okay, do what you want. I don’t even want to know what you do because you know me well enough that you know not to pick bad advertisers, and you know how I work, I’m very systemized. You create the system, so he did. Then his ads were selling for– I was hardly selling them frankly, for like a 1000 bucks a month, he’s doing 50,000 a month.

Steve: Really?

Andrew: 30,000 a month.

Steve: Wow.

Andrew: I don’t know the exact numbers. Somewhere like that, yeah. He slowly ratcheted up the numbers to make sure that we were worth it.

Steve: This is just from your podcast.

Andrew: Just for the podcast.

Steve: Outside of Mixergy, Mixergy is the podcast, right?

Andrew: Mixergy is just on the podcast. Advertisers get a link on the site, don’t quote me on the exact numbers there, but I’m not too far off. I want to be as accurate as possible, but I don’t know the numbers exactly, and he just took it and he went with it. Throughout the year, he kept saying now I’m bringing you new money. I said yeah, because you’re excited, he goes yeah, he goes, so can we grow the podcast audience and I said “Yeah, what do you have?”

Then I’d vet his ideas, I feel are a little too much, or I’d interfere a little too much, and I finally, at the beginning of this year, he and I went out to work together in person at the Fairmont hotel which I like working in. And I said, “You know I trust you, you’ve gotten me here. What if we take,” I forget the number but I think it was like 20,000 a month, “Can you do– how much is it going to cost?” I think I started with 5,000 and he ratcheted me up too like he did to the advertisers to 20,000 a month in advertising.

He said, “I think I could grow it for you,” and I knew that if I was going to ask him, how are you going to measure the results? I knew the response wasn’t going to be something that was especially helpful for me, so I just said, I don’t even want to know. Tell me what you need from me and just go do it. He needed a couple from things from me, and I couldn’t even respond on those because I’m so overbooked.

He wanted to know, he had a list of questions for me about who the Mixergy audience is and so on. I said I don’t have time to even respond to that. He said, “Okay, I know you well enough. I could respond to it myself,” and he went on and bought the ads. He didn’t even show me the Barbara Corcoran ad. I had sensed that’s who he’s going for.

Steve: Okay. Can we talk about your revenue breakdown? I don’t need specific numbers, but I’ve always been curious. You mentioned there’s sponsorship revenue, there’s the membership, and then you have courses and what not. And you just mentioned that you are thinking about dropping sponsors?

Andrew: I was, at the beginning of last year.

Steve: Okay. Well, does that imply then that, that wasn’t really a major revenue source or you thought it was interfering with…

Andrew: It was horrible, and frankly I also wasn’t also running it well because I never thought the podcast ads would do well. I just couldn’t imagine it. You think about it, how many times have I listened to a podcast where I remember the sponsor name at the end of the podcast? Hardly ever.

I never remember them. I’d like say close to never. In order for the podcast go even get credit, the listener has to remember that they heard it, remember that they heard it on this specific podcast, and then remember the code, so I just didn’t think anyone would do that, but they are doing it.

Steve: They are.

Andrew: They are doing it, so that’s why you never, hardly ever heard me mention a discount code within the interviews. If an advertiser said, here’s the discount code, I’d say I don’t think you should give a discount code. Why give people two things to remember, just give me your name, and sometimes I’d like do it, but grudgingly and I didn’t care about it, they didn’t care about it.

Steve: By the way, when you are talking about podcast right now, you’re talking about just everything, right? Like the Mixergy interview.

Andrew: Yeah.

Steve: Okay.

Andrew: Here’s the thing. Everyone thinks that me reading the video, the video counts, videos chuck [ph] now, it’s not worth anything, really. For revenue, it’s not worth anything.

Steve: Interesting, the Mixergy premium memberships?

Andrew: Oh no. Premium members do listen to it, but as far as ad revenue, as far as viewership, it’s just insignificant, because no one goes to websites anymore to watch content. You go to YouTube if you’re going to watch videos, right? And we don’t put our stuff on You Tube because it’s for members only.

Steve: Of course.

Andrew: Right? So if you want to look at pictures, you go to [inaudible 00:28:38] you go to Reddit. You don’t go to some guy’s website where it’s going to be interesting, right? There was a period where you might go to failblog.org and watch it there. Nobody does that, right? You’re just going to go to Reddit and you’re going to find it there, so platforms are where it’s at. Mixergy is not a platform on its own.

People aren’t coming to watch videos on our site. This is something search would help me realize, podcast is big because podcast is on iTunes platform, and so that does well. So when we sell ads, our advertisers sometimes get excited about being in this video interview, we have to tell them look, you’ll be there, but it’s the audio that’s really going to give you the big bang. They want the links to their sponsorship on the page.

Steve: Sure.

Andrew: We do that, but in reality it doesn’t really matter much because people aren’t coming over and clicking. I would always have some link to it, but not the long descriptions that we have because someone could forget. Who did Andrew mention, I know he mentioned some hosting company, I know he mentioned some developer company, who was it? And they want to go over to the page and click on it, but they are not coming to the site, they are not coming to watch the videos.

Steve: Has that eaten into your membership revenue then? Because your podcasts are free, right? It’s the same interview.

Andrew: It’s the same interview and then a few days later it goes in behind the pay wall.

Steve: You take it off the feed for the podcasts?

Andrew: Yeah.

Steve: Okay, I see, and when did you come to this realization, just last year?

Andrew: Frankly too late, it was end of last year beginning of this year, the day that [inaudible 00:30:12] and I sat together at the Fairmount. I like him because he keeps pushing me to think differently. I like crazy people like him, because he always has some crazy new direction and so he says what if you just kill all the video? Why kill all the video? And we started talking about it, because he is just throwing stuff out there to see what happens. And we looked the numbers for the videos and they were insignificant compared to podcast, and then that made me realize wait, what if people aren’t going to the video anymore? And maybe the video is destructing them making them think that it’s only a video site.

Then I emailed our developer and I said, can you take down the video for everyone who is not a member and see if anyone complains. I learned that from David Cowen the founder of [text stars] [ph] the investor. He said, if you want to know if a future really matters to users kill it, and then see if they complain.

If they complain you can always bring it back, if they don’t then you realize it doesn’t really matter that much to them. So I killed it, no one complained and then I had second thoughts about it, so I said Michael deemphasized it just put audio first video second, but no one is coming to websites anymore.

Steve: Here is the thing like we are talking to each other and usually I don’t turn on video for these interviews, but we have video on. You don’t think that the ability to see a person’s face matters in an interview?

Andrew: I never did, but I know that there is an audience for it. I’m just saying that if you really want to build an audience for people watching an interview, you are better off putting your stuff just on YouTube. I don’t want that, I find that — I pick the platform that I want which is podcasting, and that’s where I want the new audience to come from, and then videos available for members.

Steve: So percentage wise then would you say that your podcast has over taken your membership revenue?

Andrew: No, so what happens is people will discover — people used to discover me by going to mixergy.com, and watching a video there. And then seeing that I also have a membership site and signing up. Now the way they discover me is by going into the podcast, and they go to the iTunes store or something, they discover the podcast and then they sign up. And then they get into my world and then they come to the site to see who I am.

Steve: And then did they watch the video on your site at that point, like do the premium members watch the video?

Andrew: Premium members do watch the videos, and then the course is a video based still. So what happens is you get the interviews for a few weeks for free, if you are happy with them and you want more you can come back to the site and pay for membership and get access to all the older interviews.

And when you pay for that it as part of your monthly membership you also get access to all these courses. And the courses will teach you things like how to get traffic to your site, how to grow sales, how to automate your marketing, and the whole thing is taught by real entrepreneurs they turn on their screen etcetera.

Steve: Can we talk about how you evolved the courses, because it wasn’t something you added until what two or three years ago or something like that?

Andrew: Somewhere around there.

Steve: So how did you get the idea and it just at the time it seemed kind of random, but it’s clearly working, right?

Andrew: Yeah, I did know that people don’t pay — people pay for results, they don’t pay for just entertainment. So I kind of had a sense that that’s also where I want to play in delivering some kind of result, and I wanted to be in education because that’s the stage of my life where I am, but I wasn’t sure where to generate money from it.

And I was much more excited about selling to my audience than selling ads. I finally just admitted I didn’t know what to do and I did this thing called testing Tuesdays, where I wrote a post where I said every Tuesday I’m going to try selling you something until I figure out what to do.

And I did guides because I thought that was number one, I thought guides for sure. I did an online webinar with someone I think Mel Kegan was the guy who jumped in with me on that, I did a bunch of different things to see what worked best. The courses were the one that did the best. So I stuck with that, and at first I sold them all individually so I said each course sold individually and if you have a membership since I already built my membership to sell the older interviews. If you have membership you get it for free.

And dude I spent so long not just me my team even longer than me hooking up each one of these courses into a process that would let you buy them individually or buy them with a membership. Then I finally just got so tired of doing it both, and putting my people through so much work to sell them both ways that I said, all right, let’s kill it, let’s just go for membership and just go with all in our membership which is what we did.

Steve: How do you reduce churn on your memberships, like how long do people stay usually?

Andrew: That’s a good question; I’m finally now starting to get a handle on churn, let me see if I can tell you. A few things that we do, we increased prices recently…

Steve: Yeah I noticed, yeah.

Andrew: And I think that’s helpful for churn reduction because, maybe not. Churn is 7.4% right now, and that’s high for us, I don’t know why we suddenly have higher churn. It could be because we got more members recently, and maybe there different kinds of members.

Steve: You get people to stay basically by constantly releasing new courses, is that…?

Andrew: Yeah the introduction of new courses is the reason they stay, though I’ll be honest with you. I know that people know that if they cancel today they could always come back tomorrow and get whatever course was added in between the time they left and cancel. Or if they cancel today they could come back in three weeks or three months and get all the courses.

So that’s an issue, one of the things that I have been thinking is people have been wanting more of a community, and so I’m thinking the community could help to channel a lot. But I’m still trying to figure out where it is, I have seen other people, other membership sites numbers, our churn has been better than theirs which is really reassuring. I used to think that anything above 2% is awful, but it’s not true. I see 10% is standard, 20% not unusual for monthly memberships, education based.

Steve: I think it depends on — oh education based, okay. Have you talked to [inaudible 00:36:15] I was just curios what his — I forgot to ask him this question on our last interview.

Andrew: No, I wonder what it is.

Steve: Do you do any on boarding like…?

Andrew: We do, we should be even better about it yeah.

Steve: Okay, and one thing I also want to ask you is you got a lot of stuff going on Mixergy premium, the dojo, I don’t know if that’s still going on…

Andrew: That’s part of Mixergy premium.

Steve: You had an interview course is that part of Mixergy premium now too?

Andrew: No, so I did have an interview course that was part of premium, I said I’m going to teach; I’m going to have all these entrepreneurs teach what they do best. I’ll teach one thing that I’m really good at. And I know I had to do interviews, and had to start an interview business, so I’ll add and I did. I did an hour long version of that and it was really popular.

And I kept — when my wife gave birth, I kept getting emails from people asking me questions about how to do interviews, and I realized because I had some distance and I wasn’t at work that there is so much, there is so many request like this that I should just create a course on it, and so that’s what I did. A bigger, fuller course much more expensive, much more time commitment, much more engagement.

Steve: And I’m just curious, I imagine a lot of these people they are interviewing other entrepreneurs and what not also, how have they been doing since it’s a lot more saturated now.

Andrew: Some do really well, some don’t do as well. I don’t have numbers on it and I frankly I should, because that’s the way I should be measuring my success. Sorry?

Steve: Do you have any example of someone who has done really well?

Andrew: Yeah Tucker Max, he loved the course, he went through the course, he was trying to at the time create a business that mentored authors essentially. He said all these are really bright, but they are too busy working and don’t have enough time to write books. Meanwhile there are all these guys, these knuckleheads, that’s my word for it, who don’t know anything, who write these freaking books, where they sound like experts because they have all the time in the world to write their books, and all the time in the world to promote themselves.

So Tucker said I think I should turn these other guys, these experts into authors and he needed to know how to interview them, and how to have a team of people interview them in a way that lets him create these books. So he took the course, and he is really into the question process, he built it. He created a company called book in a box; if you talk to him you’ll see that he is a big reader.

And he showed me some books that he read to help him to figure out how to ask questions, how to interview, and some of them are good, but he said the course was the best thing that he had taken, the best place that he did learn to do it.

Steve: He was a rock star to begin with so right, even before he took your class?

Andrew: But his people weren’t, he didn’t know how to get his people who were just total off the street people to ask questions. But I see what you are getting at, who’s built a business based on this? Right, we had other examples that we put online, and you are right I don’t have any others that just come to mind right now. I wish we did a pre interview; I would have spent some time looking it up.

Steve: Maybe I need to add that — see I still work full time and I don’t have time to do pre interviews but…

Andrew: You should do the pre interviews. I used to think I had to do the pre interview, here is a problem with me doing the pre interview, and I did it for a long time. People would tell me things and then in the interview they would assume that they already told me, and I would be bored by it, so they shouldn’t spend too long, and so they would stop their best stories. The ones that I was most excited about, because I remember being excited which means that they remember me having heard it before.

Steve: Interesting I would think that doing the pre interview takes away the spontaneity a little bit so to speak? I don’t know if they had to tell the same story twice even if it’s not to the same person…
Andrew: I think people could use a little bit of practice when they are telling their best stories because if they are really excited about it they lose their place. They get too excited and too caught up in the moment of telling it.

Steve: I was actually looking through your portfolio products, and it seems like you are almost like in an exploration type of mode so to speak. I mean you have a whole bunch of stuff, your True Mind program. There is something I think I just got an email back today right that is closing the doors. You’ve been running Mixergy for a long time now, and I was just kind of curios what direction you are taking moving forward, and we kind of talked about this a little bit before this interview started.

Andrew: I am, you are right, I feel like I am the least clear that I have ever been all of a sudden this year. Usually at the beginning of the year I’ll sit down and I’ll journal out where I want my year to go, and 2016 is the first time I really couldn’t do that, I’m not sure, I’m not sure.

Steve: What is this True Mind program about; I mean you sounded really excited about it when you were talking about the pre interview, right?

Andrew: I am, here is what I noticed that people who are listening to my interviews, who go on to build incredible companies, none of them come to mind right now, but you’ll hear them in the interview say, that they listened to Mixergy while they were building their companies. Actually one guy is the founder of any park. The guy was listening to my interviews when he was in Japan, got really into them came back to San Francisco not too far from where I am. And decided he wanted to be in tech, because he didn’t have anywhere to live, didn’t have any entrance here, he slept in a van outside of Taco Bell.

Finally before he was due to get out of the country he said I need to meet some people here, he went to a tech conference, this strap conference from tech ranch. He couldn’t get in because he didn’t have a ticket, they are like $2000 or $3000 tickets, he didn’t have that kind of money. So he walked over to the receptionist and said, look I speak Japanese, you guys probably are going to have Japanese people in here who need a translator, I’ll be your in house translator if you let me in, they let him in the conference.

And he never needed to translate for anyone, but he did get to meet Paul Graham, he said to Paul Graham you told people who listen to your work that they should be coming to San Francisco, I’m here now what do I do, you at least listen to my pitch idea? Paul Graham said okay, listened to his speech idea, and founded his company and today any park is doing incredibly well creating parks for companies to give to their employees.

And I intentionally within my interviews say Mixergy fan whenever I remember to when there is someone who is a fan who is listening from the early days, and if you Google it you’ll see that there are tons of people who’ve listened at the time. That’s the first like thing that I want to do, but you are right it’s not enough. Oh right so there are people like them, I promise when I talk to my audience I see people who are incredibly successful like them who aren’t well known, who won’t do interviews, but I also see people who don’t go anywhere, who are just freaking stuck.

And the difference between the two of them isn’t intelligence. The people who are stuck are often brighter than the people who are going further. They are like really good developers, really sharp, they work hard. And what I realized was what was holding them back is the same thing that used to hold me back, the sense that they are not ready, the sense that its meant for other people, the sense that this inner critic. And they would talk to me about it in private, and I recognized it myself that I had that too. I said we need to deal with that.

And I tried doing it in the interviews and my interviewees wouldn’t talk about it publicly, they talk about if
you’re over scotch, but not publicly. I said let’s all work together on dealing with this inner critic. And we did, and it was just like me and a bunch of premium members who didn’t have to pay anything extra to talk to me and work with me, and I did a ton of work with them on this.

We realized it’s not just the critic, it’s this part of our minds that we all the counters everything we want to do, I’m not sitting here to do an interview with you, and there is part of me that says I’m not going to be interesting enough. I’m not directly a good fit for his audience, what if he asks me a question that makes me look bad, right? That’s counter mind that if I start to notice it you’ll see me drift of in conversation. You’ll see me not fully engaged with you; you’ll see me hold back, you’ll see me like break as soon as you ask me a tough question.

It is just there, it counters everything we do, someone who is listening to us right now who wants to start a business like you is going to think oh that’s not me; I don’t have a wife who is supportive. I don’t know anything; all the good ideas were taken etcetera. Or maybe this guy is actually, maybe Steve is actually cheating me or using me, so I don’t want to even listen to him, and it’s a counter mind, we all have it.
We also have this other part of us, this true mind. For me in this interview it’s I just want to get to know

Steve, because if I get an hour with you then you and I don’t get to spend much time together, right? It’s good for me if I get to help you out it’s a win because you are going to help me out at some point of my life, you are going to help me think through something, or I don’t know what, maybe you’ll throw a link in something a few years from now that will help me right?

So that’s something I just want to do a good job for you. There is another part of me that says maybe I want to meet someone in this — through this interview that’s going to be helpful for me. Maybe I can actually help somebody and change their lives the way that I wanted to when I was in Venice beach feeling like I’m not living up to my potential, right? That’s a true mind. That’s the part that we want to spend more time thinking about, more time experiencing, more time expressing, and that’s the difference that I noticed.

When you see someone who is building a great company, someone like [inaudible 00:45:18] who walks into a conference and says I know Japanese. That’s not coming from a guy who is obsessed with his counter mind which says you don’t even know, you have an accent, he has an accent. That’s not coming from a guy who was listening to his counter mind which would say, everybody wants to come in here for free, they are not giving you a free ticket, right? He’s expressing his true mind. Now, how do we do that more often? How do we get to focus on that more often?

That’s something that I got really passionate about and started talking about a couple of years ago, and then I created a course for it, and you can see people with their [inaudible 00:45:52] way of remembering what it’s about, you can see people with their beads, you can see people who views them, who’ve gotten results from them, who’re sharing it with their friends and getting results with their friends for it. When I told you before the interview started there’s a part of me that just wants to stop everything on Mixergy and just focus on True Mind, it’s because of the responses that I get from that.

I spoke at a conference and one of the volunteers at the conference came up to me and talked to me afterwards, and I didn’t realize that I made an impact with her on this whole True Mind thing. I gave her a set of beads and I moved on and … I just said here it is and you know the process– oh, I gave everyone at the conference beads, actually now that I think of it, but I don’t know if I had to give her a specific extra set because she was a volunteer, but I gave her a set of beads so she can use this process with them, and she emailed me at the end of last year to say how helpful this whole thing has been for her.

I didn’t know what she was going through, but she emailed me to say that she was going through a bunch of stuff, and this helped her focus on what she wanted and helped her get results in the part of her life that mattered to her. It took me a long time to get that kind of response from Mixergy. It took me a long time to get someone who cared that much about Mixergy, so that’s why I’m thinking maybe True Mind is what I should be spending more time on.

Steve: You know what’s interesting about what you’re saying is for me at least; I do get imposter syndrome sometimes, but am more concerned about not understanding what to do. I feel like once I understand what to do like I have all the confidence in the world.

Andrew: Give me an example.

Steve: For example, if I wanted to learn how to run Facebook ads for example, and I was not confident because I don’t know how to use it at all, once I gain the knowledge and actually execute on my own platform, I would feel comfortable teaching it, so to speak, or I’d feel comfortable running someone else’s campaign.

Andrew: I get that. The challenge is that, how do you get to a place where you know it well enough that you can actually do it for someone else? For most people, they wouldn’t even get started, because in their heads they’ll think Facebook is already done, everyone who’s doing it is doing it. In their heads, there’s someone who is listening to us who’s thinking, there’s someone who’s already better than me at this.

The world doesn’t need me especially if I’m starting at zero, why should I start anywhere, right? That counter mind is going to keep them from even starting. I’d also suggest to you that if you are waiting to know everything, then that’s also you giving in. Not necessarily you, but if a person is waiting to know everything that’s also giving in to their counter minds. I can’t possibly know everything going into every interview.

If I wait to know everything, then I’m not ever even going to do the interview. I get on call sometimes with customers who are upset. I can’t possibly know how to respond to everyone who’s upset. There was a part of me when I was younger which said, you have to read a book on how to handle disgruntled customers, you have to have some experience working for someone else who teaches you how to handle disgruntled customers, and then you can handle your own disgruntled customers, right?

Then you know, there’s always like one extra thing I had to do, there’s always one other book. I remember when I was growing up and I wanted to sell– to shovel snow for my neighbours for like 20 bucks, and whenever they would say no, I remembered thinking, I have to read The Art of the Deal because I don’t know how to negotiate with them and get them to say yes. Like that book was magically going to sell before me, so I read The Art of the Deal and then I said, I have another book that I need to read before I can really turn these people around.

Steve: I hear you.

Andrew: When all I should have done was had the confidence to say, really? Are you really going to spend some time going and shovelling your snow, or just being okay with it and moved on to the next person? It’s the counter mind that keeps us from starting; it’s also the counter mind that always shows us that we don’t have enough.

Steve: I get that a lot, since I teach a class. People come up to me and they’ll ask me a question that they know the answer to, and they just want me to say yes, I agree, and then they proceed. Is that kind of similar to what you are talking about?

Andrew: Yeah right, they need that blessing. They need somebody to say it’s okay. There are so many people going to business school just so they could have that piece of paper that says that they know business, and then they are going to be so, so disappointed when they leave and someone is going to ask them a question, and saying I’m a business school student isn’t enough, or they won’t remember it from business school, or it wouldn’t have been taught and covered in business school.

Steve: It will be interesting to see how your course unfolds; this is the first time you are running it, right?

Andrew: Oh no, I’ve actually stopped doing it because I kept going back to Mixergy and the only thing that brought me back is the graduates, the people who’ve been through it keep saying what’re you going to do with it next, what’re you going to do with it next. And so I still said I’m not sure to them, and then I have a team of people now who say we are going to help you keep producing new stuff, and new stuff that you care about that’s like my ideas, not me promoting someone else on my interviews.

And I said all right, here’s the next thing we are going to do. We are going to launch True Mind. It’s going to happen in January, and we are going to start it off and I said, “I think that January is a little overdone,” they said. “Yeah, but we’ll take care of it,” and so they organized it.

Steve: Now that’s cool.

Andrew: Yeah.

Steve: Just curious, is everything that you are doing, is this like your calling? Like is it enough for you? Because I know last time we had talked, I told you that I need something technical in my life to keep me going. Is the stuff that you’re doing right now with Mixergy, True Mind and your other projects; is it what you are meant to do?

Andrew: I think I wanted to do better, but I wanted to be this. I don’t want to do anything else. I don’t want to start a software company, I don’t want to retire, I don’t want to do anything. I want to do this, but better. Like, more people should be moved by the True Mind process and semi-results. I should be expressing it even better than I am today.

Mixergy needs to be a lot clear as a platform, as a place to learn. You should be clear about what you are going to learn on Mixergy. You shouldn’t, you the person who just, you’re interviewing me, you looked it up. You should know more about what we are selling on Mixergy, what are those courses, right? And you couldn’t clearly say right now, because I think we need to do a better job of expressing that to you.

Steve: I think the main reason is you just have a huge breath of stuff. Like just courses on like every subject practically in your library, right?

Andrew: Yeah.

Steve: So in my mind at least it’s unclear whether I should take the course from you, or I should go and find someone who just specializes in that …

Andrew: You actually would get a specialist, someone who is specialized in that. If it comes to presentations for example, a lot of entrepreneurs need to give presentations to their internal team, they want to do webinars because they hear webinars sell well, they want to speak at conferences because they know they get to meet other conference speakers, they get to meet an audience, they want to know how to do this.

Well, there are courses where you can go and take on how to give presentations. It will cost like five, six, ten, twenty thousand dollars depending on where you do it, and whether it’s in person or not, right? Or you come to Mixergy, Nancy Duarte is the woman who taught [inaudible 00:52:53] how to create the inconvenient truth PowerPoint movie that became an Oscar nominee, maybe even won an Oscar, I don’t know, I don’t remember. She’s the one who teaches the biggest people in business how to give presentations.

She did a course on Mixergy where she teaches presentation skills. Why would she teach it on Mixergy if she is also available to do it somewhere else, and why would you come to Mixergy to take that course as opposed to going to her in person thing. I think that most people need 20% of the material that will help them give the right webinar that will help them give the right presentation. That they can actually use and then decide whether they want the other 80%, and for most for people, they may not even want the other 80%, right?

So you come in, you take a course with Nancy Duarte, she teaches you presentation skills and if you want, you use it and you are good to go. If you like her style and you want more from her, she has an in person course. She has a team actually; she’s now a huge company that will teach it to you through in person classes, there are people who’ll actually create your presentation for you if you want to do that.

The same thing with Neil Patel. He teaches how to get traffic because he knows we have a big audience; they can learn from him. For most people, they could sign up for these multi thousand dollar programs that last weeks and weeks and weeks. Most people don’t want that. They want the 20% that they could use right away and get some results before they do more, and the thing that I had as an interviewer on Mixergy is, I had an audience, so if you are teaching a course, if you are Neil Patel, you are not coming in to an audience of zero where I, Andrew is saying to you, come and teach my people, but you’re saying Andrew has got this big audience, many of them are already paying him.

If they are going to paying him to watch me, many of them are going to come and pay to watch my stuff too, because they have already proven that they care enough and they are willing to pay, and I also have a bigger audience that I email every week. 70 plus thousand people that are saying, “Neil Patel is an expert on how to get traffic, he’s teaching this on Mixergy. If you have a premium membership, you can watch it. If you don’t, you can sign up. Even if they don’t sign up, in their heads, 70 plus thousand entrepreneurs now know Neil Patel is a business person. That’s the model. I need to do a better job of expressing it 100%.

Steve: Here’s the funny story on my end. I’ve in the past, given my course out to people for free. Just, these might be like friends or people who just want to learn, who know me, and everyone who I have given the class to for free has never done anything for it, and the people that I heavily discounted for, they end up doing something about it. Just the act of paying money, a lot of money has made them take action, so I was just wondering, for you, you get an all you can eat once you pay the lump sum, right? I was just wondering if that actually prevents people from taking action.

Andrew: I think in many cases it’s okay to not take action. I’m all right with someone saying, I have a membership to Mixergy, I’ve checked out Neil Patel’s stuff. It turns out it’s not for me. It turns out that really his whole attitude makes sense. I’ve learnt it, I’ve internalized it, I understand it, I’m not going to do it, but it’s good for me to know how other people are doing things. It’s okay for somebody to go watch Nancy Duarte’s course and say; I actually don’t want to give a presentation. I’m never going to do this.

My belief is that if it’s short enough and we do about an hour, they’ll watch it to the end and I’m seeing the numbers that they do watch it to the end. My belief is that, some part of it is going to stay with you. You might listen to Nancy’s Duarte’s presentation and see that she shows you how those speeches that have resonated with people for years, have these highs and lows and highs and lows and it’s an intentional process.

When you give your next presentation whether you know it or not, that’s now part of your knowledge and you are going to adjust your stuff, your style so that you can do it, so that you can have a high and then a low, a high and a low, especially if she’s convinced you that it makes sense. If she hasn’t, then why spend even more money to take a bigger course?

Steve: That makes sense; I can see it from both sides. Hey Andrew, we’ve actually been chatting for almost an hour now. I didn’t even realize that the time went so quick. I want to be respectful of your time. If anybody wants to get a hold of your latest projects, where can they find you?

Andrew: The best thing to do is go subscribe to Mixergy’s podcasts because then you get everything, all the interviews for free when they come out. You don’t have to buy anything, you don’t have to be a member, you get all the latest interviews for free. It’s in the iTunes store and if you don’t subscribe now, then whatever is free now will eventually be, tomorrow will be prepaid members only.

Steve: Behind the pay wall, yeah. Cool man. Hey, thanks for coming on the show, I really appreciate your time.

Andrew: You bet. Thanks and I love what you are doing. I’m glad to be on here.

Steve: Thanks man.

Hope you enjoyed that episode, Andrew’s success with Mixergy was actually one of the main reasons I decided to start my own interview based podcast, and even though we have different styles, I’ve learned a lot from him.
For more information about this episode go to mywifequiteherjob.com/episode113, and if you enjoyed this episode please go to iTunes and leave me a review. It’s by far the best way to support the show and please tell your friends, because the greatest compliment that 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 6 day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business. So go to mywifequiteherjob.com for more information, sign up right there on the front page, and I’ll 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.

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112: How To Make 10 Million Dollars Blogging About Personal Finance With Kyle Taylor

How To Make 10 Million Dollars With A Personal Finance Blog With Kyle Taylor

Today I’m thrilled to have Kyle Taylor on the show. Now Kyle is easily one of the most successful bloggers I know. He runs the popular website ThePennyHoarder.com which gets an insane amount of traffic.

I’m just going to make a rough estimate here but I’m guessing somewhere in the 2-3 million uniques per month range. He’s got 730,000 email subscribers and almost 2 million facebook fans for his page.

The Penny Hoarder was on track to make 10 million dollars in 2015 and Kyle’s results have been nothing short of incredible. Enjoy the show!

What You’ll Learn

  • What gave Kyle the idea to create The Penny Hoarder.
  • How a blog can generate 10 million dollars of revenue in a year.
  • How he gets over 10,000 emails subscribers per day
  • How to run profitable ads on Facebook
  • How a post to his Facebook page crashed my site

Other Resources And Books

Transcript

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 to simply 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.

Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email, now onto the show.

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 Kyle Taylor on the show. Now Kyle is easily one of the most successful bloggers that I know, and he runs the popular website thepennyhoarder.com, which gets an insane amount of traffic. I’m just going to make a rough estimate here, but I’m guessing somewhere in the three to four million uniques per month range. He’s got 900,000 email subscribers sand over 1.7 million Facebook fans for his page. Here is what’s hilarious, one day he decides to share one of my post on his Facebook fan page, and I got so much traffic from that one Facebook fan page post that it crushed my site.

Compared to my own Facebook page which generates maybe a couple of a hundred visits at most for a post, Kyle’s Facebook page was sending hundreds if not thousands of visits per minute, but of course I’ll never know since my site went down. Anyway The Penny Hoarder was on track to make $8 million in 2015, and I think up until July he was just telling me that he only had one employee. His results have been nothing short of incredible, and with that welcome to the show Kyle, how are you doing today man?

Kyle: I’m doing really well, thanks for having me Steve.

Steve: Yes, so give us a background like we are in like the same mastermind group, but we never really talked about how we all got started and that sort of thing. So what’s your background and what gave you the idea to create The Penny Hoarder blog?

Kyle: Yeah, so my passion actually has always been politics, and so for six years I worked on political campaigns and I was traveling all over the country and having a blast. But the thing about campaigns is that you are automatically fired every nine months when the campaign is over. So I was looking for ways to sort of fill the gap and get me to the next campaign, so I started doing all these really ridiculous things to make extra money.

And people would ask me how I was doing it, where I was finding these things, and I thought well it would be really fun to document the journey. So I created my first blog, I knew nothing about blogging, it was a BlogSpot domain. And I just started writing about just silly adventures I was having.

Steve: Did that turn into The Penny Hoarder or?

Kyle: It did yes so it was originally thepennyhoarder.blogspot, and I think like a lot of bloggers I’m sort of instantly fascinating, maybe when I got that first adset check of couple of dollars that you can make money. I sort of wasn’t — I was spending 30 to 40 hours a week in addition to my regular job blogging, but I just knew that if I could just get enough readers this could be a real thing. I moved it to the thepennyhoarder.com, and kept up with it.

Steve: Wait so was it your intention to create a huge blog for revenue, or did it kind of happen by accident then?

Kyle: It totally happened by accident.

Steve: Okay, so when you are on BlogSpot you clearly got a pretty decent following back then or?

Kyle: Yeah I mean decent maybe like 50 people a day that’s…

Steve: No, that’s not bad yeah.

Kyle: That’s huge, and I could just see the multiplication effect, and wanted to see how far I could take it.

Steve: Then you did not grow up in like a wealthy household either, right? All these topics that you are blogging about kind of struck home; these are things that you actually did, right?

Kyle: Yeah that’s absolutely right, I mean I grew up in a middle class family, but saving and budgeting was always a family affair. I was always joked like my mom used to really get us into like we would have competitions every month to see how low you could get the electric bill.

We would take — I’m not kidding you, we would take turns everyday going out and reading the meters on the side of the house and we would shut them. We had shut in the house, and we would challenge ourselves, and if we would beat the bill from the month before like we would all go out to dinner or something. It’s always really a family affair and same with making money, but [inaudible 00:05:24].

Steve: That is hilarious.

Kyle: My mum always had these silly things, she was a mystery shopper and so many other things, and we always did as a family, it was always a lot of fun.

Steve: So Kyle how does a blog — and this is probably going to blow my mind because whenever I tell my mum how much I make on my blog, she is always like what! How is that possible? I mean your blog is an order of magnitude larger than mine, so how does a blog generate $8 million of revenue a year, so what are you your main revenue sources?

Kyle: Yes, so we — this makes it price a lot of other bloggers, but banner ads are a very small portion of our revenue. The industry is really moving towards native advertising, and that’s where we thrive, so we build our content for our partners, and they either pay us on a flat basis or pay us based off on how many leads or sales we send their way.

Steve: Can you just define native advertising for some of the listeners who might not know what that is?

Kyle: Yeah, it’s a good question because there are a lot of different definitions for it. But the way we consider native advertising is — for us it’s content, and it’s content that is branded with the sponsor in mind.

Steve: It’s like one of those TV shows now when you are watching, all over sudden it focuses on the car and it’s like, oh I just love this cruise control of this car in the middle of the show right? It’s kind of like…

Kyle: Yeah exactly a product placement which can sound kind of nefarious, but because there are a lot of examples of really poor, native advertising on the web. But for us it’s always been really important to one, only recommend things that we would recommend no matter what. Even if we weren’t getting paid we would still write about it.

And two is to make the native content almost better than a regular content. We want readers to really feel like they were glad they clicked that headline, and that they actually learned something even though it’s sponsored and even though we are getting paid for it.

Steve: Give us an example of one of your most successful native advertising campaigns?

Kyle: Yeah, so we’ve done a lot of work with some of the market research companies like Spiebucks [ph] and [inaudible 00:07:42] dollars. Those do really well with our readers because our readers are looking for extra ways to make money. It’s one of our best, we’ve gotten really specific with our targeting, so we’ll do a state level posts like here are the best jobs in Georgia.

And in addition to sharing Spiebucks link, we’ll share plenty of other non sponsored content as well. And we hear all the time from readers who get these emails they got a job, or they made some extra money doing this and that. And that to us is the best part; I mean our success is when we get those emails that say I actually got a job from this article.

Steve: The advertisers are okay with you advertising their companies in front of potential competitors as well?

Kyle: It depends on the advertiser, sometimes there are advertisers that want an exclusivity, but that — in our opinion those actually make for often times less compelling content. I never want it to be a thousand words just a glowing review on a sponsor. We also tell our sponsors when they come on board that we reserve the right to point out the negatives, so we wanted to be a very unbiased review.

And our testing shows that those actually convert better, when you point out like the negatives that readers are more likely to take and trust you, and more likely actually try the product or whatever it is you are suggesting.

Steve: Yeah, for sure actually so would this be considered native advertising, so on my blog I often do comparisons of different services, and I get down to the nitty-gritty and I point out the flaws and the good things about each, would that be kind of considered native advertising.

Kyle: I would, I would actually consider that yeah.

Steve: Okay, and so when someone comes up, so first of all do you go out and seek these opportunities or do they kind of come to you?

Kyle: That’s changed I think in the last six months. It used to be like we wait for them to come to us, but we’ve began to hire our sales force now, so now it’s a little bit more proactive.

Steve: When they come to you is it just because they see a site with lots of traffic they want to get in front of for the most part?

Kyle: Yeah, that’s generally it, yeah generally it’s traffic, or sometimes it’s also because they might see a competitor on there, and they’ll email and say, hey I noticed you wrote about such and such how do we get that?

Steve: So I mean how did you attract these guys in the very beginning when you didn’t have so much traffic?

Kyle: Well I think every blogger can relate to this that no matter what your size is, you are always getting these emails from PR companies or from people who want to link. And even though I wasn’t willing to accept their premise and just write about them, I use this as opportunities to build relationships. So I would just respond to the PR person and then say let’s jump on a quick call and chat about this.

For me it was always about getting on the phone, and I think a blogger sometimes will lie on email too much and say X sales are made on the phone or in person. Once I can get on the phone and I could properly communicate what I was doing in my passion and who my readers were, it always became an easy sale. Even when I didn’t have that many readers because brands know the value in having influencers recommend them.

Steve: Sure absolutely, so what’s funny is you told me that you only had one employee up until like six months ago, but doing these sponsor type of campaigns it actually takes a lot of work right and a lot of communication. So how do you manage that, it’s not automated right obviously?

Kyle: Yeah, oh I wish it was. Well I have always dreamed of one of those businesses, you just set and forget it. Now it is a lot of work, it absolutely it is, and I find that the more work you do in communicating with the client the more likely you are to get a second campaign out of it, that’s how [inaudible 00:11:41] is to get another campaign.

We put together these in addition to like keeping contact. At the end of the first month we put together like just pretty little Photoshop report for them as how much traffic we send and how many leads they have. It’s often the same information they have, but sometimes just having it not only visually there, but to show that you are on top of it I think that really helps us.

Steve: Okay, so with only person though how can you possibly manage enough of these campaigns to generate millions of dollars, this was kind of what I was getting at?

Kyle: Yeah, we’re certainly out of one anymore, so we have almost 20 employees now, so that’s helped to improve, and increase our volume quite a bit. But I would be honest with you before that and I had a good team of freelancers, but it was also just a lot of hustling. It was 18 hours days I was doing what I could, I had a team helping build this as big as I could.

Steve: Outside of these sponsor type of campaign — oh actually I was just curious before we move on from sponsor campaigns. Like what is like the average rate given a certain amount traffic for like a sponsor type of campaign? I know it probably varies all across the board, but if you can just give us a rough idea of how much you can charge versus your traffic that would be great.

Kyle: Yeah, I think it depends again whether you are charging a flat fee which for small bloggers I recommend just charging a flat fee rather than affiliate. In general I think the going rate is between $75 and $150 CPM. So for every thousand people let’s see it, you can charge 75 to 150, now that’s one piece of content. So you have to kind of look at your average content. If your average gets 2000 views, then maybe you can charge 150-200 bucks.

Steve: I see, so it’s actual views, it’s not just overall traffic from…

Kyle: Correct.

Steve: Okay, what I mean by that is, is it capped or is it like lifetime views, or is it just an ongoing CPM; does that make sense what I’m asking?

Kyle: Yeah, we structure in all different ways depending on the advertiser, but I think well we are decided over the flat is we generally offer our guarantee to advertisers. So in our case we offer a guarantee that they’ll get at least 25,000 page views in the first 30 days. And for that we charge $5000.

Steve: I see, okay, and how do you decide whether to go affiliate versus CPM?

Kyle: That’s often part guide and part of what we found in the past. So our traffic is largely mobile, so we’ve learned that offers that have really long signups, so something that might be three or four pages of singing up or that require a credit card, don’t convert as well because not many people want to be doing that on their phone. If it’s a simple offer where it’s just an email address and a name, that’s more likely for us to do better on our affiliate bases.

Steve: Outside, so outside the sponsor content you have banner ads. I think that industry is slowly shifting, right? I know a bunch of my buddies who used to run sites which relied on banner ads, it’s like slowly declining over time. Are you guys still kind of showing those ads or?

Kyle: Yeah we still show. We still show banner ads, but I can tell you it’s less than 10% of our overall revenue, and I don’t think we are the only ones. When I look at really large publishers like Huffington Post and Business Insider, they are all getting into this affiliate or performance marketing game too. Have you seen these Business Insider picks where they’ll just, they review something on Amazon and they put it on Amazon?

Steve: Yeah. Actually what’s really annoying still is people still have those, they break apart the page into different pages and then– I hate that.

Kyle: Yes. I hate that too. One thing I’ll give credit for BuzzFeed is they never went the slide show route.

Steve: Yeah, I hate slideshows. Okay, sorry I cut you off though. You were saying something about native advertising in some of the larger companies.

Kyle: Yeah, it’s growing. And the other part of it that I see are more large media publishers getting into the subscription business. So choosing Business Insider again, they had this Business Insider intelligence now, and it’s weak and expensive. I think it’s like $1500 a year, but you get pre-email contact to your email.

I’ve seen like Talking Points Memo which is a big new site, they’ve done the same thing where for $50 a year, you get an ad free experience. Media is definitely getting tougher and publishers need that recurring revenue to be able to count on.

Steve: Are you guys doing anything that generates recurring revenue?

Kyle: We are certainly trying. We partnered with Erin Chase this fall on a course called The Grocery Budget Makeover. We are going to be rewriting that this spring. Just one way we are sort of dipping our toes into that and that kind of market.

Steve: So we got sponsored posts, you’ve got banner ads and then we have deals with popular bloggers like Erin Chase. Do you guys sell your own products at all?

Kyle: No, no never sold anything other than The Grocery Budget Makeover.

Steve: Okay. Those I guess sum up all of your income sources then for Penny Hoarder?

Kyle: You got it, yeah.

Steve: So it’s more like, you guys are kind of like a more traditional type of blog I guess?

Kyle: Yeah, I think we hope to eventually be in the category, be seen as a media site.

Steve: You definitely are already. I apologize if I insulted you.

Kyle: No, not at all. We are on our way. We are not quite there yet. We eventually want to be mentioned in the same graph as the Business Insider or something like that. We certainly have a lot more work to do when it comes to building an audience.

Steve: So let’s talk about building an audience. You went from zero to millions of visitors per month in like four years pretty much?

Kyle: Yes, I assume a bit more about five years now and we are around 6 million uniques a month now.

Steve: Wow, I underestimated, I apologize again. I’m just like insulting you left and right here.

Kyle: No. You can never insult me.

Steve: Okay, 6 million, that’s crazy. I don’t even know what that feels like, well I did know what it feels like when you crushed my site, but six million visitors a month. How do you– let’s go back to the early days. How do you gain traction? How did you get your early followers, and how did you scale so high in such a short amount of time?

Kyle: You mean besides just making my mum read the same article every day? I followed the same play book that everybody did. For me…

Steve: Obviously not Kyle.

Kyle: In the beginning it was all about networking with other bloggers. I was into that site [inaudible 00:18:52] building relationships there. I was commenting on a lot of other blogs. I also did a lot of giveaways. I partnered with hundreds of blogs on different giveaways. Anything I could do. I really don’t believe in that if you build a day will come. I actually believe you have to build the traffic. That was the early days for me. Then I started getting a little bit of PR. I got mentioned on Ubber.com and [inaudible 00:19:24] like Woman’s World Magazine.

Steve: How did you get those by the way? Did you actively seek them or was it just kind of…

Kyle: They came to me.

Steve: Nice.

Kyle: That was kind of a little bit of a luck. Then I started experimenting with paid advertising. I wasted a tone of money. It was a very expensive learning process, but once I started to crack that code and learned how to buy traffic that would convert on our site and pay for itself, that’s when the explosion really started to happen.

Steve: Just so you guys know out there listening, Kyle spends millions of dollars on Facebook ads every year. That’s accurate, right? Millions of dollars.

Kyle: It is, yes.

Steve: Yes. Okay, he knows Facebook ads, and I was hoping to kind of shift the conversation now and talk a little bit about that since that was kind of how you got your early traction for your blog, was primarily Facebook.

Kyle: Yeah, that’s where it really started to grow. Actually before Facebook, it was Tabula. Tabula was my primary advertising source. I couldn’t make Facebook work. This was like right when Facebook first got their ad exchange. I think a lot of other publishers experienced the same thing that quality wasn’t as good. That’s a complete turn about now, and Facebook is now our primarily source of paid traffic.

Steve: So Tabula is like Outbrain, right?

Kyle: Exactly yeah.

Steve: Just for the listeners, Outbrain and Tabula, I don’t know if you’ve noticed at the end of blog post there’s links to other publications, and you get paid per click. Is that how it works?

Kyle: Yeah exactly. We use them as a publisher too, we add them at the bottom of our articles, and anytime we sent traffic to another publisher we get paid per click.

Steve: Do you guys still use those services or not anymore?

Kyle: On the paid side? Yeah a little bit. Definitely not as much as before though.

Steve: Because I know for traffic like that it’s like all over the place right, meaning it’s not targeted, it’s random traffic, right?

Kyle: In general, it’s not very well targeted. However, they are adding more targeting options now. The problem with Tabula and Outbrain, well they are great. They have so many millions of publishers and only a small percentage of them are really high quality sites. You really have to do your homework and pick out sites that you want to target and not just let them run the network.

Steve: Let’s talk about Facebook since it’s very targeted. I actually got a quick lesson from you during our mastermind retreat last year. I actually started implementing some of your Facebook strategies earlier this year as kind of like a New Year’s resolution. Okay, I’ve run Facebook ads successfully for my physical products, but with the blog it’s a little different. So you are driving traffic to your content, and so first of all my first question is how do you know whether they are profitable? Do you know exactly how much a visitor is worth on a particular page?

Kyle: We do, yeah although not at first, so any time we publish a new piece of content, we have to figure out what that page is, it’s called our PMS [ph]. The revenue per user and so every new piece of content has its own RPU. And we do use a piece of software called [inaudible 00:22:47] to help us figure that out.

Steve: How does that work. Like how do you figure that out?

Kyle: We take out all of the different offers, all the different ways we are getting paid from that article, and we add it up and then simply divide by the number of pages we got in the same time period.

Steve: But how do you know? Like if it’s an affiliate offer, you don’t have conversion tracking information for that offer, right?

Kyle: Thankfully we do. With our platform has offer, so we actually have the advertiser place a pixel on their page, so we can track when it gets converted. That’s how to scale quite a bit. In the early days, I didn’t have that. I was a lot of guess estimating, and it didn’t always make for good advice, because I didn’t know exactly. I would say, I think the RPU is between this and this and this and this amount. We got a lot more specific now.

Steve: That was the missing piece of the puzzle for me at least. You can actually convince an advertiser to add one of your tracking pixels on their check out success page.

Kyle: Yes.

Steve: Okay, do you need cloud to do that?

Kyle: I didn’t – being a high volume partner is helpful. So you don’t necessarily need to be a big site, but if it’s a good partner for them, then yes it helps. The other easy way to do it is to go through the affiliate networks. Often times your affiliate manager can help facilitate that.

Steve: Interesting. That’s one thing that I’m definitely not doing. Okay, so you figure out how much money a visitor is worth, and then what’s the next step of the process?

Kyle: Yeah, so then really my role is to be able to buy traffic for less than that, and hope that the conversion rate stays the same because obviously paid and organic traffic can convert very differently. From there, we start testing ads. We often test hundreds and hundreds of different creatives to find one that gets us a really low cost per click.

Steve: In the beginning you said hundreds of creatives, so you just start out– so there’s different components to Facebook ads. There’s the creative, there’s the target and then there’s the bidding I guess. Let’s say you had one post that you wanted to promote, how do you tell– like what’s your targeting, like how do you start with the targeting?

Kyle: I’m sure if you ever used like the Facebook power editor, it’s a little bit clunky, and it can be really difficult to build a lot of ads pretty quickly. So we get to use another software, and it’s really affordable called AdEspresso. What’s great about it is I can just add in all of my headlines, all of my images and all the different things I want to target, and AdEspresso will build out an ad for every single variation.

If I give it five headlines, five images, and five different groups of people, I’m going to get 125 different ads. It takes literally like 30 seconds to build. That’s been really helpful for us, because then once they are alive, you can start to track to see not only what headlines they are working the best, but what groups are responding to it. That can help you narrow your targeting down even better.

Steve: What’s your initial budget during like the testing phase while you are trying to figure out what’s going to work and what’s not?

Kyle: It depends on the article obviously. In general I say that for every variation you make, you need at least 20 bucks for that variation to get statistically significant result. I don’t suggest making 150 variations if you are not ready.

Steve: Sure of course. I was just curious how you do it, so 20 bucks per variation.

Kyle: Yeah, in general that gets you a few thousand impressions per variation.

Steve: Do you just let Facebook do all the bidding for you in the beginning?

Kyle: I do. That actually is a strategy we changed recently. We’ve moved to letting Facebook optimize the bid. We found that actually in our case has resulted in the lower CPCs.

Steve: Do you have a conversion goal for this, or do you just set it to clicks for the website?

Kyle: We don’t currently use Facebook excellent conversion goals, but we are hoping to get that done this quarter.

Steve: Interesting. I was just curious when you’ve experimented whether it has made a difference in the types of people that it sends or shows the ads to.

Kyle: Yeah, I’m really curious about that too. We think that’s going to be huge for us is having these with optimized based off of conversions.

Steve: Okay, so you are bidding based on clicks to your website, it sounds like you are letting Facebook just bid whatever it wants. Given like– we had a conversation prior to recording here and you mentioned that some of your CPCs are like below ten cents sometimes as low as two cents. And in my experience at least, it has taken me a long time. Some articles I can get like, I think the lowest I ever got was like six cents, but some articles I can just never get it down to there. What is your process for getting the bids down lower?

Kyle: Well, I will say one thing that we do differently than a lot of Facebook advertisers is that we use much bigger targeting groups. Facebook is great because you can get so fine. You know you can pick out people who just watch Simpsons after 11 o’clock. It’s insane how crazy it gets. The more targeted you get; the more expensive the click is going to be. Our content, we also finance a much broader appeal or we hope it does. We don’t get too fine. We like to have groups that have at least ten million people in them.

Steve: Wow, that’s huge.

Kyle: Yup. It definitely helps with CPCs. Then beyond that, we write out, often times, up to a 100 headlines per post. We will just exhaust our creativity in coming up with different ways, and then pick out our favorite five or ten to test on Facebook, but you have no idea how important that is. I consider myself a pretty good headline writer, but when I actually get down to testing them, sometimes one headline will get CPCs at 30 cents, and sometimes I get some at a penny even though I thought they were both just as good. Writing out millions of headlines is super important.

Steve: Actually incidentally if you guys are listening, I pretty much use The Penny Hoarder now when I’m just brainstorming different headlines. Go onto his site and check out some of the headlines that he has. They are very clickable. They are not annoying ones either where like he leaves you hanging, and then you click and you are dissatisfied with the results. He actually follows through with the content that matches the headline. Anyway it’s quick log for the…

Kyle: Thank you. I appreciate it; yeah headlines have changed a lot in the last year. It used to be you could write these really leading headlines and of course they always had ellipses after them. Anybody would click anything, but I think we all got wise to that, and got tired of it. Now, the new trick is to, you still want to leave a curiosity gap in the headline, but you want to give more of it away.

I’ll give you an example; I saw a really good headline yesterday. It was, I think it was from CNN. It was “89 year old grandma graduates college. Here’s why.” Like you know exactly what happened. You know how old she is, you know she’s graduated, but of course I want to know what she was going to do with her degree like there was still curiosity there, but I didn’t feel like they were beating me.

Steve: Yeah, then you will have a headline like “Here’s like ten ways to make money just surfing the web,” or something like that and I’ll be like, oh I can make money surfing the web? I should check it, and then you’ll give all these services where you can actually do that, right? It’s important to follow through.

Kyle: Yes, exactly. I mean, your CPCs will always be high if the users aren’t sharing once they get to the site. That’s really the secret to driving it down. It’s you need people to share it. The better your engagement rate is, the more your Facebook will show your ad, and the lower your CPC will be.

Steve: 20 bucks per– so it sounds like you have different creatives, different headlines, and then do you different landing pages too? No, the pages are always the same. You don’t change the landing page, right?

Kyle: We are going to start working on that this year. We are working with an AB set software to like test different introductions and different ways to lay out the article. Because like I said, the engagement rate is probably more important than the click through rate now. We really feel like we need to test our content as well.

Steve: What I was trying to get at there was does that the headline always match the title of the post when someone lands?

Kyle: It definitely matters. The headline certainly matters. That’s the first impression people are getting of you. But if they aren’t sharing it, then Facebook will give what’s– they have this new score card called the relevancy score which is how well people actually liked the post. And Google is doing the same thing with organic now. They are measuring how long people are staying on the site, are they sharing it, are they bookmarking it. Then using that as a parameter to impact your CPCs.

Steve: Is how you manage to get such low CPCs because so many people share your content?

Kyle: Yeah, that’s definitely a huge part of the puzzle. Then that also has the added benefit of bringing in some free organic traffic which of course lowers the CPC further.

Steve: Just curious, outside of just having big share buttons on your site, what are some other ways that you encourage people to share?

Kyle: We’ve been testing a new share button now that’s really fun. It’s the Penny Hoarder. It’s now our share button at the button of your mobile screen is a penny. You just slide the penny to share it.

Steve: That’s cool.

Kyle: It’s just a little bit different. I think we all read so much content now that people get blind to the same thing over and over again. Anything you can do that’s a little bit different certainly helps. The last thing we do is when we are drafting our post, we actually write on the draft, who will share this post. If there’s nobody in our office that’s willing to share the post with their friends, it’s not a post we want to put on the blog, because if we are not going to share it, our readers are not going to be willing to share it.

We look for pieces of content that have target, like groups behind them. I’ll give you a really great example. I saw this post earlier this week about this guy who worked for Nintendo and he’s revealing 15 Mario secrets. That’s such a great targeted post, because we all have a friend that loves Mario, or we have some memory growing up with it. When you look through the comments, it’s not a bunch of comments commenting on Mario, it’s people tagging their friends and saying, “Remember third grade or whatever.” I think we look for content that does that same kind of thing.

Steve: Interesting. Actually that means it pays to kind of link different themes together and kind of mix like the guts of the content in with it.

Kyle: Yes.

Steve: It’s basically what you are telling me.

Kyle: Yes absolutely. I’ll tell you, the most viral post we ever heard was last month. We wrote this very short 300 blog post. Red robin was giving away free food, and we write about free food all the time. It does well, but this guy almost 2 million hits in 48 hours. And the reason is that the way Red Robin was giving away food was if you had a certain name. I think it was like if your name was Michael or Betty or whatever.

We got tens of thousands of people commenting because we all know someone named Michael. I think those are the posts that do well on Facebook now is it wasn’t that it was free food, it’s that we wanted to share it with somebody and let them know we were thinking of them.

Steve: That is an incredible tip actually. Do you guys find that you are doing this more now on The Penny Hoarder. I actually subconsciously didn’t even notice. I’m going to poke your site right now.

Kyle: Yeah, we are. We are certainly trying to do a better job of that, trying to figure out who it is that will actually share this.

Steve: Do you find that you are getting a lot more traffic from Facebook as opposed to like Google?

Kyle: Facebook is definitely a bigger traffic source for us, but to be honest with you the organic traffic we receive from Facebook has certainly declined. That’s something all publishers are feeling that Facebook shows organic stuff less and less.

Steve: The reason why I asked is I find that, so I get a lot of Google traffic and that’s actually where most of my traffic comes, and all that traffic tends to be really targeted and converts pretty well. I was just curious what your experience has been with Facebook traffic in terms of conversions versus Google.

Kyle: On the organic side, yes. Google is more– those visitors convert better for us. On the paid side, we’ve actually had better success with Facebook. Because with Google most – targeting options are keyword based, and with Facebook you can add obviously demographic and permission in there which we find has an even bigger impact.

Steve: And so do you actually buy AdWords ads at all?

Kyle: We do yeah.

Steve: Okay. So you have to make those profitable first. Have you found that the AdWords ads for content have been too expensive?

Kyle: They are. In our experience, they are little bit more expensive than Facebook. I think it’s largely because of the keywords that are in our category. I mean, personal finance key words are usually the most expensive keywords.

Steve: Exactly, that’s why I was asking.

Kyle: Yeah. We don’t face that same kind of competition on Facebook.

Steve: Yeah, I was just curious how you get AdWords to work for you then. Like if you are paying like dollars per click. Obviously you are not paying that but…

Kyle: We don’t– yeah we certainly couldn’t afford to pay that much. As a result we don’t get as much traffic from it.

Steve: Okay, do you guys do anything special to increase your rankings in Google, or is that not like an area where you focus a lot of effort on.

Kyle: I wouldn’t say it’s big an effort for us although we just did bring on a PR person. It’s not so much for like building targeted links and on site optimization more; it’s just getting our brand mentioned on large sites which has the same effect. I think Google has made it very clear that they don’t want us gaming. Even though everyone does, and it still works, we try to be a good partner there.

Steve: Okay. Back to Facebook, it sounds like the way you get the clicks down, and then your traffic up on Facebook is you just try a whole bunch of different things. You spend 20 bucks on a whole bunch of different permutations of everything it sounds like. Then you stick with like the best three or?

Kyle: Yeah, that’s really a good point. I don’t– once I find the winning ad, I don’t turn off all of the other ads. I try to keep, like you said maybe like the top three. The reason is, is that in our case especially people have ad blindness. Once they’ve seen the same ad a couple of times, not only aren’t they going to click it, but a lot of times they get annoyed. They may block you or block the ad. I think it’s important to have a few ads in rotation so that your frequency stays low.

Steve: When does the frequency get too high for you?

Kyle: Generally like the CPC is at its lowest when the frequency is below three. By the time frequency has gone up 6 to 8, this is every person in your target group is seeing it 6 to 8 times.

Steve: Yeah, yeah, you let it get that high?

Kyle: I do, on certain posts because they– I mean we had some ads that we’ve been running for two years, and that have been seen hundreds of millions of times, but they still convert and so we’ll never get rid of them. We don’t get it; we get much less traffic from them. They may have been a high flier once before, but now maybe we can only afford to spend a couple of hundred bucks a day on them.

Steve: Once you find an ad that works, like do you gradually ramp up the ad spend. Personally just from my experience, I find that when I do a ramp and jump and bid like the conversion just goes to crap for a little bit.

Kyle: I think that’s true with anything. As you scale it, the conversion rate goes down and same with our display ads. The more traffic we get the lower our CPNs are. You do have to plan for that. In general yes, I do. If I have something that I’m getting for four cents and then converting on my site for nine cents, I’m just going to let Facebook go.

Steve: Meaning like no budget or?

Kyle: Yeah, we are very high budget. As long as– and we monitor them. We monitor them all day long even on the weekends to make sure that our ads are still profitable. Yes, as long as they are profitable I want it to be seen as many times by as many people.

Steve: Just curious, what is like no budget for you, for an ad? Like what’s …?

Kyle: I think we– well, I’ll put it in another way. I think maybe the largest ad we have, the most is we’ve ever spent is maybe $10,000 a day.

Steve: 10,000 a day? Good lord. So these audiences have to be large for you then.

Kyle: Yeah. That’s exactly yeah, like I said, not less than 10 million. We have some ads that the targeting is completely open, which is generally a big no, no.

Steve: Open as in like no targeting, like everyone in the US?

Kyle: No targeting.

Steve: Do you target international or is it mainly US?

Kyle: We double. I’ve had a tougher time with international audiences, but we do have a couple of Canadians and Australian themed pieces of content.

Steve: Every fall out like the look alike audiences at all?

Kyle: Yes, just in the last couple of months I’ve been doing more with look alikes. We’ve been growing our email list quite a bit, and so my concern is I always wanted to make sure we kept our audience to million plus. I had to have a large enough email list to build a look alike audience that was large enough.

Steve: It sounds like so with ten million plus your budget has to be big in general to kind of hit that audience. Is the reason you choose ten million because you don’t want to manage it like on a day to day basis as much?

Kyle: It definitely makes it easier. I guess our goals are a little bit different since that– the most important metric to us is unique users. We want to see that we are growing every month. We need, we have to expand outside of our core audience. We can’t just go after people that are fanscoupons.com, that kind of is part of my thinking too.

Steve: You guys don’t do any retargeting then or?

Kyle: We do a little bit of retargeting, but it depends on the article. Often times with our paid advertising, we are promoting the same thing that we’ve been promoting for a long time. We don’t want to make our audience; our current fans see the same thing over and over again. A lot of our ads are targeted towards new readers.

Steve: What is for your best performing ads like what’s a typical click through rate?

Kyle: Best performing ads are above 10%?

Steve: Above 10%? That is insane. Let’s shift gears a little bit to emails since you have 424,000, would you say 700,000 email subscribers. When you, just for the listeners, when you get that many emails, you can’t just like blast everyone all at once because that’s crazy. How do you manage your list, and what do you choose to send to who, and how do you manage that?

Kyle: We’ve always been really protective with our list. We never rented it out. We never even let a sponsor buy it out. For us, we want to keep a really high open rate, and so that’s always meant having just as engaging content and the newsletters we do with our site. We use it primarily as a way to drive traffic back to the blog. These are our most dedicated readers.

It does get challenging when you get that many. I told you in the beginning, I didn’t know anything about blogging when I first started. I’ve had to learn a lot about even the text side, just to be able to manage that kind of list. We do use an email service provider, but we’ve had to be more strategic about bringing on additional theme, like additional IP addresses and making sure that we are spreading the send out over multiple hours, so that we don’t get targeted spam.

Steve: What’s considered a good open rate for you? What are you happy with when you send out a blast?

Kyle: Our target is 30%.

Steve: 30%, that’s really high. Does that imply then you have a very well segmented list.

Kyle: We don’t have a well segmented list, but we do clean the list quite frequently. So if someone stops engaging with us, we will send them an email asking them to please start reading us again. Do you want to stay out of this list or not? If they don’t then we remove them, because we want to keep a good open rate, and a good click through rate.

Steve: What are your metrics for doing that like people haven’t opened in six months or?

Kyle: Yeah, six months is generally the metric we use. I also– I guess the one segment we do use is we have a segment of our really engaged users, people that open every newsletter and they get the email first, because the way things like [inaudible 00:46:32] work which is this imaginary score that every email gets that tells Gmail or yahoo whether to let your email come through.

You want to have your initial emails being opened a lot, and you want to have people clicking them, because that’s a sign to Gmail that this is a trusted piece of content. We send to our engaged users first, and we let it build up a little bit of traction, and then we send it out to newer users and less engaged folks.

Steve: Interesting. Have you found the measured difference when doing this?

Kyle: Oh yeah, absolutely. You can see it in your bounce rates too and your spam rates.

Steve: Wow. I did not– I don’t do that. I did not know that. So you always do two sends for everything?

Kyle: I do yeah. Actually we do way more than that because we also AB test the email. Every email has just like our Facebook ads has multiple tasks for email subject lines, and we’ll often even AB test the images and headlines inside of the email as well.

Steve: Do you do AB testing on your loyal readers or the other guys?

Kyle: Yes, yes.

Steve: Okay. So for the loyal readers, you said they open everything. Are you just testing click through rate at that point.

Kyle: Yeah, I mean even with our loyal readers, the open rate is less than 50%. It’s hard to get much higher than that unless you personally know that person. It’s still useful to us. Again, even though we think we are great at headlines, it’s not uncommon for our best email to convert twice as well as our worst subject line.

Steve: Okay, so we are talking 30 to 50% open rates. That is amazing. Before we got on this podcast, you were telling me like the ways that you acquire email addresses is pretty cool too. Can we talk a little bit about that?

Kyle: Yeah, sure we use a company called Bounce Exchange. I know like Exit Intent is really big right now, any user getting ready to leave your site, whether they’ve– when they use it by tracking your mouse. It sounds kind of creepy, but when your mouse gets close to your back button on your browser, we ask you to subscribe to our email newsletter via a light box on overlay. That’s been working really well for us. In fact the last couple of months, we’ve started collecting over 10,000 emails a day.

Steve: Just think about that for a moment for everyone listening, 10,000 emails a day. That is just insane. There is a lot of blogs out there who don’t even have 10,000 subscribers.

Kyle: Believe me; I had maybe a thousand subscribers for 4 years. It still surprised me that that many new people are subscribing every day.

Steve: You were mentioning that the service also tries different things and it tests all the different forms for you, so it automatically shows the one that converts the best, right?

Kyle: Yes, our model here is all about putting signs behind properties, so viral is something that sounds like it can be replicated. We are hoping that we can figure out, crack the code here. Everything on our site gets tested and that includes these email overlays which are always changing not only the words in there, but we test things like the button color or when to show it to you. And it’s again it’s amazing what a difference in the click through rate it makes.

Steve: What is your most dramatic difference in one of your tests?

Kyle: Last I think that maybe 18 months ago we changed the color of links on our sites. So whenever we were linking out to whether it was on affiliate offer or even just some news article, we changed it from dark pink to dark purple, and it resulted in a 17% increase in click through rate. Just one little X code we changed which also meant 17% in revenue.

Steve: That’s insane because whenever I teach like split testing, I always like don’t bother with the colors like focus on the big things like the headlines. So here you are like totally debunking that, and changing a color and making such a big difference. I think just for the people who are listening out there Kyle can do this because he gets insane traffic. If you don’t have insane traffic, I wouldn’t test colors that’s just my — I don’t know would you agree?

Kyle: Yeah, absolutely. You start with the big stuff always, but every time I think I have become an expert I am completely humbled by an AB test. And I told you at the beginning that I used to work on campaigns, and I still take so much inspiration from the way political campaigns are doing internet targeting, it’s way more advanced than most blogs or ecommerce companies.

We all know like the story of the Obama campaign for 2008 and the crazy targeting they did. But they also on their contribution page they never stopped testing different ways to lay out that forum, or different colors on the submit button. And they estimated that those AB tests equaled an additional $50 million in contributions from them, and that to me is still an inspiration to never stop testing.

Steve: That blows my mind, what software do you use for your split testing?

Kyle: Optimizely for the site.

Steve: Okay, awesome, hey Kyle I have already occupied your time for 50 minutes, thank you so much for coming on the show. I learned a lot, and I am actually going to be implementing a lot of stuff that you were talking about starting with the initial send, that’s a great idea, I had no idea.

Kyle: Yeah, I’m so glad you invited me on; it was a blast chatting with you.

Steve: So Kyle where can people get a hold of you, what should they check out on your site?

Kyle: Well of course you want to subscribe to pennyhoarder.com even if you don’t want to learn about money, making extra money…

Steve: Who doesn’t want to learn about making extra money?

Kyle: Hopefully maybe you’ll get some ads and headline inspiration.

Steve: No, the headlines are amazing, no joke, go check out the headlines; you’ll definitely learn something just through the copy alone. And plus the site is just pretty amazing from an aesthetic perspective as well.

Kyle: Well thank you, I appreciate that.

Steve: All right Kyle, thanks a lot man.

Kyle: Thanks Steve.

Steve: All right take care.

Steve: What an incredible episode, the numbers that Kyle have demonstrated are truly mind blowing. And I actually recorded this episode a couple of months ago, and I decided to kind of just check his numbers, and he is at 729,000 email subs now, and almost 2 million Facebook fans, that is crazy.

For more information about this episode go to mywifequiteherjob.com/episode112, and if you enjoyed this episode please go to iTunes and leave me a review. It’s by far the best way to support the show and please tell your friends, because the greatest compliment that 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 6 day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business. So go to mywifequiteherjob.com for more information, sign up right there on the front page, and I’ll send you the course right away via email. 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.

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Ready To Get Serious About Starting An Online Business?


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In this 6 day mini course, I reveal the steps that my wife and I took to earn 100 thousand dollars in the span of just a year. Best of all, it's absolutely free!

111: How To Make 190K In Your First 7 Months Selling Jewelry Online With Toni Anderson

How To Make 190K in Your First 7 Months Selling Jewelry Online With Toni Anderson

Today I’m really happy to have Toni Anderson back on the podcast. Now this is isn’t the first time I’ve had her on the show. Way back in episode39, we talked about how Toni manages to run a 6 figure blog, a conference, consult on the side and home school 7 kids.

Now a lot has changed in the last year. For one thing, she decided to stop consulting and then reached out to me wanting to try opening an online store to replace the income from consulting.

So she signed up for my Create A Profitable Online Store Course and her results have been staggering. In just 7 months, she’s made over 190,000 and over the holiday season, she made 100K in just a single month.

Toni had never sold a physical product before prior to this and she did not leverage her existing audience for sales either. And today, she and I run an ecommerce conference together called Sellers Summit. Check it out!

Sellers Summit Tickets Are On Sale Right Now

What You’ll Learn

  • Toni’s motivations for starting her ecommerce business
  • Her process for product selection was and how she went about validating her niche
  • What she learned selling physical products online
  • How she found the vendors for her online store
  • Where she looked to find her suppliers
  • Why she decided to carry inventory and the thought process behind the decision.
  • How she made her first sale.

Other Resources And Books

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Transcript

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.Now if you enjoy this podcast please leave me a review on iTunes and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin I just want to give a quick shout out to famebit.com for being a sponsor of the show. Famebit is the number one market place for influencer marketing with over 20,000 YouTubers, Instagramers, people on Twitter and vine looking to promote your company in any vertical whether it would be beauty, tech, gaming, pets and more. Yes you can get famous YouTubers and Instagramers to promote your business for as low as $50.

The best part is that you don’t really need any money at all to post a campaign and receive free proposals from creators. Now if you’ve listened to my podcast before one of my guest Emanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing. And the best part is if you use coupon code mywife@famebit.com you will automatically get $25 off your first campaign. So go to famebit.com right now, and get famous youtubers to promote your products, now onto the show.

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 really happy to have Toni Anderson back on the show. Now this isn’t the first time I have had her on the show. Way back in episode 39, we talked about how she managed just to run a six figure blog, a conference consultant on the side and home school seven kids.

Now a lot has changed in the last year since I last had her on. For one thing she decided to stop consulting, and then she reached out to me wanting to try opening an online store to kind of replace the income from her consulting gig. She signed up for my create a profitable online store course, and her results have been incredible. In just seven months she has made over $190,000 and over the holiday season she made $100,000 in just a single month.

Now I have had students make six figures within six months before, but this is actually the first time that any student has done 100K in a single month in such a short period of time. And before you get all excited I just want to preface this by saying that Toni had never sold a physical product before prior to this, and she did not really leverage her existing audience for sales either, but she does have a special personality.

For example she is fiercely competitive, and I would personally never want to go up against this woman, because she will relentlessly beat you down until you give up. So one time we were casually chatting about getting in shape and losing in weight, and I mentioned something along the lines of I can lose weight pretty easily if I want to.

And instead of just saying cool or whatever she challenged me. She said, “Steve I’ll bet I’ll get a six pack before you loser buys dinner.” And I was like okay yeah whatever. Anyway my point is that I get a lot of questions about how long it takes to make significant money with ecommerce, and truth be told it really depends on two things. One, knowing what to do, and two your personality and your persistence. Toni just happens to have both, and I sure hope she doesn’t decide to sell hankies now, and with that welcome to the show Toni, how are you doing today?

Toni: I’m great thank you, how are you?

Steve: Good that was like the longest intro ever.

Toni: I know I was laughing the whole time, I [inaudible 00:04:18] out.

Steve: So glad to have you back. Give us the background here, so first off why ecommerce in the first place, why did you approach me, and how did you come up with what you want to sell?

Toni: Okay so why ecommerce. I had been consulting I think when I met you, I had been consulting for about three years, and I think we talked, I loved it, I loved what I was doing. But after a while I realized that consulting took me away from why I got on to the internet business world to begin with which was, I really wanted to work for myself.

In consulting yeah you are really accountable to somebody else, and you are really on their schedule, and you are really limited by the number of hours you have in a day because we are usually paid by the hour, by the project, and so you can only take on a certain number of projects, or you are trying to spend a number of hours a week.

I really wanted to get back to sort of the entrepreneurial beginning that I had had with blogging, and some of the other businesses. And I really felt like ecommerce was a logical step based on the fact that I had this large audience from my website, and really thought I could leverage that to help move a product.

Steve: In picking what you decide to sell did you choose something that you could use your audience for, because I understand when we talked earlier that you didn’t really use your audience in this initial seven months at least.

Toni: No, it didn’t work at all like my whole plan did not work out at all, but that’s okay, it worked out well. I definitely went with a product that I knew that my audience would be interested in, and so– and that was when — I think I started your course last January, so 2015. And really just wanted to — I knew nothing about ecommerce, importing scared me to death. I had no idea how to set up a seller account on Amazon, or how to you use Shopify. So I just spent a lot of time going through the videos and really trying to educate myself on this whole world of ecommerce which was very new to me.

And during that time a good friend of mine came to me with an idea for a product, and as soon as I saw what she had I knew that there was something that when I could leverage with my audience. But two I felt like it needed a lot — it met a lot of the requirements for selling a product. Being a smaller product, good margin, not breakable, things like that, things I had heard in your class and from other ecommerce sellers.

Steve: I know we are not talking about the exact product, but are you free to mention like what genre in general or what niche?

Toni: Sure I sell jewelry.

Steve: Jewelry okay, all right, and so how did you go about validating that this was going to sell? Like kind of what was your process for knowing that it was going to do well?

Toni: One of the things that we did was look at what we are deciding we are selling, so was it being sold on Amazon, was it being sold on Etsy, was it being sold on the daily deal sites. And one of the cool things about daily deal sites like Zulily or Jane, things like that is that it actually shows you the number of items that are sold of that deal.

We watched it pretty carefully on some of those sites and saw that there was actually pretty good evidence that this would sell. Even so I was really hesitant to jump in and spend tens of thousands of dollars, because ecommerce was so new to me, I didn’t want to be stuck with something.

And I know you talk about, and other people talk about being able to liquidate stock, but that did not appeal to me. I sold on eBay in the very early days, and I really didn’t want to go back to my eBay roots. I wanted to find something that would work, so we started out really slow, I think we purchased like 200 items to begin with.

Steve: What was your initial outlay?

Toni: I think we spent under $500 initially on products. Product and packaging and all that fun stuff that you realize that you have to buy after you buy the product. I think we did $500 at first, but very quickly moved to a bigger order because within the first couple — I think first couple weeks on Amazon we knew it would sell.

Steve: Well lets back up a little bit, so you looked on jane.com and then you found out that this thing was selling, were you selling something very similar or the exact same item or…?

Toni: Very similar, not exactly the same. We decided to make some changes to it because they were — we realized that there would be a lot of competition if we did something that was exactly like somebody else. We did make some modifications to it, but not very minimum.

Steve: In terms of Amazon not very many people were selling it on some of the other market places?

Toni: There was almost, I think there were two sellers on Amazon when we started.

Steve: Okay and then you mentioned early on in the interview like things didn’t go as planned in terms of promoting to your own audience, why was that?

Toni: Well we’ve — since the beginning we’ve had a lot of trouble because the item ended up being very popular, we have had a lot of trouble with our inventory. We actually — I was really excited because I had always wanted to use Google AdWords and things like that, and I never really thought it would work on a blog.

I was excited to learn about those things with ecommerce and it’s funny because I haven’t been able to do any of it, because we haven’t had enough inventory to actually promote outside of just Facebook post and very minimal. We did do some Pinterest promotions initially. I have a pretty large Pinterest following, so I did do some strategic pinning just so, because one of the hard things about selling on Amazon is that you can’t track on the other side.

So I was hesitant to spend any money to advertise on Amazon outside of Amazon’s own ads. What I did do with Pinterest was I would pin like specific skews, and that would be the only place that we would mention them. So we wouldn’t run any Amazon ads, we wouldn’t even mention on our Facebook, so we would only — that would be the place that could drive a sale outside of Amazon itself retargeting and things like that.

We did do a little bit of that, but outside of that we really weren’t able to leverage my branded Facebook fan page from my blog or running Facebook ads or anything like that, we just didn’t have the stock to really push that.

Steve: Okay, so let’s talk about that a little bit. What was it — first of all what was the order you did everything? So first of all you figured out what you want to do, and then did you order from overseas right away or…?

Toni: No, we actually and I think you might have mentioned this in one of your office hours was to order it on Etsy. I think that was you, right?

Steve: Yeah, well for your particular thing yeah.

Toni: Yeah, so we did an order in the states on — I think when we ordered the 200, we ordered them out of California. We probably paid double what we pay now, maybe even triple, I’m not sure, but it was substantially more. But it also when we got the item, and I think it was five days and the communication was a lot easier and things that I felt were really big hurdles for importing, we overcame immediately by finding someone in the US. Now of course they are getting that same product from overseas, but it just, they were the middle man for us, so that’s how we started.

Steve: So your first order was just from Etsy, how many units was it?

Toni: The 200.

Steve: 200 units, okay and then you threw those up on Amazon first.

Toni: Yeah.

Steve: And they sold out — oh so what did you in that first batch to kind of promote it, you mentioned Pinterest?

Toni: So we pinned — so we had two skews initially, and I think I pined one of them and the other one we shared on Facebook just like on our personal my Toni Anderson Facebook page. Just shared it with friends, just more because we were excited that we were doing a new venture more than anything else, so it wasn’t really, hey go buy our product, it was, hey we are really excited having a business. So that was all we did initially.

Steve: Did you ask for reviews or anything during that period or?

Toni: I can’t remember exactly when we asked for reviews, it might have been in that order or our second order, but I basically went into your forum and posted, hey, I have a product if you want to review it, I’ll send you one, and I think we ended up doing maybe 10 free products.

Steve: Okay, I’m just trying to remember now because it’s kind of a blur, so when you — yeah did you sell out before you got any reviews, like you sold out without nay reviews or?

Toni: We had a couple of reviews when we sold out the first time, probably under 10 though.

Steve: Those were organic probably, right?

Toni: I think you left us a review.

Steve: Yeah, I did buy one yes.

Toni: I think we had a couple of reviews from friends, but it was funny is that several of the people that work for me on my blog ordered, and one of them actually got a broken product.

Steve: Oh is that right?

Toni: And I messaged her, and I said, hey are you going to leave a review and she is like, I don’t think you want me to. Anyway yeah…

Steve: Come to think of it, I didn’t get it for free; I think I paid full price for it.

Toni: You didn’t buy it, sorry.

Steve: All right, so you sold out your first batch, is it time to go to China at that point or?

Toni: It was and we had already been talking to some suppliers when our sales — I think I don’t remember what we sold the very first day, but within the first couple of days we knew that 200 would not last. Plus we still had this daily deal that we were going to do as well, like we were going to run a daily deal with the product.

So we had already been talking to some vendors and really just struggled with how many do we order, or how do we negotiate on the price, are we going to be happy with the quality, all these sorts of things. And we finally found the vendor that we felt like we could work with, and so at some point while we had those first 200 listed, we ordered I think a thousand was our next order.

Steve: Did you find these vendors on Alibaba or?

Toni: We did, yeah.

Steve: Okay, let’s talk about that a little bit, so how did you screen these guys out, what was your selection process like?

Toni: We ordered samples, and that was kind of tough. Our product is not super expensive, so looking back on and I probably would have done the minimum order quantity instead of the samples, because I think we maybe got there or four. And we really needed to see a lot more than that for consistency and quality. And it’s not a lot — if you have a $20, a product that costs you $20 obviously the minimum order quantity is probably not going to work.

But when you have an item that’s much cheaper than that that seems to me looking back what I wish we would have done, because we had a lot of bad orders in our first couple of months. We did things like going back and forth with them; I think we used your email templates to communicate with them as far as not letting them know that we were the decision makers and things like that. And basically just went with the person that we felt like their samples were the best quality and that they were the fastest.

Because at this point we knew our stock was getting low, and we knew we were looking at four to five weeks between when we ordered and actually getting the product. The person that seemed like they were communicating with us the quickest, and then getting us samples and things like that the quickest was the person we ended up going with initially.

Steve: And were these samples exactly the same ones that you were getting from Etsy or?

Toni: Yeah, exactly the same.

Steve: Okay, and in terms of minimum order quantities what were they asking for, and how much did you end up purchasing?

Toni: I think the minimum order quantity was 200 or 300, but we did a thousand on our first order.

Steve: And I know because we’ve been chatting like you had some horror stories, can we just kind of talk about the whole process and like what you went through?

Toni: Sure so…

Steve: And how it could have been prevented.

Toni: Yeah get an inspector would be my number one. So in that first order we were getting very low in stock on Amazon. And we were really anxious to get our order, because we knew as soon as we got it we would need to — so what we do is we order the product, it comes to us from overseas, and then we do — we make modifications to some of them.

We package them in our own packaging which we had this manufacture doing first a little bit and then we took it back over, because it was actually harder to quality control, because it meant un-packaging things. Anyway so we package it ourselves here, and we have people doing it for us in our town.

The first shipment that we got, we were so excited, and it finally arrived and we were like getting a big crew together to get it ready to go to Amazon and it was the wrong size. We had ordered a thousand of this product that we basically couldn’t sell because the size is listed in selling for Amazon was not the size that they sent us.

That was our first big issue and we ended up buying some replacement parts and actually remaking them ourselves, because we knew that that would be quicker than putting in another order and trying to get — it would be another five weeks out to get new product.

Steve: So did you just end up junking those or — the chain was shorter, right?

Toni: Yeah, so we ended up adding different chains to everything, because it was just too — we needed them to sell like we didn’t have the choice to junk them, or we didn’t have the choice to offer a smaller size because we needed the skews that were starting to get reviews, and starting like — one of our items ended up on page one on Amazon in like three weeks. So there was no way we were going to like create a new product when that product was already picking up speed. We ended up redoing like a thousand pieces of jewelry.

Steve: Wait, so did you end up getting those parts on Etsy and kind of…

Toni: Yeah.

Steve: Okay got it.

Toni: I think from our same person in California, I think it was the same person that we used to get the initial badge.

Steve: This actually wasn’t the story I was expecting you to tell, because you this happened to Ken, right?

Toni: So we contacted the supplier and we were not happy and we said this is unacceptable like it’s very clear this wasn’t like it, we went off by like a millimeter, we were off by inches. So we went back and forth, and they were going to give us some credit, I don’t remember exactly how it worked out, but it sort of got us thinking like, hey we need another supplier because this person who seemed pretty reliable and fast just shipped us a thousand of the wrong thing.

So we found a second supplier who we were also very impressed with, who kind of met all the criteria and whenever the product was done she send us pictures from the factory. And we said it looks a little off on the color and she knew exactly what we like, we’ve been very specific on what we wanted.

She said, okay, I’ll fix the color, and I don’t know if there was a communication after that, because I have a partner in this too. So I don’t know if there is communication between fixing it and us receiving it, but we ended up receiving what looked like a charcoal mass of jewelry, which also came at a point where we absolutely needed stuff to stay in stock, and this was something that we could absolutely not do anything with to fix, like there was no replacing the chain or even a modification. We were stuck with our gothic line of jewelry.

Steve: Wait, so how did this happen again, so you got sent a picture and it didn’t look right, and it just somehow got delivered anyways or?

Toni: Well, the picture that she sent us initially the coloring actually looked too light, so we asked it to be darkened a bit. And I guess she took darkened a bit meaning burn it in the fire. So we ended up once again I think this was another order of a thousand, this is our first order from her, and so it was a thousand of this piece of jewelry that we just couldn’t — I mean we couldn’t sell under any of our existing skews.

Steve: So okay so what do you guys do now to prevent this from ever happening?

Toni: We actually got in touch with a company that does the inspections, and are working with them now to — unfortunately because we then — so that put our inventory off again. And then at this point we were budding up against the holidays. So our next big shipment we actually contacted the inspector, sent them our samples, filled out all the forms, but our samples did not arrive to them before we needed our next shipment.

We ended up kind of scrapping them, because once again we ran out of stock. So kind of just all we do, so anyway but so we actually we have an inspector that we have I guess contracted with. And they will be moving forward inspecting our products mainly for sizing, color, and quality. And then that’s really — for us that’s really the only thing we can do outside of things like sending them more pictures of what — like say if it’s a New York company like more, if it’s a company we have worked with before more pictures our products that we are already selling.

One thing that we decided we were going to do is because some of them asked for our listings and we decided not to give them to them. That we would just send them a picture of the product, because I feel like that just opens the door for piggybacking which I didn’t want.

Steve: Why don’t you just tell me your business, or you just tell me what your — yeah.

Toni: Yeah, why don’t you give me all of your listing descriptions and everything else?

Steve: How much are you paying for the inspector, just curious?

Toni: I think it’s about $300, and I don’t remember the order was pretty substantial when we initially contacted with them and we wanted them to inspect. I think we were probably about 70,000 items, not probably six skews, but maybe a thousand of each.

Steve: It sounds like you were just selling so quickly that you didn’t even have the opportunity to do operation inspector before the holiday season. And it’s just now that you are just kind of wrapping up the inspector.

Toni: Right, so we try to ramp it up at least we started the process I think in early October after we got our charcoal line, and after that…

Steve: Let’s call it the goth line.

Toni: The goth line, yes, sorry the goth line, so after we got the goth line we realized we really needed to get someone over there to help us, because this was — and this was actually we had another entire shipment I think of 3000 skews that were absolutely the wrong thing shipped to us which we got completely refunded.

Steve: Okay, let’s elaborate on some of these things, so goth line you couldn’t do anything about, so you just kept the goth line.

Toni: Yeah, and I ended up — so I heard from somebody that you could sell anything over the holidays. So I thought, hey, our list is on Amazon, and we’ll see if anyone would buy them, and listed them in a pretty steep discount from what we typically charge, and we sold out, so we sold them all.

Steve: Yeah, pretty amazing right over the holidays like literally, yeah?

Toni: Yeah, I was like really you guys don’t know what you are buying. But yeah I mean they weren’t in bad condition, they just were not at all what we wanted to sell. So we ended up being able to liquidate, I think we had about 800 sellable out of a 1000, so we ended up being able to liquidate all 800 of them.

Steve: Okay, the shipment of 3000, I actually did not know about this one, you guys shipped the wrong item, what did you do with that, how did you get the refund?

Toni: They admitted that they completely screwed up the order, and I think the guy we actually worked with doesn’t work there anymore, I’m not sure if that’s why, but this was his second mistake with us, and they are actually still sitting in my bedroom.

Steve: Oh so you didn’t have to ship anything back, and the fact that you had ordered I guess a couple thousand units already, they were nice about it.

Toni: We had already probably ordered 5000 units from them when we got this, and we had already ordered the same exact product, and so this was our second order of this one, and was just completely wrong. They admitted that they had made a mistake, and I think shipped us — I think they didn’t refund our money, they shipped us the right product for no charge. So basically it was washed right, like we got what we wanted.

Steve: Can we talk a little bit about just how you kind of established a relationship, did you guys Skype with your vendors or anything like that, or was it just email?

Toni: We have not Skyped with any of our vendors although I’m in a focus group and all of them are Skyping with their vendors, and I have been very pleased with that process. And actually it helped them weed out some vendors that were difficult to Skype with, so it’s something that I want to talk about with my partner moving forward, because we have had trouble finding good vendors. We have done everything via email and then via the Alibaba chat feature, so that’s all of our communication has gone through that.

Steve: Yeah, I mean for us at least we always try to meet them face to face, obviously people can’t do that depending on the situation. But Skype works pretty well and you often presently surprised by who you are dealing with, at I have been.

Toni: Yeah, I think it’s really beneficial and a couple of other girls in my group were able to immediately, they were choosing between one of two vendors for their first order and it became every clear after those Skype conversation which one was the one that they felt like they clicked with and understood them better, and was more professional and things like that? I definitely think it’s something that we should be doing, because it seems like it solves a lot of problems in the process.

Steve: Sounds like you only have one vendor right now, is that still the case or?

Toni: No, we have — so we have a second vendor now although our last shipment had a 25% damage rate from that vendor. So we are working with them to try to figure out how that can be rectified because that’s obviously not acceptable.

Steve: Well let me ask you this, would you have gone with multiple vendors from the start or do you feel like the way you kind of preceded was what you felt comfortable with?

Toni: No, I absolutely would have done multiple vendors from the start.

Steve: Okay, even if you didn’t know like whether your stuff is going to sell, like would you still have — like based on your initial 200 order, was that enough for you to just place like a bulk order of like a couple of thousand units?

Toni: Yeah, absolutely, so that initial 200 I would have just gone with one vendor for sure like we did. We got the person in California, but as soon as we saw that those were selling, I think it’s because we were taken a little bit by surprise at how well these products sold. So from the second or third week of being in business, we felt like we were always behind as far as how many do we need to order, should we start a new skew, what’s — is this worth it?

So we were trying to do all these things at once, like should we introduce new products, what do we do about quality, how do we find vendors, how are we going to set up our store, all these things trying to do them all while we are also processing our products here. So it was really a lot considering I wasn’t thinking like, hey I’m going to do this 50 hours a week from the beginning.

Steve: Let’s talk about that a little bit, let’s talk about the pain. Okay we so far we’ve talked about everything that’s kind of gone right outside of like the inventory, can we just talk about like the Amazon pain right now, your experience selling on there?

Toni: I love selling on Amazon, I think it’s great because I get Facebook messages and emails from everybody that I have ever met with screenshots of my product, and ads on other websites, but Amazon is painful. I love being able to be in front of that like huge audience on Amazon. In that way it’s great, it’s really easy to do the FBA as far as once you get a hang of getting your labels and packing up and shipping it to them, it’s really nice not ship your own stuff out, especially when you are first getting started and you don’t really have a set up to do that.

Steve: Wait, I thought you loved shipping your stuff out yourself?

Toni: Oh well only during the holidays.

Steve: Okay, well we’ll get to that part of the story, sorry go on.

Toni: I loved that that they make it really easy for you because you basically put all your stuff in a box, ship it to them and they deal with a lot of the customer service; they deal with a lot of the delivery issues. So it’s really taking a lot of work off of you, however they are taking what, 30% to 40% of whatever you make.

And on top of that Amazon, I mean I am an Amazon shopper, I probably buy stuff on Amazon five times a week, and I love that they are so amazing to buyers, but with that comes the cost that they are really crappy with their sellers. When you have a problem with Amazon, it’s not uncommon for me to talk to like 16 people at Amazon before I get to somebody that can help me.

Or they can help me with like one very small specific detail of my problem, but then of course they have to send me to this person who is not available and they’ll have to call me back. So there have been days where I’ve spent and my partner has spent three to four hours either on chat, on the phone, on email with Amazon trying to correct a problem that really wasn’t ours to begin with. In that way it’s you take the good and the bad, so you take the big exposure, you take the ability to sell to a lot more people, and having them promote your products with the fact that they control everything.

Steve: So let’s elaborate on some of the reasons why you had to contact Amazon support.

Toni: So in October I woke up and checked on my listings like I do most mornings, and there was my listing with my picture and my description and with a totally different price. And not really having a ton of experience I thought we had been hacked. So I’m panicking, I’m calling my husband, I’m thinking like this is the worst thing in the world, and I’m thinking like has my whole Amazon account have been hacked, what’s the deal? And then come to find out after a little bit of research is that we were actually piggy backed which is it’s — I don’t know what it is; it’s a process or a thing that is actually allowed by Amazon, where someone can sell your same product under your listing for a different price.

And from everything that I have now read about it and know about it, it’s kind of like if Nike is selling their Nike jogger shoes on Amazon. Well if I’m like the footlocker I can sell Nike shoes on Amazon too, but the deal is I kind of have to stay in the same price point as far as Amazon etiquette goes. And with piggy backing what I think seems to happen with most like small businesses like me, and probably other people in your class is that people that are piggybacking you are not like a footlocker or a DSW, it’s a vendor in China who’s under cutting you by like 70%.

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And in fact they are probably not even selling the exact same product either.

Toni: Yes they are absolutely not selling the exact same product, so it’s like your product is getting your [inaudible 00:32:56] pass for much cheaper.

Steve: So okay so you get piggy backed, what did you do about it?

Toni: So I panicked…

Steve: Well besides that, that’s obvious yeah.

Toni: Yes I panicked, I read every forum post, every Amazon– I spent eight hours on Google. I think I talked to you and I ended up– you connected me with Lars who is like the Amazon expert. And the first thing he told me to do was match their price, and went back to buy box, which was a little difficult to take, because that minute I was dropping my price by several dollars and when you don’t have an expensive product you are cutting into your profits pretty significantly radically by doing that. But the theory behind that is when they have the buy box they are seeing the volume that you are selling, because they are getting all the sales or a good percentage of them.

I mean one of the interesting things about when people are piggy backing you is they are usually an FBA, they are usually shipping form most of the time China, so people have to wait four to six weeks to get their item. You can still get sales if you don’t have the buy box and that’s your situation, but our situation was we saw almost like our sales went from probably 20 units a day to two. They were getting all of our sales.

Steve: Right, and the shipping was a lot longer right since it was coming from China and not shipping the same stuff so that could really have screwed you up.

Toni: Yes, because what I also found out which is makes Amazon suck is that they order a product that’s your product although it’s not really yours from a seller that’s not you, and then they leave a review of that product that’s not really yours on your product. When they are getting merchandised, it doesn’t actually fit our description.

And we have branded packaging and we sell some accessories with it, so you are really getting something very specific when you buy from us that wasn’t coming with the product that was — that they were selling from overseas. The potential for us to be hurt by negative reviews was really high, because they were selling a significantly inferior product with all pictures in our listing that made it look like they would be getting something very different.

Steve: So how did you end up getting rid of this piggy backer?

Toni: So one of the things you can do is you can have someone, a friend or someone you know order the item from the piggy backer, and then contact and file an A to Z complaint or submit a return. There is a bunch of different ways you can do it and depending on when you get– someone on Amazon will let you do this before you actually get the product, but in our situation our people couldn’t do anything until they had the product in hand.

And then the first time we did it what happened was is that they went to file the A to Z complaint which is I think the place you go to file like a counterfeit or the item wasn’t as described type of complaint which was supposed to almost immediately get that seller suspended was that Amazon told the buyer and of course we knew the buyer, so we are talking to them as the process is going on.

Was that if they — they had to first contact the seller, and in our case the seller actually accepted the return which we had been told that that wouldn’t happen. We were told that, oh its form China, they don’t want to mess it, they are just going to like not mess with the return at all, they are not going to contact the person, but our seller actually did. We ended up like the first two times we had someone order this piggybacked product the seller ended up taking — seller ended up letting them return it, so they couldn’t file the A to Z complaint because the seller had issued a refund.

Now I think on the third time they were actually able to file the A to Z complaint and then on top of that we had them leave seller reviews on Amazon. There is the listing review of the actual product, but then the seller has its own reviews, so we had them leave reviews basically stating that, hey, I got this product it wasn’t as described, it’s a counterfeit, things like that to bring their seller review rating down.

Because when they initially started they had like two reviews there both five stars. And we had like five stars too, but we had 50 or whatever, but it didn’t really matter because our people really see that we have achieved the five stars filled up on Amazon. So we had them do that, we had them contact Amazon, and then at one point they actually took over our listing.

Steve: Yeah I remember that yeah.

Toni: So I logged in into my dashboard and I couldn’t edit anything because it said I don’t remember the exact words, this listing is not owned by you or something. And they actually weren’t allowed to do that, because during the very first piggy backing we went and got the brand registry which I…

Steve: Yeah I was just going to ask yeah.

Toni: Yes which I wish we would have done in June; we ended up doing it like October, September maybe. So that was actually really easy to do, there is a tutorial on Amazon, it’s…

Steve: Yeah, you guys should always do that first because otherwise it leaves your listing open to people just taking over the entire listing.

Toni: Yes, which we thought we were protected against because when the piggyback initially happened we did the brand register. And it only took us like 24 hours to get brand registered maybe 48 it was very, very quick. We contacted Amazon and said, hey we can’t access our listing, we are brand registered, and it was basically equipped on Amazon.

They had never actually put us as brand — even though they had sent us a confirmation and we had gone through all the process. And they had said we completed the steps via email. They had never adjusted it in their backend. As soon as they took over our listing, and then we reported it and we got them to acknowledge our brand registry, the piggy backers actually were gone in like a day. So I don’t know, so it’s kind of like we don’t really know exactly which one of our five techniques worked, but one of them did.

Steve: Yeah usually after a series of complaints at some point Amazon — it will trigger something within Amazon, and you haven’t seen those guys since right?

Toni: We haven’t although our gothic line has actually been piggy backed.

Steve: Oh really?

Toni: Yes, but we are sold out, so I’m like good riddance you can sell all those that you want.

Steve: Maybe that was actually a good product upfront, maybe these goth people are potential customers that you haven’t tapped yet?

Toni: Yes, I feel like we missed the boat on that one for sure, but…

Steve: In fact for your podcast image I might have something a little cooked up here for you.

Toni: Oh good great.

Steve: So let’s talk about — like let’s stop talking about Amazon for a moment and did you have your own site at this point or?

Toni: We tried to launch the site I think in August, we just used Shopify, I think even — I think we used a free theme. It’s very similar to WordPress, so I actually was able to set it up pretty easily by myself. We got it set up I think in August and did a soft launch on Facebook because we still were sort of messing with our inventory stuff, so we didn’t really…

Steve: And don’t you need product to sell?

Toni: You do, so…

Steve: You do right okay.

Toni: So we had a Facebook page that probably had 1500 fans for our brand. And we did like a Facebook class like, hey we have a store, here is a coupon code back to school or something like that, it was time around school started. And right after that I think was when we sold out of something again.

So basically we stopped talking about the website after that, so we did maybe one or two Facebook things in the first couple of weeks to decide it was live. And then we just stopped because we really felt like since Amazon was like a clear working model at that point, we really felt like we needed to send all of our inventory to Amazon as opposed to holding inventory back for the site.

Steve: Can we talk about your Facebook page real quick, I think we glossed over that, but how did you build up a page o 1500 people?

Toni: So I actually followed I think it was Neil Patel, right about the time that we got started. Did some sort of experiment where he was trying to grow a Facebook page and a blog on like help in nutrition and he was doing this whole the tests with how to build fans quickly. I basically thought — I was actually trying to find a link to give it to you the other day, and I couldn’t find it, but I’ll dig it up. But basically I think I might have promoted it — I promoted it on a personal page, we bought likes, or bought fans or whatever they are calling it these days.

Steve: How much did you end up paying per like?

Toni: 3 cents.

Steve: 3 cents okay.

Toni: And basically we did that and I think it was Neil that talked about this is it, you set your language in your areas that you will buy the fans from, and so you can keep from getting a lot of junk likes. And then so we did that, I watched it pretty closely and I think we set I don’t remember how much we said we were going to spend, but when we had about 1000 fans we shut that campaign off. And we didn’t spend more than definitely under $100, and that’s about…

Steve: Do you know how many sales were attributed to just that Facebook page, you probably don’t know right?

Toni: I know that almost all of our — no okay all of our store sales before Christmas were attributed to Facebook.

Steve: Okay and how many — what was like the ball park?

Toni: Oh we probably had 15-20 sales, so not many, but we didn’t — we didn’t promote it. And the other thing we did with the Facebook page is that when we started it we were buying the likes or the fans, but we were also posting content that would be — we thought about like our ideal customer, who’s going to buy our product.

And then we would post content that that person will probably like or share on Facebook. So we didn’t post anything about our products, we just posted articles or funny like the [inaudible 00:43:07] and things like that in order to just get people to like comment or like or share which grew the page organically.

Steve: Like people with dark make up, emo [ph] music, that sort of thing right? Okay.

Toni: Yes, 18 year old teenage girls, yes, that’s really who we marketed to.

Steve: Okay so that Facebook, okay so it sounded like you had like inventory problems, so you really didn’t have an opportunity to even work on your site, and plus you probably would have had to fulfill these sales yourself with your site also, right?

Toni: Yes.

Steve: Let’s talk about going forward, so you have this Amazon channel, like going forward are you going to work more on your site, or like what’s your future plan?

Toni: I think for the future, obviously we are not going to walk away from Amazon, it’s been really successful for us, and I feel like there is — since we started there has been — we’ve had a lot people come in with competition. But I feel like we are ahead of them as far as we have a lot of reviews now just from selling the volume that we are selling.

And we do sell some products that are not much harder to copy. So I think we are going to obviously continue to focus on Amazon although at this point there is not much we can do with Amazon outside of customer service, so fixing any problems people have, watching the reviews, I know one time we had on one of our products, it actually has really great reviews, the top review was a terrible review.

It was like everything under that was like amazing, like I love it, it’s awesome, thank you so much, you guys are great. We ended up being able to like push that review down and put some better reviews. So things like that watching the reviews, watching the pricing. So making sure that we are priced competitively with other sellers out there, now that we do have more people trying to do something similar, and then launching like one or two new products that are a little more expensive.

That’s the Amazon plan. Then the other goal would be to really start working on the site and key one just because I feel like Amazon does take a large cut of what we make, and after all the piggy backing and all that that happened in the fall, it really kind of opened my eyes to the fact like this all could be wiped out in a second. I don’t want that to be something where we are 100% dependent on the Amazon revenue.

Steve: Let me ask you this, do you plan on still having Amazon fulfill even your store orders, right?

Toni: I didn’t know about that.

Steve: Oh, maybe you should watch some videos.

Toni: I didn’t know about that until like two weeks ago. Yes, that is definitely, actually my partner and I talked yesterday and she didn’t know that either. I brought that up and that actually seems like a really great way for us to do it, just because I’m not a huge fan of shipping the stuff myself, but I’m also not a huge fan of keeping the inventory at my house.

Steve: Just, a lot of the listeners don’t know the back-story, but at some point you ran out of inventory at Amazon’s warehouse and shipping more inventory to the warehouse would have taken too long, so you decided to ship stuff yourself, right?

Toni: Right.

Steve: Without any equipment, without any know-how of like the whole shipping process, no software and you ended up driving to the post office to deliver your stuff?

Toni: Oh yeah. They know me there now. Everybody, we knew that black Friday and cyber Monday would be big, and we still were having issues getting of course inventory, because–and this was the big reason why I think having one supplier is really dumb is because we ordered this huge order for the holidays, and it just he did not ship, something was wrong, then this happened and then he shipped part of the order, he didn’t ship the whole order. It was like a ten week total process to get our full order. We had expected to have inventory like November 1st and we didn’t get the last shipment until like December 17th. He was like our only guy, so we have nothing else coming in, we have no relationships because we had to fire the lady who sent us the goth necklaces.

We just didn’t have any other levers we can pull when we were having issues with this guy. It really put us in a bad spot as far as just not having anywhere else to turn when things, when he didn’t live up to his end of the bargain. So anyway, we did really well on black Friday, I think much better than we thought we would. I think, from what I’ve heard from other sellers, everybody had a really great black Friday and cyber Monday. I think things were up for a lot of people, but what it meant was between the increased sales of the holidays and our piggy backers. So our pricing was really low, so we were not only beating out like the big firms, we were beating out all of our competitors because we were priced lower. We were also beating out our other products.

Our products that were selling really well, then stopped selling as well because we had these two products that were piggy backed. They were priced three to four dollars below what everything else was priced in the entire market place. Those items were not at stock over the Thanksgiving holiday. All I could hear at the back of my mind was Lora saying, “Don’t let them see your volume, don’t let them see your volume.” And I thought we had received part of the shipment, but they were still at my house like we hadn’t processed it and send it off the Amazon yet. The only thing I could think of was, well, I’ll just ship it out from here. I’ll switch it to merchant fulfilled, offer free shipping, because it still was– we still made out better doing that.

Steve: I think this example just kind of illustrates how persistent Toni is. Some normal person would have probably just said, hey I’m going to enjoy my holiday, I don’t want to be packing and shipping stuff where I have no experience doing this whatsoever, but there you go.

Toni: That’s what I did every Thanksgiving break.

Steve: Real quick, what’s some advice you would give just to people who are just kind of starting out. You haven’t really been doing this for very long. What would you tell people who are just thinking about at least just starting out with Amazon at least?

Toni: I think there’s a few things. One, get in a focus group. If you are part of the course, I know that you can– I think you can meet people that way. I actually joined the focus group really late in the game. I think I joined in October or November, but that’s actually been really, really valuable for me, because as I look into other products and other ideas, having people to bounce things off of, and then me as someone who’s been doing this for not very long but a little bit longer than everybody else in my group, I’m able to give them a perspective that I can say, “Hey you should look into this.” I’m not going to tell them everything, but then they can go into the videos or the blog post or whatever on your site or whatever else they are getting their information, and doing more research on things.

When I got piggy backed, I’d never heard of that before. But now everybody in my focus group knows all about it, so if anything like that would happen to them, they automatically they are like five steps ahead of where I was when I started. I think the focus group is really valuable to have that group of like a couple of people to bounce ideas off of, get advice, even like, have you had trouble with the vendor like doing this, or do you think I can get my samples for less, things like that. That would be the first thing.

The second thing is I really do think your product matters. I think we got lucky. We came up with, we didn’t have to research for a product. The idea was before we got started. I think finding something that is lower competition, quit trying to do what everyone else is doing. Find something a little bit different or new or hijack a trend that you can sell an accessory to or something like that, because I think that’s really valuable. Because when you have a lot of competition, it’s really hard to beat out the people that are on the first page of Amazon. And honestly like second page of Amazon, you are like you are dead. No one is finding you there.

You can use like Jungle Scout, it’s a great tool to research and find out where the products rank and what the opportunity would be like as far as the revenue. I think that’s a big thing. I guess my third thing is really take all the pricing into consideration. You might find a great product that doesn’t have a lot of competition and that might actually be in demand, but when you do the math, which you know I love…

Steve: Toni is excellent at math.

Toni: I’m terrible at math, that’s why I love all the little calculators you can use. Sometimes it’s not worth your time. We had a couple of products this summer that we actually have just kind of let die a slow death on Amazon, because when we priced out the math, the cost of our product plus what we pay people to package and ship it off, our margin isn’t worth it for us. Unless we would do in a million, it wouldn’t be worth it to make a dollar off a product. I think really doing the math on– and I think you have a really good calculator where even does the shipping cost where you can compare like your freight and things like that.

Steve: Yes. That is me.

Toni: He will have the link in the show notes for you, but anyway …

Steve: Who’s giving this interview, are you?

Toni: Sorry. I won’t give out your phone number. I won’t let them call you. I think things like that. It’s easy to get carried away when you think you have a good idea, but I really recommend researching every aspect. Like how long is it going to take you to package it? How much is it going to cost you to get it from overseas or from the United States wherever you are getting them from, things like that? You can quickly find out that this great idea might be absolutely terrible, because you are going to make so many five cents at the end of the day. So, those will be my three big ones.

Steve: I just wanted to throw this out there also, Toni had experience running conferences and I have experience in ecommerce, so we kind of decided to work together and we are putting on this ecommerce conference. I know that last year, towards the end of last year we actually went to a couple of ecommerce conferences together. And you had a really positive experience, right?

Toni: I did. I actually– I run a conference that’s blogging related. And one of the activities we did at our conference was to set goals for the rest of the year. So our conference is September. We basically made everybody group hug and hey let’s talk about some really crazy goal that you want to accomplish before the end of 2015. I said, “I want to do 100K in 30 days with my ecommerce.” As soon as it came out of my mouth I was like, “What did I just say? Like, that’s crazy.” I think I had been selling for three months at that point, four months.

But as soon as I said it I felt like man, I’ve got to hit this or what does my word to anybody after that, if I go off there and make some big proclamation and then don’t hit it. I went to that conference, did that and then you and I went to those couple of events in October and because I had sort of thrown that out there, I really felt like when I was at those events, that I needed to meet as many people, talk to as many people, learn as much as I could in those sessions, take notes, because there was in no way that I was going to get that goal if I didn’t have more knowledge about the wholesaling process.

I think honestly being at those events and having those like, eating lunch or sitting down in a hallway and having those conversations with people, I just think about– We had that conversation with Daniel Solid, the Amazon. He gave me two pieces of advice in the hall way that I think just kind of propelled us to the 100K which wasn’t in any session, it wasn’t– it wasn’t like someone stood in front of us and gave us advice, but it was like because we had this relationship and I ended up getting on a call with him a couple of weeks after the event and building a relationship, exchanging ideas, and so I think that attending those events was huge for me, because it automatically plugged me into a network of people that all are doing the same thing and didn’t want to help you. I think it was huge.

Steve: That is why I decided to start a conference working with Toni. It’s called the Sellers Summit. It’s at sellerssummit.com, it’s going to be a very intimate conference. We are talking no more than a 100 people, small focus groups, workshops, the people that Toni mentioned Lars and Daniel; they are going to be speakers at this conference. They will be there to answer your questions and that sort of thing. So, I basically took the conferences that I’ve been to and modeled it into the conference that I wanted to attend. Yeah, you still there Toni?

Toni: I’m here. I was like can I clap, I don’t know.

Steve: Yeah, go check that out. It’s sellersummit.com and Toni thanks for coming on and telling your crazy story, always a pleasure having you.

Toni: Thank you.

Steve: All right. Take care.

Toni: Bye.

Steve: Hope you enjoyed that episode. Toni’s experiences is a clear testament to the power of ecommerce and Amazon, and the fact that she’s made over 190,000 in just seven months and as much as 100K in just a single month is amazing. For more information about this episode, go to mywifequiteherjob.com/episode111.

Once again I want to thank FameBit for sponsoring thing episode. As I mentioned earlier FameBit is the best place to find YouTubers, Instagramers and other influencers to promote your products online and it works. One of my podcast guest Emanuel Eleyae used famebit.com to make over $65000 in four months with YouTube influencer marketing, and it costs as low as 50 bucks to start. And the best part is if you use coupon code mywife@famebit.com, you will automatically get $25 off. So go to famebit.com right now and get famous YouTubers to promote your products online.

Finally if you’re interested in starting your own online business, be sure to sign up for my free 6 day mini course where I show you how my wife and I manage to make over 100K in profit in our first year of business. So go to mywifequiteherjob.com for more information, sign up right there on the front page, and I will send you the course right away via email. 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.

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110: How To Source Anything From China And Establish Good Vendor Relationships With Dave Bryant

110: How To Source Anything From China And Establish Good Relationships With Dave Bryant

Today I’ve got my buddy Dave Bryant on the show.  Dave and I met when he randomly reached out to me via email and we’ve kept in touch ever since.  And what’s cool is that we finally met face to face at the Ecommerce Fuel conference last year.

Dave runs several online stores selling boat equipment but I think his most successful site sells boat anchors of all things:)   Big and heavy boat anchors that he imports from China.  Talk about niche.

Dave also runs the popular blog ChineseImporting.com where he teaches others how to import goods from China.   He’s been importing since age 16, he’s written a few books about the topic and what’s cool is he works with his wife just like me.

Today, we are going to discuss his businesses and some more in depth topics on importing that go way beyond your typical find a product to sell on Alibaba stuff that you’ve heard in the past.

What You’ll Learn

  • How Dave got into the boat anchor business.
  • Why Dave decided to sell the heaviest, most unwieldy items possible.
  • Where Dave finds his vendors.
  • How to find Chinese vendors outside of Alibaba.
  • Which sourcing services Dave recommends.
  • Dave’s opinion on Alibaba vs Global Sources vs Canton Fair vs using Panjiva and Import Genius.

Other Resources And Books

Sponsors

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Transcript

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.Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin I just want to give a quick shout out to famebit.com for being a sponsor of the show. Famebit is the number one market place for influencer marketing with over 20,000 YouTubers, Instagramers people on Twitter and vine looking to promote your company in any vertical, whether it would be beauty, tech, gaming, pets and more. Yes you can get famous YouTubers and Instagramers to promote your business for as low as $50. The best part is that you don’t really need any money at all to post a campaign and receive free proposals from creators.

Now if you’ve listened to my podcast before one of my guest Emanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing. And the best part is if you use coupon code mywife@famebit.com, you will automatically get $25 off your first campaign. So go to famebit.com right now, and get famous YouTubers to promote your products, now onto the show.

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 got my buddy Dave Bryant on the show. Now I’m actually not 100% sure how we met Dave, but he randomly reached out to me one day and we’ve kept in touch ever since. And we finally were able to meet face to face at the Ecommerce Fuel conference last year.

Now David runs several online stores selling boat equipment, but I think the biggest business that he has sells boat anchors of all things. Big and heavy boat anchors that he imports from China, so that’s pretty niche as far as niches go. Now David also runs the popular blog Chineseimporting.com where he teaches others how to import goods from China, he’s been doing this since age 16.

He’s even written a couple of books about the topic, and what’s also cool is that he works with his wife just like I do. Today we are going to discuss his businesses and some more in depth topics on importing that kind of go beyond your typical find the products on Alibaba stuff that you’ve probably heard on other podcasts. With that welcome to the show Dave, how are you doing today man?

Dave: Good and I’ll clarify this because my wife is on maternity leave and the government of Canada would not like to hear about her working for me. She does not currently work for me, maybe in the future.

Steve: Everybody works for their wife Dave; it’s cool to admit it.

Dave: That is true, I only work for her, but she does not work for me.

Steve: I have always been curious how does one get into boat anchors of all things, like they are the heaviest most unwieldy things that you can possibly sell in my mind?

Dave: The lucrative world of boat anchors, so it’s kind of funny, way back when I was in university I was kind of a globe trotter, and I was always in the back [inaudible 00:03:53] crazy parts of the world. One of the things in my bucket list is — one of the countries to visit was North Korea, and the only way to get to North Korea is through China. Believe it or not there is no direct flight from Canada to North Korea.

I had to go through China to North Korea. I was – decided obviously while I’m in China I might as well travel around a little bit. And while I was there I decided to visit a couple of trade shows. I had always worked — I had worked with a family friend working for his import company actually. He was selling boat anchors himself. I was over there and I kind of split off with him, I didn’t talk to for a couple of years.

I was kind of familiar with the business itself, so I attended a trade show while I was in China, a boat trade show. I met a supplier there and I kind of hit it off with the supplier and he had this one product that I was really interested in, and it was boat anchors. I asked him if I could bring one of these samples back with me to Canada and he said sure no problem.

I took this boat anchor and there is actually a couple of other products with me, and I had this huge box of products I carried around me for the next 3 weeks all throughout Asia. And I was like going on trains and I was going on buses, and I was going on…

Steve: With the boat anchor?

Dave: With the boat anchor and actually people I’m sure said all things. Anyways long story short I made my way back to Canada somehow all the products arrived safe and sound. I put them on eBay even though I got the products for free; I knew the cost was about $50, sold them for I think around 200. Of course I went back to the supplier, I asked him, hey can I can buy some more products off you, of course he agreed, he sent me some more products, again had a similar success. And fast forward about 7 years later and the supplier to this day is actually our largest supplier.

Steve: Amazing, so wait you sold things on eBay, did you have the intention of creating this business at the time or no, you were just testing?

Dave: I mean it was a test to me. I knew like I said, I had worked with a friend, our family friend way back when he was actually doing something similar to boat anchors himself. And I kind of split off from him, and he had gone on his own way doing different things. I was kind of testing the water more than anything.

Steve: Do you own a boat?

Dave: I do not.

Steve: You do not own a boat, but you went to — okay you went to a boating…

Dave: My family has been in the boating their entire life, so I think that’s probably part of the reason why I don’t own a boat myself. I have grown sick of the [inaudible 00:06:14] over the years. It’s a great clientele to work with, but by myself, or I myself, no real interest in boats.

Steve: Okay and then you are based in Canada, right?

Dave: I am.

Steve: Okay, so for the listeners what’s kind of interesting about Dave and I get a lot of questions about this. He is in Canada, but he actually makes most of his sales in the United States, is that right?

Dave: Yes, absolutely true.

Steve: Do you ship to any other countries besides the US?

Dave: The way we work is we don’t — we actually don’t inventory anything in Canada really, everything is inventoried in the US. We ship anywhere in the world like pretty much any congress country. But even if we are shipping something in Canada, we actually ship from the US to Canada. We sell something to the UK the same thing going from the US to UK.

Steve: That implies that all of your goods when you make a shipment goes straight to the US and you don’t actually see it or?

Dave: It’s kind of a backwards way to do; we do it through the port of Vancouver and what they call your shipping in bond to the US. Meaning that it comes through Canada, we don’t pay any duties or taxes on it. It pays all the US duties and taxes, and then it goes directly to the warehouse in the US. But we never touch — we never put our fingers on it.

Steve: Okay so wow, okay I was going to talk about this later, but let’s try to talk about it now, what do you do about quality control?

Dave: We work with– I do travel to China once or twice a year kind of do a little bit of QA there. It’s a little bit tough to do it if you are not permanently situated in China as you might have experience with. Other than that we’ll use a third party inspection agency, pay $300 or $400, have them check it out kind of according to our checklist.

Then once it arrives in the US, then obviously we’ll have our warehouse down there do some QA there, take the [inaudible 00:08:00] we need it, and just kind of get an idea of the overall I guess quality of the products. And what was I going to say here? Yeah, we have such long lasting relationships with our suppliers where we haven’t really had any huge quality control issues, and when it has come up they’ve been pretty good at addressing it after the buck.

Steve: Because you told me earlier that you sell over 300 items, 300 skews, is that right?

Dave: Yeah, it’s about 300 skews. A lot of those are variations, so I would say it’s closer to probably 75 if you get rid of size and color variations.

Steve: Okay, and then for each one of these items you have a separate quality control checklist for each one of these?

Dave: I mean certain things you don’t necessarily need to have the stringent quality control checklist. So something like an anchor I mean more or less there is not a lot that can go wrong in an anchor, some of the…

Steve: Okay.

Dave: Some of the other things obviously yeah, you do need to– we have a certain checklist that we go through for example something like a rope. We’ll have a checklist, and basically asking them if it’s supposed to be happening throughout, we’ll have the third party inspecting agency or the supplier measure it, physically measure it to make sure it’s actually happened. We have a whole bunch of different criteria we use for all of the different products that we just kind of have either the supplier check, or have a third party inspection agency check, or have a warehouse checked after its been received.

Steve: In terms of sales you have your own website and you are also selling on Amazon, but if someone places an order on your site do you — like how does the communication go to your warehouse to — the shipment is from the US, right?

Dave: Yeah, so if somebody places an order on the website, it goes through our automatic — our auto management software. We have an order taker here, she basically just checks it over and make sure it’s all good, and then she emails it down to the warehouse and they ship it out. It’s kind of, it’s an old school way of doing it with this email and back and forth just a PDF invoices.

Steve: Interesting.

Dave: We are trying to get a little bit more automated, but a lot of times when you are working with these third party fulfillment companies especially some of the smaller ones, their automation schemes aren’t exactly up to today’s standards, so they prefer just the old PDF invoices even faxing them sometimes.

Steve: What about returns? Do people return anchors?

Dave: They do believe it or not, a lot of times they are on their boat. So it’s a pretty low return item, but people do return it like anything. A lot of gifts that people return and returns are a bit of a pain in the butt just for the fact that it’s hard without us really having any eyes and ears on the ground to handle returns.

But our third party fulfillment company that we work with, I kind of consider them almost one of the girls there, almost one of our employees because she’s been handling our orders for God almost five years plus now. She knows the products pretty much inside out, she can decide if it can be resold, it should be disposed off or whatever.

Steve: If it can’t be resold you just junk it?

Dave: Yeah pretty much. Well at times a lot of the products that we deal with are metals, so stainless steel items and they can actually be scrapped, and we can actually get a little bit of money back, I mean from when they are scrapped.

Steve: Interesting, so you said you sell over 300 items maybe 70 unique items, and you source all these from China, right?

Dave: Yeah, most of them are coming from China. We work with a few local distributors and manufactures in the US, a couple companies in Taiwan and even the guy in Canada too, but 90% of our sales are coming from Chinese made products.

Steve: I want to talk a little bit about kind of how you found these vendors. Now everyone who kind of listens to podcast and has been doing this, everyone talked about Alibaba, but let’s talk about some of the other things outside of Alibaba today.

Dave: Yeah, so I mean Alibaba is one of those things, it’s — You can’t really escape. And it’s like if you want to buy something online even if you don’t actually buy on Amazon, at some point they are probably going to be on the Amazon website. The same thing if you are looking for a product at some point you are probably going to come across Alibaba. But Alibaba is probably not the most ideal place to find a supplier, basically 99% of importers, that’s the first and only they go to is Alibaba.

If you find a supplier on Alibaba and a really good product and you are selling a ton of them on Amazon, somebody at some point in time is going to come along and see that, hey Dave is selling all these products, I want to buy the same thing. I’m going to go to Alibaba, try to find the supplier that Dave is using and just import the exact same product from the exact same supplier. If you can find the supplier not advertised on Alibaba, you’ve basically cut down 99% of your competition.

Steve: Good point, I think you are pretty safe with anchors though by the way Dave.

Dave: You would be surprised Steve.

Steve: Really, okay?

Dave: I think the nature of kind of the whole private labeling boundary now; I think there is competition in absolutely every single niche. Now obviously some niches are well guarded than others, but every niche out there is you have some degree of competition.

Steve: What’s funny is we never had used Alibaba until relatively recently I guess within the last few years, because we just always went to trade shows to find our vendors.

Dave: Yeah, and that’s how I found our top supplier like I said we meet the trade show too, and the great thing is they don’t advertising on Alibaba, so…

Steve: Yeah same with ours, none of the vendors that we use actually today pretty much they are not advertising on Alibaba anymore.

Dave: Yeah absolutely and it’s kind of weird, not every supplier wants to advertise on Alibaba. Alibaba is kind of like internet dating for Chinese suppliers, and if you ever talked to a girl that’s on an internet dating site, they get dozens of enquires a day, people messaging them all types of creepers and only a small selection of actually serious incredible guys.

For Chinese suppliers I get the impression it’s kind of the same way with Alibaba where they might get dozens of enquiries a day, and only a really small fraction of that actually turn in to sales. And the sales that they do get tend to be kind of picky really cheap buyers who are typically ordering pretty small orders.

Steve: Right, yeah, actually I asked our vendor the last time we were there why they weren’t on Alibaba. And they said that — in so many words that they didn’t want to deal with the riffraff.

Dave: Yeah, I think that’s absolutely right, but I mean it’s a lot of work I think for these guys actually managing all the leads that they get on Alibaba, and some which are obviously not the greatest quality.

Steve: Do you use Alibaba for any of your stuff?

Dave: Yeah, I mean again like I said, like Amazon if you want to buy something online you kind of go to Amazon. If you want to find a supplier you kind of go to Alibaba, and I would say about half of our suppliers I found through Alibaba. Those products don’t make up a huge percentage of our sales, but they are a lot of our recent products that aren’t necessarily a huge part of our sales yeah, we use Alibaba to find source.

Steve: In general do you go there first, or do you hit some of the other places we are going to talk about here first?

Dave: I mean it depends, if there is a product which I think that — I just know that our customers are going to buy it, they going to buy an anchor and they need this product as an ad on, and they really not that pretty sensitive, absolutely I go to Alibaba and just try to find it in the lowest price there and import it.

If it’s a product that I really want to be kind of considerable portion of our business which I — yeah which is not going to be an ad on or an accessory product, then I’ll try to reach out to some of our current suppliers, or like I say I’ll use a couple of the other tools available which I don’t know if you want to get to now or later to try to find a supplier.

Steve: Okay, well let’s talk about the way that you guys find vendors right now first, so outside of Alibaba.

Dave: Yeah, so first thing we do is go to trade shows. And every year I try to go over there and I try to attend a big one for instance obviously boat trade shows. Like I said the great thing with the trade shows is that you will find a lot of suppliers not advertising on Alibaba. The great thing with China is a lot of people know about Canton Fair. The Canton Fair is great, that’s a huge massive trade show, it takes place twice a year in Guangzhou, China.

The only problem with the Canton Fair is that it tends to be just such a huge fair and it has a little bit of everything, but it doesn’t really specialize in anything. In China there is a specialized trade show for absolutely every single niche that you can think of. Going to these specialized trades shows, there’s really a network; you’ll find some of the best suppliers for your products. Again the Canton Fair is an okay place to start, but there are a lot of trade shows outside of the Canton Fair.

Steve: How did you find these trade shows?

Dave: I believe Chinaexhibiton.com; I just goggled China trade shows, it has a huge list of all the trade shows. And again once you’ve kind of learn your niche that you are in, you just kind of get a feel for what the most popular trade shows are. It’s kind of a — it’s a long process to learn a niche, but once you do, you do this just intuitively through speaking to various people. You kind of know the big trade shows.

Steve: What is your process from when you get to the trade show, like what preparation do you do prior to going?

Dave: Ideally I’ll go through the website of the trade show, go through the supplier list, and kind of try to get a feel for anyone’s that I would like to speak to in particular. So go through — most trade shows will have exhibition or exhibitor list, go through those exhibitors, kind of browse their website, and get a feel for who is there. Make kind of a hit list for people that I want to talk to, and then when I’m there talk to them.

Then at the same time while I’m there maybe some other companies catch my eye which I never even knew about browsing the exhibitor list and talk to them. And more or less so I do kind of when I go to these trade shows, I want to kind of have an idea of various products I am interested in importing. I don’t really go there and get surprised by new products that I even never even thought about.

Steve: Is there a lot of overlap between these companies, do they go to both that fair and the Canton Fair?

Dave: Most of our suppliers especially in our niche they don’t go to the Canton Fair.

Steve: Okay, probably because you are in boating, right?

Dave: Yeah, I mean there is a boating section in the Canton Fair. There is a boating section at the Canton Fair, but again I think it’s maybe six or seven suppliers where a boat show would probably have like 300 suppliers. It’s the same thing for anything; I mean there is a popcorn trade show in China. There is a trade show for everything.

Steve: Interesting, okay, yeah, I have only been to the Canton Fair myself and some of the ones in Hong Kong too, but…

Dave: Yeah, I’m surprised with you because I think linens, handkerchiefs; there must be a natural specialized trade show for that I would think.

Steve: Interesting, yeah I’ll go look after this, not that that would really excite me, but yeah, I’m sure — at least with the Canton Fair there is variety like, if you are bored you can go off and see some of the other cool stuff.

Dave: I know, I mean it’s overwhelming. I mean I have only been there actually once in my life, and it’s — you definitely need quite a few days to actually go through it. And I think that’s almost the predicament people are getting into, there is so much selection there, it’s almost too much selection. If you have a more narrow idea of what you want to import, it’s a lot of times you can deal with a more a little bit more efficient.

Steve: Yeah, I don’t actually recommend going there without a plan, because otherwise you’ll just wonder aimlessly. Okay so trade shows, what else you got?

Dave: The other way, so another actual good way that we reach out to a lot of suppliers is we’ve got put on these Chinese spam lists. And somehow if you ever give your card out to any trade show in China, you get put on any email list. First pity you and second you are going to get a lot of emails from a million different suppliers every day.

The only funny thing is aside from your traditional spam which nobody is ever interested in, when you get put on these Chinese spam list, actually quite a few credible suppliers will email you. They’ll say, “Hey Dave, we noticed that you are selling boat anchors. By the way we sell boat anchors. You may be interested in our products.” It’s actually, responding to those spam emails is kind of a nontraditional way actually to find suppliers.

Steve: We’ve actually found two legit suppliers that way now that you mention it.

Dave: I think talking before you; you met a guy in India out of all places?

Steve: Yeah.

Dave: So, it’s kind of funny. I will never reply to a spam email from a US company, but Chinese company for whatever reason, it’s pretty well directed spam.

Steve: Yeah, exactly and actually that one person even showed his photos of stuff that was similar to what we sold on our site, and so that’s what caught our attention.

Dave: Yeah, they do a lot of due diligence.

Steve: Unlike the US companies which just …

Dave: I know, it’s just a mass of email to everybody.

Steve: Okay, so we’ve got emails, what else?

Dave: The other thing is you can public import records. This might not be news to all of your listeners, but probably news to a lot of them that whenever you import something to US, at least if it was coming via ocean freight, the information contained on the shipping records is public information. If I’m importing boat anchors, you can actually, and you know that company name, you can go find what supplier we are using and what products we are importing.

The US government releases its public information. I think they do it on the premise that’s it’s free information, and can be used to predict economic indicators, but long story short it’s public information. To get access to this information, you either have to pay the US government a fee, or you can use one of the websites out there. There’s free websites out there and you can actually access this information, and you can type any company name, and basically type in Dave Bryant company import records, and it will return a list of some of the products that we’ve imported.

But some of the paid services like Import Genius and Panjiva, what they will do is they aggregate the information a lot more nicely. So you type in the company name, and it will really give you an itemized list of all the suppliers that my company or any other company is using, and it will give you a list of the products they are importing and a list of all the supplier names.

And why this is really good is that you can use one of these import tools, you type in the company name that you are kind of snooping on, and normally what I like to use, I do pick a big retailer who is probably less products I know they are private labeling themselves. Type in that name of that company and maybe take for example [inaudible 00:22:30]. I will type into Import Genius and they will give me a list of all suppliers that [inaudible 00:22:34] is using to import from China.

Then I will get that list of suppliers and I’ll search for them on Google, and I will reach out to all those suppliers, and only a small fraction of them are actually going to reply to you with cost sheets and spec sheets. And the ones that do, typically they are going to have really good high quality good products, because they are selling to the bigger brands, and they are going to have pretty low prices as well.

Steve: What I actually didn’t know is that, you mentioned that there are some free services that do this? Do you happen to know what they are off head?

Dave: Yeah. I think there’s, Port Examiner is one of them. I think if you go to them, you’ll kind of get my point of what I mean is that they don’t aggregate information very nicely. So they’ll give you I think, if there’s 30 different import records from my company, they’ll give you 30 different HTML pages, where some of the paid services, they’ll actually export to a nice excel worksheet for you.

Steve: Okay.

Dave: There’s [inaudible 00:23:25] and then there’s paid services.

Steve: In terms of ordering, or when you look for suppliers, do you tend to go this route first, second, third, last?

Dave: It’s pretty aware now, we have such a– we have a nice typing group of maybe ten to 12 suppliers that we kind of rely upon. When it comes to actually finding new suppliers, first thing I will do is actually I would go through kind of my list of various companies that I’ve bumped into tradeshows, and see if there’s anybody there that might be selling the products I’m interested in.

Second, I would see if one of the big box retailers is selling the products, because the big box retailers they tend a lot of times especially in small niches like boating, they tend to sell for really high prices. So I will go on to Import Genius or one of the other tools, find the list of the suppliers that they are using, get that list of suppliers, find the ones who are selling the products I’m interested in, see if there– and reach out to those suppliers directly. Then as kind of a last resort, I’ll go on Alibaba.

Steve: Okay, okay. What about Global Sources?

Dave: I think, I’ve heard good things about Global Sources and the fact that you can kind of refine your search criteria a little bit better, but my impression has always been Global Sources more or less is kind of Alibaba 2.0.

Steve: Global Sources, from what I understand is, the vendors are more vetted and they tend to cater to – they are like more established players, whereas Alibaba seems like a hodge purge [ph] of a lot of different types of vendors.

Dave: Yeah, I’ve heard really good things about Global Sources. Just my experience using that I always find it more or less a lot of overlap between them. Like said, I know people that swear by them.

Steve: Yeah, I just actually had Peter, I don’t know if I added the episode yet, the CIO of Global Sources here. I was just curious what your opinion was.

Dave: Yeah, I’ve actually never used them, but I’ve heard good things about them.

Steve: Okay, so that, today at least that’s the order it seems like you go to Alibaba, kind of like a last resort so to speak today?

Dave: Yeah, like I said the only problem with Alibaba, and you can actually find good suppliers, the problem is I know if I go to Alibaba, I find a supplier without a product I know if it starts to take off, somebody is going to rip me off probably within a year.

Steve: Okay. Let’s just assume now for a sec that you’ve kind of found a potential vendor, what I was going to talk with you about today was kind of more along the lines of establishing relationships with vendors, negotiating and that sort of thing. You’ve gotten in touch with a vendor, what are some steps to kind of ease the relationship so to speak? Do you start negotiating on a price, do you talk about MOQs, what do you do to ensure quality?

Dave: I mean, I think one of the bigger mistakes that new importers make is that, I don’t know how to say it, they tend to be a little high maintenance. So they’ll send a million emails back and forth with the supplier on a really small order. So I think one of the first thing that you can do to kind of start building that relationship is be to the point, be efficient with your communication, don’t hug all over pennies on a crazy off, you should have an idea if you are importing a product. You got to have an idea of more or less what the fair price for it is.

So if you know the fair price for an anchor is $100, don’t try to get them down to $50. Get a whole bunch of quotes from different suppliers, figure out what the fair price for it is, and just make sure you get a fair price, but don’t be a haggler, nickel, and diming the supplier. Be efficient with the communication. Don’t– if you get your products and you order a thousand widgets and one of those widgets is defective, don’t make a bid deal of it. So I think just being really efficient is a really good way to kind of get your relationship with the supplier off on the right foot.

Steve: I actually don’t ever negotiate on price in the beginning. Instead I just do a shot gun, and just go with the range of prices and kind of wrap up the highest and the lowest. Do you do that too?

Dave: Yeah, absolutely. I think time is changing quite a bit in the last few years where the prices you get tend to be a lot more firm. I don’t know about your experience too, but the negotiating room there isn’t quite as high as it used to be.

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Steve: In fact my prices have been going up.

Dave: Yeah, except up until recently with the price of oil and everything has really been dropping prices.

Steve: Okay, so your tip was be low maintenance.

Dave: Number two, it’s scary for a lot of people this idea, but actually travelling to China and meeting your supplies, because China still is a very relationship oriented country. So actually going over to China and going for beers, going for dinner with your supplier, you can’t really duplicate that relationship building and trust building the same way that you can through email and even Skype.

It’s scary I know travelling over to China, and eating a bunch of weird of food, but if you can go over there even once and meet a supplier that you’ve been working with, I guarantee you, you are going to see a huge improvement in your relationship with that supplier, and so certain benefits that you don’t get. Obviously your lead time will go from 60 days to 30 days if you let the supplier know that your order is urgent. They won’t be self [inaudible 00:29:23] on minimum order quantities with you. Overall the quality of products that you get will tend to be a lot higher if you kind of have that good relationship with your supplier.

Steve: I think that a lot of suppliers that you find, at least on Alibaba, they give you a high MOQ just to kind of weed out like the riffraff, but if you actually fly over there and visit them, they know you are serious and they are probably much more willing to work with you and be more flexible.

Dave: Yeah, absolutely, I mean our main suppliers; MOQ is not really an issue. Obviously they are not going to sell you one, but we want to import ten or twenty as a sample, no problem. The minimum order quantity doesn’t really come up all that often. Again, that’s kind of one of the things that’s important about building that relationship with your supplier, because getting low MOQs is probably one of the most important things when you are importing from China. You have that relationship and you can kind of make it. So MOQ is not really an issue. You are going to have quite a leg up on your competition.

Steve: Let’s say you can’t go to China, what are some of your strategies for lowering the MOQ at least in the beginning?

Dave: Yeah, if you are just working with a supplier, professional off the butt, first thing you can do is again just be low maintenance. So a lot of times, take for example I was working with a new supplier this year. I think that an MOQ 250 pieces, I only wanted to order 50. They said there’s no negotiation on the MOQ. I said, okay, we can only do 50, but we will pay entirely upfront not 30% deposit and 70% upon shipment like normally, and will make payment right away tomorrow.

And they said okay, fine, fine, fine. Yeah, we made the payment in full and upfront, real quick and we never really hag all over the price too much. Again, paying upfront and just offering to pay 100% upfront a lot of times will– a lot of suppliers will be a lot more open to that low MOQ.

Steve: Also just asking for their bank number, so you can wire the money over right away does wonders.

Dave: Yes absolutely. Yeah if you start asking for something like a PayPal account, where you can escrow the money to, they are probably not going to be as receptive. Again, just be straight to the point like you said ask for the bank information, and a lot of times money talks. It’s hard to say no to money.

Steve: Okay. What are some other things because we were talking prior to the recording here, what are some of the other things that you kind of talk about besides price and MOQs, some of the more obvious things. What else do you negotiate?

Dave: When I’m negotiating with the buyer, I kind of figure, price is kind of the last thing I always negotiate. I figure these five things that I kind of go to order trying to negotiating. Kind of every order I try to negotiate with that supplier on a new item. The first one is obviously minimum order quantity. I think for most importers, that’s always going to be the first thing they need to negotiate, because it’s pretty rare that a supplier gives a minimum order quantity that you are completely comfortable with. So it’s kind of trying to negotiate that minimum order quantity.

Then the second thing that you can negotiate is shipment terms. Again, I’ve seen so many importers get burned on this. Supplier will get them a really low price, but will have shipment terms of EXW their factory, and I get the impression that you … Have you been burnt?

Steve: I haven’t been burned, but some of the students who just didn’t do their research, they are like, this is so cheap and then they realized they had to pay everything from the factory all the way to their warehouse.

Dave: To give some background of EXW you basically normally people or suppliers are going to quote you on FOB Shanghai or FOB Beijing, and that basically means supplier pays everything to get it to the port. If you’ve been quoted EXW, chances are you are going to pay at least $500 to $1000 more in extra fees, basically customs, brokerage to export the products, getting the products from your supplier’s factory on to a track and load it to the port, and a bunch of other mysterious fees. EXW adds a lot of money to the price. So if you get quoted EXW, that’s another negotiation point. Try and negotiate it to get FOB terms.

Third thing that you can negotiate is actually the cost of freight. Again once you are ordering big enough, your supplier might not be receptive to say a 5% price cut, but if you ask them hey do you think you can cover the cost of freight to Vancouver, for whatever reasons, suppliers tend to be a lot more receptive to covering the cost of freight to your country rather than actual price discount.

Steve: Interesting. I have not tried that before.

Dave: Our two biggest suppliers right now, one of them pays all the freight, every order to Vancouver, and the other one pays half bill.

Steve: I wonder if it’s just all the same though. They are like wamping that into the cost of the goods.

Dave: I’m sure it’s being locked in to the cost to some degree. The one that obviously pays for all of it I’ve no idea what they are charging. The other guy, where we pay 50%, I mean our prices haven’t changed in four years.

Steve: That’s impressive. Okay.

Dave: When we first started working with them, they weren’t paying the cost of the freight, so I get the impression that they are actually just eating that cost now.

Steve: Okay.

Dave: Yeah, obviously if they agree to cover the cost of freight and they jack up your prices, $2 per unit then you are not really saving. The third thing or the fourth thing you can negotiate is packaging. Again it’s something that a lot of new importers forget about is packaging. Your supplier, when you are importing, their default is going to be to give you the cheapest ugliest packaging possible.

Steve: Yes.

Dave: Depending on your product, I’ve ordered products before, 100 different widgets. Assuming that they are going to come individually boxed, instead they just give you 100 widgets in one massive box. Of course you will be selling online, that means that now you have 100 widgets which you need to buy boxes for. That can actually be a pretty sizable sum.

So either getting something as simple as what they call an inner box for each item, or actually have them pay for the cost of all color packaging. Because even if you are selling online, look in what somebody gets when they first get an amazingly design package, it does result in a lot better reviews on places like Amazon. Packaging does matter even if you are selling online. That is something to keep in mind, negotiate with your supplier especially once you start getting orders which are, have the bigger variety.

Steve: So you guys have a box for your anchors, or is it for the other stuff?

Dave: No we actually don’t, we don’t have – actually it’s not true, some of our anchors do have boxes off. It’s a long story. Most of them do not, but all of our other products do.

Steve: So I’m just curious, this is kind of a different topic, how do you find the suppliers outside of China since prices are kind of increasing?

Dave: We don’t actually– we work with suppliers in like say Vietnam, United States and Canada, but that’s pretty much it. I haven’t actually gone looking for boat anchors anywhere else in the world yet. Maybe in the future that will happen. I do notice for a lot of suppliers, the suppliers in China, they are outsourcing a lot of their manufacturing to different countries.

Take for example I was getting a quote recently for some life jackets, just like [inaudible 00:36:51] that you wear them on the boat, and they were having a lot of production done in Vermont. So it seems to be kind of the way Chinese suppliers tend to be outsourcing their production now.

Steve: Yeah, that’s kind of what I’ve noticed as well. They have like teams in like Pakistan or Vietnam.

Dave: I don’t know if we’re ever going to come to a point in history where we have such a big country of cheap labor that’s barely professional and they can barely high quality goods. India and Pakistan and those countries, they are trying to compete, but still in terms of price and quality, it’s really hard to compete with China even today.

I know prices are going up in China, but it’s still ridiculously cheap and like we kind of touched on before with the price of oil and kind of the Chinese economy not going down right now, they are not doing as well as it was in the past. Prices due seem to be stabilizing in China. I’m not an economic forecaster, but I think it’s probably going to be stable for at least a couple more years down.

Steve: Prior to the recording we kind of talked about some of these cool online services that you use for importing. What are kind of your go-to services?

Dave: So important doing this like I mentioned Duty Calculator is definitely your importing product, that’s what you should kind of always, that should be one of the first places you go to is figuring out what the duty on your product is. And Duty Calculator does a really good job of kind of classifying goods.

You can type in a pretty broad definition of your product. So running shoes and it will give you a fairly accurate duty rate for that product in your country. That should definitely be one of the places that you check. Make sure that you don’t get burned, because you can get burned pretty easily importing various products.

There’s personnel mastermind group for importers. The guy was importing pencil crowns from China. It turns out that pencil crowns have been plagued like antidumping product by the US government. Basically he gets charged like 110% duty on pencil crowns when he imports them, and he had no idea until the shipment actually arrived in port. Make sure you actually get an idea of what the duty rate on your products is.

Steve: Pencil crowns?

Dave: Yeah, for some bizarre reason, the US government what they call antidumping they think China is really affecting supply of pencil crowns in the United States, and they’ve now decided to tack on 110% duty on pencil crowns.

Steve: Interesting. What is your go to place in terms of finding out whether there’s any special rules and regulations for selling a product in the US?

Dave: Yeah, I know it’s a tough one, I mean that’s one of the reasons why you should try to work with a customs broker. If you work with a customs broker and you kind of build that, again that relationship they will likely tell you for free if you say, “Hey I want to import pencil crowns. Is there anything I should be aware of?” They will probably tell you for free, “Hey Dave, watch out, there’s a 110% duty on that product.”

Or if I’m considering importing a product that’s heavily regulated, they might say, “Hey Dave you got to be careful that you need to have such and such testing done.” A customs broker is a really good place that you can start. After that, there’s definitely certain categories of products which you always have to be aware of, and that you can eat or drink, anything for a kid, and anything really that’s inherently dangerous.

Steve: What is your go to place for finding a customs broker? For us, we just kind of went with the first one and we’ve kind of stuck with him ever since. But do you actually have a go to place that you recommend.

Dave: No, I’m kind of the same way; we’ve worked with our customs broker for years. I mean, I’ll just pick the biggest one in your area. I mean there’s quite a few of them. I think every city probably has at least a handful of them. Pick the biggest one, preferably the one that we work with they also have a freight forwarding division, so they can do everything for our shipment, by the time it comes in the port they can pick up their shipment, they can pay the various different local companies that need to be paid, they can pay the ports; they can absolutely do the customs for us.

Look for a customs broker that kind of has a few different services branched together. You might even be able to find one where they can actually arrange for pick up in China from you and ship it all the way to wherever you need to have it shipped. It’s really; it’s a really nifty feature to have if you have a customs broker who has a few different services that they offer.

Steve: It’s worth saying that the freight forwarding is pretty important because otherwise your goods are just sitting there at the port. What’s funny at least for me at least is getting the goods from the port to our warehouse often times cost as much as or more the shipment over.

Dave: Yeah, absolutely. We have something coming in the port right now. Overall cost was $9000 on the container. I think after the container fees, customs and all that, I think the fees were nearly $4000. It’s almost 50% of the overall cost was just on customs, freight and all that money stuff.

Steve: Cool. So what are some of the other services?

Dave: Aside from that, another fun little one is seafreight.com. Seafreight.com, what you can do is you can track basically any boat in the world, and track it where it is in the world. Why that is kind of fun is if you are importing something from China, you are going to get a bill of rating, and on that bill of rating is going to be the name of the ship that your products are on. It might be the Korea 123 Express.

You simply go under seefreight.com, type in the name of that ship and you can actually find out where your products are in the world. I don’t normally have some practical use, but there is something about seeing your shipment of products sitting in the middle of the Pacific Ocean, I don’t know, something bad about it.

Steve: Okay.

Dave: I think that’s pretty much the big three that I would recommend. Import Genius, Duty Calculator, and searates.com, sorry.

Steve: Searates.com yeah. I want to switch gears a little bit because I want to talk, since you are kind of unique in that you are from Canada and you sell into the US, but you don’t have like a US entity, right?

Dave: We don’t have US entity per say. I will get into that after the only thing that we do have to have.

Steve: Okay, but you do have like a three PR I guess in the US.

Dave: Maybe an easier way I will give a brief overview of how we do things. We are a Canadian company through and through. We don’t have a US company. What we do have, if you are– wherever you are warehousing your products in the states, if there’s a state sales tax there, you are going to be responsible for paying that state sale tax.

If you are– in our case, we warehouse our products in Washington State. We have to collect sales tax on any Washington State order. We have to be registered with the State of Washington. We collect sales tax of any Washington order, but in terms of actually US business, paying US income tax, we don’t do that.

Steve: And in terms of just selling on Amazon, you pretty much just need a bank account, right?

Dave: To sell on Amazon yes you only need a bank account. FBA is a whole another [inaudible 00:44:03] of legal issues when it comes to the tax ratio. But in terms of the selling on Amazon, yup, absolutely I believe that is right now all you need is just a bank account. That bank account, it can be a Canadian bank account. The only crappy thing is if you are a Canadian company, or a UK company or whatever, Amazon will only pay you in your local currency. For us if we had a Canadian bank account, Amazon would only pay us in Canadian dollars which kind of sucks, because when you are paying your Chinese suppliers you are paying them in US dollars. What happens is you are changing money from basically US to Canadian back to US.

Steve: Right, right.

Dave: It’s kind of a in-depth answer, but…

Steve: I’m also kind of curious what avenues you use to kind of market your store. First of all, I was just curious; do you make more money on Amazon or on your own site right now?

Dave: Every year you get maybe you can just speak to this. It seems every year Amazon is chipping away 10% on all the other channels. I don’t know if that’s kind of been reflective of your experience?

Steve: I haven’t been doing on Amazon as long as you have, so I have less data to work with. I mean our site is still by far more lucrative than Amazon. But that’s probably going to change this year.

Dave: Yeah, with Amazon taking more and more. For us right now Amazon– our website sales are about 25% of our sales, eBay is about 20%. 5% is just miscellaneous tradeshows, selling direct and 25% is selling directly on Amazon as a third party seller. The other 25% is selling on Amazon what they call through the vendor central platform. That’s basically them buying our products and selling them directly on behalf of Amazon.

Steve: They asked you to join that program, right?

Dave: It’s an invite only program. I get the feeling if you hit a certain threshold on Amazon in terms of your private label products; they will send you an invite because we’ve gotten a couple invites after we’ve been enjoying this program. They think that we are different company than we really are, but I do get the sense that after you hit a certain point on Amazon sales, they’ll pretty much automatically send you the invite.

Steve: Is that basically like an invite where you join or else they’ll find someone else to replace you?

Dave: No, they seem to do it. I think every– basically Amazon’s goal is to have every product in the universe. So once they kind of categorize you as a fairly large seller, they’ll say, okay we want to have your products. You can decline the invitation, but there are already lots of parts to it.

It seems that Amazon when they buy your products, they’ll tend to outsell you 2 to 1. We might have been selling 100 boat anchors as a direct seller on Amazon, when they start to buy our products; they were selling maybe 200 boat anchors. So it’s seems to be you are going to move up to 50% to 100% sales increase by selling directly to Amazon.

Steve: Outside of just the volume of sales, in terms of margins though, how far did they go down once you started…

Dave: That’s the crappy thing. They take more or less about 25% off your margins.

Steve: Okay, but they make up for it in volume.

Dave: Theoretically.

Steve: Have you ever had any…

Dave: You got to be careful. We got burned our first year of not watching the margins quite as well as we should have, and I’ve heard that from other people too.

Steve: Okay. I mean, is there any– what are the pros and cons of doing—like would you have declined? What would have happened if you declined? They probably would have found someone else and then lowered your visibility, right?

Dave: It’s hard to say. I mean, you’re always going to wonder with Amazon what kind of punishments they inflict on people. It’s kind of hearsay what they would have done. We agreed to it more or less. We don’t sell every product to them. We over the– they really wanted us to sell the product to them, but some of the time the margins just, we can’t do.

Steve: Didn’t make sense, right. Okay, and then you do a combination of that and you do FBA also or no?

Dave: I try to stay away from FBA just for some of the sales tax issues. I know it’s– FBA is becoming such a monstrous zone on behalf, but sometimes I try to avoid.

Steve: Okay by avoiding FBA, you are only covering sales tax in Washington.

Dave: Yes, and that’s one of the things, I mean, every seller, no matter where you are, if you are selling an FBA you should theoretically be collecting sales tax in nine states, or however many states that Amazon has warehouses in. Truth of it is that probably no one is doing that, but technically you should be. Again that’s a talk for another day.

Steve: Okay, no I was just curious because if you had that attitude, then FBA probably would have boosted your sales regardless, and are they going to go after you in Canada, maybe less likely than someone in the US.

Dave: In terms of Amazon and trying to find our competitors?

Steve: No, in terms of the US government going after you for taxes.

Dave: Yeah, yeah, I figure they’ll go after you before me.

Steve: Yeah exactly. Actually can we comment on what you just said though, Amazon like just going by passing you and going straight for your supplier?

Dave: Yeah, I don’t know. I mean, they are definitely doing that. There’s actually one product that we sell which is not a huge chunk of our sales, but they’ve actually are now sourcing it under what do they call private label brand, I forget. That was on basics I think. They have actually are sourcing now directly from China for that product. I think boat anchors and that type of product is going to be pretty low on their packing order, but I think it’s something everybody else is going to be aware of. They do seem to be reaching out more and more directly out to Chinese suppliers.

Steve: So given that they are doing that, when you are actually finding products to sell, do you have criteria more along the lines of random products, or like more niche products like boat anchors.

Dave: Again, that’s something I always try to recommend to people that the more niche you can get, the more successful you are going to be. Me and you, like you’ve mentioned in the intro we were at the Ecommerce Fuel live conference. One of the striking things attending this conference, it was basically a whole bunch of sellers just like me and Steve, and the crazy niches that were all in from boat anchors to handkerchiefs to pencil crowns to coloring books. Everybody seems to be…

Steve: Air filters.

Dave: Air filters. Everybody seems to be in some crazy little niche. I guess that’s one defining criteria to pick a product to sell. The crazier the niche probably the better protected you are going to be.

Steve: I also want to– every other person I talk to there seems to have been hijacked, or had problems with Amazon in some shape or form. That was one of my key take away from the conference session.

Dave: In terms of Amazon and kind of stealing their products and…

Steve: Either stealing their products or other suppliers just hijacking, similar to what you said, they found it on Alibaba, someone else just went on Alibaba and decided to either hijack or piggybacked a listing or sell something exactly the same.

Dave: It’s a check we do every month. Now we actually check all the listings to make sure nobody is piggybacking our brands, because you can’t, if you are selling our branded products, you can’t theoretically hijack that listing, you shouldn’t be able to. Normally just send an email to them saying, “Hey, you are probably not aware of what you are doing, but it is not allowed and could you please stop.” So that’s kind of a monthly check just to make sure nobody is piggybacking any of our products. Again we probably find five people every month doing it.

Steve: Going forward, just curious, are you spending more effort on your own site or Amazon and if it is your own site, what are some things that you are trying to do to increase sales?

Dave: I wish I could say it’s more of our own site, but Amazon– even people that go to our site, they are ultimately ending up on Amazon it seems. They might start this search and they might end up on our website looking for a product, but they are going to simply go to Amazon and see if they can find our branded product on Amazon. They have that trust I guess with buying through Amazon. It seems people sometimes joke about best buy being the display room for Amazon. I think in a lot of ways our websites are display rooms for Amazon.

Steve: Interesting. Even for boat anchors, amazing.

Dave: I know, it’s crazy. We are putting a lot– we are still continuing to put a lot of energy into our website, but not necessarily for direct sales through the website. If anything, just as kind of a display room for the products on Amazon.

Steve: Given that you are saying that, why not just have links directly to Amazon product listing.

Dave: Well, hopefully people buy through our websites; we don’t get charged 15% commission that Amazon does. I mean, ideally they don’t click through to Amazon, but like I mentioned, still about 25% of our customers do buy through our website, but a large portion of them are going to Amazon. Hopefully they buy through our website, but still a lot of them are going to Amazon ultimately.

Steve: What is your primarily traffic source of sales for your own website?

Dave: Definitely AdWords. And AdWords again is becoming more competitive. Just going through our yearly profit and loss kind of per campaign like our cost per clicks it seems like 50% higher in 2015 than they were in 2014. Again, everyone is getting squeezed there, so AdWords isn’t quite as profitable as it once was, but you can still definitely run some pretty profitable campaigns on there.

Google shopping is really where all the money is in terms of our ROI. So Google shopping is just becoming a huge avenue in some regards. I think if anybody was kind of trying to sell their own products through their website, first thing I would do is make sure you are on Google shopping.

Steve: What about organic search?

Dave: Again, it’s one of the things where all the big brands Google tend to be favoring more and more. We still get probably half of our sales are through organic search, but like everything, it’s becoming more and more competitive even for boat anchors.

Steve: Amazing, boat anchors.

Dave: I know.

Steve: Do you guys do anything on Facebook or…

Dave: Facebook, because of our audience we tend to be kind of an older clientele, they don’t tend use Facebook a lot, so we don’t use a lot of Facebook, compare to some shopping engines, things like Nextag and…

Steve: Does that work for you?

Dave: And [inaudible 00:54:29] and Shopzilla.

Steve: Shopzilla.

Dave: They actually, they bring quite a bit of traffic.

Steve: Do they really for boat anchors? Okay.

Dave: Yeah, again it’s just– I think again because of our older clientele, it’s just, if they have a search and maybe Shopzilla is their default search engine. So that’s how they find it.

Steve: I stopped using Shopzilla because I was getting really high volumes of fake clicks.

Dave: Yeah, it’s hard to say. I mean there’s some products where we make a killing on, and there’s other products where they are outnumbering Google in terms of clicks and you get to wonder how is that possible.

Steve: Well, I actually stalked a few of these people and they are clearly butts.

Dave: Really?

Steve: Yeah because I was annoyed, because I contacted them and I said, “Hey these are clearly boughts, and I have logs to show for it.” He was like, “No, we do a great a job of filtering out clicks.” Anyway that’s why I stopped using them.

Dave: Yeah, I know. That’s been our experience. You really have to monitor the campaigns, because you can dump a lot of money on a product, get out so there’s no conversions from it. But if you do monitor, you can actually get some pretty profitable campaigns.

Steve: Cool. Hey, Dave, we’ve actually been chatting longer than I was planning. I understand you got a pretty cool website. Where can people contact you? First of all, what is the website and where people can contact you at?

Dave: Yup, so the best way is chineseimporting.com, we get a lot about how to use [inaudible 00:55:57] and importing from China. So it’s a really good way if you are a beginner import, a lot of useful information there. If you are even a more experience importer there’s a lot of good information there for you too. On Facebook, facebook.com/chineseimporting.

Steve: And you have a book, right?

Dave: We do. It’s Importing is Easy: How to Make a Million Dollars Importing from China. You can buy that through the website chineseimporting.com, or you can find it on Amazon.

Steve: Awesome. Thanks Dave for coming on the show.

Dave: Yeah, thank you for having me.

Steve: All right take care.

Dave: You too.

Steve: Hope you enjoyed that episode. Dave is the perfect example of a business that does extremely well in a very narrow niche. Like boat anchors would probably the last thing that I would think to import from China, but Dave makes it work. For more information about this episode, go to mywifequitherjob.com/episode110.

Once again I want to thank FameBit for sponsoring thing episode. As I mentioned earlier, FameBit is the best place to find YouTubers, Instagramers, and other influencers to promote your products online and it works. One of my podcast guest Emanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing. It cost as low as 50 bucks to start. And the best part is if you use coupon code mywife@famebit.com, you will automatically get $25 off.

So go to famebit.com right now, and get famous YouTubers to promote your products online. And finally if you’re interested in starting your own online business, be sure to sign up for my free 6 day mini course where I show you how my wife and I managed to make over 100,000K in profit in our first year of business, so go to mywifequiteherjob.com for more information, sign up right there on the front page, and I will send you the course right away via email. 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.

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109: How To Make 7.5 Million Per Year Selling On Amazon With Will Tjernlund

109: How To Make 7.5 Million Per Year Selling On Amazon With Will Tjernlund

Today I’ve got someone really special on the show, Will Tjernlund. Now I met Will at the StartupBros conference and I’m really glad that I did.

He and his brother Andrew made about 7.5 million dollars from Amazon and their own stores last year making him one of the most successful Amazon sellers that I’ve had on the podcast so far.

And the best part is that his business is just a 2 man operation with him and his brother. Today, we’re going to go into depth on how he got started.

What You’ll Learn

  • How Will got into ecommerce and what made him start selling while he was still in college.
  • How many products Will was selling in 2014 to achieve 7.5 million in revenue
  • How Will came up with what to sell.
  • How he got his start
  • Will’s strategy is for entering new markets
  • Will’s main criteria for selecting a product to sell

Other Resources And Books

Sponsors

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Transcript

Steve: 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 tractions for their businesses.If you enjoy this podcast, please leave me a review on iTunes, and if you want to learn how to start 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 100,000K in profit in our first year in business. So go to mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini-course right away via email.

Now before we begin, I also want to give a quick shout out to famebit.com for being a sponsor of the show. FameBit is the number one market place for influencer marketing, with over 20,000 YouTubers, Instagrammers, people on Twitter and vine looking to promote your company in any vertical whether it be beauty, tech, gaming, pets, and more. Yes, you can get famous YouTubers and Instagrammers to promote your business for as low as $50. The best part is that you don’t really need any money at all to post a campaign and receive free proposals from creators.

Now if you’ve listened to my podcast before, one of my guest Emanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing. And the best part is if you use coupon code “my wife” at famebit.com, you will automatically get $25 off our first campaign. Go to famebit.com right now, and get famous YouTubers to promote your products. Now on to the show.

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’ve got someone really special on the show, Will Tjernlund. I met will at the StartupBros conference and I’m really glad that I did. He and his brother Andrew made about $7.5 million from Amazon in 2014 in their own stores last year making him one of the most successful Amazon sellers that I’ve had on the podcast thus far.

The best part is that they are basically a two man show with just he and his brother. Now you might be wondering how that is even possible. Well, Will sells his own private label items, buys from manufacturers in China, and then sends his products directly to Amazon for fulfillment using FBA. And today we are going to go into great depth on how he does it. With that welcome to the show Will, how are you doing today?

Will: I’m doing pretty good. How are you doing?

Steve: I’m doing good. It’s good to hear. We chatted a little bit before the interview started. There’s a lot of stuff going on with you. I did want to, I was very curious on how you kind of got started in ecommerce, because I understand you did this while you are still in college, right?

Will: Yeah, even kind of before that. I’ve always been kind of looking for gaps in the market and always looking for different ways to make money ever since I was in like high school even. Me and my buddies were doing black [inaudible 00:03:29] out of my basement the whole grade, every Friday that kind of thing, always finding a way to make money. And I actually started selling online when I was still in high school.

I worked at Target and I would buy all the Nintendo Wii and Xbox 360s when they were in high demand, and sell them for about 30% more on eBay. That’s when I first started selling online. But then from there, my brother graduated high school in 2003 and soon after that he started private labeling from Alibaba and selling on eBay. And so even when I was only 13, I saw it was very possible to import and make money selling online.

Steve: So your brother was the first one that kind of got to get you into this?

Will: Yeah, at a grand scale like I could not believe it the first time even when I was 13, when he showed me Alibaba and saw the prices on there, because this is way before any kind of private labeling and stuff people were doing now, and a classic example will be like if you just saw Alibaba today and you saw like the price of tablets on there. You go, wow you can get like a android tablet for $12? This is crazy. They go for $200 in the stores, because we just didn’t know back then like what kind of quality assurance and all that kind of stuff that factories were doing.

Steve: What was like the first product that you imported over to sell?

Will: The first one I personally imported all by myself was like my sophomore junior college and it was actually a marijuana vaporizer pen.

Steve: How did you come over that Will?

Will: No, seriously though, it was one of those things where I was just constantly doing the one tab Alibaba, one tab Amazon and just looking for random crap. And I got on the tobacco products, and then from there they all qualified themselves as tobacco products. But I saw that they were charging $100 and I go, well that can’t cost $100 from Alibaba. It ended up costing like $7. So that was like one of my first big products.

Steve: So you were in college, where did you store the stuff. I assume you had– you shipped it to yourself.

Will: Yeah. I would just have the stuff air freighted or myself. Then from there I was– I was even doing FBA when I first started doing like my sophomore year in college. There’s actually a post office on my campus. So I would just have a backpack full of vaporizer pens that I would drop off on my way to class.

Steve: I see. So was this for eBay or was this for Amazon?

Will: Both.

Steve: Both?

Will: I was even doing a little Craigslist.

Steve: So can you kind of describe why you decided to use both platforms?

Will: I just kind of– it’s the– I always think in terms of why not? I knew that eBay sold well, and I knew Amazon sold well. For me to just– I was pretty much create the listing once, then copy and paste all the descriptions and photos and all that stuff over. So for an extra whatever 10 minutes of time, the potential value could be thousands of dollars.

Steve: What’s your take real quick on just Amazon versus eBay, the type of customers and selling on those platforms?

Will: I hate eBay more than anything. I hate the all the customers. They are all terrible. Etsy is like the anti-eBay. Where in eBay you deal with every single individual customer, they are always asking for tracking information, and they are always bugging you about the kind of intricacies of your product, where on Etsy, the customers are always overly nice, they are super optimistic.

You tell them I’m sorry, the shipping is going to be three weeks, they go, “Wow, that’s great. I’m just happy it’s not four,” kind of thing. If I sold 1000 items on eBay in one day, my life is going to be miserable trying to flip through all those orders. If I sold 1000 times in one day on Amazon, I don’t even notice.

Steve: Yeah, I mean I had the same experience in eBay. Everyone there tends to be cheaper buyers.

Will: I compare to people who shop on eBay are more Wal-Mart shoppers, and people who shop on Amazon are more Target shoppers, where the Amazon customers are willing to pay maybe that 10% more to get like the automatic two-day shipping and have them more quality experience, where the people on eBay are shopping more for deals and they are wiling to deep dive and try to find those diamonds on the raft.

Steve: Do you still sell on eBay today?

Will: No. we sold over a million dollar in 2014 on eBay, and we quit even though it was all automated through our fulfillment and everything. My brother and I quit selling on eBay in 2015, because we were spending just as much time on eBay as we were Amazon, but selling 7 times as much on Amazon.

Steve: Okay. Amazon is it all FBA or do you do any merchant fulfilled?

Will: The only merchant fulfilled I do would be most likely if I’m like drop shipping.

Steve: Okay, okay. And you pretty much only drop ship when you are testing the product or?

Will: Either when I’m testing it or say like, I sign up a deal with a distributor where their catalogue has a thousand products. I only want 50 of their products, but the other 950 I have available for me to drop ship. So I might as well throw up a merchant fulfilled listing for all those to see if I can get anything. Even if those things sell maybe one unit a day, it’s still an extra thousand units a day.

Steve: Yeah, I know, that totally makes sense. So, I know the listeners out there are very curious on how you actually come up with stuff to sell. If you can just kind of talk about your strategy for finding stuff that will make you a profit.

Will: All right, so I can go all day about this. Cut me half when you need to. But basically I’m just looking for items that have high proceed value with minimal down sides. I make sure that the product can always be liquidated. Example, say if I’m buying a set of four drink coasters for a dollar, and I usually sell for $20, if I sell them for $4 and break even, they will fly off the shelves and at least I know I can get rid of say 100 units I order as a sample.

I always make sure they can be liquidated, and I always try to have minimal moving parts and minimal electronics in it. So like my perfect product is the drink coaster, because nothing can go wrong with it. I’m not really worried about quality assurance or anything like that. It’s just going to be a square piece of say wood, and there’s not going to be anything else to it. I really like kind of products that just nothing can go wrong and products that are super simple where I’m either selling a hunk of rubber, metal, wood, or plastic.

Steve: So when you say liquidate, do you mean liquidate on eBay or Amazon?

Will: Either or, just liquidating in general where something where I can charge such a low price that people can’t help but buy it type of thing. Whereas I give everyone selling a product for $30 and I’m just trying to sell for $4.50, there’s no way that I don’t at least just get rid of my inventory.

Steve: Okay, so that implies that your margins, you require something on the order of 8X then?

Will: Not necessarily 8X. It’s more kind of a proceed value type of thing. It’s different per each product category. When I’m selling something that’s like more home and industrial, that kind of product has a lot less price fluctuations than maybe say like a fashion item. And so that one I can only charge maybe 20% below market price, and still liquidate it pretty quickly because everyone has the same exact price, as opposed to drink coasters where some might be five dollars, some might be $100.

Steve: Okay, and so can you give us an example of your ideal products. So with coasters, I mean, I don’t know that’s like a real product that you just mentioned?

Will: Yeah, exactly. That’s a perfect product where I’m walking through Target, and I see some men drink coasters a four pack of them for $25. And I go, that doesn’t make any sense because a cinder block cost like a dollar. So I go and look that product up on eBay, I mean on Amazon real quick.

And I go wow, they are selling concrete drink coasters and they go for about $20 for four pack. That still doesn’t make sense to me. Then I look it up on Alibaba store, and I go, wow, those things are four pack cost a buck. Well, if I order 25 packs, it’s really hard for me not to at least just get my money back kind of thing.

Steve: Okay, do you use any sort of tools to find these products, or do you just go through and flip through Amazon.

Will: Yeah, I don’t use any tools. I feel like when everyone uses the same tools, it draws the same conclusion for everyone. It’s hard with these analytics tools, and an example I always use is the drone landing pad, and still no one sources yet even though I’ve used that example a million times, but there is two listings currently on Amazon. If you throw a drone landing pad, you’d be the third one on Amazon. It’s just like there are certain products like that where you would be shooting and fishing a barrel not to source that product and try it out.

If you looked it up on one of Amazon’s softwares it would say that there’s a very low sales velocity and that you shouldn’t even try it, but that’s because not enough people are offering quality product yet, because the only drawn mini pads are like one foot by one foot landing pads and not like what the customers really want. So the software can be kind of deceiving because it won’t show sales for products that aren’t there yet.

Steve: So how did you find like a drone landing pad for example?

Will: I just continuously click the also bought with button.

Steve: Interesting.

Will: And so I will go and I will see – I was looking at drones just to buy one myself just to see what kind of price they are at, and then I see like also bought with XYZ and I’m like, weird. I didn’t think about drone accessories. Then I looked up drone carrying cases, and then after looking at the shipping and the pricing it’s like, oh, there’s no money to be really made there and it’s like okay how about drone spare parts.

I was like no money will be made there. It’s like, oh what about a landing pad. Then I looked it up, and there’s no one selling it and it’s merchant fulfilled with reviews. It’s like, wow, I could just come in here and just dominate this market if I wanted to.

Steve: Are you worried at all that if there’s not that many people selling it that the demand might not necessarily be that high for it?

Will: No, because I know the demand is going to keep going up with drones just in general if you look at Google trends. Also, I love the idea of products that fly under the radar, instead of selling the silicon baking mat and try to sell a hundred units a day, and constantly finding a few people piggy backing on your listing and fighting off all these competitors.

I love the idea of selling say a 50 dollar drone landing pad that I get for ten dollars that I make $25 a unit, and I sell for a day. I’m sneakily making a hundred bucks a day, 36 grand a year off of this drone landing pad, and people look it up and go 4 a day, that’s not worth my time.

Steve: Okay, so I was just curious then, so for your seven and a half million revenue that you did in 2014, how many products was that?

Will: 1700.

Steve: 1700? Holy crap! When you sell these products, do you ship them direct to Amazon, or do you ship them to yourself first and analyze them or look at them?

Will: Ship them to myself first. I still don’t fully trust any of my Chinese suppliers to do everything correctly, and I would hate to have a container get denied at Amazon. It doesn’t cost that much more like an insurance policy for me to have it stop it at my place beforehand, or my pre-fulfillment place beforehand.

And then with my wholesale suppliers I think a lot of them don’t know I’m selling on Amazon. I don’t want them just to send straight to Amazon, because then basically I’m teaching them how to cut me out of loop.

Steve: 1700 products and you use the same strategy you are trying to fly under the radar with these products.

Will: Yeah, it’s way easier to sell a thousand products once a day, than to sell one product a thousand times a day.

Steve: Interesting. So then it doesn’t really matter I guess when you look on Amazon you don’t see that many listings, you just go with your gut is what it sounds like.

Will: Yeah, with my gut and like very small low risks moves over and over again. Where I’m not sitting there going and buying a crazy amount of inventory right off the butt, I’m sitting there ordering 20 units, then 100 units then 200 units, then 1000 units kind of thing where I never get caught with like my foot in my mouth, because I ordered too much and I don’t know what to do with the inventory.

Because it’s all about basically once you get product selection down, which is not– it’s like one of the more difficult parts, the whole entire Amazon game basically just comes down to cash flow, and how can you hold the perfect amount of inventory where you have enough cash on hand to keep growing, but at the same time you have enough cash to replenish your current inventory.

Steve: What are some of the price points that you like on Amazon then? Do you have any guidelines there?

Will: No real guidelines. More times than not, I tend to lean towards more expensive products, because I like the idea of knowing like I’m getting a size more cash every time I sell a unit. So instead of me saying, oh I did a thousand dollars in sales doing 20% profit margin after everything, I’ve become more and more tuned to saying, I sold four units and I made a hundred dollars. I put a hundred dollars new in my pocket from those four units, as opposed to saying I did 400 in sales at a 25% margin.

Steve: Does that imply then that your price points is in the order of hundreds of dollars then?

Will: Yes, my brother and I our average price point was like a $130. But it was the kind of thing where, that kind of skewed as I explained earlier because of say they had those thousand skew catalogues we would get, and we’d only source a 100 items, and then have 900 items or whatever as an example drop shipped.

More times than not we are drop shipping those one because we don’t want to tie up cash in them because there are hundreds and hundreds of dollars. My brother and I we are selling some products that are like $2000 each.

Steve: Oh, wow, and you’re fronting the inventory for that?

Will: Yeah basically we are just sitting there having a merchant fulfilled and say as soon as we see a sale come through we just email the supplier and say we have a drop ship to this address. And so we only spend the money once we’ve already made it.

Steve: Oh sorry, I meant like the ones that you actually store at Amazon using FBA. Like what’s your price point?

Will: Oh we try to be lower. It really comes down to like you prefer under a hundred dollars. But at the same time it really comes down to sales velocity. So how fast can I get that dollar 20 back in my bank account after I spent that dollar. If I sell say, some of my products were selling like say 15 units a day. I don’t mind that it’s a more expensive product because I know I’m flipping my inventory quickly, where if I know I’m only going to be selling five units a week, then I’m probably going to back off on ordering so many units of that if that makes sense at all.

Steve: Yeah I know. It totally does. And so if you can, can you just walk me through a typical example of how you proceed from product inception all the way to the sourcing process?

Will: Yeah, I will give you an example of a product we used to sell. We used to sell knee scooters. When someone injures their foot, and they scoot around, if you’ve ever seen those instead of scratches.

Steve: That sounds like an oversize product.

Will: It is. It’s like a 3 foot by like 1 foot by one and a half foot box.

Steve: So you don’t care about that either.

Will: No, because the thing is that they are such low competition in margin. So these things were going for like 200 to 300 dollars on Amazon, and we can get one for 60 dollars landed. So like there’s plenty of margin we made there. Even after everything we were only making 40 bucks a unit, it’s like that’s still a pretty good margin.

With the knee scooter was my cousin broke his foot, and he had to get a knee scooter. And he emailed my brother and I since he knows we like buy stuff online for a living and said, “I’m having trouble finding this knee scooter for anything cheaper than like $200 to $300 anywhere online. Do you think you guys can find anywhere cheaper online?”

And so we went and looked all over online and couldn’t find a cheaper, and we go, that’s kind of bizarre because it’s just like less moving parts like a child’s bike, and a child’s bike doesn’t cost that much. Again it comes down to perceived value, like why does this cost so much for no reason?

So then we looked it up on Alibaba and saw that after shipping and everything we can get them for 60 backs landed. It’s the kind of thing where we go, well crap. We only have to sell maybe half of a 20 foot container to break even. That’s not going to be too difficult.

And so we ordered I think it was a 20 foot container which was 210 units, and what got tricky was we sold 5 units that very first day between eBay and Amazon, and so then it took us 60 days from us ordering to getting the items in stock at Amazon. We are looking and we go wow, we ordered 210 units, five units a day for 60 days, that’s going to be X300 units. Even though we only sold five units of that container, we had to go buy another container already which was kind of an annoying thing to do.

Steve: So what are your guidelines then when you are sourcing? You mentioned before you like to start out with really small quantities. It sounds like here you start out with a 20 foot container?

Will: Yeah, that’s the thing where it’s hard for me to give guidelines, because I do something different almost every time where with these knee scooters I looked and I go this is a product people need not want. This is a product where we can just kill people price wise, where we can go, oh you are selling this for 300, I’m going to sell the same exact quality one for 160 bucks. It’s like, what are they going to do about that?

It’s like, when I show up and then two it’s a low velocity item. After I get like two sales in a review I’m already on like the first page. And so when they see mine for 160 bucks with good reviews, everyone else selling for 300 bucks, I just knew that people couldn’t help themselves. They’d had to buy ours, because it would literally make zero sense for them to buy anyone else’s. Also ours came in different colors, and everyone’s else’s in back.

It’s like I just knew there was like four different ways that we were going to just knock the competition off the pack. So I was willing to do a bigger order right off the butt, where if I’m using concrete drink coasters, they might be more competitive and I’m not really sure what the sales velocity is, and it’s a product that people want, not need. I’m going to order maybe 20 units because I’m not sure about it.

Steve: Okay, with these scooters then, that’s like a pretty large outlay, but you were confident– how were you confident that the quality was the same as the others? Did you actually buy the competition and compare the two?

Will: No, we did get one– we did bite the bull and get one air freighted to us very quickly. I was like, test driving it around like a little warehouse and that kind of stuff, and beating it up pretty bad, nothing happened to it. I was like trying to like rough house it and everything seemed fine. It seemed like a great product. But this is why we don’t source them anymore, is because everyone needs a new scooter for about 3 weeks. And so everyone returns it when they are done, and gets their money back.

Steve: Okay.

Will: We had about zero negative reviews, but 75% of them got returned. What does that say, kind of thing?

Steve: Right. I’m just curious. Are you only selling in Amazon or do you have your own site?

Will: I have my own sites, but for like a different private label brands. They are basically there for legitimacy. They don’t really make any money. It’s kind of thing where I don’t know that much about SEO or like social media marketing, or any of that kind of stuff where the amount of time I’d have to spend to the returns is not worth it to me.

Steve: Okay. So let’s go with your coaster example, because that seems like something that is more obtainable for someone who doesn’t have a whole lot of money to invest. So let’s say I only have like $500 or $1000, how would you proceed?

Will: Okay, if you had say 500 dollars, I would go and I would try to find lower competition products and that’s something that’s like in a top 100 BSR or anything, I would try to find lower competition products for anywhere from one to four dollars on Aliexpress. And buy these items for one to four dollars, will sell from anywhere from 15 to 25 dollars on Amazon. You are going to be looking for stuff on Aliexpress with a big price discrepancy. You are going to be looking for stuff with free shipping and shipping that’s in 15 days. If you can find products like that, you can basically undercut the price enough that you can make yourself competitive no matter what.

Then I would go and order with that $500, I would order say 20 units of five different skews. So say in that, like say that can be at five dollars a unit landed. That’s even on a high end. From there you send in those five different skews, 20 of each unit into Amazon, set up the Amazon PPC and sit back and wait for two weeks. During those two weeks, you are just trying to see if, if you flip a generic sample with no reviews, and you get any traction at all on Amazon, you know you are on to something.

Like a typical example is I put up a listing of a new product I’m trying on Aliexpress. I sell maybe two or three units the first week, and in the next second week, I end up selling seven units, and I go, “Wow, I sold ten units in two weeks and I have zero reviews, a crappy picture and a crappy product?

Now that I know that there’s demand for the product and I know that I can compete, I’m going to start keep continuously flipping my Aliexpress product while I start working on my Alibaba order. Because of the time zone difference with Alibaba, it takes forever to go back and forth which is prior and takes forever to get all the details ironed out, and so you might as well keep selling and making cash from Aliexpress while you go through that whole process.

Once you are done with the Alibaba process and you actually have your order in hand, say two months later. You can go back to that listing from Aliexpress, you can reupload the photos, reupload the title to a new private label title, and have this listing with reviews and with sales history to launch your new private label product from.

Steve: Okay, so the five skews then, you just run with the winners and then you just liquidate the crappy guys that don’t sell.

Will: Yeah, and then repeat that process every month. So, this basically came from– My brother and I had 1700 skews at Amazon, and we kind of looked at it and go wow, it’s an 80/20 rule to the max where the top 100 units make up 90% of our sales. Then our top ten units make up like 65% of our sales. It’s like, wow, wouldn’t it be sweet if we only had like ten skews and we are still making millions of dollars.

This would be like the easiest job of all time and it would be so easy to manage. The only way we found only those ten skews is through testing all those products. And so once I started working by myself this past May, I’ve started just testing tones and tones of products from Aliexpress trying to find my ten true winners out of the 1700.

Steve: So you guys sell 1700 and it sounds like to me that you want to reduce that number to just a handful.

Will: It was more than 1700 if you include all the drop shipping. But yeah, it’s the kind of thing where 1700, it’s an easy way to build up a bunch of revenue and make a bunch of money easily, but now I’m spoiled enough where I can focus more on my lifestyle than the cash flow. That’s where I’m more worried about. So it’s cool making all that money with my brother, but it’s not cool working in a factory over 40 hours a week. And so I’d rather make 100 grand working an hour a week than ten million dollars a year working 100 hours a week.

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Steve: So back in 2014 you guys were still a two man show, right. I would imagine to house all these products, like four or whatever five million dollars worth, that’s a pretty big warehouse and you have to go through each product?

Will: Not necessarily, because we were really efficient about it. We could get a container in and have it out the same day.

Steve: Okay.

Will: So we would get a container in and then me and my brother would just mad men unloading this container, labeling it, making sure everything looks legit, stacking it out on pallet, wrapping the pallets, weighing the pellets and having all the weights and pellets and everything labeled by later that day where then we could call the freight company, the third party whatever freight company, and they could pick it up and bring it on its way to Amazon later that day if we got it early in the day. So the longest our inventory ever sat at a warehouse was like 20 hours.

Steve: Oh wow, okay, you guys are sick. I think I saw a picture of your warehouse. It’s pretty big.

Will: Yeah, we have like a – it’s kind of confusing, I was worked out, but my family owns a manufacturing company. So they have like a manufacturing type of warehouse where it’s like we don’t go anywhere near for like safety reasons. But we got our own little section because they moved over to lee manufacturing and had a bunch of extra space. We use their extra warehouse space and knocked down a couple of walls to add some more loading dock doors for ourselves.

Steve: I’m just curious, you are doing all these products, have you ever had any problems with quality control and dealing with vendors?

Will: I haven’t really had much to deal with quality control. The only kind of issue I’ve ever really had is when I either get like a few samples and they just suck, and I just basically throw them away. It’s a price of doing business. Or I once get a container of these products where the two sides didn’t fit. But I had already ordered say four containers in the past year from this company, and I was a good customer and I told them that “Hey, you attached the wrong part to it. It doesn’t fit properly.” Without question for free, they air freighted out the right part and we got it all fixed and everything was fine.

Since I had a past history with them, and I would spend tens of thousands of dollars with them, they had no problem just to admit that they are wrong and just air freight the stuff out there. I have very good relationships with all my suppliers. So I have no problem asking them to bend over backwards for me at this point.

Steve: Do you think the reason for that is because you pick really simple products like your coasters example, right?

Will: Yeah, that’s the main, main reason is that I really try to go out of my way to perceive any problems ahead of time. Then when I don’t perceive the problem ahead of time, it’s something stupid like the knee scooter where people just return them like in 30 days which I just had no idea. I didn’t think about that.

Steve: Did you end up liquidating those knee scooters then?

Will: We ordered a second container, sold all those and then we thought about ordering a third container and said F it, we don’t want to waste our time anymore.

Steve: Okay, and so with your vendors then you mentioned that you start out with like 20 units and that’s like from Aliexpress, right?

Will: Usually. Yeah.

Steve: Then for your second order, you said you graduate, I think you said like a hundred units or something like that.

Will: Again, it’s a really case by case kind of thing where say, if there’s $100 a unit, I’ll probably just order another twenty again and just keep ordering 20 every week, because I don’t want to tie up my cash flow. But if they are a dollar a unit, then I might just order 500 because it’s like I just don’t want to waste my time ordering again.

Steve: Have you ever run into any problems where the vendor like after that small initial order that they want you to order like 500 units for example?

Will: Well not on Aliexpress, because you don’t really talk to the vendor at all. You just …

Steve: Oh, this is all in the context of Aliexpress.

Will: Yeah, I don’t order from Alibaba and tell them I’m going to order a large quantity, that I’m going to actually private label and do like a little bit customization to it and all that stuff, because that process takes long. I hate wasting two months of emailing back and forth. I want to make money now kind of thing.

Steve: Okay. You mentioned before I asked you this whether you had like your own store for your own website. You made it sound like those are just place holders I guess or brand pages?

Will: Yeah, they are basically there if I ever want to make an ecommerce site, like it’s indexed on Google for a certain amount of time, so it looks better and two if anyone ever like searches the brand name, something at least pops up and it looks like a semi legit website and stuff. It’s something like my business partner and I will make a square space site in the afternoon, and then that’s good enough for us. It’s not like we are spending a bunch of time on it.

Steve: Are you showing your products on there with links to Amazon listings at all?

Will: Yes, that’s exactly what we are doing. We are doing like the add the cart button and the add to cart button links to our Amazon listing through a super URL.

Steve: Here’s one thing I was always curious about. Are you worried about Amazon kind of pushing you out and going direct to your manufacturers at some point?

Will: I don’t think worried is the right word. I know it’s going to happen. I’m just ready for it. I have grown up in a weird time where I was born in 1990. And so I’ve seen like [inaudible 00:32:08], like Yahoo, AOL and Myspace like go out of business over night. I’ve seen a bunch of tech companies come and go, and that’s basically how my whole life has been.

I’m so very used to the idea that like Amazon might just come in and wipe everyone out and take away all the third party sellers, and then ten years from now Amazon is going out of business because the rejects is going crazy or something. And so it’s kind of thing where I’m always have the kind of mind frame that this is probably not going to be there tomorrow, so make as much cash as you can today.

Steve: Are you doing anything to kind of prepare when that happens, or are you just prepared to gradually lose this over time and come up with new things?

Will: Well, if you can’t beat them join them. I’ve been selling a lot to Amazon.

Steve: You mean with the vendor program?

Will: Yup.

Steve: Can you just describe that real quick for the listeners who don’t know what that is.

Will: It’s basically you just sell to Amazon instead of on Amazon. It’s a little bit more annoying because they place like multiple purchase orders a week and you kind of have to have the inventory ready to send to them or to back order it. But it’s a very wise thing to do if you have a very hot selling product and you are competing for the buy box, because if you sell to Amazon, Amazon will basically control the buy box, and yes you will make a smaller profit margin, but controlling the buy box 100% is pretty sweet. Amazon will buy a lot from you. They will pay you fairly fast, so it really clears off the cash flow issue.

Steve: Can you talk about like the decision making process or was it just clear cut decision to sell to Amazon for you?

Will: It just kind of like…

Steve: Because there’s pros and cons I would imagine, right?

Will: Well there’s definitely cons, but it’s how do you take advantage of Amazon’s greed. Do you know what I’m saying? And so you think and they are going, okay, Amazon wants to have every skew possible, and they want everything for like low prices. If I see a product that’s not on Amazon yet, and I can get like a wholesale say account with them, I can take that catalogue of a thousand products and upload it to Amazon saying, “Hey I had these thousand products and you want to buy them for me.”

And if Amazon even looks at them and goes “Wow, we don’t have any of those products yet. Yeah, we want to add to our catalogues, can we get three units of each?” Those sell out probably instantly within like a week, because Amazon promotes its own stuff a lot more than third party sellers. Then I sold 3,000 units to Amazon that week kind of thing, and I did nothing besides copy and paste like a spread sheet over to them.

Steve: Let’s say you said to Amazon, “Hey, I don’t want to use– I don’t want to sell direct to you,” and then they go with someone else, are you pretty much screwed at that point?

Will: That’s why if you have like a legitimate private label brand, there’s really nothing they can do about it. So that’s basically the only time you wouldn’t want to sell to Amazon is that you have a legitimate private label brand, you are the only one on the listing and you are selling 30 units a day.

If you sell to Amazon, you may go up to 40 units a day, but then you are going to lose your profit margin. You are going to make any money in that. If they go and they try to source any of your competitor’s products to try to like run you out of business, there’s nothing you can do about that. At that point, if you are competing with Amazon like that, then I would just sell yours to Amazon too.

Steve: So by legitimate you mean something really unique that no one else is offering.

Will: Yeah, if you are just selling some crappy yoga mat with just like your logo on the corner, or you are selling something like meat cloths, or like barbecue gloves or something like that where you are adding zero value and there’s nothing unique at all about your product, then yeah, I wouldn’t blame Amazon for taking down all those similar listings and just having a few barbecue gloves. But if you actually have something somehow unique, then yeah, I doubt they are just going to [inaudible 00:35:39] your listing because you are competing with them.

Steve: Can you give us an example of something that you are selling direct to Amazon or?

Will: Yeah, I’m trying to think of something on top of my head. Because it’s like we were selling like those knee scooters directly to Amazon. Once we kind of like things started slowing down a little bit, and we thought that might boost sales, but also with mostly like my brother just signed a big contract with a wholesale company that has 10,000 skews. He uploaded those 10,000 skews to Amazon, and Amazon first order from him was for 500,000.

And so my brother made basically like 100 grand of that being a middle man. That 500 grand is already sold, it’s not like you are sending 500 grand in the inventory and to wait to sell it for months, its already sold because Amazon bought it from him. It clears the whole cash flow issue.

Steve: So here’s a question on that, a perfect example, why don’t they just list their stuff on Amazon and instead go through your brother?

Will: Because, this is where it gets kind of slimy. Have you ever read “The Everything Store.” It’s Jeff Bezos’ biography?

Steve: No, I haven’t read that.

Will: He explains in there a story about wood stove knives. Have you ever heard of wood stove knives?

Steve: Yes, of course.

Will: Okay. Most people I tell this example to have never heard of it which is like okay, I know you’ve heard of it.

Steve: Are they not married? I mean the real one registers for those.

Will: Exactly, so Wood stove knives was contacted by Amazon. This is back like 2008 or 2009. They were contacted by Amazon saying, hey we want to sell your knives. They say– say wood stove buys 10,000 knives to a knife store for $100 and then they are supposed to market it for $400. They sold their knives to Amazon for $100. Amazon went around and sold them for like $101 on Amazon.

Wood stove just freaks out and goes, “What the heck are you doing? You are screwing over like a hundred year history of our family selling to all these different brick and motor shops, you are screwing up our whole entire supply chain, all our wholesale accounts, we are not selling to you anymore Amazon. Amazon goes, “I don’t care. There’s a million Mom and Pop shops already have contracts with you who will sell directly to us.”

And so all these Mom and Pop shops sit there and sell all their stuff to Amazon, wood stoves are trying to contact these 500,000 distributors they had throughout the world, saying who is selling to Amazon. They can’t figure out who it is. Amazon is still selling them at break-even prices. Most more times than not, big large manufacturers and distributors don’t want to sell to Amazon, because they are afraid of them undercutting mat pricing, and they don’t want them to screw up all the distribution channels. It’s basically, you are sitting there being kind of like a middle man for Amazon to make sure they can get inventory, they can’t get their hands on personally.

Steve: Interesting.

Will: Again it’s taking advantage of Amazon’s greed.

Steve: Do you see like the Asian manufacturers selling direct on Amazon?

Will: A little bit. I don’t know. It’s like no offence to anyone anywhere, but like from a lot of Chinese businesses I’ve dealt with, they are a bunch of idiots. Like they would never– they are very good at following very strict directions, but I don’t think a lot of them are like good at thinking outside the box and thinking about like, “Oh look, we are selling a crazy amount of these products and he’s having us label them for Amazon.

Maybe we should cut this guy out of the chain and just sell these directly on Amazon, because it’s easy enough for them.” It’s not blocked in China, Amazon is in. they just look it up in Amazon and go, “He’s getting $40 a unit? We are selling to him for $4 a unit. Why don’t we just cut him out of loop? He already showed us how to label it for Amazon.”

That’s happening to maybe 1,000 different suppliers throughout China and not one of them has just skipped the step, and instead they put up these super crappy listings on Amazon that are merchant fulfilled with like 70 day shipping. It’s like obviously they don’t understand how Amazon works, how the customers work, how prime works, anything. It would take them a half second to look it up, but they just don’t think that way.

Steve: No, I agree. They are actually really good at copying stuff, not so good at—but here’s the thing, whenever I get on the phone and I notice someone has perfect English, that’s when I get worried.

Will: Oh yeah, that’s for sure. I even thought about is a consulting job just doing my rounds around Shenzhen and Guanghou and just teaching everyone on how to sell on Amazon, and just making billions of dollars and screwing over everyone, because they just like shooting fish in a barrel.

Steve: Yeah, totally, yeah. Let’s take a step back. I want to talk a little bit about this before we go. Do you have like strategy for getting your first sales on Amazon? Do you use any strategies and reviews services when you launch a product, or do you just let it ride?

Will: I use it as PPC and just let it ride. I’m usually going after super low competition products, or very specific products where I’m selling each HP190SL, which is like a specific model of someone. You know what I’m saying where’s it’s like someone is going to search HP190SL and even if mine has zero reviews, it’s going to be the first one that shows up because it’s such a specific search.

Steve: Okay, so all of your products that you sell in your store, kind of follow these guidelines so that you don’t actually need to do like a zone blast or something like that for example?

Will: Yeah, I don’t really believe in zone blast or a lot of those give away services. I’d rather, like I was saying earlier, fly under the radar and sell a thousand products once a day. Those are kind of my ways, it’s dumb really kind of trying to grow my business quickly, because it’s just the easiest way with the least amount or work on my end.

Steve: So on that note then, when you are doing your research, how many sellers do you like to see on Amazon for a given product?

Will: It really depends. It really depends on their price because– they is going to be a thousand sellers if they are all selling for $100, and if I can make money at $50 then I don’t really care if there’s a thousand sellers. I go compete with them. Like my wooden sunglasses, I sell just because I can go in there and totally undercut everyone’s price, and so that’s why I’m luring not because of my style. But then another one is where it’s I know I can’t cut the price down as much. I need to make sure there’s not as many sellers out there, so it’s a balance.

Steve: What is your strategy going forward assuming that Amazon is going to push everyone’s prices down to like the minimum?

Will: Strategy moving forward is I’m going to start my kick starter most likely in 2016. I’m also going to build out a few of my brands and actually try to do some legitimate marketing for the ones that are really selling. I’ve also looked at selling some of my private label items to brick and motor stores, and all sorts of different things. I’ve just been looking at every single thing I can, and listening to every business podcast I can that’s not about Amazon, and trying to use outside business tactics and apply them to Amazon.

Steve: I guess what I was trying to get with that was, are you going to try to invent your own unique product that’s kind of tangible?

Will: That’s what the kick starter. That’s what I think about with that is I’m going to take some products that has already been made on Alibaba, just add a few quick little things to it, and say I’m coming out with a brand new product. If I can create say 20 to 40,000 dollars, and pay for that first container, I’m just going to make a killing, because once you can get up to the sea freight level, you pay so much less per unit.

Steve: It sounds like you feel like that’s kind of like the way to create a lasting business going forward, right?

Will: Yeah, it’s no way you are going to be able to have a business where you are just slapping your brand name on it ten years from now.

Steve: Okay, to prepare for that– so it obviously requires a much larger investment, that’s why you are mentioning kick starter.

Will: Yeah, the kick starter is not only the investment, but it’s also the proof of concept. It’s also that I get everyone’s emails from kick starter. So as I come out with more products in that brand and that niche, I can sit there and spam out to say a thousand people who funded me over and over saying, hey now we are coming out with this version of it, now we are coming out with the waterproof version, and just doing that over and over again because now I have actually a built in base.

Steve: That was actually my next question. Do you do any marketing for your Amazon products outside of just Amazon’s visibility?

Will: No, I don’t at all. It’s something I’ve done in the past. I’ve done something like Google PPC and that kind of stuff, but it’s too expensive. But if I actually had like an email list of people who are interested in my products, I think it would be a totally different thing.

Steve: Do you try to gather any emails or having people register for your products? Do you have any inserts in your products?

Will: No, well not really inserts. I have like I go and visit print and I get a bunch of really high quality stickers that have like a logo on it, have our website and have like our Instagram and all that accounts. I stick those outside the packaging, so it looks like it’s actually part of the packaging.

That sticker also has like a UPC coat on it. It’s like a super nice glossy looking like sticker that’s maybe the size of a deck of cards. Yeah, it has our logo, it has our UPC, it has everything on it. And so like we can label that one fell swoop and then two, Amazon can’t get mad at us for like us trying to drive traffic to our website instead of Amazon, because it’s actually a part of UPC label we have to have it.

Steve: So let’s say people do go to your website, are you doing anything special on your website like do you offer coupons in response for emails or anything like that?

Will: No, honestly. The amount of traffic we get say like four visitors a day or whatever, it’s not something that I will really spent too much time on.

Steve: Okay, so it is literally just a brand website, and so even if you were to drive traffic there, it doesn’t really matter that much.

Will: Yeah, if they got ten thousand visitors today, I don’t know if our sales can go up on Amazon really, because it’s like – they are really not that awesome at all.

Steve: Here is kind of a question that I have been curious about since we’ve been experiencing with our store. Prices in China have been increasing pretty dramatically from year to year. Are you looking in other countries to source besides China at this point?

Will: Yeah, I only do China usually because it’s the lowest price I find in Alibaba. If someone says they can give me a higher quality lower pricing in Vietnam or in Canada, or anywhere, I don’t really care, I’ll just buy the lowest price at the highest quality. I can care less what country I do business with.

Steve: Yeah, but are you– how would you find those other vendors like in Vietnam or Pakistan for example?

Will: Alibaba does have a bunch of other countries on there. But then to go into like the different trade shows and all that kind of stuff and just through my networks now that I know enough Amazon people, and I know people who have designed their own products enough times that it– I can go and I know people I can contact who’s like, “Hey this guy has made back pack before.” I can go to this guy about back packs.

This guy has made cosmetics before. I can go talk to him about the natural cosmetics. I’ll go talk to someone like that and kind of pick their brand and see what they know about the industry and say, “Oh no, yeah, you definitely want to go to source it from Vietnam.” You don’t want to source it from China. Then I will go with that. So it’s just kind of– I’m totally open to it, but I don’t have any specific way how I target non Chinese countries.

Steve: Have you traditionally then just used Alibaba and trade shows for your vendors then?

Will: Yeah. Like 99% Alibaba and then for like the wholesale accounts I get, that’s just stumbling upon them on Amazon where I see something selling for 200 bucks, has 200 reviews and it’s isn’t fulfilled by Amazon. It’s like I should probably source that and take over the buy box.

Steve: I see, I see. Just to kind of close this interview, we’ve been talking for a while, if you were to give some advice to people who want to try this, just to get into ecommerce and Amazon, give them a couple of pieces of advice.

Will: Don’t over think things. Don’t try to anticipate too many problems before they happen. It’s just going to make you freeze, you don’t move forward. I had someone email me today saying, “Should I start on Amazon Canada because I’m afraid I might sell too much out of the gates and on Amazon US, and I’m not prepared for it.” These are the kinds of problems that you do not need to worry about. It’s just a total waste of time, worrying about what if I sell too much and I can’t get my account under control. Figure out once you get there.

But these are the kinds of things where people try to sike themselves out, and smart people try to over think things. One of the biggest benefits I had was that I was young and dumb when I first started and I wasn’t worried about if I find LLC on [inaudible 00:47:38] and I wasn’t worried about if I was paying the exact custom fees, or any of that kind of stuff. I just got started and didn’t think about it. It sounds like that would be terrible advice, but honestly, until you sell 10,000 worth of stuff on Amazon, just don’t think about anything. Just get selling. And then once you hit that five figure plateau, then you can actually start systemizing and actually figuring out how to actually run your business.

Steve: In terms of timeline, minimum investment.

Will: Minimum investment, the more the better. At least five to ten thousand dollars, is you are going to be able to move a lot faster than if you only have say 1000 dollars. If you have 1000 dollars, you can maybe expect to be doing five thousand dollars in sales within six months, but you start with $5000, you can maybe be doing 20,000 dollars in sales in the six months.

Steve: Okay, and in terms of timeframe, how quickly can you make your first sale?

Will: That day. Like I do it all the times where I’ve thrown up listings and sold something maybe 20 minutes later.

Steve: Oh, you mean when you don’t have products?

Will: When you don’t have products?

Steve: I mean the whole process from start.

Will: You are starting from scratch? The fastest I’ve ever done it was from, with these glowing sunglasses, but they were from me ordering hitting buy now on Aliexpress to be in stock in Amazon and my first pair sold was ten days.

Steve: Wow.

Will: It was very first in China. It was like 6 days from China, and then I immediately later that day got it sent it to Amazon and it was like 3 days until I was in stock in Amazon and sold later that day.

Steve: So you can literally get started in two weeks, it sounds like.

Will: Exactly. That’s why it really discourages me when people spend two weeks just doing research, because they can already know whether something sells within two weeks.

Steve: It sounds like if I can just put some words in your mouth, you like to go with the shot gun method so to speak. You just put a bunch of stuff up, see what sells and just ride the winners?

Will: Yeah, and I’m not a detail oriented person. I’m not a marketing type person. I’m a type of person who likes to take action and see results after the fact. The shock and effect works great for me where I can go try a million products, and if none of them work, whatever, if they all work, great. It’s kind of thing where if you test a product and you have to liquidate it, a looser looses once and a winner wins forever.

Steve: It sounds like the minimum investment, I mean you are not putting down large amounts of money to test each of these products either, it sounds like.

Will: No, I am. I had this, like I was mentioning, I had this marijuana glowing sunglasses I was selling that were for like when you grow in indoor rooms, and they are basically sunglasses with a key word marijuana growing in front of them. I bought 20 pairs for $70 landed and I sold them out within two weeks and did $400 in sales. I turned $70 into $400 in two weeks. So it’s like you can’t really beat that kind of…

Steve: I kind of like your strategy actually. Less thinking, more action which is what a lot of people lack actually.

Will: Exactly. That was the whole entire reason why I kind of came up with this. It’s between what my brother and I what worked. From same people go, okay, I spent X amount of money in software, I’ve ordered two samples, I’ve been talking to suppliers for three months and I still haven’t sold anything yet. What should I do? It’s like, well, by three months, you should have already tested twenty products, you should already know what sells, what doesn’t and be on your way.

Steve: Interesting. Hey, Will, where can people find you if they have questions?

Will: You can email me, just my name WilliamTjernlund@gmail.com, also Twitter at @Wtjern add me on Facebook, I’m pretty easy to find because of my last name. Besides that, yeah, that’s the easiest way to get in contact me.

Steve: Awesome Will. Thanks for coming on the show. I learned a lot and it was kind of refreshing to hear a different Amazon strategy actually.

Will: Yeah. There’s– I’ve made money about a million different ways on Amazon between drop shipping, private labeling, wholesaling, everything and it seems everyone is kind of stuck in the same ark of chambers. So I’m happy you gave me an opportunity to kind of express my opinions.

Steve: Well thanks for coming on the show. I really appreciate it.

Will: Thank you.

Steve: All right take care.

Hope you enjoyed that episode, Will’s story is awesome, and it just goes to show that you don’t need a large stuff to run a seven figure ecommerce store. Now imagine just making 7.5 million dollars with just two people. Obviously it can be done. For more information about this episode, go to mywifequiteherjob.com/episode109.

Once again I want to thank FameBit for sponsoring thing episode. As I mentioned earlier FameBit is the best place to find YouTubers, Instagrammers and other influencers to promote your products online and it works. one of my guest Emanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing. And it costs as low as 50 bucks to start. And the best part is if you use coupon code mywife@famebit.com, you will automatically get $25 off. So go to famebit.com right now and get famous YouTubers to promote your products.
And finally if you’re interested in starting your own online business, be sure to sign up for my free 6 day mini course where I show you how my wife and I managed to make over 100K 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 right away via email. 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.

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108: How John Rampton Lost His 7 Figure Amazon Business

How John Lost His 7 Figure Business By Getting Banned From Amazon

Today I’m thrilled to have John Rampton with me on the show. John is someone who I met at FinCon 2 years ago and he’s got an amazing story to share with you today.

In fact, his story is almost unreal. 10 years ago, he was working in construction when he had his legs crushed in a freak accident.

He didn’t think he could walk again and during that time when he was bed ridden, he studied business, marketing and selling online 16-20 hours a day.

Fast forward to today, he’s started a bunch of 7 figure companies. He writes for Forbes, Entrepreneur, Huffington Post and he the founder of his current company Due.com which provides simple online invoicing and time tracking for freelancers and businesses.

Anyway, the reason I decided to have John on the podcast is because 1, he’s awesome and 2, I wanted him to talk about his former 7 figure Amazon business.

That’s right. John used to sell on Amazon and made a lot of money doing it too until one day he was banned and lost it all.

What You’ll Learn

  • Why John got his Amazon account banned
  • How he could have prevented getting banned
  • How he tried to get his account back
  • What he did with all of his inventory.
  • Recommendations for Amazon sellers on how to avoid getting banned.
  • Whether John recommends creating an Amazon business today
  • How he bounced back with his new venture

Other Resources And Books

Sponsors

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Transcript

Steve: 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.If you enjoy this podcast, please leave me a review on iTunes, and if you want to learn how to start 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 100,000K in profit in our first year in business. So go to mywifequitherjob.com, sign up right there on the front page and I’ll send you the mini-course right away via email.

Before we begin I’m happy to announce that I’m holding my own ecommerce conference on May19th in Miami Florida this year called the Sellers Summit. Instead of the large crowded conferences that you are used to hearing about, mine will be small and intimate with a focus on learning. So picture a small round table workshops instead of large auditoriums with a focus on actionable strategies that will grow your ecommerce business. For more information go to sellerssummit.com and watch the video.

Now before we begin, I also want to give a quick shout out to famebit.com for being a sponsor of the show. FameBit is the number one market place for influencer marketing, with over 20,000 YouTubers, Instagrammers, people on Twitter and vine looking to promote your company in any vertical whether it be beauty, tech, gaming, pets, and more. Yes, you can get famous YouTubers and Instagrammers to promote your business for as low as 50 bucks.

The best part is that you don’t really need any money at all to post a campaign and receive free proposals from creators. Now if you’ve listened to my podcast before, one of my guest Emanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing. And the best part is if you use coupon code “my wife” at famebit.com you will automatically get $25 off. Go to faembit.com right now, and get famous YouTubers to promote your product. Now on to the show.

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’s your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job podcast. Today I’m thrilled to have John Rampton with me on the show. John is someone who I met at Fincon two years ago, and he’s got an amazing story to share with you today. In fact his story is almost unreal. But ten years ago he was working in construction when he had his legs crushed in a very freak accident. He didn’t think that he could walk again.

During that time when he was bedridden, he actually studied upon business; marketing and selling online pretty much 16 to 20 hours a day, and fast forward to today he’s started a bunch of seven figure companies. He writes for Forbes, Entrepreneur, Huffington Post. He’s the founder of his current company due.com which provides simple online invoicing and time tracking for freelancers and businesses.

The reason I decided to have John on the podcast today is because one, he’s awesome and two I wanted him to talk about his former 7 figure Amazon business. So that’s right, John used to sell on Amazon and he made a lot of money doing it until one day he was banned and lost it all. With that, welcome to the show John. How are you doing today man?

Rampton: Hey doing very well? Thanks for having me.

Steve: Tell us about your back story. I mean I kind of glossed upon it in the intro, but how did you become the serial entrepreneur that you are today, and how did that freak accident shape who you are?

Rampton: I’ve always kind of been an entrepreneur. From a young age, I really loved money. I like making money. I like what it can do, but more importantly I kind of like when it just builds up in your bank account, and you could see that number just growing.

Steve: It is fun.

Rampton: Yeah, it’s a lot of fun seeing that number grow. From a young age, I started the candy stand, did this and working. After and I guess during college as you mentioned I got in a freak accident. I was working at a construction site. I got ran over. It crushed my right leg, completely just crushed it. The doctor said I’ll never walk like ever, ever walk again.

I spent the next however many years it was. It was about a year I spent in bed. I had to be– I mean to the point of I was sponge bathed and had– I couldn’t get out of bed for nine months. During that time, you still have bills to pay even though I was a college student. At the time I was with my parents living there. I still had a car payment, I still had this payment, I still– you still have bills. So I had to find a way to make money from my bed. That’s kind of when I got in into the whole marketing thing is I had no other choice. That’s what I had to do.

Steve: Amazon wasn’t your first venture then, right?

Rampton: No. I originally worked at real estate startup. We were helping people, helping real estate agents sell their homes online and…

Steve: This is from your bed or?

Rampton: Yeah, I was working pre bed and post bed. I mean if you can imagine that. So I got hurt. I was working a side job on the side, and decided I was going to make some extra money on the side, that’s when I got hurt. Basically what happened is I worked at this job and every time I made a sale I got paid like $8. I found this, when I got hurt and even while I was at my job, you can only call so many people every single day as a sales person. There’s only so many calls you can make. So then I started doing other things. I got into affiliate marketing. I got into tax marketing. I started finding there are better ways to sell than to just sit and call people on the phone.

I went on Craigslist and I said for $6 per sale, I will pay anybody who can sell what this is for $6. I was making a $2 cut. I was the top sales rep at the time, and I was getting like ten sales a day. Then I started having other people sell for me, and just playing the middle man and that, and I started getting really good at people and getting to know people and having men sell for me. My top sales day there was 540 sales, and the next higher sales rep was like 11.

Steve: That’s crazy.

Rampton: I was– one I was making great money, but two, I really learned how to sell online. And if you are going to get in to like ecommerce and selling on Amazon, and doing that type of stuff, you need to find what works and find ways to make money online. And as a business owner, you can’t just be like, “Oh I’m going to sell this way, or oh my customers are going to come to me.” You have to go out there and find those ways.

Steve: Okay, and so how did you transition from this real estate company to selling physical products on Amazon?

Rampton: That was kind of a weird transition. I actually left that company that I was working at and I started a competitor about a year and a half or about two years. Technically we launched like two years to the day after I left there. So we launched this company. It went very, very well. We sold it. We made some money. We ended up taking that money and pouring it directly into an ecommerce company located in Southern California called organize.com. We bought organize.com…

Steve: That an amazing domain by the way.

Rampton: Oh yeah, it was a great domain, and had existing sales. We had this very, very large warehouse with about 56,000 skews. We were selling pretty decent amount of things, of product. Had a little team and I came in there and I was like you know, I’m really good at this online stuff. I can triple the sales. We came in and I started applying my methods and stuff. We started really getting into ecommerce.

Some of the things that you can do in ecommerce and especially on Amazon, there’s a couple different tools you can use that for example they go on Amazon and they say, “Hey here’s your product, and here’s” — there’s twenty other products on Amazon just like yours. So you can say, “Hey I want my product to be 8% lower than the lowest price, but here’s the lowest I’m willing to go.” We went and did that for most of our products. Immediately we started, we almost doubled our revenue in a couple of weeks. We were selling a lot more. We weren’t as profitable, but we were selling just massive amounts. I mean …

Steve: Can we back a little bit. Why did you think you could triple revenues as soon you went in there? What things were the companies not doing when you got there?

Rampton: Well first of all, I analyzed the numbers and I’m like, man first of all traffic perspective. They were only converting at about a half a percent.

Steve: Oh my goodness, okay that’s really little, okay.

Rampton: So I look at that and I’m like man, there is one way I can triple. Second I went in there and most ecommerce companies have this problem. What happens with large ecommerce companies that have been around for a while is they are not up to date on current methods and practices. For example, when an order came in for us, we printed off a piece of paper. That paper then was taken over and manually entered into our system.

Then another then taken, they stamped it, take it back to the warehouse where the person would pick the stuff, ship it, mark right on there the shipping address, and then we would have to manually go enter that into Amazon.

Steve: Oh my goodness.

Rampton: Once that was entered into Amazon we take the reference number and enter it into Quick Books. That sadly is how a lot of ecommerce companies today are.

Steve: Was this a purely Amazon business when you got there or was it…

Rampton: It was Amazon. Their own website did about 10%, 12% of all things and there were a couple of other things, but it was primarily Amazon.

Steve: So it wasn’t FBA, it was self fulfilled Amazon?

Rampton: Correct.

Steve: Okay got it.

Rampton: Yup. When you have that many skews you really can’t – it’s really hard to do FBA. FBA for those who don’t know is fulfilled by Amazon where they fulfill the orders for you. If you’re– FBA has to have a good profit margin for them. You pay them a lot more and the skews have to sell very, very quickly. They don’t like inventory sitting on their shelves. Most of our things were ones to two Zs. We did have a lot, but we wanted the actual profit margin.

Steve: So these were other people’s branded products or were they your own branded products?

Rampton: They were other people’s products. All we did was sell other people’s products.

Steve: Okay, and so the margins probably weren’t high enough to make FBA worthwhile?

Rampton: I mean, they were, but the problem with FBA, and if you have somebody else’s products is – I mean one reason why we left FBA is if they are not your products, they will find the original person, and take you out of the equation. Amazon did that several times, and that’s how they ruin a lot of companies, middlemen, like ourselves. If you are going down that route and FBA will– if you put in there, they’ll go direct.

Steve: Okay. So this business was already there when you had acquired it.

Rampton: Correct, yeah.

Steve: They were selling organizational products?

Rampton: Correct. Like picture the container store online. We are probably their largest competitor online.

Steve: I see. So what was the differentiating factor? Were you just selling similar products in container store, or did you kind of have like a — what was your value preposition is what I’m trying to get at?

Rampton: I mean one the trust. I mean people just go online and they say what’s the lowest price, and we were usually the lowest price. So that was our biggest value differentiator. We sell the exact same products as container store. All container store is us with a different marketing. There’s a million other stores out there too that have these products and sell them online.

Steve: Okay and then so you went in there and you found I guess in the fulfilling side, there were a lot of inefficiencies, but how did you increase your sales on Amazon? You mentioned you used some automated pricing tool where you reduced prices by X number of percent. Was there anything else that you did to kind of scale this?

Rampton: I mean instead of like when you direct people to Amazon, there’s a couple SEO techniques. For example if your emailing out a list and you are saying, “Hey, buy this product on Amazon.” We usually say, “Hey go search this specific name,” and we direct people through the funnel instead of directing them to the end of the funnel. It doesn’t help you out as much on direct sales at that moment, but if you can direct people down the funnel that you know the majority of people are doing and everybody goes to you, Amazon’s algorithm is set to make it so that you come up a little higher in their search results.

We did this on two or three different occasions, one for example on a Christmas tree storage box. We said go type in Amazon Christmas tree storage. We were on page two. At the time we sent like– our email list was like 600,000 customers. We had a very, very large email list, but we directed probably like 50,000 clicks, people going towards this. They all typed in Christmas tree storage and they wanted the lowest price, and they know that ours is the lowest price because they could search it really easily.

They search that, and then they go to page two and they find us and they purchase us. Well over the course of one week we went from page two to page one, and that increased our sales on that one product by like 2000% because all of a sudden anyone who types Christmas tree storage is now, we are number one. And we are the lowest cost, so they are always going to purchase that. So we got– I mean we had one day where we had almost 6000 orders of that product.

Steve: Let me ask you this, how did you develop that 600,000 email list when Amazon doesn’t give you emails?

Rampton: Those were actually from our own site. We do get significant orders. We do have a lot of people ordering from our own site. Amazon also used to give you the email addresses. They don’t anymore.

Steve: Okay, what year was this by the way just for context?

Rampton: This was in 2014.

Steve: Oh, so it was just last year?

Rampton: Yeah, 2013, sorry.

Steve: Okay. So you were building emails based on your website sales which were about 10% of the over all.

Rampton: 10%, maybe 15% of the overall.

Steve: And then at the same time Amazon was giving you emails which you added to your part of your email addresses.

Rampton: Correct, yeah.

Steve: And then just to summarize for everyone listening, you’d have someone do a search and then you take that URL with the search term in it, and then drive traffic to that.

Rampton: We would actually drive them to Amazon and say to like Amazon.com, or to the category page, and we would say search this term. Like look for us.

Steve: Oh I see. You would have them do the search.

Rampton: Yeah, we would have them do a search. We won’t direct them through the search. We would direct them to the search. Again we lost a lot of money doing this, because we are directing people to our competitors. But we found that whenever we did this, people would search out our product, and find that one, we were still the lowest price. That’s in most worlds that’s the most important thing is having the lowest price. But we would direct them and we would say here is how you find us, here is how you do this and it worked, very, very well.

Steve: That’s interesting, because I’m just curious what the math look like, versus directing that traffic directly to the buy button on your own site, and I imagine your margins are a lot higher.

Rampton: We did a split test where we sent 25%. We originally started with 50-50, but then we switched. We always did 25% to our own website. The rest to Amazon, but on our own site people would do that, and we got usually a very high significant, literally when we sent that email out, we probably of the 25% versus 75%, we probably made equal revenue between the two.

Steve: Oh wow, okay.

Rampton: I mean it hurt us a lot. Having, from it taking us from page two to page one, or– we didn’t tell people what to type in either. We just said, whatever, and people used their own keywords, their own prices. We did say, type in Christmas tree storage or whatever you are looking for on the storage and find us there, because we have lots of products. People– so all of our search terms, now you type in that, and we were number one on all of them.

Steve: That is interesting. So that was just like a long term…

Rampton: The short term result within seven business days, they broke even, both of them 50-50. The longer term thing is we noticed the week after, like our sales improved by like 10, 15% a week.

Steve: That’s crazy.

Rampton: Like Intel was like, holy cow, we are getting– like I said we had one day where we had like over 4,000 or 5000 orders of one product.

Steve: That’s interesting. Do you recommend that strategy today?

Rampton: Yeah, it works. I mean don’t like bet all your chips on that, never put all your chips in one basket. We will get into that a little bit later.

Steve: Yeah we will.

Rampton: But like that was a very, very strong technique that worked very, very well for us. Again it hurt us in the short term; it helped us in the long term.

Steve: So can you talk a little bit about FBA, because you didn’t have the prime monitor next to your product, right?

Rampton: Correct, no we did not.

Steve: Were there any competitors with prime that were competing against you?

Rampton: We still beat them. The prime versus non prime, it still comes down to a pricing issue. If they can get it, if a person has to wait one additional day, they are already waiting– online shoppers are actually really, really good shoppers. They know what they are looking for and they are willing to wait. If they are not willing to wait, just go down to WalMart and buy it, or go down the container store and buy it.

Those are for people who have to have it now and impulse shoppers. Online shoppers are typically online impulse shoppers, but they are willing to wait. They are willing to wait a couple of days. The difference between getting the package in two days versus getting a package in three days is not that big of a deal.

Steve: Interesting. Okay and you still think that holds true today?

Rampton: Oh yeah. I mean, did it hurt us? Yes. I’m sure it hurt us. I’m sure there’s a percentage of people that say effort. I want in two days or I’d rather pay a $1.50 more to get prime. Overall I would say the majority of online shoppers are really, really, like price conscious, that’s why they are going online and not running over to WalMart. It’s a price issue for them.

Steve: So I was going to ask out this question, if you saw an FBA you said Amazon would seek out the true supplier. Did that imply that you do not recommend selling FBA for products that are non-branded to your own name?

Rampton: Correct.

Steve: Okay, so anyone selling other people’s products you don’t want to use FBA and sell much and fulfill to take advantage of the actual profits.

Rampton: Correct, if you are selling others, I don’t recommend it. Again if it’s small and you are doing ones and twos numbers, it’s just fine. If you are a stay at home mum and you are making $3,000, $4,000 a month, they are not going to go after you. But when we were making–when we were doing– I mean we had one product that netted us probably $2 million in one month. They are going to go after that.

Steve: Okay. And when you are selling other people’s– okay, so you basically out strategize all your competitors by getting it to rank in Amazon?

Rampton: Correct.

Steve: Okay, got it. I want to transition us a little bit, did you ever have any problems with Amazon going forward. I mentioned earlier that you got banned, was this just like a total surprise, or did you see it coming?

Rampton: Amazon is a little hard to work with. It’s a good thing and it’s a bad thing. What happens with Amazon is Amazon wants you to have a certain satisfaction rate and shipping rate and on time rate. When you are selling other people’s products and for example we did some drop shipping, which a lot people listening to this are probably going to be drop shipping.

It’s really, really hard if the drop shipper runs out of products. So you are last on the totem pole to get that. For example, that one product that we sold 5,000 in one day, we preordered 100,000 units in our thing. But within about 30 days we’d already blown through almost 100,000 units.

When we were selling those and when you are selling things, if you run out of something all of a sudden your shipping date gets kind of screwed, which forces you to fall below. They have a very high, I think it’s 96% customer satisfaction, 94% shipping rate, and 95% on time shipping. So you have to ship it by a certain day, and it has to be received by a certain day.

Then all the customers have to be happy. Around Christmas time and in high demand times, that’s very hard on any company. During that time, we were getting again, a minimum of a 1,000 orders of a couple of products a day, and when somebody runs out and you– we got probably on average like 3,000 orders a day.

Steve: Crazy.

Rampton: Yeah, we were getting massive volumes. It was great. Whatever that is, if you are getting 3 orders a day and one of those three orders is behind, that all of a sudden causes all your numbers to be skewed.

Steve: You can’t just cancel the order?

Rampton: Well, that hurts your customer satisfaction, because that is not good customer service to cancel orders.

Steve: I see.

Rampton: You can’t cancel up to like 3% of orders without it hurting you– but after that, for every like 1% of your total volume, I’m not sure what the exact is, but I’m kind of mixing this up, but for everyone 1% of your total order volume that you cancel, you go down 1% in customer satisfaction.

At the time when they canceled that and they told us, so they told us two days after they run out. And we’d run out as well. They are like it’s going to be a week and a half. And we are like all my work. By that time, by the time we paused that, we had 7,000 pending orders.

Steve: Oh my goodness.

Rampton: When you are only having 3,000 orders a day, and you have 7,000 pending orders I mean even for an entire month, that’s 10% of all your orders. You are screwed.

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Steve: How big is this operation, how many employees did you have?

Rampton: At the time we had like 14.

Steve: 14, that’s it. Okay. This kind of…

Rampton: We had most of our things were dropped shipped. 70% of all of our items were drop shipped. 30% were in-house.

Steve: So given that inventory is so crucial when using merchant fulfilled, you really had to have a very strong tie to your drop shipper’s databases.

Rampton: Correct, yup.

Steve: Okay, and so you had this one…

Rampton: For all of you wondering, that’s called EDI.

Steve: Yes, I think that’s a little advanced for the listeners, but yeah.

Rampton: Yeah.

Steve: So this one order basically screwed you guys over or this one product?

Rampton: This one product screwed us over. It was actually a combination. We had this a couple of times. This actually happened twice. So what happens in Amazon is you’ll get paused and then you’ll say, oh sorry we are improving this, then you have 30 days to make it better. But if all those orders are still like screwed, I mean it kills you overnight.

We got turned back on and then this happened again like three months later, whereas if somebody didn’t turn it off and it really, really hurt our company, and we ended up getting shut off permanently by Amazon. The first time they’ll kind of get back with you, the second time, like we tried everything. We contacted every person. I know every person I knew at the company and LinkedIn friend request them, everything. They would not turn us back on.

Steve: At this point you had a track record of doing lots of business with Amazon, right? It’s not like you were some pull down seller.

Rampton: Yeah, we had hundreds of thousands; I mean we had 100,000 reviews.

Steve: Crazy. And so that kind of implies that Amazon doesn’t really care even if you are making them a crap load of money. You fall below their standards and they’ll ban you.

Rampton: Correct. They just look at it as, oh, that product was making us a lot of money, but there’s still three other people selling that. Oh well. Or even if it’s your own product, they are like we are willing to take that, because we don’t want this perceived bad reputation.

Steve: I see. Could this have been prevented in your eyes looking back?

Rampton: I mean, automation, if we would have automated like if a person has a certain amount of orders that are outstanding, we automatically shut them off, but it’s really hard when you are getting massive amounts of orders for things. We could have preordered more. I mean we did preorder 100,000 or so units of one product. You figure that’s enough, but it’s not. In my eyes, there are little things we could do here, little things that we could do there, but overall there wasn’t much we could do to get over that problem.

Steve: I’m just thinking like this business model that you had doesn’t seem– it seems like you are going to get banned sooner or later.

Rampton: Most people, I would say yes. If they’re not your own product, yeah.

Steve: Just looking back also do you kind of still think that drop shipping this way is still a viable model?

Rampton: Yeah, I mean, I think it’s a very, very good model as long as you have good products that you can market that you know will go out, and you know your suppliers are not going to run out of.

Steve: Let me ask you this, the drop shippers, what’s their incentive not to list their own stuff on Amazon?

Rampton: Sometimes they just don’t want to deal with it. I mean we did have, we had like 4 or 5 customer service people. At times people from the warehouse and like our office staff had to come in and we had 8 people in customer service on the phone.

Steve: I see.

Rampton: A lot of companies don’t want to have to deal with that. They’re like hey, we make this product; we make a 20% margin on it no matter who we sell it to. Let’s just be good at that and sell that product, and there’re thousands of companies like that. They just don’t want to deal with it. To make an extra like 15% would increase their cost significantly; versus we have a thousand other products that we’re selling, so we can do that customer service.

You have to figure 1 to 3% of all orders will be coming back to you. It doesn’t matter if you have the best product in the entire world. 1 to 3 are going to be coming back, and most of the time the ones that come back are damaged or broken and problems like that. Again a lot of people don’t want to deal with that.

Steve: Even with FBA these companies– because you’re essentially outsourcing all that.

Rampton: I experienced the exact same thing like especially when you’re shipping containers and organizational stuff, like breakable items, a lot of these things just get broken in the mail and sure like, okay, it’s FedEx’s fault, or it’s UPS’s fault, but you still have a customer service, you stop to send out a new item, you still have to file that request. You still have to do all that. That requires a human body. For a $20 item, it’s going to take a person 20-30 minutes of time to get a refund on that item. Does that make sense?

Steve: It does, it does, so I’m thinking these people as like pure distributors. They don’t want to deal with anything consumer-facing, right?

Rampton: Correct. We are the consumers, the resellers.

Steve: I’m just curious logistically, when you got banned the first time,, were there any special steps that you took to get reinstated that first time?

Rampton: They make you go through a very, very strict process. Usually when you get banned you’ll get an email, you’ll have to log on, you’ll have to put together a reconsideration letter and send that back to them. It’s very process-driven and process-oriented. They do that because I’m sure they ban a lot of people.

Again we were a major account for them, but it wasn’t major enough to really have any direct people. I think that they could up their game in that, and really improve their company 10 fold by really caring about people like us, but again they don’t.

Steve: How long were you down for that first time?

Rampton: The first time we were down for 18 hours.

Steve:Okay. Oh okay, that’s not terrible.

Rampton: No, it wasn’t bad at all. I mean that still is a day, and a couple of hundred thousand dollars in sales, but yes.

Steve: Then the second time it was permanent. You were expecting that to happen then?

Rampton: No. We weren’t. We kind of got shut off. I mean we were tittering the line, but at the same time it was during our peak, peak, peak season. We were like okay, we understand this. We understand that we’re tittering the line, but we were a little bit over on the line towards the positive side. We were actually doing well.

Steve: You get that letter and then what happens?

Rampton: We got the email and our [inaudible 00:34:44] came in and she’s like, ah expressitory word, and I was like, well let’s get it back on. She’s like, okay I’m trying. I’ve already done this, this, this. The next day they didn’t respond, and the next day we submitted something and they were like we’ll be back to you within 24 hours. 4 days later we were like, okay. We started adding every person. We started calling every person, trying to make it work.

Steve: Did you shut down after that point?

Rampton: Yeah. It was like 2 weeks later, because I mean, our site sustains a lot, but it doesn’t sustain that many people, and in the ecommerce business we’re used to playing the numbers game. We have at any given time we had half a million dollars out like in accounts payable. We did have at the time like $180,000, maybe $200,000 in accounts receivable like coming from Amazon, coming from a couple different places, but that doesn’t make up for the half a million plus a good $50,000, $60,000 in payroll.

At that point I was like, we got to just nip this in the bud. There were a few little factors in there. I don’t really want to get too much on this, because it gets into details a lot more like on the thing. There were a bunch of other factors where we were just like, man this isn’t worth it to keep this alive.

Steve: Because I was just thinking, what I want to ask you was looking back would you have focused more efforts on your own site in marketing, or would you have still done the same thing and gone more or less selling on Amazon?

Rampton: I would have focused around, towards the end when we got cut off by them, we had never gone on Overstock, or [inaudible 00:36:50], eBay or other places. We put all of our skews on eBay, and we started selling like 200 units immediately. Then we put them on Overstock and we’re selling another 100 units a day. We made up for about 20 and maybe even 30% of that within a week, and we were like okay well damn it, why didn’t we do this originally, because that would have improved our margins and had us a lot more profitable and made us been able to sell more and stuff like that.

My recommendation for people getting into this business is don’t have 100% or 90% or even 80% of your revenue all from one place. If 50% plus of your revenue is coming from one source, you need to start working on other sources to get in revenue. If we would have done a lot earlier– eBay limits you in the beginning to how many products you can sell, same with Amazon, same with all of them. If we would have focused on that a lot sooner, we would have had a lot better of an ability to make a lot more profit earlier on which would have helped us through this time.

We were two and half, three weeks after Amazon shut us off before we were at actually live in Overstock. House was another one. They were another market place and we were selling like 10-15 units a day on their thing. If we had had all these other things along the way, and we’d been shut off, we would have been like, oh shoot there goes 40% of our revenue. We’ve got to lay off a couple of people, but not close down shop because it doesn’t make sense. We just didn’t have the time at working at those to really make sure that it would work.

Steve: Basically there wasn’t enough cash in the bank to kind of pay all the bills for a couple of months. Is that correct?

Rampton: Correct.

Steve: Okay. You decided to shut that down may be like a month later it sounds like?

Rampton: Correct.

Steve: What happened after that? Did you immediately start your next venture?

Rampton: Yeah. I started my next venture a little while after that, again kind of going back to the other thing that actually ended in a lawsuit. It was with the previous owner so part of us closing it down was it didn’t make sense knowing that a couple of things were not disclosed when we purchased the business a year prior. We actually ended up filing a lawsuit and winning that lawsuit about a year and a half later. It wasn’t that long ago.

Those were other reasons and any person needs to make sure that they weigh all their options. Like I wasn’t everyone to be like, oh my word I just want to shut this business down next. Like there were so many factors in this where I’m like, it doesn’t make sense for me and my family to do this, so we shut it down. I kind of tucked my tail, lost tons, and tons of money, but you know this happens in life. You have successes, you have failures.

I then went back to marketing which is my thing. I started advising some companies, I started building my own personal brand. I got a couple odds and ends jobs. I got a couple of consulting gigs where I was helping different companies in search, and I was paying my bills. I started basically building up that cash flow. My wife and I live very, very humble lives. We don’t spend so much money. We pay for cash for like everything.

These are things that helped us the couple of crashes that we’ve had in our lives. To know that like, sure like I live in Palo Alto California, one of the most expensive places in the world to live. What most people don’t realize is I rent out my basement. That covers all my expenses. My entire living expenses is covered by me airbnbeing [ph] my basement every month, literally everything, the entire mortgage covers it. We do things like that and that allowed us to get back on our feet and start saving up money for the next venture.

Steve: Which is dew.com?

Rampton: Which is dew.com. About a year and a half after that collapsed, I was able to go purchase dew.com. Dew.com is an online invoicing thing. Firstly we kind of did the same thing. We found a really good URL and I purchased it and then I went and I was like well I need something to do with this. I went and bought an invoicing company. I was just like, hey here’s a good invoicing company, and I put it on Dew.com.

Steve: I’m just curious; you seem to like purchasing existing companies as opposed to starting them from scratch. Is that just a personal preference?

Rampton: Yes. I realized that I am not the best product person in the world, but I’m an amazing marketer. I always say that nobody can market products better than me out there, nobody. I can market products better than anybody else out there. But actually building a good product that people like, I’m not the best at. One tip for people is know what you’re good at.

If you find what you’re good at, don’t try and be good at something else. Be really, really good at one thing and okay at everything else. I realized I’m really, really good at marketing, but I’m okay at products, so I went and bought a good product, a really good product. Now I can market the hell out of it.

Steve: I’m just curious, is there a reason why you avoided ecommerce the second time around?

Rampton: I was really burnt out and I hate Amazon right now, like I still hate them. I think eventually I’ll get back to that, but right now, I just haven’t.

Steve: The things that you learned about marketing you learned while you were in bed during your injury?

Rampton: I learned a lot while I was in bed during my injury, but I learned a lot along the way, like just trial and error. I’m the guy that takes chances on everything. I’m the guy willing to jump off a cliff, and see if I can build a parachute or build the wings on the way down. That’s my experience. It’s trial by fire.

Steve: What I wanted to ask you was, when you’re a brand new online store and you sell physical products, what would be your first steps on the marketing side to get your first couple of sales?

Rampton: My first steps on a marketing side is probably research. I would research and make sure that you compete. There are a lot of other people out there who have been doing this for a long, long time, and if you can’t compete with them and you don’t know, you’ll never go anywhere.

If you want to sell a product, even if it’s your own product, if you go to the market place just saying, here’s what I’m going to charge, because somebody said online that they’d pay me that much. It’s great, but if you’re an ecommerce store and there’s other people that are a lot cheaper than you, you’re never going to sell anything, or it’s going to be onesy twosies. I would say a lot of research. That’s the first thing I would do to market my product, it’s research online.

Next find tools that can different price matching thing, so you’re actually when people search for a product you are the lowest price. Start getting a reputation for yourself. After you start getting a reputation you can up that price a little bit.

Steve: It sounds like in our conversations a lot of what you’re talking about is price-based, which seems to imply that brand and quality don’t factor as much if you’re not well known. It always comes down to the lowest common denominator which is price. Is that …

Rampton: I would say that is pretty true. I would say in that I was never selling a bad product, or a non-reputable product. I have always sold very, very high end products; I’m just the lowest priced of the high end.

Steve: I see. If you were to do an ecommerce thing all over again, would you sell other people’s products, or would you try to develop your own at this point in time?

Rampton: I would sell in mixture.

Steve: You’re saying you’re in drop shipping as well?

Rampton: I would just make sure I get in bed with the right drop shipping partners, and make sure that I take priority.

Steve: How do you get into bed with a good drop shipper if you have nothing, if you’re a beginner?

Rampton: Trial and error, trial by fire. Go find 20 of them and start working with them and start selling, and really get to know– I would really find a company that works on EDI, because that means their inventory is live updated. You want to find people who are online, who know what their inventory is.

EDI updates on like a true second, every one to two seconds. Like it updates your database, their database and then in turn updates Amazon, eBay, all the other places. You know what your live inventory is, and that would eliminate the problem all together.

Steve: Unless someone screws up on their end?

Rampton: Unless somebody screws up on their end, but the likelihood of that happening with EDI is very, very hard, because they have to physically scan in every product, and when products go in, unless they’re defective which is one thing, but when products are purchased somewhere else or by another vendor, that’s automatically taken out of the system, so you don’t have to worry about that.

Steve: I also want to give you an opportunity to talk about due.com, and what some of your value propositions are for your new business.

Rampton: We are due.com. We’re an online invoicing and time tracking company. Some of our competitors are FreshBooks, Xero, Cutlass, there’s a lot of them. Some of our value propositions; one you can bill people online, you can get paid online. We’re trying to make it a lot cheaper for people. You can integrate it with your own site, so you don’t have to go to a third party site to bill. It can basically all be done internally on your own site. When somebody gets your bill, they’ll come to your site to pay it. Those are some of the things…

Steve: Hope you enjoyed that episode. John’s story just goes to show that you should never, ever depend on a single channel for all of your income for your business. If I lost a seven-figure business overnight, I’d probably go and start crying in the corner and swear off entrepreneurship forever. What’s incredible though is that John has bounced back and has created another successful business, because he is the man. For more information about this episode go to mywifequitherjob.com/episode108.

Once gain I want to thank FameBit for sponsoring this episode. As I mentioned earlier, FameBit is the best place to find YouTubers, Instagrammers and other influencers to promote your products online, and it works. One of my podcast guests, Emmanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing, and it costs as low as $50 to start. And the best part is if you to use the coupon code ‘mywife’ at famebit.com you will automatically get $25 off. Go to famebit.com right now, and get famous YouTubers to promote your products.

Finally, 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 $100,000 in profit in our first year of business. Go to mywifequitherjob.com for more information, sign up right there on the front page, and I will send you the course right away via email. Thanks for listening.

Thanks for listening to 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.

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Ready To Get Serious About Starting An Online Business?


If you are really considering starting your own online business, then you have to check out my free mini course on How To Create A Niche Online Store In 5 Easy Steps.

In this 6 day mini course, I reveal the steps that my wife and I took to earn 100 thousand dollars in the span of just a year. Best of all, it's absolutely free!

107: How To Make 17 Million Dollars Selling iPhone And iPad Cases Online With Kai Klement

How To Make 17 Million Dollars Selling iPhone And iPad Cases Online With Kai Klement

Today I’m thrilled to have Kai Klement on the show. Kai is someone who reached out to me with an incredible story and I knew that I needed to have him on the podcast.

Kai and his partner Jorg(yerg) are the co-founders of Kavaj (kavai), an internationally top-selling leather case manufacturer for phones and tablets. They’ve sold over 500,000 cases generating over 17 million in revenue.

They both started out as former Amazon employees with zero knowledge of manufacturing, or product creation and ended up creating this awesome ipad and phone case company. Enjoy the interview!

What You’ll Learn

  • How Kai came up with the idea to sell iPad cases
  • Kai’s motivations for starting his business.
  • Why Kai decided to manufacture his own cases
  • Kai’s product creation process
  • Where Kai found his vendors and how he designed his cases

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Transcript

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.Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin I just want to give a quick shout out to famebit.com for being a sponsor of the show. Famebit is the number one market place for influencer marketing with over 20,000 Youtubers, Instagramers people on Twitter and vine looking to promote your company in any vertical whether it would be beauty, tech, gaming, pets and more. Yes, you can get famous Youtubers and Instagramers to promote your business for as low as $50.

The best part is that you don’t really need any money at all to post a campaign and receive free proposals from creators. Now if you’ve listened to my podcast before, one of my guest Emanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing. And the best part is if you use coupon code mywife@famebit.com you will automatically get $25 off your first campaign. So go to famebit.com right now, and get famous youtubers to promote your products, now onto the show.

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 Kai Klement on the show. Now Kai is someone who reached out to me with an incredible story, and I knew that I needed to have him on the podcast. So Kai and his partner Joerg are the co-founders of Kavaj, an internationally top selling leather case manufacturer for phones and tablets.

Now they’ve sold over 500,000 cases generating over 90 million in revenue on a span of about four years. Now they both started out as former Amazon employees with zero knowledge of manufacturing product creation, and they ended up creating this awesome iPad and phone case company, and with that welcome to the show Kai how are you doing today man?

Kai: Thank you very much for the nice introduction Steve, I’m very well thank you, how are you?

Steve: I’m very good; I’m really excited to hear your story here. So give us the quick background story about Kavaj, how you kind of came up with selling genuine leather cases online?

Kai: Yeah, it’s very easy actually, so in 2010 when Apple launched the first iPad, Joerg — he wanted to have one, he was very, very keen on it. And by the time this case was only available in the US and as we founded our company in Germany, so we had to get it somehow. Joerg asked a friend who was a pilot at Lufthansa during the time to get one in New York. And once he had his iPad obviously he needed a case. So we both were looking around, checking out Amazon in particular what was available, because Joerg and he had his dream case already in his mind.

His dream case was a thin genuine leather case. And by the time nothing like this was available online and nothing available on Amazon nor somewhere else. This was like the turning point, then we thought okay let’s do it. We will produce our own case and we — yeah first we do it for us, and then second we do it for everyone else, because there was nothing around we liked. So it’s like the story how we came up with the idea.

Steve: It was — your primary motivation was because Joerg was looking for an iPad case?

Kai: Exactly, this is a private motivation, so it’s the passion for — we needed first ourselves and then yeah let’s do it.

Steve: Were you guys both working at Amazon at the time?

Kai: Yes, exactly this was the background, we both we used to work Amazon before we started Kavaj and yeah.

Steve: So did you start this while working on Amazon, or were there any rules about that?

Kai: Yes, exactly we started while we were working there; obviously it was not allowed like to build your company besides working there. So we did it like everyone else was doing it, who has this entrepreneurs [inaudible 00:05:19] like we used a company which was led by my wife, and then we were kind of advisors for her obviously we were running it all.

Every morning we were like we met at seven and discussed like our project, and before we started like producing genuine leather stuff, we did a trial. We took a little bit of everyone and then we did a trial in order to test the whole system like how to source stuff, how this stuff works, how Amazon…

Steve: This first case was not leather though, right?

Kai: Yeah, exactly we just took like simple case and then yeah created…

Steve: So before we get into like the product creation, I was just a little bit curious since you mentioned that you formerly worked at Amazon, did working there actually help you guys at all, and what did you learn from Amazon that kind of gave you the courage, or helped you sell this product?

Kai: Yeah, definitely it helped us. This was our idea in the first place to get into cooperate business for 2 or 3 years in order to learn as much as possible about business, about running businesses. And one of the most important things I think we learned even while working at Amazon is like to be so customer focused is one of the key factors of your success. Like this was the first reason in the first place I used to work for Amazon because I was such a happy customer.

Okay, I said, I have to work for this company because they are so customer centric. And while working there we recognized they really lived this kind of customer philosophy also internally. Every project, everything is like, on the top as the customer. If you have a reason why the customer will love this or will hate this, we will always get the project through management.

Steve: Okay, but in terms of any sort of insights and contacts inside of Amazon to help you launch, did you guys take advantage of anything like that?

Kai: Unfortunately not, I would even say we had a kind of disadvantage …

Steve: Oh why is that?

Kai: Because like all the people we used to work with, they said, okay, they know everything; they don’t need an account manager. So basically — imagine obviously we had the advantage to see all the internal figures, internal data of other people or other sellers working there.

This advantage, everyone has this, so during coffee breaks, stuff like this everyone was talking about okay, I would do this, I can do this. But Steve it’s one thing to have all this knowledge, it’s completely different to use it and do your own thing, so…

Steve: Sure, I was just wondering if you guys got by like sat around the water cooler and saying, hey, these leather cases are really hot, we need to get into that, because you have access to that data.

Kai: No.

Steve: Okay.

Kai: But there are a lot of products we have access to, but as I said it’s not the access to data or the information that’s really the use of it and really doing it.

Steve: Okay, so let’s start from the beginning then with your cases, you just mentioned to me earlier that you didn’t start out with a leather case; you started out by testing something, a plain old case. So was this just a generic case that you sourced from China or something like that?

Kai: Exactly, we started out with a simple plastic case we sourced on Alibaba, because we just each didn’t have $1000 and yeah. In order to get enough products, we put the money into the product and then just sourced via Alibaba and via email.

Steve: And what was the purpose of this test because it wasn’t anything close to your final product, right?

Kai: No, exactly it wasn’t like our dream case, the purpose was really to set up like all these background systems we needed in order to scale the business basically. So meaning first how did we get the products to Germany? How do we get the products to Amazon warehouse, so we…

Steve: Okay, so the logistics basically?

Kai: The logistics, so then the second part was what do we need company wise, which company do we have to establish? What kind of taxes do we have to pay, where? So the second biggest part and the third part obviously was how do we get the product to sell on Amazon. Obviously we had all these figures, but we didn’t– yeah, we hadn’t been like the seller so far, so we didn’t know how did we do this.

Obviously I was in working in this department, so I told people what to do, but I didn’t see what they actually did. We built up our own system and like promoting the product and generating traffic and marketing the product, so these 3 big things we basically set up with our test.

Steve: Okay and in that first vendor selling the plastic cases, they weren’t the ones that manufacture the leather ones, are they or?

Kai: No.

Steve: Okay.

Kai: This is what we recognized, we had one, it wasn’t a factory by the time it was an agent on Alibaba.

Steve: Okay.

Kai: When we started our real business with Kavaj we met this agent in China, and recognized we cannot talk, because we only communicated via email so far, and she was not able to talk in English. The boss of the factory of the agency wasn’t able to talk English either, so our relationship was finished once we met in person.

Steve: Okay, let’s talk about these plastic cases first.

Kai: Yes.

Steve: You listed them on Amazon how did you– it seems like they were just generic cases right that all the other guys were selling as well, so how did you get rid of those, or how did you move those in the first place?

Kai: Exactly, it was a generic case, we just proto did a simple generic name on it and RAR14, and then we listed the product. The first one we did is really we listed the product, we optimized like the whole product detail page.

Steve: Okay.

Kai: And we named all these information which are for free on Amazon on the detail page, first the title, the bullet points, the product description, the search key words, and the images is one of the most important parts, is the images. This is where we really had like the lack of founding a company very early, because we tried to find someone who took images like for our budget. We emailed 20 people around our city in Munich, and they all offered us images of like $1000.

It’s a very high price for one, the shooting of high professional images. The other day one guy came back with a really cheap like $200 offer, and we first couldn’t believe it and in the end it was really a very professional photographer who used 2 or who’s doing photos for BMW and all these big machines, and he said he really like our inquiry. He was starting a business also like 30 years ago, and he decided to help us out if we come back again. He wanted to test our inquiry if we were serious about it.

Steve: I see.

Kai: Then we got to him and we got really high, very, very high quality images, and I would say this is one of the key elements on Amazon. If you have really high professional images, you are way better than a lot of other of your competitors.

Steve: From what I understand you stood out from the rest of the park because of your product photos at the time?

Kai: Yes exactly, this was…

Steve: This is probably almost 10 years ago then right or no not that long?

Kai: No it’s like 6 years ago I would say.

Steve: 6 years ago, okay.

Kai: Yes 6 or 6 ½ years ago we did this, yeah.

Steve: Would that work today like going back and trying to sell a generic case, I’m just curious what your opinion is on that?

Kai: Yeah I think it still would work as a one shot, it still would work with this strategy, because it’s something a lot of people are doing like this one shot opportunities in several niches, because Amazon is such a huge market place. It’s going like when we used to work there like Amazon had 80 around 88 or something million customers.

Today I just checked the favor it’s like they have 295 million customers worldwide. They’re just growing this so huge that I would say it would still work, and but what we did after that is what works much better is like to build a brand on Amazon.

Steve: Right.

Kai: Because this is like the ultimate thing, we had to learn, we almost messed up with this but…

Steve: Are you still there?

Kai: Yes.

Steve: The tendency– so you had this one successful product in the beginning which was just like a rebrand of an existing product. How did you decide that that wasn’t good enough and that you actually needed to create your own branded product? Because a lot of people will just take that money and they go hey great, let’s keep this going?

Kai: Yeah, the thing is this case was as you said it was just a generic product with not designed anything name on it, and just a weird kind of name. There was no brand strategy behind it, not at all, so…

Steve: Okay.

Kai: Fortunately our designer by the time he convinced us hey if you want to really be successful in the long-term, build the brand, and do this consistently through all your channels, you’re using your brand, so…

Steve: Okay.

Kai: We decided to do this first, in first place we decided to do this in design and in naming process. The naming process I would say also with our cases because we have all got a city name, so…

Steve: Okay.

Kai: People nowadays after 4 years like they really look for our brand and the city combined. Then they find our case, this was of course like by chance, it wasn’t really planned out like this well, but now we have experience. We say okay, have you just started? The best way you can do this, build the brand from the start out, think about all your elements you can put into this.

Steve: Just curious, you said you had no practice or any experience, how does one go about designing a leather case from scratch?

Kai: Yeah. This is also pretty simple, because what we did is we took two weeks of our vacation at Amazon, and then we checked out okay, where can we go out to get ideas about a simple and genuine leather thin leather cases, where can we go? Then we checked out the fairs in Hong Kong and in China.

Steve: Which ones, the Canton Fairs…

Kai: Yes.

Steve: Did you go to Global Sources also?

Kai: Exactly we went to Canton Fair, Global Sources.

Steve: Okay.

Kai: And where all these suppliers meet 2 times a year and we went there to get ideas, so what was possible, and what exists. Then we met with a couple of– we did like our due diligence with the suppliers. After deciding which supplier would be suitable for us we went to the suppliers, and actually checked out their factories and met with the designers in house, because every factory basically has like the tech guys and designers in house, who are producing their design for the local market usually, and then we just talked as like as I said we wanted the case basically for us for ourselves.

Steve: Right.

Kai: We saw what they can do, and then we asked okay we want to change this and this and that, can you do a sample for us? So and then we…

Steve: Did you specify measurements, how specific were you when you…

Kai: No, we didn’t specify any measurements because for the devices like the iPhone, the iPad, stuff like this, it’s all like you cannot change the dimensions, they are all given so to speak.

Steve: That’s not what I meant, like if you wanted to put a little pocket on there, did you specify the dimensions, or did you let the designer give you?

Kai: No, we didn’t specify the dimensions, we iterated. We said okay we want like, we want the following like this, or we want to add something here and then they gave us a sample, and we checked it out with a real device. We said okay, no we don’t like this, we don’t like that, can you please change this, so…

Steve: Were you in China the whole time during this iteration, or did you shift things back and forth?

Kai: No, we were during our first order where we were in the first, we were in China all the time, so it was like a very fast process was kind of this, we did this.

Steve: Wow okay. Did you, I’m just curious, did you commit to a large order before they were willing to do this for you, or did they just make these samples for you?

Kai: They made the samples for us before committing to the core [inaudible 00:19:57].

Steve: How much did you have to pay for each sample?

Kai: Nothing actually, because we decided … I think because we tried to build relationships, like really from the start. They also had the feeling, okay these guys are serious. They are here, they ask us for samples which nobody really does in this … Because we would spend, really, hours and then days there. I think they were like also sure that we would definitely buy something if they just deliver what we asked for.

Steve: Yeah. That’s just a quick tip for the listeners out there. If you actually go to the fair and meet the vendors face to face, they’ll take you a lot more seriously. We found the same thing with our stuff. Clearly that’s something that Kai experienced with his case.

Kai: Yeah, definitely, much, much, much more seriously. We’re going to China basically 3 to 4 times a year just to foster these relationships, and do it face to face.

Steve: You’re iterating over these designs. For anything custom, what was your minimum order
quantity for your first design?

Kai: It was always 500 for every design.

Steve: 500 units?

Kai: 500 units, yes.

Steve: Okay. Did you start out with one particular model? Was it just for iPad and when did you decide to branch out to some of the other devices?

Kai: Yeah, this Steve actually was one big mistake we made, because we actually knew that we had to focus on a few models or a few designs in order to be successful, but once we were there in China, we took vacations, and was first time order and all these hundreds and hundreds of suppliers and millions of people.

We were kind of overwhelmed during the first days. Then we made the mistake to do 10, I think it was 11 designs for our first order. 11 X 500 different designs, and then also 3 different suppliers. Once we were back in Germany and we tried to build our system, we build with our test case; we recognized it’s impossible actually to get 11 different designs on page one of your main search keywords on Amazon, because this is the ultimate goal.
Your listener should listen closely, this is your ultimate goal for all you do on Amazon is to have your main keyword, and to get this main keyword, your product, on page 1 of Amazon search results, and in the best case, 1,2,3, because this is where the magic basically happens. This is not possible with 11 designs.

Steve: Right. Did you drastically cut back then, and only do a couple of designs per keyword I guess?

Kai: We drastically cut back. Unfortunately we had to remove quite a lot of these first designs. We didn’t sell all of these. We cut back to maximum 3 designs per device, so we can claim slot 1 to 3.

Steve: When you say 3 designs do you mean designs and colors, or do you just mean designs?

Kai: I mean designs, and we do 2 colors, so basically we have maximum six products per device.

Steve: The minimum order per color, per device is 500, right?

Kai: Yes, nowadays are down to– we can basically order what we want, because we have really, really good relations with our main supplier, so it’s possible to get way below 500.

Steve: Okay. Yeah. It’s like that with ours too, but I am curious when you’re talking with these guys … First of all what were your margins early on?

Kai: On the test case or on …

Steve: On your first leather case.

Kai: On the first leather case like it’s always around 50-70%.

Steve: Okay. That’s interesting. I would expect it to be a little higher than that. Basically you were making around 3X it sounds?

Kai: The thing is with genuine leather you cannot compare it to these cheap plastic cases. We have to buy at a much more higher price. In order to sell really big numbers you cannot price it higher than like $50-$60 on Amazon, because that’s like the matching price for on Amazon. After that it is just impossible to compete against the $10, $15 on the first page.

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Steve: How did you guys know that you were getting genuine leather?

Kai: We tested everything. Basically we asked a testing company to test all the stuff for is it genuine leather using no chemicals which could be possibly dangerous.

Steve: You did your first production; let’s just say you did 500 units. Once you got those 500 units, did you have any defects? Did you have any issues, or did you just kind of list those on Amazon right away?

Kai: No, we had like– not with the genuine leather cases we had no issues, but with two cases from the other designs we had issues because they were not packed properly. They got damaged. Almost half of them got damaged. Fortunately by the time we did the QC ourselves in Munich, we spent almost a day looking through 700 cases, and just throwing 350 away because they were just compressed, so we couldn’t sell them anymore. The thing is they just forgot something to insert into this case, so during transportation they just made the mistake.

Steve: I see, so an inspection company probably would not have helped in this case?

Kai: No, I don’t think so.

Steve: Okay. Your first batch, it sounds like you had to throw away half almost?
Kai: Yeah, half of one design. It was really one case … I don’t know how they forgot this, but it was this one supplier who forgot to insert something so that the transport wouldn’t harm the cases.

Steve: You went through everything and then you just listed them on Amazon. You hired a photographer to take professional pictures?

Kai: We still used the same photographer we had for our first test case. He was helping us out the second time, and the third time he said, okay, now you’re in business and I’m actually much more expensive. Please find another one. He was like really was time constrained and we found another really good one.

Steve: What are your steps to getting the top 3 spots on Amazon search, because iPhone and iPad cases are an extremely competitive area?

Kai: Yes, exactly. What we do right now is we have iPad, and obviously we expanded to iPhone and iPad mini and all other Apple devices. The key is there are 2 main aspects to this. First thing is really optimize everything on your product detail page you can do. Like I mentioned, like the key words, the title, the hidden keywords, and the images, and …

Steve: Let’s go to that in a little bit more depth before you go on. How do you figure out all the keywords and make sure that you’re getting all of them? Do you use any tools or …

Kai: Right now we’re using tools. Back when we started we didn’t use any tools. We just thought okay, what are the top 3 main keywords our customers would search for? Only during our time we made this process better, meaning one thing like you said buy a software that can help you with this, but the easiest thing you can do, or your listeners can do is really check out what Amazon is suggesting when you type in your best keywords, because Amazon automatically fills in your search.

For example if you type in iPads, you will definitely see iPad case as one of the suggestions, and these suggestions are like the main search terms in terms of volume, what is currently running on Amazon. If you do this like for example iPad case, you would see there’s iPad case and there’s very high volume search terms ‘iPad case leather’.

If you type in iPad case leather, you will see iPad case leather and very high volume is iPad case leather black, iPad case leather brown. Only by checking out these automatic search suggestions, what Amazon is doing there, you can find your top keywords very, very easily.

Steve: You mentioned you use tools today. Do you suggest any keyword tools to use?

Kai: Yeah. We use MerchantWords.

Steve: MerchantWords, okay.

Kai: Yeah, we use this to just like search volume, and it’s basically our primary search tool. Another one we use is FreshKey, I don’t know if you have heard of it.

Steve: FreshKey. Yes I have.

Kai: These are basically 2 tools which can kind of automate this manual work to check out the Amazon Keywords.

Steve: You’ve got your keywords down; can you describe the process of putting together the bullet points on your listing?

Kai: Yes, of course. What we do is optimize first title, because this is like priority number one on Amazon, and second is bullet points, and we use … All keywords we’re not using on the title, we try to use in the bullet points because priority number two when you search on Amazon is bullet points. Most current information is that Amazon is currently changing its algorithm, and probably ranking the search keywords higher than the bullet points, but we’re just trying to figure out if it’s already happening or something like this.

Until today we’re really optimizing the bullet points as the second step, meaning we put the keywords, we’re not using in the title. The second is we answer the five questions a customer would ask us in the store, in an offline store. Imagine you were an offline store and a customer comes in and asks, okay, what can I do with this case? We try to use customer language, and combine it with the keywords we found for product.

Steve: Interesting, so what are the five questions that a customer asks about iPad cases?

Kai: First, what can I use it for? Do we have stand functionality? Does it support auto wake up function? Can I access all ports? Does it match your other Kavaj products? It’s [inaudible 00:33:57] and that’s the good thing of building a brand.

Steve: yeah, definitely.

Kai: People right now, they really want like sets. They want Kavaj iPad, iPhone, iPad mini and now we started doing wallets, and they just combine everything and they just look for the brand, and then next product.

Steve: You have your bullet points down, trying to use the customer’s language, answer commonly asked questions, what about your details, the product description?

Kai: Yes. Product description, we also value this very, very high. We take the same approach basically. We try to use really customer language. We get this customer language before using and reading the reviews. What we did is we called a couple of customers and did quality interviews in order to hear what we’re really talking about our cases.

What language do they use, and then we put together a product description and also stating the main benefits and really what the cases can do for them and help them in. For example they can use it for watching videos and doing presentations very nicely and to type on the case. It’s something like this, what Apple is also really doing nicely. Not putting out all features, but to really state, what can I do with this in real life?

Steve: Just curious. Do you find that a lot of people read your descriptions and that it makes a huge difference?

Kai: Yeah. You really have to specify. We think so but it’s the whole package of your detail page. If it really looks totally aligned, like images, everything looks professional. I think this is which makes the difference, because then people are checking out. It’s very hard to specify on Amazon, because we don’t have hard facts, hard data.

I think in the long term, the customers will really check out the whole feature page, if it makes sense, the number of reviews, and the bullet points and they will come back and check out this. What we see a lot is really in the seller feedback ‘Product as described.’ This is like the best feeling you can get. If people are writing this or giving you this feedback, then they’re obviously reading it.

Steve: Just curious in the very beginning, let’s say you have your listing down and everything is all good, how do you get it to rank? Did you start giving away products for reviews? What was your early strategy to get sales?

Kai: No, we didn’t do like giveaways or something. What we knew from the beginning is we had to drive all traffic we can possibly get to our Amazon detail page, because we had these tests with one product. We obviously had only one product. Then we really tried everything. Every channel we can get and in the early days we even used Google PPC.

We bought ads on Google, and then we built our own website and like putting the professional images there and building like a detail page for the test case already. Then we bought the PPC ads on Google, got the people to our website, and then we sent them to the Amazon detail page.

Steve: That’s interesting. You’re paying for ads and you’re not taking the sale for yourself, you’re instead giving the sale to Amazon where you have to pay Amazon’s fees. So the rationale was that you want to rank on Amazon over your own site?

Kai: Exactly. The rationale is really, we want to get our products into this magic page one of Amazon because as I said, Amazon, there are already 295 million customers who are searching there. The traffic you can get on Amazon on page one is all for free, because the people are searching there for free.

If your product is on the first page of Amazon search results, you will get the traffic automatically. You just have to get there somehow, and then the magic will happen all along.

Steve: Was this an issue of PPC traffic? Was it profitable despite the fact that you’re …

Kai: No. No PPC traffic is profitable in the first place for us right now, I would say. It’s really, we spent– it’s really our strategy to spend there, and then get the sale and get ranked. Once we are ranked, like the sales of page one are coming in and supporting this initial spending on PPC so to speak.

Steve: How do you correlate the two, because it’s not like you can put a conversion pix on Amazon site. How do you know that the sales are actually coming from PPC?

Kai: We don’t know, but in the early days when you don’t have a ranked product, or if you put in a product in a category like iPad cases, you have one million results, no one will find your product if you don’t do any kind of either PPC, or getting all the traffic you can get from other sources to your products.

It must be from somewhere. What you do doesn’t matter actually, but if it’s PPC, or if you like have an email list, or if you have YouTubers, bloggers talking about your product, but it must come from somewhere else in our category.

Steve: Interesting, okay. What were some other ways that you drove traffic to your Amazon listings early on?

Kai: Early on what we did is we got in touch with YouTubers and bloggers through influencers basically, and gave them samples for free. They did a review for our products, and then like posted these on their channel, and obviously linked on their channels to our product.

Steve: On Amazon?

Kai: On Amazon exactly. This was one very, very good way to promote it.

Steve: How did you find these people? Did you use any services, or did you just reach out to people on YouTube?

Kai: Exactly. We just reached out to people on YouTube, and basically what happened was like they reached out to us. Somehow they found us later. It wasn’t kind of that we put this much effort into it, but we would recommend to do this much more right now. I know that there are even services nowadays who can connect you with famous influencers. I think you even had one guy on the show who was very successful for this kind of strategy.

Steve: Yes

Kai: We didn’t use the services, but we definitely will look into this. I hope this information– this could be a very good strategy.

Steve: Can you comment on driving all that traffic to Amazon where you have to pay the 15% fee on top of FBA fees as opposed to taking it on your own website, saving that 15% and having Amazon for full regardless?

Kai: Yeah of course. Our strategy is really the thing to get ranked. Your sale on your website is one sale on your website. The sale on Amazon is one more sale than your competitor, and this means Amazon will rank you higher, because sales and traffic is the most important you can get on Amazon in order to get ranked. In the long run, or we see it with our products, this will benefit your products in terms of ranking.

Once you’re ranked on Amazon, you will just get the sales, first of organic traffic on Amazon instead of the sales on your website where you always have to drive the traffic to your website, and will always cost you money to drive this traffic to your website. On Amazon, once your products are ranked, you will get all this organic traffic from Amazon and these organic sales, which makes a huge difference, because you will never get 295 million customers on your website so to speak.

Steve: Interesting, so do you collect emails, like how do you, do you do any marketing outside of Amazon then?

Kai: Yes, yes.

Steve: Okay.

Kai: We started this way too late actually.

Steve: Okay.

Kai: This whole email thing, nowadays when we last priced we use email as one of a big external traffic drivers as well, so we would recommend to use email very, very early on and try and start building a list so in order to spot your launches.

Steve: How do you entice people to give you their email because you can’t get it from Amazon right?

Kai: Exactly.

Steve: I assume you’re doing some sort of promotion outside on your own site?

Kai: Yes exactly.

Steve: Okay.

Kai: We just give them like a $5 coupon code, once they give us their email address, and this which is valid for all Kavaj products.

Steve: Okay.

Kai: Exactly and we place this very prominently on our website, so like nowadays.

Steve: I see and then you send out an email and then you drive those people to the Amazon listing, and that in turn boosts your Amazon rankings, because that leads to sales?

Kai: Exactly.

Steve: I see so you’re going all in on Amazon basically?

Kai: We’re going all in on Amazon, all in.

Steve: Okay.

Kai: 100%.

Steve: Have you had any problems with Amazon?

Kai: Obviously yes.

Steve: Can you just go through some of the common problems that you faced?

Kai: Yeah, we have problems, first problem is for example someone else will hijack our listing, so basically…

Steve: Okay, how do you deal with that?

Kai: Basically I just describe what happens, we have 2 colors for example one iPad case black and brown, and then from one day to the other there, well there’re like 20 color variations like red whatever, blue something like this. It’s a different seller we didn’t know who cannot connect; it’s just hijacking of our listing, and benefiting from our sales rank probably.

What we do is we registered our trademark and our Amazon brand very, very early on, and we contact Amazon either the support team or the service performance team, and just proving that we are the manufacturer of these products. We are the only seller of these products, we have the brand registry, we have the trademark, and we have the EAN code on our website which only shows that we are selling black and brown cases. Then we ask please remove the seller, please correct the listing and this usually works within 24 hours.

Steve: You in this regard you mean they put up a different listing, not sharing your Amazon number, right?

Kai: Yes exactly, they are just extending our listing variation to more colors, yeah.

Steve: I see, but what about the ones you piggy back on your exact product number, how do you get rid of those people?

Kai: We didn’t have this kind of thing so or so to speak, we have our sellers who try to sell these products, but are only very, very limited number, and it’s not a problem for us basically.

Steve: Okay.

Kai: Because they’re usually either selling like used or something, or they are selling higher prices.

Steve: I see.

Kai: And they are not, they cannot do FBA because we don’t sell them so.

Steve: Okay.

Kai: Yeah this is basically it, second problem is, or any question to this or?

Steve: No, no I’m good yeah.

Kai: Like the second very common problem is that Amazon is just removing our product from the platform from one day to the other without noticing us. And this usually happens during Christmas season.

Steve: Okay.

Kai: Like just one week ago again, so it happens all on all platforms in UK, Germany, US, I don’t know if you’ve experienced this, but…

Steve: No, you mean just a complete removal of your product you mean?

Kai: Yes.

Steve: No, we haven’t seen that yet.

Kai: Okay and this can happen pretty easily because Amazon has a process called [inaudible 00:47:35] court. Which means if one customer either one customer is complaining about the same issue twice, or if 2 or 3 customers are complaining and talking about the same issue in a very short time period, like the Amazon guideline is pull [inaudible 00:47:55] and take the listing off line and to protect the customers, or basically the future customers in order to experience these kind of issues.

Then okay once this listing is offline you can inform the seller, and you can ask the seller to yeah, provide feedback on this issue, and a system to get the product online again. But the communication is very difficult with Amazon regarding this. The solutions also because basically, most of the time it’s obviously by chance that this happens that really one customer has the same problem twice without notifying us. Usually the people come to us and ask, hey what’s the problem? Can you help me? But there are customers who just don’t speak to us, but first to Amazon…

Steve: Right.

Kai: They know obviously and…

Steve: Do they, does Amazon at least warn you that this has happened, or did you have to just notice yourself?

Kai: No, well yes.

Steve: Okay.

Kai: We have to notice it ourselves, so Amazon like we didn’t really fully understand how this works, sometimes they notify us, sometimes they don’t, so this is why we always recommend to monitor your listings very well on Amazon to also keep an eye is everything online. Especially your top sellers are they still online, because as I said it can happen pretty fast.

Yeah if just two customers are saying, okay I have this issue and the next comes I have this issue, like there’s a red light internally yeah on Amazon. The solutions also contact the Amazon support staff and then the Amazon service performance team and explain what happens. The best case you know what happens if they notify you. If you don’t know you have to just guess what happens.

Steve: Okay.

Kai: We had one example story from our products was we used to wrap all our cases into a wax paper, and at the beginning we only used black wax paper also for our coniac [ph] brown cases. People got these coniac cases, but saw okay they look black; I ordered brown, why does it look black. They just didn’t unpack the case, so they just saw the black wax paper, and figured okay this must be a black case, it’s a mistake.

They made it like Kavaj made it. They just reported us to Amazon that we shipped the wrong case, and if you ship a lot of cases during Christmas time, it’s very likely that two customers are not unpacking these cases, and then they’re just complaining at Amazon. This happened actually three times to us, and we always explained please check the bin, please unpack the case, the customer just had forget to unpack the cases.

Steve: I see, okay.

Kai: After three times we learned the lesson the hard way, we changed the packing material and now we wrap everything in their respective color brown or black.

Steve: Okay, that’s a good story. Hey Kai we’ve been chatting for quite a while, I understand you have a couple of other projects on the wing that I thought that you might want to mention.

Kai: Yeah definitely yeah, we got a lot of questions during our time during last couple of years because we built like Kavaj only in only 4 years, and we build a global brand in UK, US and in Germany, and people came to us saying how did you do this actually. We quite, we had quite a lot of people already in Germany and the UK and US and helping us out with explaining, just explaining what we did.

Then we figured okay we can share our knowledge like our experience from working in Amazon and building a brand, and what we did is we wrote a book and we put our whole story together. Steve for your listeners they can just go to kavajacademy/book, and they can get our book for free there.

Steve: Awesome.

Kai: We’re building like a whole Kavaj Academy around this topic selling on Amazon, because we saw there’s huge demand really how to sell on Amazon. We really love to get the feedback we already received from this book, and what we did with Kavaj Academy already.

Steve: Okay.

Kai: This is the second biggest thing we do currently besides Kavaj and expanding Kavaj internationally.

Steve: If any of the listeners have any questions for you Kai, where can they reach you?

Kai: Yeah, obviously as I said they could just go to Kavaj Academy, and we have a Facebook group, or a Facebook profile already for Kavaj academy, this will be probably the easiest way to get in touch with us or working.

Steve: Okay, sounds good. Well Kai thanks a lot for coming on the show.

Kai: Yes, thanks a lot.

Steve: I must say I think you are the first person who I’ve interviewed who drives all of their traffic from their own page to Amazon for ranking, so I found that very interesting.

Kai: Yeah, it is definitely very interesting, and it’s working, and all countries we use to do the strategy.

Steve: Yeah, awesome well thanks a lot.

Kai: Yeah, thank you Steve for having me and thanks for the interview.

Steve: All right take care.

Kai: Thank you.

Steve: Hope you enjoyed that episode. Kai’s story is truly amazing, and it just goes to show that you don’t need any business experience whatsoever to start a 9 figure business. All it takes is some initiative, a lot of hustle and a strong desire to learn and adapt. For more information about this episode, go to mywifequiteajob.com/episode 107. And once again I want to thank famebit.com for sponsoring this episode.

As I mentioned earlier Famebit is the best place to find YouTubers, Instagramers, and other influencers to promote your products online, and it works. One of my podcast guests Emanuel Eleyae used famebit.com to make over $65,000 in 4 months with YouTube influencer marketing, and it costs as low as 50 bucks to start. And the best part is if you use coupon code mywife@famebit.com, you will automatically get $25 off. Go to famebit.com right now, and get famous YouTubers to promote your products online.

And finally if you’re interested in starting your own online business, be sure to sign up for my free 6 day mini course, where I show you how my wife and I manage to make over 100K in profit in our first year of business. Go to mywifequitherjob.com for more information, sign up right there on the front page, and I will send you the course right away via email. Thanks for listening.

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

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106: How To Design A High Converting Website With Chase Reeves

How To Design A High Converting Business Website With Chase Reeves

Today I’m thrilled to have Chase Reeves on the show. Chase is someone who I met recently at the FinCon Expo in Charlotte and the face to face meeting was a long time coming.

If you don’t know Chase, he is the creative director for Fizzle.co, Corbett Barr’s awesome online business training course which was mentioned back in episode 45.

And he’s also the goofy white guy on the Fizzle podcast where he’s frickin hilarious. You should check it out. But the main reason, I decided to have Chase on today is because is he is great at design.

Here’s the thing. He’s not a developer in the traditional sense, but he’s just really good at designing websites that clearly convey a site’s true purpose and value proposition. He’s designed countless websites for entrepreneurs like Corbett Barr and Pat Flynn and I’m really excited to have him on the show to talk about how he does it.

What You’ll Learn

  • When you should redesign your website
  • The main things to consider for your design if you have an ecommerce store
  • The pain points that Chase tries to address in every site design.
  • Chase’s target design metrics
  • Design guidelines that your site must follow to increase conversions.

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Transcript

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.Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin I just want to give a quick shout out to famebit.com for being a sponsor of the show. Famebit is the number one market place for influencer marketing with over 20,000 Youtubers, Instagramers people on Twitter and Vine looking to promote your company in any vertical whether it be beauty, tech, gaming, pets and more. Yes you can get famous Youtubers and Instagramers to promote your business for as low as $50.

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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’m happy to have Chase Reeves on the show. Now Chase is someone who I met recently at FinCon I think in Charlotte, and the face to face meeting was a long time coming to be quite rank. If you don’t know Chase he is the creative director for fizzle.co, which is Corbett Bar’s awesome online business training course, which was mentioned back in episode 45 when I had Corbett on the show.

And Chase is also the goofy white guy on the fizzle podcast where he is freaking hilarious, and you should definitely check out that podcast. The main reason that I decided to have chase on the show today is because he is great at design. So here is the thing, he is not a developer in the traditional sense, but he is just really good at designing websites that clearly convey a site’s true purpose and value preposition.

And he’s designed countless websites for famous entrepreneurs like Corbett Barr, Pat Flynn, he did nerdfitenss.com. I’m really excited to have him on the show to kind of talk about how he does it in the process, so with that welcome to the show Chase, how are you doing today man?

Chase: I’m doing good Steve; really pumped to be here, thanks for having me, you are right in that meeting each other at FinCon was long overdue.

Steve: Have you gone to previous FinCons before?

Chase: That was my first FinCon and I was impressed, I liked it. I really liked PT Money, the guy who puts on the show, I met him at WDS a few years back, and he just seemed like just as a cool dude. So his event lived up to my expectations.

Steve: Cool man so maybe I’ll see you there next year?

Chase: I think so.

Steve: So give us a quick overview about how you started out designing websites and kind of how you ended up at Fizzle. And feel free to explain what Fizzle is by the way just in case people don’t remember.

Chase: Sure, yeah, so Fizzle is a membership site, I think that’s kind of crapy way of putting it. What it is, is there is a lot of people who want to figure out how to start their own business. Steve have you’ve ever met anybody who is like this before, somebody who wanted to start his or her own business or something?

Steve: I don’t know, it’s rare, it’s rare.

Chase: So what we’ve been doing for a long time is teaching people how to start their own businesses. The truth is that a lot of people love to waste time learning everything that they can, and that’s kind of a natural path is you got to go learn everything to kind of feel confident enough to get started. But the thing that we’ve learned is that the only real learning happens once you get started. So what we’ve developed is this nine stage road map, plus a bunch of other courses that are what we call just in time learning.

Everything is broken down into bite size chunks so that you can learn, how, hey, I need to grow my email list, okay, boom take this quick course on that, grow your email, and now you’ve got everything you need to know to do to grow your email list. Same thing with the road map, there is these nine stages every business goes through. So just focus on the stage that you are in right now and what’s next instead of trying to be an expert in the whole can get brutal.

So that’s what we do at fizzle, we are constantly improving that and alongside the courses and the training is the community of entrepreneurs that won’t let you quit. We just locked out really early on probably due to that I think a lot of the design and copy writing that we did on the site, and just which is always — which is of course due to who I am and who Corbett is as entrepreneurs and what we care about.

We just somehow locked out that a bunch of great people started finding us and becoming members. Now it’s one of the liveliest online business communities that you can find, and more than that it’s zero douchebagary. It’s like not douche at all, like we — the headline on our home page is honest online business training, it’s something that we’ve really built our whole business on.
It’s just this idea of like I want to build the business that’s going to last, that’s sustainable, not something that’s like a flash and a pen, get a bunch — get a million email address, just try to take advantage of old people who are wondering what to do with their money at 3 PM in the afternoon, in between televangelist spots. You know what I mean, like I’m sick of internet business being associated with that. So we kind of got started to help people find the real route to honest success, and so that’s what we teach.

Steve: So you designed that website, right?

Chase: Yeah.

Steve: How did you end up there, like what was your early web design history, before Corbett yeah?

Chase: Where that started from was I got a computer kind of younger, I wasn’t like, Corbett got like a real old computer like way back in the day like learnt out code as the first thing. I got a computer like in high school I think, and started obviously beside like playing doom on windows, playing some silly video games. I just kind of started like fiddling with like Microsoft paint and like making things — trying to make like funny stuff, I was always like, I was always the funny guy, I always like to make people laugh.

That turned into to having a computer, knowing how to use it, and then I got into music a lot, I started recording a lot of music which kept me using the computer. Then I got into college and we needed like a dorm shirt made, and I had a computer and I knew how to pirate software from the internet. So I was like, I got Photoshop now, we can make our shirt. So I did that and started like making silly things for our dorm room shirts or something.

Now this kind of kept going, band, concert, posters and things, all the things that I was associated with, that I was like, oh my band’s playing, and I knew let’s make a silly [inaudible 00:07:37] poster and so we did it. So it kind of started there and then it turned into like I got really — like my dad says, like, men are so good at computers. I just got good at computers do you know what I mean?

So like I could add a video, I could design things, I could — in Photoshop I could manipulate images, I could make music and record it, and then add it and play it back and all of these things. That honestly was the foundation on top of — that I built my whole career on. Because what happened is my taste developed and maybe that was there before hand.

Like your taste is the thing that let you go like, no, that’s not very good, I don’t feel comfortable putting that out, that’s embarrassing. That just kept getting stronger and stronger, and then my skills started getting stronger trying to like make things up to the level of taste. Soon as the long way is…

Steve: So Chase real quick, sorry so there is a difference between designing something that looks great and designing something that actually converts well too. So did you pick up those skills at a job or apprenticeship or something like that?

Chase: No, no that’s all software lessons, so for me it really came to a T when I learned how to design websites and that was — like I respect writing a lot, adds up few personal blogs and I just wanted it to look a particular way. So that’s where I started fiddling with all the stuff about 10-11 years ago I guess. So you bring up a good point, so in design it’s very common founders people start to do their own business, they really want their site to look good right? We all want that, we want it to look good.

Okay we want it to feel kind of fancy right? We want to feel quality, we want to create that — what design does is it creates trust. Right, imagine that you are learning — you are searching Google, you are going across the internet a million miles an hour, you land on billions of websites or whatever, and it’s like you — how are you going to stand out from the noise, all the old crap that’s out there?

Like design is one of — is this brutal split second trust factor thing, it’s the first step in the door all right, you don’t seem like a total piece of crap, I’ll read your headline, you know what I mean? So it’s just this sense of — it’s almost like this intangible sense really, beyond that there is a lot of functional parts of design as well. Like you are getting into it what is the difference between sort of a good looking design and a very effective design.

And what you are talking about there is the effectiveness is direct result of what your goal is on the sight. If you want your site to have a lot of people to it and they just spend a lot of time there, well then that’s one goal. Another goal is to get them on your email list. A different goal is for you to get them to buy a product.

A different goal will be to get them to not only buy one product, but then up sell them by the time you’re going to let their shopping cart right, and now they’ve bought multiple products. It’s like there’s all of these goals you can bring in to your design, it matters immensely which one you choose to design for it, does that make sense?

Steve: Yeah, totally just hey by the way Chase I’m going to just going to cut it real quick. Your mike is creating some back ground noise.

Chase: You’re getting background noise?

Steve: It’s like this scratching noise, I can’t describe it.

Chase: That’s probably online on my shirt, then what I’ll do is this.

Steve: Okay.

Chase: I can fix that, just like that. Okay. There we go how is that, is that a little better?

Steve: Yeah that’s better, okay.

Chase: Sorry about that.

Steve: Yeah no problem okay so hey…

Chase: I’m saying I like this thing and walk around so I’m kind of like I’m mobile.

Steve: I still here the scratching noise actually.

Chase: Okay you still can hear it now; you can still hear it now. Can you hear it now, am I still making…?

Steve: Yeah you’re good now, yeah maybe it’s only when you move.

Chase: Okay I’ll try to stay still.

Steve: Okay, all right so Chase one fundamental question that I always think to myself is when does a website actually need a redesign, and when are things just okay as is?

Chase: It depends, obviously it comes back to that idea about your goal right, so if your goal is to sell more products, up sell more products across your site, I’m speaking specifically to in ecommerce terms here so that because I understand most audience is doing ecommerce stores, is that correct?

Steve: That’s correct yeah.

Chase: Say you wanted to start up selling more things, well that could be a design goal, that could be a business goal that design helps you do, right? Other times you might just feel like way out of step with the competition, you might just feel like dude I look like it’s 1992 and everywhere else is playing in 2015. I really need to update my brand.

Steve: Okay.

Chase: Another time might be when your business has changed direction, kind of changed focus, and you’re like actually this doesn’t feel like, I’m still using last year’s strategy in my design when I have a new strategy that I really want people to understand and resonate with, right?

Steve: Right.

Chase: Those are all perfect examples of when you might want to redesign something.

Steve: When someone comes to you with like a Pat Flynn or a Collin and says hey I need my site redesigned. There’s probably some sort of process that you go through right to figure out what their goals are and where you even start, because everyone’s different right?

Chase: Yeah.

Steve: How do you proceed?

Chase: Yeah absolutely, so perfect example is when Pat Flynn of Smart Passive Income needed to have a site looked at. Actually what happened was a long time ago I emailed Pat and I just thought the design, I’d probably, I had kind of gotten to know him a little bit. I was just like dude your site looks really lame, this is back in the day. He was under the impression that it was really the coolest site; he’s said what do you mean? Everybody loves my site, it’s working really well, what are you talking about?

I’m like listen here, I’m just saying, I took some screen shots like this is gross, that’s gross, all of this is out of line. You don’t have any great typography, like it all just feels a little sort of 1992 to me. He was like okay I guess whatever, and then like a year later he finally got in touch with me and was like, dude I really want you to design my site, come on let’s talk about it.

What happened is Corbett and I flew down to San Diego and we did a weekend down there just doing all these preliminary things and actually packaged this all together in a course within Fizzle called “The essentials of design for none designers,” okay.

Steve: Okay.

Chase: It’s just for business builders, for people who aren’t designers and there’s kind of like, in making the course I really sliced and diced my process into a few different things and then I call it craft C-R-A-F-T. Okay, so the C stands for a clarity of purpose, all right it takes a lot, this is that goal that we were talking about previously. What’s your goal and it’s not just what’s your goal, it’s what’s your goal right now, because your goal is going to change.

Your goal might eventually be to be at the level where Pat Flynn is or what Steve Chou is or who knows where right, but right now what’s your goal, what’s your goal right now. I’m trying to get to X amount per month or this year is the year that I something, something, something. That’s why it’s important not to go like I’m going to be Dave Ramsey, yeah okay.

I mean you can have a sight that looks like Dave Ramsey’s, it doesn’t mean that your business is performing like Dave Ramsey’s business right? The idea is where are you going right now, what’s your purpose right now and that always comes from who are the people I’m trying to attract, and what are they looking for that I can help them with right, it’s always comes…

Steve: These are like more broad based goals as opposed to specific ones like build an email list for example?

Chase: Totally.

Steve: Okay yeah.

Chase: Because that all very specific to, I mean to build an email list might not be relevant in 5 years, it might not be at all, but having a clarity of purpose, knowing what people in your audience rally want. Knowing the kind of wants you want to attract to your website, that is always necessary, that is always essentials right, and that’s where everything starts, so that’s you have this clarity of purpose that’s the C, then the R is a ruthless…

Steve: Can we focus on the C a little bit more; I know you’ve got 5 letters to go.

Chase: Yeah no, I mean…

Steve: But so for the C does that mean you have to have your target customer avatar in mind for that C potion also?

Chase: Totally.

Steve: Okay.

Chase: Now this idea of the avatar or your customer profile or whatever, I come from, I was in the web agency world for a while, advertising world for a while and that’s very prominent in a lot of different places and it’s also the world of advertising, the world of design is split on that. Especially also the world of the startups this idea of like who’s our ideal customer is very important, but a very common thing that happens is we turn these avatars, these become like not real people in our brains.

These become — and we don’t get to use the biological, like honest to God intuition that you have about someone for instance that you really know. One this is in we have a free guide at Fizzel on defining your audience, defining your ideal customer, and one of the tricks in that is this idea that who is one real person that you know who is a part, who is like an ideal customer for you.

Steve: Okay.

Chase: Then because getting to the idea of, getting to the real person, now all of a sudden you know, you could call them up and go like listen Bob, here’s what you’re struggling with, here’s what’s going on, here’s what, here’s the limiting believe. Here’s what I wish you could do right now, and here’s the product I think that’s best for you where you are right now, because it’s going to give you this result that you really want.

It’s that kind of stuff that like that when you actually have a real person verses like a paper, that’s like my, this is Sally. She is my ideal customer avatar; she sells the whole this and has to [inaudible 00:17:23]. She is really neat; do you know what I mean?

It gets unhelpful doing that, because now you’re like I guess Sally would like this, I don’t know, Sally is not real. Whereas you know Bob in real life, and you’re like actually I would feel cheesy to Bob, actually Bob wouldn’t be able to find that. This is helping you make actual real life decisions about your conversion and design and copywriting on your site.

Steve: These people does it matter how many of these people there are out there, or do you just focus on one real life situation first?

Chase: That’s a great question, and you go with your gut. My experience I’ve been doing this for a while I would say I pick like one, it just happens naturally that’s seasonally, I pick one, one at a time, and then that might change in three months or two weeks or 6 years or whatever, but I’m checking in on myself. Okay we’re still making this for Joe, is that what this is still for, or is she already moved passed that and now we should go back to someone else, do you know what I mean?

Steve: Okay.

Chase: So having that real person that you can actually talk to, super, super valuable.

Steve: Okay, got it okay.

Chase: Does that make sense on the clarity of purpose?

Steve: It does yeah, let’s move on to R.

Chase: Okay so with R again this all still all stealing a craft because I’m a crafty little minx, R stands for this ruthless focus, all right, so…

Steve: R stands for ruthless?

Chase: Ruthless man.

Steve: Ruthless okay.

Chase: Ruthless focus. There’s a famous quote about writing, it says that in writing you have to cut out your darlings, you kind of have to murder your children. These little bits in your article that you really love, but they just don’t support the point of the article. You know what I mean, you have to cut those out because in order for the article to make more sense to more people.

Same thing with your website, the more crap you have in your website, the harder it is for someone to understand what the hell they’re supposed to do there, right. You don’t want to treat your website like some vest ad, like a TGI Friday, one of the waiters there that has got the flare all over the place and they’re leaning down at the table. They’re like hey guys really excited that you’re here are at TGI Friday. Can I tell you about our Apple Zilla, smash? We’ve got a great news or something or rather.

That’s not what your website is, your website isn’t this big convoluted messy bunch of buttons and Instagram feeds, and all of that sort of stuff. It’s focused, why? Because you have a clarity of purpose, you know who’s out there, what they’re struggling with, how your product solves their problem, and now you have to edit. You have to remove things so that that’s what they understand about it. It’s not just knowing what your purpose is, it’s effectively communicating, and that means you don’t say other crap on your website. Does that make sense?

Steve: Yeah, so one thing I teach in my class, is for example if you are on ecommerce store on a product page, the whole purpose of them going on that product page is to hit the “add the cart” button. Is that something similar to what you are saying?

Chase: Exactly, exactly. That actually gets to the next one which is A, which is you get to choose one action per page, one action per page and yeah, for that product page. For example, guess what the action is, you nailed it. It’s click the button, add to cart. It’s not – and actually in some ways the insight there is not that it’s just that, it’s how do I get them to — how do I get that experience to feel like they are more prone to complete the cart.

Because anybody in ecommerce knows that like cart abandonment is a really big deal, because people are adding things to carts, because it’s easy to do so. It’s just this virtual little click. It doesn’t cost me anything. But then, “No, maybe I want it. No maybe I will come back here later.” And they never do.

I don’t know how — there’s ways and designs that you could sort of make that feel a little more substantial, they click it, the cart goes from 0 to 1 and gets bigger, and you have a message that goes, “Awesome. Just think of what it’s going to feel like when you get your good new gismo, and you put it on your thingy, and everything is amazing, and your life all of a sudden has meaning and purpose.” Whatever it is that you have to try to tell them or something, but the action idea is that there’s one action per page.

I would — most of the people, a lot of the people that we help coach are bloggers and podcasters. I kind of have this idea that I’ve always stuck to about there’s basically one action across your entire website, because you can treat things progressively over time. You can be in a relationship with your customers over time if you pick the first right action. If your first action is just “purchase,” ecommerce is a little different than blogging, because in blogging world, you kind of want your first action right after them reading something or acting on something and like it, you want it to be like getting on the email list.

Now you can have a second action. Yeah, maybe follow on social networks somewhere, but like we all know that’s not nearly as effective as email. If you everywhere across the site you are getting people on your email, now you can justify a second point of contact hopefully, if you don’t just go straight to …

Steve: Does that imply that you remove all the other buttons except for …

Chase: Go on. Keep on.

Steve: Except for an email sign up when you can. I actually haven’t looked that closely at the Fizzle blog, but do you not have social media buttons or anything.

Chase: We really don’t have social media buttons or anything. We make those a part of the first email that goes out to people. Basically the big action across the site is, we are kind of split right now, because we’ve also got a lot of people coming to the site for the second, third, fifth, tenth, a millionth time.

We have like a 150,000 uniques on the site every month. There’s many different customer segments there that we kind of have to serve. This is what happens when you site gets bigger, bigger, and bigger. When it’s smaller, when you have a more pointed niche kind of focus, a lot of the sites I design, have been like that.

When I designed Pat’s site, when I designed Nerd Fitness for example, Steve Kamb’s website, the conversation went up by 80%. When we redesigned, traffic conversion went up by, it was either — it double, went up by 100%. When I designed Small Passive Income, which was a bit bigger than think Traffic, actually not Demo Traffic and conversion stayed relatively similar, but one of Pat’s goals was to get a lot of people over to the podcast page.

I had — his podcast listeners went down because a lot of people were listening wherever in the blog before. I had changed how some of that works for the sake of being way more focused and focusing on one action. And what happened is he realized how much of a goal was for him to keep his podcasts listeners up. We had to go back and make some changes. Design is that iterative thing like that.

When you have big sites, you kind of have to do the work to identify those different user groups to be able to serve all of them. But as you are saying, for the most part, you got, if you pick one action across the site, it’s going to perform well on that action. You will have to do some testing over time, see how it’s doing. Maybe that’s the wrong action, who knows. That’s where you get to use like sort of like your intuition on this stuff, right?

Steve: Yeah. I’m just thinking about all these blogs that I look at and a lot of them have these really cluttered side bars and a whole bunch of buttons everywhere, social media buttons. Somewhere buried in there they have the email sign up form. I was just curious maybe we can talk about some examples later on once we get through your framework.

Chase: Yeah, definitely. That’s C claritive purpose, R is the ruthless focus, A is the only one action per page, and F is for your first time visitor. This is, you want to design your site for growth. Maybe in an ecommerce situation you are designing your site for impulse buyers in somewhat, which in the same way, that’s a first time visitor. But when you design it for your first time visitor, instead of for your over and over and over again visitors which always is going to happen. They are going to find tier way around over time if you keep putting up great content, if you have new products etcetera.

But this first time visitor, what I find is that if you can do the work to sort of slip into their skin, and think about what it feels like to land on your site just another ecommerce site that they are landing on. Because they don’t give a crap, they don’t care who you are. They don’t care about the product, they don’t care who you are. They are busy. Their mum is sick. Their kids are yelling in the background, who knows where they are.

They seriously don’t care about you or your website designer or anything like that. What are they interested in? What do they want? What do they want that brought them to your page? What’s their intention? Then, how can your site perfectly line up with that intention?

Steve: How do you figure out that sometimes? Do you use any tools to figure that if you don’t really know?

Chase: Honestly my favorite tool for this is customer interviews.

Steve: Interesting. Okay.

Chase: For developing more content businesses, customer interviews are great. You can obviously use search stuff, looking through Google’s key word, tracker thing. You can look through Moses tools to understand how people – with obviously Google analytics looking where are people searching that they are landing on this product page. How can you infer like the intention from that thing.

But for me, I’m often times, I find and a lot of people find this. You can be really intuitive about that and sometimes you hit the nail on the head. But often times you think it’s this reason, but really it was totally different, it’s this reason over here that’s why. And if you knew that before hand, you could totally have — you would totally change the design or the copywriting on this page.

One great example of that is, there’s a framework called jobs to be done. This milkshake stand every morning filled up with people. What the heck is this all about? They hire –meaning people just do like pack, get buying milkshakes like crazy in the morning. It doesn’t seem like a very morning kind of thing for me to do. That seems strange.

They hired these business consultants to check out what’s going on here. They started talking to customers and realized everybody that was there was a commuter. They were driving a long a distance to work. They needed to get breakfast, but something that they could hold on one hand while they are driving. And they needed it to kind of keep them filled up at least till lunch time.

The milkshake weirdly fulfills all these rules, but there was no merchandise or marketing of billboards out saying like, “Have a milkshake for breakfast.” It’s just something that a lot of people started figuring out on their own. That changed the idea of how you can present what’s available to the people during the morning time at the milkshake stand. It’s one of those weird, like you could have been intuitive about this, now that we are going backwards. But it took talking to customers to really understand where it came from.

Now I understand talking to customers actually is kind of a nightmare for most of us entrepreneurs. Honestly, it still is for me. I’ve done a lot now so I sometimes get a little excited about it, but most of the times, it still feels like work. In an ecommerce business, it can feel really kind of weird.

Steve: It’s actually not so bad. So earlier on, whenever a customer actually called us, I would interrogate them so to speak. I did a lot of that earlier on. I don’t do it anymore obviously, but it was quite helpful. We found a lot of bugs with our site that way.

Chase: Yeah, it makes tones of sense because when you get to — the whole point of conversion and design, the whole point of this craft frame that they develop is how do I get you out of your skin and into an actual potential buyer skin, not only just a potential buyer but like that ideal customer?

How do I let you know what it’s like for Bob to land on your website after they’ve been on hundreds of similar websites? How can you really grab Bob’s attention and resonate with them by saying, “Bob, I know who you are. I understand what you care about and this is the thing.”

A great example of this is like, comic t-shirts or Giki culture of some kind. The kind of place that has that t-shirt and that highly curates hilarious comic books inside joke type t-shirts or knickknack and things like that, all of a sudden I feel like these people know who I am, because they are getting — I get these inside jokes from world of Warcraft or Minecraft or something like that.

It’s that kind of like “You are speaking my language. Holy crap, I found — these people know who I am.” That’s where I always loved those smaller sort of niche sites even though you might have less people to your site, you might be more profitable in the end.

Steve: How about if it is aesthetics versus copy, because I’ve seen some really heinous looking websites that convert super well.

Chase: Yes, that’s a good point. This is one of the first points in the design course that I made. It’s this fancy effectiveness thing we kind of touched on the beginning. But the truth is your website’s most important assets are its words. And that doesn’t mean that just because it’s on the page it’s working, you have to tell me which words are important to pay attention to. And there are literally words I can’t unpay attention to for lack of a better term.

For instance if you go to, like a site that’s very clean like Medium, if you read any articles on Medium, pay attention to how it feels to land there. There’s a big headline right centered, like in some image or something like that, and then there’s no distractions on the left or the right or even on the top. You just fall directly down into the copy and you start reading. If it’s well written, if they are talking to you, then you kind of like keep going and now they are — now they are convincing you of something. Do you know what I mean? That’s the beauty of good sales copy.

A great example to look out for that is also Base Camps home page. Unfortunately it changes all the time. But if you go to basecamp.com, you will be able to see like right now, there’s a very simple homepage; one column of text just saying here’s what we do. It’s super effective for them. To answer to your question, the words are to me the most important part. Your headline has one job and that’s to get them to read the very first sentence, which has one job to get them to read the next sentence, which has one job to get them to read the next sentence. You are drawing them in to this kind of relationship.

And so if your headline sticks out, it’s eligible, it kind of set nicely in some good fonts, it’s not gross and weird and some crazy cuss of handwriting font thing, even though you think that looks cool man. That is like neat and pretty. It’s all of these kinds of simple things. All of that details of that stuff I get into in the course. I’ll keep going on the craft process if that’s good for you.

Steve: Do you do an Asian accent too by the way? You are doing southern accent the whole time.

Chase: No I can’t listen. I mean, I think it’ll just be two item in [inaudible 00:32:46]. I can’t see. I’m not going to. How could that not be offensive? I’m trying — I do a lot on the physical shows, I do a lot of voices. I really like for instance I really like doing the Indian voice, these certain Indian voice, but I try — I’m trying to keep myself from doing anything that is not done by a Caucasian man, just for the sake of like not offending somebody.

I don’t mean any harm by it. I literally love these accents. I love the way they sound and I love making them, but I have to try and keep it to like just, I can tell you a little bit of this you know. It’s a white dude in London, is a bit of a Christ Stoker accent really. It’s not like I kind of want to go full anything else I guess.

Steve: We are on T, right?

Chase: Yeah, so F was for the first time visitor because they don’t give a damn about you. They don’t care about who you are. They have their own story in their own life going on. Either you have a product that solves their problem or you don’t. Do you know what their problem is? Can you focus on that and ruthlessly focus down on that?

Then T is the last part. It’s the testing over time. Because one of the big mistakes I see people make as they start conversion optimizing AB testing stuff, is they can actually crank down too hard on converting this time at the expense of someone trusting you to buy next time.

The idea is you want a sustainable long term business. You also — that competes sometimes with I want to make as much money as I possibly can right now. Do you know what I mean? I can slam you hard with the bill sales message, and all this crap and pop ups and things that don’t let you quit — you just try to quit the page and the job description button goes, “Are you sure you want to do this?”

You can slam people really hard with stuff which all that does now is it goes like, “Oh clearly you are desperate. I don’t trust you. You clearly don’t have a great product.” That’s becoming more and more common as more people come on to the market place savvy about computers and things.

This long term view is not looking at your business just this week or this month, but over the course of the next five and ten years, how can you keep tweaking this in a way that makes it feel more like a relationship, that makes it feel more like you are providing value for people who have an honest need, and all this everything that’s going back and forth here is totally human, it’s total like actual connection and interaction.

That’s my fantasy about business. I know it can happen that way. I’m ruthless about promoting that way of doing business instead of just like, scorch to earth policies, steal money from everyone kind of thing.

Steve: The problem with that though is it’s a little harder to quantify, right?

Chase: Yeah, it is hard to quantify. To be honest, it’s a big mistake that I see people — the first big mistake that I see people make is focusing on fanciness instead of effectiveness. Then the other side of that coin is when you focus on effectiveness too much, and have no sense of relationship in there.

There is no magic number you are trying to get to that I can tell you once you get to this kind of conversion rate, then you are a real business. It’s all has to be felt. It all has to be felt. It’s like, it’s art. It’s literally a kind of a soulful artistic way of going through the things. The truth is you could probably try to tweak a bunch of stuff on your site to increase the conversion and stuff, and you are not going to see a tone of change.

There are some places where you are going to see change and that’s going to be your headlines, that’s going to be your copywriting, stuff that’s easy for people to read, your product photos, and how enticing those kind of things look. And all of that stems from, how well do you know your buyer? How well do you honestly know your buyer? That’s going all the way back again to this clarity of purpose.

Steve: You keep mentioning conversion rate. I was just curious, you mentioned like you increased Corbett’s conversion rate, Steve Kamb’s and then Pat’s. What was the conversion metric?

Chase: Conversion metric for them was always email, so a visitor to an email subscriber. For contents like that’s the big thing because now you’ve trusted me enough to give me your email, I gave you this free book or something in return, now over time can I walk the balance of capping you with an email and making you feel like there’s some value in this, reminding you of our relationship, is it worthwhile to keep intact without you going like, “All right you are bugging me. Unsubscribe.” You know what I mean? It’s just like being at a bar and trying to woo a person of the opposite sex. It’s this delicate sort of balance. That’s the artistry and the stuff that I really love.

Steve: Yeah, it definitely it is an art. Unfortunately art is often hard to describe in words, right?

Chase: Yup. No actually it’s not. For me, I’m becoming really like — because I’ve thought a lot about that. I live more in this like sort of the fancy artist designer musician world than I do kind of in the business world most of the time even though my work is in the business world. I actually from Stephen Colbert [ph] I was learning a lot about faith and art and the things. He says things very succinctly and concretely because he’s so smart. These were in interviews not in a show or anything. Just in interviews with him out of character.

All I know for sure is that art gives you a feeling. That’s the art I’m interested in. I’m interested in the art that make me feel something. I think business is like is the thing that can make us feel something, that can remind us of our humanity, that can make us feel more connected to each other to the earth to the things, rather than just being someone who is just unconsciously consuming whatever comes in your own mouth. You know what I mean?

I want to live better. I’ve bought products that made me live better [inaudible 00:38:55] there’s a donut here in town, not voodoo donut, I live in Portland, Oregon, but this little donut called [inaudible 00:39:02] is the most delicate little [inaudible 00:39:04] bar Steve. I swear to god, it’s the donut that made me want to be a better man. I swear to god.

I believe that product, that there’s something about a great product that’s well designed, that’s thought through, that meets my needs, that kind of like, it makes me feel like, “Yeah, maybe I’m not a piece of crap. Maybe I can live well. Maybe I can stay married. Maybe I can be a good dad.” Do you know what I mean? I need all the help I can get, because that sounds really hard.

Steve: I need to get some of this donuts man. Let’s take a look at the fizzle.co website because you designed that, and obviously you were there and now, I’m just curious about some of the design elements. I notice right when you land on the page, it’s basically just a video and then the headline. It’s not even like long form copy. You got like maybe five paragraphs with the verbation and stuff free trial. I was just curious how you came up with that landing page.

Chase: We tried a few different things. We didn’t try a million things; we just tried a few of the different pages. Originally we had a long page that was really well designed, all these customer testimonials, all this part, and the other. But honestly the story of our product, of our service lives in this video. So we wanted the headline to be extremely simple and clear with a little bit of style and then you come right down into the video where in the first 15 seconds — I won’t give away the joke in the first 15 seconds, but in the first 15 seconds it was this little great like wait what!

This is, what am I watching, and them it just tumbles straight down into this little letter from Corbett our CEO. And it works really well for us because to be honest we can’t — I don’t know we could fiddle a lot with a lot more stuff, but this works really well right now.

And because it’s so simple, because it’s kind of so human and honest, because on video and the audio and the video like you hear our voices you get the reflection you kind of get know us a bit. And also in Corbett’s simple letter there, you kind of get to know our point of view just a little bit more and just the tone and things like that; it’s really effective, so it works really well for us.

Steve: Would you say that most of the people who land on that page already know who you are, or do mostly cold people land on that page?

Chase: It’s a good question. I think most — like I don’t, I couldn’t tell you for a fact one way or the other, I could probably go look it up in the analytics at some point. Or have one of my spreadsheet guys do that, we have these spreadsheets guys. Yeah, he is actually our head of growth, so he does deal with a lot of that stuff. The truth is there is going to be a lot of both, there is going to be a lot of both, I bet most that convert it’s not their first time landing on our site or the home page.

Steve: Because I’m curious for you guys, I wonder if you get a lot of podcast people come in right.

Chase: We do, we do get a lot of podcast, so we have — on the podcast we have a sort of little some tiny advertisement for Fizzle there with a special link that people go to. And that takes them to a different page that just — that gives them a special discount for people listening to the show, right?

So we do see a lot of people converting from that especially after they listen to several episodes, because what happens with people right now who are listening to you Steve, they are listening to you because they trust you. They trust your point of view, they know you have experience, and so if you recommend something to them they are going to listen to you right?

And I feel like with podcast way more than any medium, honestly even more than video, there is something trustworthy about it, because I’m listening to you while I walk the dog or I commute or I go on a jog, or I’m walking around or doing the dishes, I can listen to you anywhere. I’m rarely listening to a podcast when I’m just sitting on my butt listening to a podcast. I’m always kind of doing something else right?

So when your ear, your voice is in my head all the time, I don’t know, I feel like you get to know someone all the time through just hearing their voice kind of like when you used to have those girlfriends or boyfriends in junior high. And you were calling them on the phone and you go like, no you hang up, no you, no you hang up. I don’t know if you remember talking to people on the phone like and like your dad was like, get off the phone, I need to call someone.

Steve: I would just hang out because I was too cheeky to even talk to them so…

Chase: I just settled from x-tapes, I just…

Steve: Yeah x-tapes those were the days man, yeah.

Chase: Totally.

Steve: Okay so this page I guess then you kind funnel people through the podcast, this landing page in which case they’ve…

Chase: And the blog, I mean the blog is a different design, right? So the blog if you land on any of these posts from the blog, for instance if you give content away will anyone pay? It’s sort of one of our related episodes of the podcast where we talk all about like sort of the balance there. And you have this — where there is content, a couple of quotes, you have actual podcast player.

So this is just content, everybody is used to looking at a blog page, an article. Then there is nothing too sexy or crazy about it, I feel like if there was something crazy about it you would be like wait how am I supposed to proceed? You know what I mean, like it’s supposed to just be a blog page.

But then on the right side this is where it’s like okay we have some interesting links over here, we have a free trial sort of promotion, and then asks for the — get on the email list there at the bottom of the page as well as on the top.

Steve: Yeah it’s very minimalist, I’m looking at it right now actually, so I guess these are all the main goals that you want someone to click on. And I notice you don’t have any like previous posts, you have popular posts, but you don’t have a whole bunch of links on the sidebar.

Chase: No, I kept the sidebar super clean and minimal and just kind of like it’s like to me it’s like you get here, you land on this particular episode, if you give content away will anybody pay. If there was a longer article or shorter article, I don’t care I want you focus totally on that. If that’s interesting enough to you hopefully the call to action at the bottom or the very top will get you.

And go like, oh, well, I trust these guys, I like their voice, I’ll just go back to the blog and see what else they are talking about. Oh I can subscribe to the podcast, oh because you know what there is a lot of those little touch points, you got to see the same person at the bar maybe a couple of times before you get enough confidence to talk to him.

You know what I mean? Because very few of us are like brush enough to just dive right in, and it feels like it’s something similar in the way that a regular user person — a regular person just browses the web, finds content, and looks into stuff, you know what I mean?

Steve: So I’m looking at one of your blog post right now, and it seems like obviously that getting an email sign up is the primary purpose because those buttons are like orange right, and they stand out. So I’m just curious I didn’t notice any pop ups or anything either, and I was just wondering where your philosophy was on that?

Chase: Well I mean so to me I hate pop ups, I just hate pop ups, so I don’t do them. And I feel like I can make a big [inaudible 00:45:50] argument about how…

Steve: It’s just a philosophy thing then, right?

Chase: Disrespectful to the people, they don’t trust, to be honest they can be really, really effective tool. This is one of those situations where it’s like I have faith in humanity that I don’t have to do a pop up to get as many people on the list as possible. One of the things I just had a cruise event speaking to a bunch of podcasters, and one of the things a handful of other speakers like Chris Brogan was saying is how his favorite thing is like deleting people from his list. Like he goes through and finds everybody that hasn’t clicked any links or opened anything on his list, he sends them all an email and says, if you are not — if you want to stay on the list click this link otherwise I’m removing you. And he loves calling his list down, down, down.

Steve: I do that once a month actually.

Chase: Do you really?

Steve: Yeah I do.

Chase: What’s it like for you, do you like it?

Steve: I don’t mind it because like if they are not clicking I don’t want to be paying for those people on my list right? That’s my philosophy at least.

Chase: Yeah, I mean it’s something I haven’t done, but this is like the front end of that right? It’s almost like, if you don’t put a pop up there you are not going to get a bunch of crapy unwanted people on your list, unqualified people.

Steve: So for a blog for an ecommerce site what would you say you would — how would you populate your sidebar and that sort of thing? If making a sale was your ultimate goal?

Chase: It totally depends right, because what you have, you have the potential in some systems you have the potential for a lot of intelligence. So someone lands on your site because they were searching for rollerblades and you are selling rollerblades, and they land on this one particular rollerblade, the K2 fatty and they land there and then…

Steve: Sorry go on.

Chase: That’s a real rollerblade.

Steve: I noticed yeah.

Chase: Yeah, so then they go like, oh, this kind of interesting, but I’m not ready to buy right now and they go up to the blog. Some sites it’s very easy to have the kind of intelligence that goes like you were looking at the K2 fatty, let’s make the sidebar sort of special to someone who is looking at that. Which could be another sort of like offer for the K2 or some or who knows what right? Like wheels or any other little things, the kinds of things that you could sell.

But ultimately for a blog, this is where the difference between like I have a bunch of products for sale, and I want to create an audience for people, who believe in this kind of thing, or who care about this kind of thing right? If I was building an audience of people who care about rollerblading, I would have a kind of freebie to give away to them with like quotes from my favorite rollerblades.

Or like the top 10 rollerblade wheels or bearings revealed by someone that you know. That’s free, get on the list, will send it to you, and then you just have the responsibility to keeping that relationship good. Keeping that relationship honest and fresh too, right? So that when they do want to buy some K2 fatties they come straight to you. Because in one of the emails you are like listen, as a reader we just want to make sure that you know that we value you, the attention and being a rollerblade yadi yadi yada, here is a discount for 5% off anything in the next 30 days.

Steve: Chase this is funny yeah, I just recently wrote a post about this, I think this is the direction ecommerce is taking because you got these amazon.coms out there, where people are selling similar products, and it’s just the race to the bottom right? And the only way you can really stand out is by building a community that really appreciate you as business and they’ll buy from you just out of loyalty.

Chase: Yeah, and that to me is a massive difference, because to be honest it’s like you can sell products without a community, and you are totally in business, you are like partnered with wherever your traffic sources are which is probably going to be Google, or links from other sites, or who knows where, buying advertising, things like that. Then you do have a race at the bottom because if your prices are more than somebody else, then I’m going to go somewhere else, because guess what I could find that at the tip of my finger, like I just opened up another tab and I just search.

And frankly I’m just searching on Amazon which has the lowest prices I can find, right? So why would I buy from you? Now a good example of this a great example of an ecommerce store that the design is extremely good is Need. It’s called neededition.com, N-E-E-D edition .com, and its men’s clothing for that like sort of like 30 to 40 year old men thing. There is nothing, you don’t get discounts here, there is no discounts. But I want to buy everything on that site because he so nails who I am. Do you know what I mean?

He is like this is who you are, and he writes a little story about each of the article of clothing for sale. These funnel clothing he sells some low price items there too sometimes socks or ties or like magazines, like specialty magazines or whatever, and he nails it. And he actually he is a friend of mine, he just switched over to Shopify actually, from a totally custom built thing, now everything is running on Shopify which is pretty fascinating. Even more so then the custom thing, he is like no I would just go to Shopify after they had already spent a bunch of money making the custom thing, it’s pretty cool, that Shopify has got so many functions.

Far so much functionality rather, but that’s a great example of he is built a community and they are open rate — here is what he does, every month there is a new edition, right? So there is new articles of clothing for sale, and he’s built a massive email list, because you only get notified about the edition by email. His open rate is like 80 something percent, I don’t remember what.

Steve: That’s ridiculous.

Chase: It’s ridiculous, okay, so it’s just fascinating edition way of doing an ecommerce site. Obviously the design, what’s the design here? The design doesn’t get in the way you understand? Like the point of design is to not get in the way of what the customer wants and what the business wants. You want to facilitate that interaction as well as possible.

The message that the business has, that’s the message you are helping the audience resonate with. And the design can only amplify that or turn it down. So the whole idea is that in amplifying that, you are always going to become more minimal. You are always going to become more sort of essential, unless like flair on a vest at TGI Friday restaurant, you know what I mean? So he does that really well at Need Edition.

Steve: So people don’t comparison shop, they just buy straight from his email is what you are saying?

Chase: Yeah pretty much, so the email that comes out is just a short little bub about the spirit of this issue, of this edition basically. And then you click the link and you go over there and you see all the articles. And then I mean half the time I just read through, I have no money to spend on this stuff right now, my wife would kill me.

But I just read through it, because it’s funny, and then I really want that $130 shirt, like I really want it. Because I just read the story of the person who makes it, and the designer and the silly English guy talking about like why this shirt other than other shirts, and it’s this relationship based community based kind of thing.

Steve: And it’s not his product brands right, it’s other peoples brands, and he still…?

Chase: No, totally and now they’ve become so big that a lot of other brands have started doing collaborations with them, they’ll do a shirt that’s just for Need, which is kind of fascinating.

Steve: Awesome, yeah, I’ll definitely link up that site, it sounds really interesting.

Chase: Yeah it’s a very good example.

Steve: Cool Chase hey, we’ve been chatting for like 50 minutes man, so let’s close this with some facts about yourself. Where can people reach you if they have any design questions, do you still design websites, I imagine not anymore, right?

Chase: I don’t, no, yeah, I’m so on the — I’m full time Fizzle now. So where you can find us is at fizzle.co. And actually I went through the course on the design steps to try to just like think through what exactly to share with you guys. And I found a handful of worksheets that I’m totally good with sharing with your audience. There is one on how to visualize and do some worksheets on your first time visitor, there is also another one on like questions such as like a long term view, how do you set up your thing for a long term view, as well as another one just like the overview of this craft conversion and design system.

So what I’ll do is I’ll make those available for everyone who wants it at fizzle.co/chouchou. And I know that you said that that’s something that they might have teased you with in junior high school?

Steve: Elementary school but yeah, so it was my last name right it’s not chouchou as…

Chase: It’s your last name, yeah, so chouchou, I just wanted to have a unique URL that wasn’t too long, and I was like I just couldn’t get chouchou out of my head.

Steve: I’m sure I’ll find some way to get you back because it is my blog and I’ll be posting your graphic, so we’ll see how.

Chase: Perfect.

Steve: All right man, hey thanks for coming to the show, I learned a lot today man.

Chase: I’ll do well, thanks for having me, thanks for doing the work you do man.

Steve: Cool all right, take care.

Chase: Bye, bye.

Steve: Hope you enjoyed that episode, designing a high converting website is both an art and a science, and Chase is an expert when it comes to funneling site visitors to their desired destinations. For more information about this episode go to mywifequiteherjob.com/episode106.

Once again I want to thank Famebit for sponsoring this episode, as I mentioned earlier Famebit is the best place to YouTubers, Instagramers and other influencers to promote your products online and it works. One of my podcast guests Emanuel Eleyae used famebit.com to make over $65,000 in 4 months with YouTube influencer marketing, and it costs as low as 50 bucks to start.

The best part is if you use coupon code mywife@famebit.com you will automatically get $25 off. Go to famebit.com right now, and get famous YouTubers to promote your products and get $25 off with coupon code my wife.

Finally if you’re interested in starting your own online business, be sure to sign up for my free 6 day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business. Go to mywifequitherjob.com for more information, sign up right there on the front page, and I will send you the course right away via email. 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.

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105: How To Run Profitable Facebook Ads To Sell Physical Products Online With Miracle Wanzo

How To Run Profitable Facebook Ads To Sell Physical Products Online

Today I have Miracle Wanzo on the show. First off, isn’t that the coolest name ever? When I first met her, I had assumed that it was her pen name but nope, her name is really Miracle and she is one of the sweetest, most down to earth person you’ll ever meet.

Anyway, I met Miracle at the Ecommerce Fuel Live event in Nashville a few months ago and I’m glad that I did. Miracle runs HipUndies.com where she sells women’s undergarments and lingerie.

Now normally, I tend to think that selling clothing or anything that has to do with fashion is very difficult and challenging. In fact, I tend to discourage the students in my class from going this route because it’s extremely competitive.

But Miracle has pulled it off and does extremely well with her fashion line. And today, we’re going to find out exactly how she uses Facebook ads to drive traffic to her business.

What You’ll Learn

  • How Miracle got started in ecommerce
  • Why she started this business
  • The main drivers of traffic to her ecommerce store
  • HipUndies’ unique value proposition
  • Where Miracle sources her products from.
  • The strategy that Miracle uses to run profitable Facebook ads
  • How she picks an audience
  • How she creates a high converting ad and landing page

Other Resources And Books

Sponsors

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Transcript

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.Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin I also want to give a quick shout out to famebit.com for being a sponsor of the show. Famebit is the number one market place for influencer marketing with over 20,000 YouTubers, Instagramers, people on Twitter and Vine looking to promote your company in any vertical whether it would be beauty, tech, gaming, pets and more. Yes you can get famous YouTubers and Instagramers to promote your business for as low as $50. The best part is that you don’t really need any money at all to post a campaign and receive free proposals from creators.

Now if you’ve listened to my podcast before one of my guest Emanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing. And the best part is if you use coupon code mywife@famebit.com, you will automatically get $25 off your first campaign. So go to famebit.com right now and get famous YouTubers to promote your products, now onto the show.

Welcome to the My Wife Quite 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 Miracle Wanzo on the show. Now first off isn’t that the coolest name ever and in fact when I first met her I kind of assumed that that was her pen name. But no her name is really Miracle and she is one of the sweetest most down to earth people that you’ll ever meet. And I met Miracle at the Ecommerce Fuel live event in Nashville just a couple of months ago, and I’m really glad that I did. Now she runs Hip Undies.com which is a store where she sells women’s undergarments and lingerie.

And normally I tend to think that selling clothing or anything that has to do with fashion is very difficult and challenging, but — and in fact in my class that I run, I tend to discourage the students in my class from going this route, because it is in fact extremely competitive. But Miracle has pulled it off, and she does extremely well with her fashion line. And today we are going to find out exactly how she has done it, and so with that welcome to the show Miracle, how are you doing today?

Miracle: I’m doing great, how are you?

Steve: I’m very good, now I know you’ve been doing this for heck of a long time like over 15 years just on ecommerce. But can you give us a quick background story just kind of how you got started, and tell us how you ended up starting Hip Undies.com?

Miracle: Yeah, I got started on eBay, and I was selling off price designer clothing on eBay for a couple years way back when, and it got to the point where I felt like I was spending enough money on eBay to justify having my own website. And I started playing around with building websites and I have back then, I mean I used so many different platforms back then to build a website, because I built one and not quite like it, then go find another solution and start building a website on that. And eventually after a little bit of time I actually found software that I liked which probably isn’t even around anymore. And I built my first ecommerce site which was selling the clothing.

And the issue that I had with that was that I was selling actual clothing as opposed to under garments, and I felt like for where I was at that point and time it would have required too much for me to keep up with all of the trends and the changing out of inventory. Because that’s one of the issues that you deal with in fashion is that you have to constantly have fresh inventory coming in to keep up with what’s on trend and the seasons. And I wanted to find a way to not have that much change happening with my inventory. So I pulled back from that website — oh hold I have to cough. Sorry and started playing around with drop ship sites, so I could still stay in ecommerce while I figured out what to do.

And back then I was on a couple of mailing lists and a couple of forums for ecommerce merchants and there was this one guy who was talking about selling jewelry, and how it was one of the perfect things to sell online. He wasn’t selling high end jewelry; he was selling things like 30, 60 bucks. And he said because he could fit all of his inventory into a trunk and travel. And they just hit the road, travel all around the country, and they would stop wherever they were and they would ship out all his orders and get back on the road, and I thought oh my God that’s awesome, I got to find a way to do that in clothing.

And that’s how I ended up in lingerie because it’s so tiny, that it fit within his model of being small and not taking up a lot of space, light weight, easy to ship, small packages, nothing heavy and bulky. But still having a reasonable enough price point to [inaudible 00:05:56] our average order value is over 50 bucks.

Steve: So are you still selling clothing today, or is that completely gone?

Miracle: No I do not sell clothing; there are some things that sometimes I pick up with Hip Undies, like yoga pants or lounge wear, things like that but not real, real clothing.

Steve: Okay and then in terms of just fashion do undies — do they not go out of style as quickly I guess?

Miracle: There are two sides in the lingerie industry. Well this is in the contemporary kind of designer branded industry, because there is also the sexy side, and I’m not really in that niche. But in the branded designer industry there are two sides, there are fashion lines that come up with new collections all the time just like apparel, but then there are basics. And those are the things that women wear every day, that they buy repeatedly because they like to fit, or they love the fabric or it’s just like their go to piece, and they’ll stuck and wear it. So there is a side of it that changes rapidly as apparel, but then there is also a big group of it that doesn’t.

Steve: Okay and that’s the side that you focus on?

Miracle: Yeah.

Steve: Okay and so are your products — are they under your own label or are you selling other peoples brands?

Miracle: Both. I have what I call house brands which are brands that I have made up and manufactured. I also bought someone that I knew that had a line, and she was winding it down to go back to work as a custom designer. And I bought out all of her assets, all of her patterns, all of her designs and things like that. So I have a few house brands, but the bulk of it at this point is brands that are found in department stores or specialty stores or boutiques.

Steve: Interesting, so if you are selling brands that can be found in department stores and that sort of thing, so what is Hip Undies’s unique value preposition, and how do you actually get customers into your store?

Miracle: I know, and people ask me that, and I have a really good friend who’s been a sales rep in lingerie on the other side, selling manufactures brands to retailers, and she is been doing this for 20 years. And after I came back from Ecommerce Fuel, because people ask me that a lot, and we talked about it because I felt like we just didn’t see it through that lens, and we still don’t see the industry through that lens, because I’m not sure if it’s a matter of the customer having a different perspective on it, or if it’s that we just didn’t look at the industry that way. When you think about it with all of these brands, any brand that I carry if there in Nordstrom, [inaudible 00:08:46] some of them are in Macy’s, Bloomingdales, not so much Macy’s, but sometimes you find a few.

And they are in these department stores yet still there are all of these independent boutiques that still carry those same brands and they co-exist. So when I looked at it, I didn’t see what I was doing as being any different than having a boutique other than the fact that my boutique was online instead of a brick and mortar store. So I didn’t see it through that lens of well if Nordstrom has it, I really need to have a unique value preposition to be able to sell something. Because I mean that’s just what it was offline and I didn’t see online as being that drastically different. I think with customers it’s just a matter of what they want, and then being able to get what they want.

And they’ll buy it from whomever, and with Hip Undies considering that I started in 2003 and it’s 12 year later, so a lot has changed. There were — initially there were a lot of advantages that I had that bigger companies weren’t doing at that time, especially when it comes to servicing people who are Americans, but who’ve moved to somewhere else because a lot of the other websites still don’t really make it all that easy for international buyers.

Steve: Interesting.

Miracle: Then also there’s a matter of selection, offering certain things that other stores don’t, because a big company is not going to necessarily buy across a collection. They’re going to maybe stick with some of the best selling items and not carry the rest. I think more than anything it wasn’t the large retailers that were an issue. It was really as the manufacturer started to get into ecommerce, that really changed things, because they can offer everything they have to offer versus a retail like myself or any large company not wanting to carry an entire product line.

Steve: Do you find yourself selling more of your own house brands, or more of other people brands?

Miracle: There’s two sides. There’s search, and of course with search-based traffic most of them are looking for brands that they know. Then there’s paid advertisement. With paid advertisement, then it’s more advantageous to me to advertise the brands that I own.

Steve: Let’s talk about paid search for a little bit, because I know you do a lot of paid search. For the listeners out there, Miracle posts on the Ecommerce Fuel forums, these really long and detailed posts which are really awesome. You mentioned Google search. Is it hard to rank for brands?

Miracle: It is harder now definitely after Panda and Penguin, it is much more difficult than it was before, absolutely.

Steve: Do you have any tactics that you use to rank in organic search, or have you pretty much focused more of your efforts in to just pay-per-click at this point?

Miracle: I gave up, so I think last year, it was either last year or the year before, at one point I was really having SEO and I spent a lot of effort and money into developing all of the resources to really handle Search Engine Optimization, and there came a point where I was kind at a fork on the road. I said, okay, I either can go this SEO path and invest more in it, or I can really try to figure out paid traffic. I made the decision then to just go the paid traffic route, and kind of let the SEO stay where it was. Not to really focus on it, but to put my time and my resources into learning pay traffic.

Steve: If you break down your traffic and your conversions today, where are most of your sales coming from? Is it paid traffic or organic traffic, or direct?

Miracle: At this point, there is organic search, there’s search for the domain name and stuff like that. At this point in terms of where it’s going, it’s on the paid side, and also probably because for me personally it’s easier to have a direct correlation between money spent, and growth on the paid side as well.

Steve: Absolutely. I know Ecommerce Fuel Live you talked about Facebook. Is Facebook your primary paid source at this time?

Miracle: Yes because for me I find it hard to keep growing Google product listing ads, and I’ve gone around and asked all the merchants like, you know? It seems to be that with the catalog of products you have eventually you kind of hit a little bit of a ceiling with that.

Steve: Yeah, there’s only so many searches that are out there right? Do you use generic Adwords or is it just listing ads?

Miracle: No. It’s product listing ads. I probably have a few generic Adwords campaigns, but not so much with what I have just because of the people who bid high and bid a little bid broad. It’s tough.

Steve: Yeah. I know. It totally is especially when you’re selling other people’s brands and that sort of thing. One of the reasons I wanted to have you on the show is because you have had a tremendous amount of success with Facebook. In terms of my store I’ve had success too with Facebook ads, but mainly from a combination of email marketing and backend funnels. What I found interesting about your presentation at Ecommerce Fuel was that you’ve managed to run profitable ads that pretty much directly result in sales. I was hoping that you would be able to share some insights with the listeners from the perspective of a smaller shop on how to run some of these campaigns.

Miracle: Yeah. I will also say that I should learn how to set up a photo and I’m trying to learn how to do that, because I think that at some point it will start to tap out what you can do with selling direct. The way that I got into this was because I started focusing on Facebook ads. I was managing ads for another company, and at that point in time the only groups that I could find that were really going hard with Facebook and making sales of products were the people who were selling T-shirts on sites like Teespring and other crowd sourced type of print-on-demand apparel sites. I started getting involved in those groups and learning from those groups.

They really, really figured it out. I mean seriously figured it out. The great part about it was that because Teespring was almost solely depends upon these marketers for their revenues, they had to make the adjustments that the marketers needed to help them convert better. Teespring kind of took care of the heavy lifting of conversion optimization and split-testing, and they take all the marketers’ feedback and they keep tweaking and refining everything to get to the point where they built a platform that converted really well on desktop and most importantly mobile. All the marketers had to focus on was just driving traffic and tweaking that side of it. Go ahead …

Steve: No, I was just going to say, if you can go into a little bit more detail? Let’s talk about Hip Undies. Let’s say you want to start … Let’s consider one of your most successful ad campaigns. A couple of questions right off the butt. You create an ad and then you have it point directly to a product range. The thing about Facebook is that a lot of people are on there just to hang out, and not necessarily there to buy. I was wondering if you could just provide some of the guidelines that you’ve used to create your most highest converting ad.

Miracle: First I will say that I think everyone who’s come before us has made it such that people on Facebook are now used to seeing things that they want to buy and buying those things from the newsfeed. I think that they’ve done such a good job with marketing and because they were … And for product sellers and they sold it to all these other people and these other people have also done it.

To the people who purchase, not in Facebook in general, because we have to keep in mind that out of all of the people on Facebook maybe only a small percentage of them are active shoppers from ads. Of those people at this point, the idea of being interrupted in their newsfeed and going to buy something is not foreign to them at this point. What you find … I need to put you on hold for a second. I’ve got to grab an inhaler. Hold on real quick, okay?

Steve: Sure, absolutely.

Miracle: Sorry about that. I’m going to start after what you fired. Among those people who shop from Facebook is that they actually shop from Facebook. I even spoke at one point when I was interviewing for [inaudible 00:18:23] that there are Facebook boutiques and there are Facebook buying groups. There are groups of women who group-buy things, and then one of them is responsible for shipping it out to all of them. I think at this point, it’s a thing now. It’s a thing where a lot of people are into finding things On Facebook and shopping and buying those things.

Even on my ads where I have posts you’ll get comments that say I bought one or I bought one like this and I bought one of these last week. It’s the thing now, I think. I don’t think it is that foreign any more. It’s just a matter of there being this huge, broad Facebook audience, and when you run ads you have to figure out how to get more of the buyers in the group of people who see your ads.

Steve: Let’s talk about that. It sounds like targeting is the key here.

Miracle: Yeah, pretty much. Of course you’re going to have products that just don’t work, no matter how good your targeting is, but yeah.

Steve: Let’s say you want to sell one of your undergarments, and let’s just again take your most successful ad. What did the targeting look like, and how did you actually come up with that audience?

Miracle: Trial and error. I’ll say that honestly because there are times when I go in and I think I know what’s going to work and it doesn’t. I’ve tried a whole bunch of different things, and it’s hard for me to say that it’s the most successful ad, because even within the campaign I will have different ad sets. Those ad sets target different groups.

First it’s a matter of making sure that the product is going to work, because sometimes you have the right targeting, but the product just isn’t appealing and that can make you think that your targeting is wrong, but it’s not your targeting. It’s just that the product didn’t work. You have to keep trying things. Sometimes I feel like it’s just a matter of hitting the right thing at the right time.

Not necessarily because my ad was great or my targeting was great just like everything combined at that moment to find that audience and to pick up momentum, because that’s one thing we know for sure about Facebook is that it builds off of momentum. If you get momentum, most of the time you keep momentum, and if you don’t have it’s really hard to get it. It was trying a bunch of different things really, trying a lot of different things to target. It’s targeting brands sometimes. It’s targeting other online shopping destinations. Sometimes I’ll try QVC or HSN or …

Steve: Interesting. Let’s just do a hypothetical situation here. Let’s say you have this new product coming up. You mentioned yoga pants earlier, I‘m just more interested in the process here. Let’s say you want to sell these yoga pants. Who are you going to target first, what’s your creative going to look like?

Miracle: Sure. First I’m definitely going to split the ages. Facebook works I think it’s like 35-44, 45-54, 25-34. I’m definitely going to split the ages. I’m probably not going to expect much out of the 25-34 range. When I set up that ad set they’ll get the least budget.

Steve: Is there a reason why? Is it because you looked at your audiences who shop on your site already, and you’ve determined that that age group doesn’t spend as much?

Miracle: No, it’s not from looking at the audience. It’s from looking at the ads reporting. A lot of times in my experience just from what I’ve been doing, the 25-34 they’re very highly engaged with Facebook so they’re very clicky and they do a lot of comments and shares, but when you run the report and you break down your conversion by age, it tends to take a lot of money to get a conversion in that age range.

Steve. Interesting, okay.

Miracle: I don’t know why. Maybe it’s other factors, you know. They have less disposable income.

Steve: Sure, absolutely.

Miracle: Typically, I’ll split apart the ages for once. If they were yoga pants, then I would start looking at things like … I just did one for yoga a few days ago. I think I have in there stuff like yoga journal, and other yoga websites and yoga terminologies for yoga pauses, and just let it go and see how it goes.

Steve: You’re using only interest based targeting at this point?

Miracle: For something like that, yes. If it’s yoga pants. If I were looking at something a little more general like a bra, but not really because I wouldn’t do it with a bra, but just say I was. Then I would do something broader or I’d do a lookalike audience. If I were trying to sell yoga pants, I would start going for … I’d look at it like, this brand, when it’s in a store, it’s merchandized this way. It’s with these other brands, or it’s at this type of store. If I want to find the kind of person who would buy that, that’s where my mind thinks to look for that person.

Steve: Okay. Yeah, that makes sense. You’re running a variety of different ads I would imagine at this point, how do you evaluate the ads. What are some of your metrics to determine what to continue running and when to stop?

Miracle: Right. Usually when I sort of fine testing, like I said I just started something with yoga in it last week. I will look at that early on and see if I’m getting a click-through rate that’s reasonable. Like if I get a less than 1% click-through rate then I know I’m just way of the mark with the targeting. I’ll look at that early on, and if the click-through rate looks good, like it’s 3%, 2% and above, then I’ll let it run for a couple of days to see what happens with the website visitors and how expensive or inexpensive they are because on Facebook a click is a click. It’s not necessarily a visit to the website.

I’ll start to look at, is it being added to the cart and if it’s converting. If it’s being added to the cart and it’s converting then that’s it, I’ll let it go. If it’s converting well enough, like cheap, then I’ll start to look for other interests to target, and add another interest to target, and another ad set to that campaign.

Steve: It looks like you’re looking at a click-through rate that’s greater than 1% and preferably in the 3% range?

Miracle: Yeah, early on, early on.

Steve: Early on, right. Is this just … are you looking at this like after a day or 2 days?

Miracle: If I’m trying something that I haven’t done before, then I’m looking at it … I’m starting the ad earlier in the day like in the morning, then I’m looking at the click through rate in the late afternoon or evening, if I’ve not done that before. If I’ve done it before, then no.

Steve: Okay. It’s like a one day thing and then you make a judgment after one day whether to continue running that.

Miracle: Well, I make a judgment if I feel like I really bummed, because sometimes I’m way off. Just way off and it’s like, this click-through is so bad. I’ve got the wrong audience here, because again, on Facebook it’s hard to get momentum if you don’t have it. It’s hard to turn something that’s not working into something that’s working, and it’s much easier to just go back to the drawing board than to just sit there and cross your fingers and hope that it works.

Whereas if you’ve got some momentum going, your click-through rate’s good, the engagement is good, then just let it go and the algorithm will do its work. It’s kind of like a car. If the engine’s running smooth it’ll run smooth, but if it’s having a hard time getting started. You’re in for trouble.

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Steve: How much do you put on an ad, and what is the size of the audience when you’re doing these experiments?

Miracle: Sure, ultimately more than 100,000 people. Sometimes I can’t get there with what I’m targeting and again, because I said I break the ages out into separate ad sets. Really honestly if I’m just starting something I haven’t done before, no more than $10 a day in that ad set.

Steve: You typically run multiple of these ads, and then you look in the late afternoon after running for what sounds like a day, and you pretty much iron out the obvious losers.

Miracle: Yeah, the obvious losers. That’s a good way to put it.

Steve: What do you do with the guys that are the click-through rate is like one and a half percent? You start looking at the shopping cart ads percentage you said, right?

Miracle: Right, the next day though, because if my click-through rate is that low, then I’m not … You know I only have $10 a day budgeted. I’m not getting that many visitors to the website yet. I’ll look at the next day and start to see where I’m at with adds to cart, or with conversion.

The adds to cart is a back up to conversions, right, because if something hasn’t converted but you see a healthy enough adds to cart, then it’s just a matter of time before people start to complete those purchases, but if it’s not converting, and you hardly have any adds to carts, then it’s just not going to happen.

Steve: What’s a typical good adds to cart percentage?

Miracle: I don’t know. I don’t have a thing that looks at the percentage. It just has the number and I just kind of eyeball it. What I look at … This is how I do it, because I don’t like to bring all my reports into Excel all the time, because it takes too long then. I look at, how many people … Do I have enough people that have visited the website for me to start expecting to see adds to cart and conversions?

Then I look at, do I have enough people adding it to cart for me to expect to see conversions, like kind of eyeballing. What I look at is, if I only have 2 adds to cart and I spent $20, $10 a day for 2 days, and I only have 2 adds to cart then I’m like, okay, well that’s probably not going to get me where I want, because by the time I get a conversion out of this, I’ll be probably 30, 35 bucks in. This one doesn’t have any momentum here. I can try it again. Sometimes you can just restart that same ad and get better momentum just because you’ve hit better timing, maybe it’s pay day, a bunch of other factors.

Otherwise I look at, let’s say that I spent $20 but I have like 10 adds to cart, then I’m like okay, I only got to see 2 of those convert to sales before, I’m okay with keeping this ad running. I kind of eyeball it. It’s not all that specific, because if I bring it in to Excel, then I’ll never get it done, and I have to make a report and make a decision based on what I see in the Facebook interface.

Steve: I think I see where you are getting at and really determine — it really depends on how much profit you are going to be making per sale also right? You know how much profit you are going to be making, and so you just eye ball to see if the ad will potentially be profitable right that’s what you are saying okay?

Miracle: And even if it’s kind of not really all that profitable let’s just say it’s an item that’s like 30 bucks, and I’m up to $15 per sale right? Even if I’m out of number like that or arguably the 15 is my margin. I’ll still keep that going just because there are obviously a lot of people who buy more than one.

And then there is also the impact of the people who come through on organic click from Facebook which is that someone saw it as a pain impression, and then because of their engagement someone else saw it organically. And they clicked through and that’s not reporting in the ads interface. So that also brings in traffic and in some of those people who don’t come in right away, they come in a little bit later.

If a person saves your post, if they see it as an ad, but they save it, then they come back later and click through later, that’s also not going to show up in the ads reporting because it wasn’t a pain impression at that point. There is a lot of traffic that’s not recorded in the ads interface.

So even if I’m not all the way profitable on that specific campaign or ads set, I’ll still keep it going because it’s bringing in more sales for more items than it’s being recorded there. And while I could go looking Google analytics and I could run the reports. Again I need to be able to make a decision off of what I see in Facebook; otherwise I’ll never make these decisions.

Steve: No that totally makes sense, and I was just curious how does retargeting kind of factor into your calculations?

Miracle: I run the retargeting in a separate campaign. I build custom audience, I build custom audiences based off of products and collections of products, so like brands or groups, or I’ll have a custom audience for one type of garment versus another type of garment. So I have a bunch of custom audiences in there, and I will set up retargeting camping sometimes for specific products.

Sometimes they are dynamic products we are targeting that Facebook feature that has that where Facebook matches up the products. And then sometimes I cross promote something, so I’ll take one product and promote it to a group of people who’ve either looked at or added to cart, or purchased a completely different thing.

Steve: I was just curious though, so you have these experiments and let’s say you have one ad that has like a huge click through rate, but not that many ads to cart. But on the flipside maybe some of those people are coming back through your retargeting ads and actually making a purchase. Is it just kind of a gut feel whether you want to continue with that ad?

Miracle: No, I learn because — like I said I got involved in these t-shirt groups and this is how I learned how to do this, and I have had different people help me out. And one of the guys I respect so much whose name is Glen Williams. And he published this article basically saying you need to have a system.

And this is the only way you’ll make it work consistently is if you keep making the same decisions over and over. If every single time you see something you have to think about it, and you have to decide in context, then you don’t have a system. So I really took that to heart and my system was if three days in a row, three consecutive days I don’t see a conversion, then in cut it off.

Steve: Okay, and in terms of the actual creative, what is your ad actually look like, and what does the landing page look like?

Miracle: The landing page is the product page and the ad looks like the product. It’s just the product shot that’s in the 12 — if it’s a link post; it’s the 1200 by 600. So in a lot of times because that’s the rectangular post in items and a [inaudible 00:34:13] can be toll up there more than one item in that picture, I’ll just – it’s nothing fancy, I’ll just put them together in Photoshop like two three pieces.

Steve: Do you put any text in the image?

Miracle: No, the only time I’ll put text is if it’s promotional, but I try to stay away from that, because, and it just was more than anything, it was probably a factor of having something very consistent that I could hand over to a VA to just make the ads, and not have to think what ads to go on each one.

Steve: Interesting, okay, and so there is no text, you don’t like to use promotions it sounds like?

Miracle: I do sometimes, but then — but here is the thing right, because sometimes if you’ve put a promotion on a post, and you’ve done something that restricts you and you get super good engagement, and you want to reuse that post in another campaign at a later time, then you can’t, your hands are tied, because you’ve restricted it.

I try not to put text on the image, I think I’m going to start putting though the logo on some way like where it has maybe a stroke around it, so it stands out on all of the images, I’m probably going to do that. But outside of that probably not much, because I just won’t be able to have a VA make all of these images without having to think about matching up words to pictures.

Steve: Interesting when you are running these experiments how many do you typically run at a given time? So if you are doing yoga pants for example how many variations would you try?

Miracle: How many variations, so typically if I were doing yoga pants I would start off with one set of targeting, split by age, and then the next day — I have to cough, sorry. I would go in and based on the failure or success of what I had already done, I would start another group of ads or ad sets with different targeting. If it’s working I want more, and if it’s not working I have to try again.

Steve: You start out with age groups and interests, right?

Miracle: Right, so I’ll pick a group of interest like I said like yoga journal and yoga pauses and maybe a couple of famous yoga sites, and a couple of brands. And then I’ll just split those into different age groups and that’s three different ad sets and I’ll let that run. And then the next day either way it goes, I’m probably going to have to do something right? Because if it’s not working I’ll have to try something else, and if it’s working I’m going to want to find more groups to target, more groups of people to target.

And then after that’s gotten a lot of traffic, let’s say we’ve run it for a week or more and I have got a lot of visitors and some ads to cart and purchases, then I can go for the look alike audience, and see how that does.

Steve: Interesting, so you don’t go to the look alike until alter?

Miracle: Well if it’s something like yoga pants, right? If it’s a broader general item from my site like a robe, then I’ll go for the look alike based on the audience that I already have from the website. But if it’s something like yoga pants, I’ll collect an audience based on the targeting that I have done right? Because I’m sending them to a specific part of page and even if there are people that have seen that product that didn’t come from that ad, it’s not that big of a deal for me. And I’ll collect a look alike audience for people who visited that page. And I’ll also collect a look alike audience for ads to carts and purchases. Then I’ll go ahead and run an ad to that look alike audience, I also use look alike audience, because before you said, how big are your audiences.

And let’s just say I can’t figure out how to target something, and I have wrecked my brain and the biggest audience that I could come up with is like 70,000 people. Well I’ll also I’ll just run that ad, and once I get enough people in a custom audience, then I’ll create a look like audience off of that with the hopes that that look alike will bring in more people that I couldn’t figure out with my targeting.

Steve: Interesting, so do you do all — one thing I don’t really like about Facebook ads it is kind labor intensive. Do you primarily outsource this stuff?

Miracle: No, no and I have gotten really fast with it. My biggest issue with Facebook is that it’s so buggy that it’s time consuming. And I think at some point I’ll probably go and find something that I can use that’s third party. But most of the ones I have tried haven’t really hit the spot.

I have a blank ad set like — well it’s just a generic campaign, I have a generic campaign that already has the ad sets set by age, they just don’t have any interest in them in the current reset. Then the ads where the pixels and everything are just set up, but there is no ad in it and there are no interests in it. So I can just copy that pain and just pop into …

Steve: You got it stream lined?

Miracle: Yeah.

Steve: I was just curious you separate up by age, and you’ve already told me that the younger crowd doesn’t convert as well, yet you still run the ads, do you just bid last on those ads?

Miracle: Yeah, I allocate less budget, sometimes they convert, but consistently I have found that the cost for conversion for them is kind of high. But they do help, because they are engaged, they do help boost the social proof on the ads which I think impacts other people in the other target ages getting to it. Sometimes I exclude them altogether, like if I really feel like maybe based on price or something else that it’s just not going to work or that group, I’ll exclude them all together.

Steve: Okay and can you just give us an idea of the copy for one of your ads, just any generic ad that you’ve written?

Miracle: Yeah, it normally says I’m not a copy writer, so it’s not going to wow you. It normally says the first thing is a question like do you like something, or like if its pajamas and maybe the pajamas have puppies on it, love dogs, be sure to check these out. I believe it says tag someone who would love this year if you would wear it, click here to get yours. It’s really not fancy.

Steve: Okay and then the ad and then just the product photo?

Miracle: Yeah and but I do ask them to tag someone or to share it and I do, and I got that tip from someone else, and I found that that does make people do what you ask them to do. They will tag people, even on some of my ads almost 50% or more of the comments are them tagging other people.

Steve: Interesting, so you’ll always point this add directly to the product that’s in the photo as well, right?

Miracle: Yeah I haven’t found as much luck with sending them to like a category page or a group of products, and I think part of that is probably because so much of that traffic is mobile.

Steve: Okay.

Miracle: I haven’t had much luck with that. I have played around with different landing pages for the products. Like cleaning it up, not having as much navigation on it, things like that to keep them a little more focused, or honestly really cleaning it up for mobile. Not so much for desktop, but for mobile like getting rid of the extra navigation, getting rid of some of the other stuff that maybe you’d put over to the side, like your related items and rearranging the product page for mobile, not so much for desktop.

Steve: That was my next question actually, so do you; you always show your ads on both mobile and desktop?

Miracle: Yes, always.

Steve: What about on the retargeting side?

Miracle: Yup.

Steve: You retarget on mobile as well?

Miracle: Yup.

Steve: Okay, so would you say then that most of your transactions are mobile transactions?

Miracle: They’re not that far apart. I mean I posted in Ecommerce Fuel; they’re not a percent a whole percentage point apart. They’re maybe a half a percent apart in terms of the conversion rate on mobile and desk top. It’s pretty close and tablet is up there with desktop of course, especially Ipad. Ipad’s really good, iPhone’s really good too, but it’s when you start to break down your audience by device, it’s hard to get a large enough people in it unless you’re going for a really big group in the first place. But yeah, but they’re very close in terms of conversion rate on desktop and mobile.

Steve: That is fascinating, because when I do it I only retarget on the desktop because for some reason our people like there’s a big gap between desktop and mobile use, or smart phone I should say, but yeah. That’s interesting, so in terms of mobile then is there anything that you do to make the check out process smoother?

Miracle: At post PayPal app oddly though most of them are still putting in their credit cards which I still find fascinating, but whatever. I change the buttons, the order of the buttons, and I have … So the software that I use it’s interesting. It’s old nobody uses it, but what it does is it allows you to run concurrent template sets for the same site. It was really built that way for people who were going to translate them. But what it allows me to do is to actually, outside of having something that’s over a mobile responsive, it allows me to set up a completely different template set, and just run traffic to that template set without having to really change the underlying software of the site.

There are a couple other things that I’ve played around with that I’m not sure how I’ll go forward with, but I’ve also played around with not having not asking for as much information right. There’s a down side because the less information you ask for on a credit card transaction the more you can get fraud.

Steve: Right yes.

Miracle: But reducing the amount of information that you ask for to make it easier for them to fill out. Reducing the amount of required fields to make it easier for them to check out, defaulting to more of a one step check out as opposed to the multi set, but also keeping the linking to allow people.

One of the things that I have to do is I found that I was getting a lot of ads to wish list, so I’m going to have to have a program or like let the wish list feature on my site go through Facebook connect, so that if they’ve come from Facebook and they see something and they add it to the wish list, instead of them signing up on the site they can just connect to Facebook and then that would drop in their name and email address and stuff to kind of make it easier.

Steve: Interesting yeah.

Miracle: And that’s another thing that I actually want to play with, I don’t know if I’ll do that until next year, but playing around with like, grabbing some of that persons information through Facebook connect. But it’s little things like that, it’s tweaking things to make it less cumbersome. I also tested doing the Google maps feature, where you can use that in you check out and as they start typing in their address it will pull up suggested addresses like Google maps does, so it’s a bunch of little things like that that I’ve tried.

Steve: Yeah that a great tip.

Miracle: But mostly it’s just, it’s taking away things that you don’t need to ask them that are default in most ecommerce checkouts, so that they have fewer fields to fill in when they check out.

Steve: Excellent, and I also I forgot to ask you this earlier how often do you rotate your ads, like what is the time to stop an ad and refresh it?

Miracle: When I get three consecutive days with no conversions, then that’s typically when I’ll start to get rid of them. If they are converting just not as inexpensively as they were before, I’ll let them go, because that you can control with the budget, right. If your conversions are dropping, then you can drop your budget accordingly. Sometimes what I’ll do is just start something new same post, different, like a little tweak on the targeting just to try to see if I can jump start it again, because I think like I said so much of it is going off for that momentum.

Steve: Right.

Miracle: In a worst case scenario like say none of that’s working, I’ll use the same pictures; I’m a little bit lazy on that regard. I’ll just change the type of post, so if I was running a link post, then I’ll try a carrousel [ph] the ones with multiple pictures and see how that goes.

Steve: Sure, so by momentum you mean likes and shares, right?

Miracle: All of it because…

Steve: Okay.

Miracle: You just start to see that the little graph at the top of the screen when you look at the ad set, you just start to see a little decline where you’re just not gaining as much out of it, so yeah. Then if I had a carrousel post I’ll try a link post, if I had a link post I’ll try a carrousel post.

Sometimes I do a photo post, not so much, they do get grade engagement, but the problem is very, very few people relatively speaking when compared to a link post or a carrousel post that I actually click through to that website. You don’t build as much of a customer audience with the photo post, but they get really good engagement, and you can get a lot of organic traffic from a photo post.

Steve: I was just curious so once you’ve found an ad that works, how much money do you actually put behind it because in my experience if you add a lot of money to your ad it doesn’t necessarily mean you’re going to get a whole lot more conversions?

Miracle: Right.

Steve: Like it’s not linear.

Miracle: No, you have to bump them bit by bit which is frustrating, so if you were to go and look at all the people who run a Facebook ads and what they suggest, most of them are in the 20 to 50% range in terms of an increase. To increase it is close to mid, like don’t do it in the middle of the day, because what happens is whenever you change an ad set the algorithm has to re-optimize. If you change it in the middle of the day, then you’ve interrupted whatever optimization was working to push it back a few hours while it re-optimizes, so most people will do them at the end of the day close to midnight.

Or if they’re in a different time zone they’ll do them super early in the morning since facebook runs off of the Pacific Time zone. They’ll do them super early in the morning when they’re not really messing anything up, but yeah you really can’t boost that budget way up, because all you’ll end up doing, if you look at your numbers, all you end up doing is sky rocketing you CPM cost. But you still have the same kind of clicks and all that going on, so then everything just tanks, it just gets more expensive, so yeah.

Steve: Yeah that’s totally what I’ve noticed, so you just gradually up the bid 20 to 50% a day till…

Miracle: Yeah I do like 50%.

Steve: 50% okay.

Miracle: If that’s in I’ll go to 15 maybe 16 and then the next day if it’s still working I’ll go 50% in that and so forth, yeah.

Steve: What’s a typical life time of one of your ads?

Miracle: That’s interesting. I have some right now that have been running for over a month.

Steve: Really wow, okay.

Miracle: Yeah, I have some that are older than that and then I have some old ones that were running maybe in June for like 4 to 6 weeks that I’ve restarted and pretty much now this month I’m going to restart a bunch of old ads. Because they’ve already got the social proof, I’ve already got the targeting, and we’re moving in a holiday season…

Steve: Yes.

Miracle: All that really happened with it was that it fatigues, so I’m just going to restart it now that more people are shopping.

Steve: One of your keys it sound like is to reuse these ads that already have a whole bunch of social proof on them, right?

Miracle: Yeah.

Steve: They naturally go viral?

Miracle: Yeah I use the ones that already have a lot of social proof on them, because it looks good right?

Steve: Yeah totally.

Miracle: When you already have got a lot of shares and likes and comments, it looks better than starting new, so yeah. I’m going to restart a bunch of old even probably I’m going to start some campaigns from last year, because I still carry some of the same stuff from year to yeah, so yeah. I’m probably going to go back all the way into like summer 2014, and start picking that stuff and then restarting it.

Steve: Cool, so Miracle yeah, that was a great, that was a lot of detail you just gave on how you run your Facebook ads. We’ve already been chatting for almost 50 minutes, so I want to be respectful of your time. If anyone is interested in undergarments I guess, or I mean questions for you where can they find you?

Miracle: Yeah mostly on Facebook, if someone wants to hop on Facebook and ask me a few questions I’ll be happy to answer them.

Steve: Also you have miraclewanzo.com.

Miracle: I don’t monitor that though.

Steve: You don’t monitor that?

Miracle: I just did it, because I wanted to make sure that my own website showed up in Google.

Steve: Okay and where was that one resource that you were talking about with; was it Greg about having a Facebook strategy, or being consistent with your Facebook strategy?

Miracle: Gosh, I don’t remember.

Steve: Okay, well maybe offline if you can, if you end up finding it, then I’ll link it up in the show notes.

Miracle: Okay cool.

Steve: Cool, well awesome, hey thanks a lot for coming on the show Miracle, really appreciate your time.

Miracle: Thanks for having me.

Steve: Take care.

Hope you enjoyed that episode. I’m always interested in how people structure their Facebook ads, because it seems as though there’re just so many different ways to it and still make money. For example my Facebook strategy is a lot different than Miracle’s, and I’m anxious to give her strategies a try. For more information about this episode, go to mywifequiteherjob.com/episode105.

And once again I’m starting my own ecommerce conference this year. It’s called the Sellers Summit, which is going to be held on May 19th in Miami Florida. If you’re interested in learning about ecommerce, or talking your existing ecommerce business to the next level, then you must attend. Go to sellerssummit.com for more information.

Now I also want to thank FameBit for sponsoring this episode. As I mentioned earlier FameBit is the best way to YouTubers, Instagramers and other influencers to promote your products online and it works. One of my podcast guests Emanuel Eleyae used famebit.com to make over $65,000 in 4 months with YouTube influencer marketing, and it costs as low as 50 bucks to start. The best part is if you use coupon code mywife@famebit.com you will automatically get $25 off. Go to famebit.com right now, and get famous YouTubers to promote your products and get $25 off with coupon code my wife.

Finally if you’re interested in starting your own online business, be sure to sign up for my free 6 day mini course where I show you how my wife and I managed to make over 100K in profit in our first year of business. So go to mywifequiteherjob.com for more information, sign up right there on the front page, and I will send you the course right away via email. 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.

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104: How Tony Horton Started P90X and Sold Over 7 Million Workout DVDs

How Tony Horton Started P90X and Sold Over 7 Million Workout DVDs

Today I am honored to have the one and only Tony Horton on the show. If you’ve never heard of Tony, he is the creator of the incredibly popular P90X home exercise program. Now the personal exercise industry is EXTREMELY competitive and to give you an idea how big time his video was, it ended up selling over 7 million copies.

Ridiculous! Since P90X, Tony has released P90X2 and P90X3 with awesome success as well. Not only does Tony look great but he’s quite an entertaining guy as well.

Enjoy the interview

What You’ll Learn

  • How to stand out among the crowd and create a popular workout video.
  • The challenges associated with growing a physical fitness business.
  • How Tony generated sales early on with P90X.
  • The challenges Tony faced during the early phase of his business
  • Tony’s primary marketing channels
  • Tony’s key mistakes
  • How Tony motivates people to become fit

Other Resources And Books

Sponsors

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Transcript

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.Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin I’m happy to announce that I’m holding my own ecommerce conference on May 19th in Miami Florida this year called The Sellers Summit. And instead of the large crowded conferences that you are used to hearing about, mine will be small and intimate with a focus on learning. So picture small round table workshops instead of large auditoriums with a focus on actionable strategies that will grow your ecommerce business. For more information go to sellerssummit.com, and watch the video.

Now before we begin I also want to give a quick shout out to famebit.com for being a sponsor o the show. Famebit is the number one market place for influencer marketing with over 20,000 Youtubers, Instagramers, people on Twitter and vine looking to promote your company in any vertical, whether it would be beauty, tech, gaming, pets and more. Yes you can get famous Youtubers and Instagramers to promote your business for as low as 50 bucks.

The best part is that you don’t really need any money at all to post a campaign and receive free proposals from creators. Now if you’ve listened to my podcast before one of my guest Emanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing. And the best part is if you use coupon code mywife@famebit.com you will automatically get $25 off. So go to famebit.com right now, and get famous Youtubers to promote your products, now onto the show.

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 honored to have the one and only Tony Horton on the show. Now, if you’ve never heard of Tony, he’s the creator of the incredibly popular P90X home exercise program. To be quite frank, the personal exercise industry is extremely competitive. And to give you an idea how big time his videos have become, they’ve ended up selling over 7 million copies which is ridiculous.

Since P90X, Tony has released P90X 2 and P90X 3 with awesome success as well. Not only does the guy look great, but he’s actually quite entertaining as well. With that, welcome to the show Tony. He’s actually flexing right now, you can’t see him.

Tony: Yeah, you can see me, but I can’t see you. I showered today, so I figured out why not do a video thing just for you.

Steve: I didn’t shower, so that’s why we are not doing a video today.

Tony: That’s right. It’s about the information man, it’s about the content. They don’t need to see you.

Steve: I noticed you are really pumped, so did you do pull ups before this interview, or is that just natural?

Tony: Actually my work out is tonight. I have a routine tonight where I do a lot of Plyo boxes and core and functional stuff on stability balls and med balls and BOSU balls. That’s tonight’s work out. I’m not– this is standard pomp, right there.

Steve: That is impressive.

Tony: No, no it’s okay. It’s okay.

Steve: So what I didn’t actually know about you before I started doing my research on you, is that you actually used to do standup comedy, you are an actor, you are a go-go dancer, you are Chippendale dancer which is pretty cool.

Tony: Dude, you went deep.

Steve: I did. I did. I want to hear all about that stuff in a little bit, but I also heard, and this is just a rumor that you were kind of a terrible athlete also?

Tony: That is the truth, the absolute truth. I was a wannabe athlete. My father was a phenomenal athlete. He was a three sport captain, football, basketball, baseball. But his job was such, when I was a kid and he was gone Monday through Friday, and so I didn’t have sort of a weekly father-son baseball, football, basketball games and instruction and mentorship. So I was kind of left learning on my own.

I played football in high school. Let me put it this way. I was in the football team [inaudible 00:04:57] it tackled on me Monday through Thursday, and then on the game on Friday nights I took stats. I didn’t even know what I was doing wearing pads and helmets. I had no use for them.

I was an okay tennis player. I was an okay basketball player. I was a middle of the road skier. I loved skiing, I loved hockey. I was this smaller kid, the weaker kid, the kid without endurance, the kid without the skill, but I wanted to do it. I loved watching sports. I was a big fan, but I was kind of a dork. I mean I’m much more athletic and stronger and fitter and more flexible and faster in athletic now than I have ever been at almost 60 years old.

Steve: I was really curios as I was like doing my research. How do you kind of go from standup comedy to go-go dancer to Chippendale dancer to fitness? Like what’s the path there?

Tony: That’s a security’s route, wouldn’t you say. It’s only a forty minute conversation; I don’t know whether or not to cover it all. Yeah, I mean the go-go dancing thing was fine. I used to love to dance; I used to love to watch. A lot of your listeners are probably younger, but there was a show called soul train. They had a lot of disco and funk. And they had this little soul train line. And I would just get up in family room looking at my victroller, my [inaudible 00:06:20] victroller, and I would try to pop and lock and do the robot and walk in place and Michael Jackson walk in the wind.

One thing that I was pretty good at that was physical was how to dance. I mean I could see a dance move and pick it up. Years later, moving out to California, I would go to clubs and I would just dance, every Friday and sometimes Sunday night. I just loved going to clubs and grabbing a girl and getting out there and just sweating and dancing. I was in a club one night at a dance contest, and I won the dance contest and the girl, another girl was there, was sent by her friends and she happened to work for Chippendales. She said, “We are looking for go-go dancers, do you want to audition?” And I did, and I got the gig.

Now I’m on a three by three box in a Para Dolphin show and [inaudible 00:07:07] and tiger socks doing the robot, making– and I was making like 32.50 an hour, which was…

Steve: That’s not bad.

Tony: As a young kid in his 20s that was a lot more money than I was making as a carpenter. I had all kinds of jobs. I was a handy man, a carpenter, a go-go dancer. I used to go down to the pier in UCLA and when I was completely out of money, I would put my hat down and I would do mime, so I could make like $25, so I could live on churros and yoghurt for three days. Those were tough times. I mean it was a big transition coming from New Ireland as a young kid to go out to California to make my way.

I wanted to be an actor, a movie star. Doing standup was another one of those things where people said, “Tony you are funny. You should get on stage and tell some jokes.” Storytelling and joke telling are not the same thing. There’s a formula to it like anything else. I had to learn that formula. You have to do your set up and your act up your punch line and your tag. Learning about a list of three, something called call back. These are all little tricks that comedians use. Just like a magician, or mime.

When I would go down the pier, I did mime for two years in college. It was all about survival. I’m in California, I’m not going back to the east coast, so I’m going to figure out how to survive. These are all the things. I was a statue during the academy awards. I put like gold lame spandex outfit on and stand …

Steve: I know what you’re talking about.

Tony: For an hour. I would just stand there motionless like a giant Oscar, so whatever it took baby.

Steve: The fact that you became a Chippendale dancer kind of applies that you had a good body before then, right? Did tennis come first or?

Tony: Well, you know the fitness came when I first came here to LA. I mean, east coast, fitness training was for athletes. Everybody else didn’t care. I mean there were people on the stands and people on the field are core. So you had two different groups, people watching, and people participating. The people who were watching were forced to do gym class. There wasn’t a fitness culture.

There wasn’t … You come out to LA, it’s 72.5 and sunny most of the time, that’s the reason we have a drought. When you came here, “Oh wow, there’s a body building gym and there’s an aerobics gym, what the heck is aerobics?” You know what I mean, like “Wow, let’s go to aerobics class because it’s all women, sign me up. Or yoga, more place for these all women. I don’t know why the dudes aren’t in here.”

I just really gravitated to the culture and partly because as a young actor at that point who was out of work my agent said, “Hey look here, you’re a little purgy around the waist; you’re a little scrawny shoulders and arms. If you want to get more work in this town, you might want to look a little better.” I had an agent, oh my god. I was like I’m going to watch Johnny Carson show and these big-time actors, they are talking about their agent, and I had one.

I just thought she was a goddess, so I just did what she said. I started changing physically and little did I know at the time that I was changing physically, I was also changing mentally and emotionally. I didn’t really realize then, there was a connection, a kind of a biochemical reaction inside of my brain as a result to working out four, five, six days a week. That’s how the fitness thing came in.

I was exercising and training, maybe three or four times a week. I wasn’t eating very well, but I was young so I had crazy metabolism. I was still eating hot dogs and pizzas and burgers and drinking beer three, four times a week. I had a good enough physique that I could get up on a box and dance.

Steve: So how does that kind of lead to exercise videos. I’m sure there is a long path. Whenever people think of people successful like yourself, they think of like overnight successes and that sort of thing. P90X wasn’t your first gig, right?

Tony: No, I mean…

Steve: If it was, I hate you.

Tony: What’s that?

Steve: No, P90X, if you scored a big hit on your first try, I hate you, but…

Tony: P90X is the one that people know about, but there were a few beforehand that did okay. They were like, they weren’t home runs, they were a good sell off the wall double that kind of thing. My on camera experience came as a result of having two careers. One career, when I was done being a Chippendale dancer, being a carpenter and a bar tender and being a statue during the academy awards, eventually I fell under training people. People saw how I changed physically, and so they would say, “Hey, can you do that for me?” I wasn’t certified. I didn’t know anything about training people. I knew how to talk to people and I knew how to show them to do what I was doing.

All of a sudden, I was — one of the last jobs I had before I was able to make a big switch was I was a production assistant over at 20th Century Fox. So I started training my boss, this guy Harlan Goodman was also in the music industry. Harlan made a tremendous physical change. He and I used to train, I didn’t have a gym. His apartment was pretty small. There was no place to train him.

My buddy had a converted garage, it was a gym, and we would just drive over to my friend’s house and start training Harlan in his backyard three days a week. One day he ran into Tom Petty, and then I got a call from Tom Petty and I hung up, because I thought why the hell is Tom Petty calling my house. Then he called back. “Hey, it’s Tom Petty. I think you hung up on me. My name is Tom Petty.” I mean, Tom Petty?

So I got Tom in great shape before a tour, and then my phone just running off the hook. Now I was officially a trainer, but at the same time I began to start my standard career then. I mean I had been a trained mime for years, so I knew how to perform. I knew how to– when you are performing to try to make money to feed yourself, you’ll push the envelope to get people to kind of people laugh and to participate in the whole process of street performance. On one side I was training Tom Petty, then Billy Idol, then Annie Lennox from the Eurythmics, and then Usher in the Ewan McGregor and then Sean Connery.

Steve: That’s crazy.

Tony: I had Bruce Springsteen. I had all these rockers and stuff, but then I was doing standup and I already had an agent that point. I was doing commercials. Now, I got a show called 360 which run on the playboy channel. It was like the Entertainment T4onight, but without the black line for women’s breast, I mean it was a little bit lustier. They were trying to break in to more legitimate TV with two co-hosts. I had a co-host, I was reading the teleprompter. I would start on camera one, I’d look at my co-host, I go to camera two and I go back to my– I mean learning these tremendous skills, how to do voice over for the first time. That was another great skill.

Steve: Can we take a step back. So you got Tom Petty. How did you get the other guys? Was it all word of mouth at that point?

Tony: When Tom Petty got ripped, no one ever saw Tom Petty rip before. That was a complete anomaly. He went on a huge summer tour, I think it started in late spring and went all the way through almost the end of the year. Tom Petty and Billy Idol had the same management company, East End management. They said, “Hey, you know, Billy is in from New York,” is when Billy moved from New York to LA. “Can you start working with Billy?” Then I got Billy ripped, you know what I mean.

Tom Petty introduced me to Anny Lennox. My day started out when I go to Tom Petty’s house, I drive around the corner and go to Annie Lennox house, and then from Annie Lennox I went to Stephen Stills from [inaudible 00:14:05]. I couldn’t do anything for him. And then I go– Tom, Anny, Steve and then Billy Idol and then some mornings I’d get Bruce Springsteen or Sean Connery in there or Sean McLain in the afternoons.

I go to Melbourne, I train [inaudible 00:14:20] in the little studio. That was kind of my routine. I would have regular doctors and lawyers and other folks too. I mean, I was getting up at the crack of dawn getting up at four, five am. My first client, it was still dark outside when we were finishing. Then I would go all day, and I would drive my old beat up mustang convertible and survive on power bulbs all day. I was making a few bucks and wearing down my old car, and thought I was on top of the world. Then I get a call from my agent, “We got a Lori Brown commercial. You got to an [inaudible 00:14:50] commercial, whatever. That was …

Steve: So you weren’t advertising. This is just all word of mouth.

Tony: All word of mouth. There was no advertising whatsoever, none whatsoever. I had business cards. I had business cards made up, and I’d hand them out and like maybe get a gig or two from that. But it was just that when you get a celebrity, a rock and roll person, super fit and no one’s ever seen them like that before, there is a lot of conversation that starts up within their community, it’s a very tight community.

And the reputation that I had back then was that I was good company, that people enjoyed and I mean obviously the workouts were hard, and I was giving them, great results, but I wasn’t the traditional drill surgeon guy. I didn’t treat the stuff really, it wasn’t dry, just like my workouts, if you get my workouts, I’m a bit of a clown.

Steve: Yeah, I love it.

Tony: So because this is the formula, it’s the formula giving people the variety. So when I had a client they would do yoga, they would do martial arts, they would do weight training, they would focal and functional stuff, they would do trimetrics. And a lot of the trainers that they had had in the past were just weight lifting or just all cardio. And they would get bored, they would get hurt, they would stop seeing results after a while. And with me they would continue to improve over time, and they actually enjoyed the process, and so that’s how my client list just grew as big as it did.

And the boomer was there is only so many hours in a day, and you have to drive your car from Venice to [inaudible 00:16:07] to Hollywood, to Kansas [ph] city. It’s just this; there is a lot of dead time in a day just getting from one or the other. But now with the job I have now I mean I can access millions of people.

Steve: Yes so was that the primary impetus for doing the exercise videos?

Tony: No, I mean it was pure serendipity that I actually ended up where I am. I mean I at that stage in my life having moved from Connecticut and Rhode Island and being a fairly depressed overwhelmed procrastinator, I kind of fell in into the very LA, California, personal development world.

A lot of Deepak Chopra, a lot of Don Miguel Ruiz, a lot of Tony Robins in his heyday, a lot of doctor Thierry Zukoff and Andrew Weil and all these and Wayne Dyer. I mean had them all, I had all the books and all the tapes. I listened to them, and I go okay, 80% of this is crap, but this 20% that I can use, you know what I mean? And I did that, I would go to these weekends down by the airport; down by LAX you know what I mean?

You would do all the S seminar and you do a terminal seminar. I had this change in my thinking patterns, because I wasn’t — I mean I had a high school and college education that were designed to help me get a job, so that I can make money, so that I could have a house or a car, and a wife and some kids, but I wanted more than that, I wanted to be able to inspire and motivate and educate people. But I needed the Intel and the information for myself first.

I needed to get it, I needed to apply it to my life and then I was able to disseminate it to other people. So I was in the middle of all of that when I was training these celebrities and these rockers, and they thought, this guy is not just a muscle head. He is somebody who is thoughtful and creative, and wants to have a life outside of just driving all the time and training people.

So the gig– so I had all this going on, and then a friend of mine in Minneapolis said, hey I got a job out in Minnesota with Nordic Track, you had some experience on camera, you are a fitness expert, you’re training celebrities, they want to audition you. After the first audition they said, great and so I went back and forth to Minneapolis and did some Nordic Track stuff, kind of their own camera guy, their infomercial guy.

Then I got the show on Playboys, I had that in on camera time. And then one day just a mutual friend introduced me to a guy named Carl Daikeler, who was this young entrepreneur out of Philadelphia, who had had two nickels throughout [inaudible 00:18:34]. He had all these great ideas, he was sort of a visionary, and so I get this idea for great body guarantee, this is little infomercial, a 15 minute workout. 99.9% of most people who know all of my stuff have never even heard of that workout program, but it did well, it made money.

So investors came around and said what’s the next thing? So I talked to Carl and I said how about a full 90 day program, we’ll call it Power 90? This is when everything was on a half inch tape, there were no DVDs yet, there were no cell phones, the internet was brand new. And we did this thing called Power 90 in six days, and we couldn’t eat right? Everybody in the industry said you are wasting your time, but that thing we sold about a million and half of them.

Steve: So how did you do that, can we walk through that first product, like how did you get the word out, how did you market it?

Tony: Well Carl worked for a company called Guthy-Renker, Guthy-Renker at that time was probably the biggest infomercial company in the world. Infomercials are for folks who don’t know how this works; there is a long form and short form. Long forms are the ones that are full half hour, short form are anywhere from 30 seconds to two minutes right? So the — I’m being told I have to sign something, hold on. This is the life of [inaudible 00:19:43] oh an agreement with China?

Steve: Oh that would be my agreement.

Tony: Yes, that’s cool okay, well maybe we could do that one, Steve you and I. So the way it works is like, anybody and I can’t tell you that if there is 100 people with an infomercial idea. Some kind of retractable cap or some kind of ad machine or workout program that I do, out of that 100 people that try probably two or three succeed, and because it’s one of the most difficult industries to get into.

But Carl had that background back in Philadelphia; he had a couple of little things out of Phili where he had some success that were not fitness products. But the one that he did get well before he came to California was eight minute ads, and that’s like eight minute ads, for a guy out of Phili who didn’t live in LA that was pretty impressive.

So they brought him up to LA, Guthy-Renker did. And he came to me and he said I want to do this thing; I had some great success with eight minutes ads. So you basically come up with what it is, like why is this thing unique, why does it stand out in the industry, what else — why isn’t this like everything else. We thought a little 15 minute workouts with another trainer named Debbie Siebers and I. And I had three of them and she had three of them, we packed them together. And then you have to cross, and then you have to go, make all your phone calls to find out who can make it the cheapest, who can press in, who can package them, then of course it’s all happening in China. You have deals with various media buy, it’s like different companies that buy media for local stations and also national.

You got ABC, NBC, CBS, and FOX those are big national, then you got all the cable ones as well. We made these things, we manufactured these things, and then the marketing people started making phone calls. Hey, yeah, can I have a 3 AM slot on NBC for next Friday? Can I have — and they called the Miami affiliate, then we called the Buffalo New York affiliate. Because the New York City, LA and Chicago ones are too expensive, and you would spend like five grand you know what I mean? And you sit there and then you wait for the numbers to come in and the…

Steve: So you pay money to get on these infomercials, okay.

Tony: You pay to buy these minutes, two minutes, or full half hours. And it’s not — you buy in half an hour for an infomercial. That is not cheap. So you might get — this is, I’m talking about people who are first starting out, or new in the business, who don’t have deep pockets like Sony or other companies. So every time we would spend 5000 bucks, we make eight, we spend six we make 12, we would spend 10 we would make 20 and that’s how it went.

So investors saw that after great body guaranteed, and so we made Power 90. Power 90 was sort of like P90X junior. Power 90 did so well that I got to move out of my three bedroom apartment after 21 years to buy a beautiful home in Bradwood. So I had kind of a cartoon like upgrade from living at the poverty level to living in a pretty beautiful house.

Steve: And this is all through infomercials?

Tony: All through infomercials. I was still training people; I wasn’t training as many because I didn’t have to. But I mean I was getting these royalty checks every month, the kinds of money that I never made as a — I might make 20 or 30 grand as a actor in a beer commercial over the course of a year. I was getting checks like that per month, and then I was getting twice that and then three times, then four times, then five times. And then I mean I was getting checks — I don’t want to get to read the numbers, it feels sort of not…

Steve: No that’s cool, no numbers aren’t important, I was just curious though how does even one get on an infomercial, like let’s say I want to have my own infomercial, who do I call? I mean you had the contacts, right?

Tony: You can Google infomercial companies, and so Guthy-Renker would come up, Beach Party would come up. And they aren’t that many, there is probably about 10, and then you just have to — for me it was a different route. Mine was that I happened to know a guy who worked for one, and he liked my technique as far as exercise and fitness, and so I was just a paid gun. I mean I got paid $2000 for being in that very first product called great body guarantee. And to me at that time that was a big chunk of money to have to only workout three days.

But it sort of evolved over time, but the average person and the average person is like one of the philosophy is build it and they will come. So and for a lot of people who are entrepreneurs whatever their idea is, they have to have a ton of passion, they’ve got to probably trade market, they’ve probably got a patent because they don’t want people to steal it, right? Then you got through that process and that’s several thousand dollars just to do that.

And then you have a couple of prototypes made, and so one of my prototypes for me as an entrepreneur I had — every time I went to a gym, or every time I went to a retail store, I was trying to find some decent push up stance. But they were really rickety, and made of metal and handles were sort of narrow and they dug into my hand, and the platform wasn’t really good, and they didn’t use good rubber, the rubber would always peel away.

So I thought — I called a buddy who worked for a fitness company and this is sort of an example to help the average person who wants to do this. And he called a guy who manufactured ladders in downtown LA. And he said, hey, and so I made it dry and he made this thing and each one of these hands — push up stands weighed about 5 pounds each, nothing that you could ever ship, but they were functionally awesome.

And they had a round base and had a really wide handle, and the handle was declined from the back to put pressure off the wrists, this was just like sort of my idea. And then after I got the patent and trademark, I went over to Beach Party and I said, hey do you think you guys would be interested in what relatively would be– and since I did all the due diligence, since I did the manufacturing and the prototype and I had patent and trademark, they didn’t have to do it. I got a much bigger royalty than if they had done it from scratch and they just wanted me to wrap it or something. And still to this day I get royalties on my power, and so that was [inaudible 00:25:42] every month yeah.

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Once again that’s bench.co/mywifequitherjob to get 20% off of your first six months, now back to the show. So that was actually one of the other questions I wanted to ask you, so you had P90, and then P90X was the one that like get it out the park right?

Tony: Yeah and both Power 90 and P90X didn’t do very well at first, because they were so different. It would be like you walking up to your friends 15 years ago with a Smartphone. They would have said what, that isn’t a thing, that isn’t real. And that’s the reason why I think it did so well. I think the reason why — if you can find a niche that is — I mean I have like a list of 15 things that haven’t been invented yet, but eventually I hope to have invented.

And you can come up with a way to get it manufactured at a reasonable price and it’s like Henry Ford. They first said, why are you creating this thing, the horse and buggy are fine. People aren’t asking for this because they don’t know what to ask for, but I’m going to show them why they need it. It’s the same thing with Steve Jobs. It’s the same thing, he just said, yeah, people don’t know they know it yet, but I’m going to show them why, and of course now look all of us have phones and laptops and iPads now.

Steve: So P90X was primarily through infomercials that you got the word out, did you guys do any other sort of marketing or?

Tony: Very little social media stuff then, this is even way before Instagram and Twitter and Facebook, and stuff like that, it was all through infomercial. And the original Power 90, the original P90X didn’t do well. The original Power 90 we put it out there, we put out the offer, and it was crickets, you know what I mean?

Well then and everyone went, oh well I guess it failed like we all predicted in our CEO cross fit, no now all we have to do is just change the offer a little bit. Don’t make it three easy payments, make it four for less. But the beautiful thing that happened which no one else had done before prior was, the few people that bought Power 90 and P90X were submitting there and before after pictures, their day one and day 90 pictures.

And they were also submitting their own video, because now this was the early time when people could kind of – they didn’t need a big recording device on their shoulder, with tape anymore. They could record their process on their phone, and they were sending this stuff to us. And it was gold, we didn’t need to use fitness models anymore, we didn’t need to use people on test groups anymore. We were just using regular folks who were submitting their stuff.

And we just injected that into the infomercial and people saw that stuff and went, oh my God there is my uncle, there is my father, there is my brother, there is my aunt, there is my sister. There is people I can relate to, they seem like me, and Power 90 nothing and then the following year this crazy checks were coming through the mail. So now it was time– and I had a good three, four year run, and then Carl came to me and said what’s the next thing? And I said I don’t know, we both agreed on taking it to the next level.

So he gave me a year to research P90X and everybody said, okay, you got lucky with Power 90. I mean if you are going to go even more extreme, I mean forget it people aren’t professional athletes, you are going to kill them with that thing. Same thing, nothing at first and about a year later after all the before and afters guys like Jeremy York who had had 180 pounds to lose did it and lost 180 pounds, as well as Catherine MacDonald who I know tried everything.

And she told everybody her story, tried this, tried that, then I did this extreme program and I lost 150 pounds. Richard Neal, I mean he didn’t know he was going to be one of the greatest ways to advertise this product, losing 242 pounds doing extreme fitness program. On top of that, professional athletes, famous actors, Sheryl Crow goes on the red carpet at the Grammys and says, “Oh my God, you look amazing.” “I’ve been using P90X.” I mean that was happening with congressmen like Paul Ryan, who was vice presidential candidate.” It was just that regular folks and big influences were all using it.

Steve: But it took a year for it to catch on.

Tony: Yeah, it took a year before it really exploded.

Steve: So let me ask you this, as you were doing this, what was your time frame in which you would have declared it a failure?

Tony: Any other company other than Beach Body would have killed it after about anywhere from 5 weeks to 4 months. They would have killed it. But when you got something that is extraordinary that is helping maybe only a handful of people, because seeing these extraordinary results, sometimes you just have to kind of re-work the offer, and really begin to interject the people who are using it, and getting the great results.

I feel really fortunate, I mean the one lucky thing is the company that I work for really believes in what I do, and they bend over backwards to make sure that they find a way out to get it out to more people. Now the advent of on-demand, we’ve got Beach Body on Demand, now did a 30 day offer which is really great, so it’s another way to … You don’t have to make a phone call anymore.

You just go to Beach Body on Demand, you hit a couple of buttons and you have instant access on your phone, on your laptop, on your iPad, wherever you go, even on your TV now, without having to call, wait, the mailman delivers [inaudible 00:31:38] machine. That’s archaic compared to how it’s done now. But with people, that transition it’s like what happened to tapes and the DVDs, there was that…

Steve: yeah totally.

Tony: We had to go for a while and I don’t know how many other people have tape anymore. That’s kind of a transitional phase around it, but you want to make sure that people have access either way.

Steve: That’s one of the things that I was going to ask you. One, what are you working on now and how has the marketing changed? Are you still doing infomercials, or are you focusing on YouTube. I noticed your YouTube channel; you’ve got a lot of videos on there. How has your marketing evolved?

Tony: We’ve try to evolve with the rest of the planet. Not everybody is doing infomercials, people still try to get into that genre, but we’ve got that down. We’ve got tremendous relationships in the industry with all the networks and stuff. They know us, they like us. We’re very consistent with buying media with them. It’s funny week-to-week, it’s not like you pay, if it’s 3:00am on ABC week 1, it can change the following week depending on how many other people are buying media.

We’ve got that stuff all figured out, so we’re never going to lose that. That is a formulation that works. We’re doing more short-form stuff. We’re doing a more 30 second, a minute, two minute stuff and maybe not spending it all on full half hour. We’re using Instagram, and Twitter and Facebook and social media. We’re using YouTube. We’re using our website; we’re using my website Tony Horton Live as well.

The thing about social media, you’ve got to be careful because that’s usually typically for free content, and people don’t like to be advertised to. They like great advice, they like great content, but stop selling me stuff. It has to be done in a very subtle way, in a very respectful way, and we haven’t quite figured that formula out yet. There’s nothing worse than posting something about Shakeology and I see more unsubscribes than I see subscribes. That’s not my plan. I don’t want to piss off my fans.

At the same time if you really like something and you really [inaudible 00:33:38] I’m a huge believer in our performance online and our boost line. When we first started doing supplements and stuff, it wasn’t very good. We were not very good at that. We were good at infomercials and fitness products and diet programs, but we didn’t have our supplementation stuff down, so I didn’t promote them.

People say how come you don’t promote the bars? Because the bars suck, that’s why. Our bars are terrible, so I’m not going to talk about our bars. But shakeology itself, it’s a phenomenal product. It’s helping people, and I like talking about it, but at the same time you have to be careful.

We’re using every means possible to get the word out. For example yesterday in the Beach Body and I shot two Beach Body on Demand workouts, a brand new yoga routine and a [inaudible 00:34:20] sequence, which are really important. When it comes to people who are getting older, you need the tricks of the trade. If you know more you can last longer and be less vulnerable and more durable than if you were a tennis player, or a skier or whatever. This is for on-demand subscribers only; you can’t get it any other way. We’re just trying to build that kind of content.

But generally the company is about, we got a problem, and we’re not selling you some, excuse my French, bullshit diet program that works extraordinary, so you can look good and dress in front of your friends at your re-union. We’re trying to look at the big picture here. The big picture is obviously, anybody with a brain, exercising where you will enjoy doing and you can be consistent with, and by the way, eat more vegetables. We’re going to give you a recipe so vegetables don’t taste like wax, that you think they usually taste.

Steve: Let me ask you this Tony, if you were to start all over again from ground zero in today’s day and age, where would you focus your efforts?

Tony: I would focus my efforts on figuring out the latest ways to connect with as many people as possible. That is through a YouTube channel, what you are doing, what you and I are doing, this is a credible way to get information out. I think if you’re starting out right now infomercials are not the way to do it. There’re so many huge YouTube stars, it’s these kids that were working out in their apartment in the middle of …

Steve: They have billboards in LA for YouTube stars, right?

Tony: I know. The thing is you want to probably spend as much time as possible where everybody else is, mostly where people in their teens and 20s are spending their time. There are a lot of people who are just kind of stuck in the old school stuff, and it’s time to move on. At this stage in the game, I would have an electronic press kit, I would have a ripping website, I would have a great presence on all the social media platforms.

All I would do is just copy people who are killing it, like who has 5 million subscribers? Duplicate that, just go [inaudible 00:36:22]. Everything that I’ve done, every push-up, every pull up, every jump knee tuck, every cool and functional thing that I’ve done is a combination of some other version of it. The only reason why I’m successful is I can kind of give them goofy names and I can upgrade them.

Steve: I can tell you why you’re successful Tony. I watched a bunch of those videos prior to this interview, and if I might say, you’re kind of like a goofball in these videos, but it’s really entertaining at the same time. I just called Tony Horton a goofball.

Tony: I am! I did standup comedy and look, it’s about our attention span, it’s all about raising attention span. If your delivery is dry, and boring, I don’t care how informed you are, I don’t care if you had a 4.0 all the way from grad school. If you can’t figure out a way to communicate, then you’re not going to …

How do you think people are elected? Why is Donald Trump popular? Because he’s a freaking train wreck, and nobody can take their eyes off it, there is no opinion about his policies or anything there. It’s just that he’s extraordinarily entertaining, and that alone, is a reason for people to go, “Yeah.” If you look at Barack Obama, same thing, there was a certain style, a certain panache, a certain sort of charisma, regardless of whatever his policies are. It’s sad, but it’s true. It’s the delivery system. It’s an absolute delivery system.

That’s how people learn and that’s how people grow. That’s how people change. If you’re in the middle of an exercise routine, and it’s trimetrics or yoga, something you would rather eat [inaudible 00:37:52] than do one of those two things, there better be a delivery system that makes it so that you come back over and over again. That’s all I’ve ever done. I just said, exercise kind of sucks. We are going to have a couple of yucks along the way so that this thing is doable.

When you’re asking people to do something for 90 days, which is what most of my programs are. The brand new one ‘22 Minute Hard Corps’ is 8 weeks. It’s boot camp; it’s all boot camp training. But it’s still a long period of time and it’s every damn day, and if you don’t have variety, and if you don’t have modifications, and if you don’t have a decent delivery system, then you’re going to be like everybody else and you are going to have a much smaller audience.

If you want to build your audience … Like you, you have a tremendous audience. A lot of people like what you do, they like your guests, and the reason being is you figured out a phenomenal formula with a great delivery system. And that’s why you’re popular, and that’s why I am too.

Steve: Let’s talk a little about motivation. Just a brief background like I’d always wanted six pack abs, and then 2 years ago I decided to just do it. I ended up not just eating carbs, and I ended working out, and I cheated after 5 months, and then I felt so good that I decided to keep that diet up. It was a lifestyle change for me.

The problem is a bunch of people– I wrote a post about this and a bunch of people started asking me about it and how I did it. I told them how I did it and they were like, I can’t do that. There’s no way I can do that. So I’m just curious, what is your method of motivating people to follow through.

Tony: My reasons and it’s changing because I’ve been handling this now for a long time, I think more and more people begin to get it. My reasons for doing anything are much different than what most people’s are. Most people want to eat and exercise because they want some sort of aesthetic, hypothetical aesthetic change sometime into the future. What they do is they start doing something; let’s say it’s one of my programs.

They start on day one and all they’re thinking about is that photograph on day 90. They’re constantly on the scale, they’re constantly pulling out the tape measure, and they’re constantly taking pictures with the hope that they’re going to have some sort of aesthetic change that is really all ego. Like you wanted six pack abs?

Steve: It was ego, yeah.

Tony: It was ego. That’s all ego and that’s all, “Hey, look at me.” But in the end, you were able to sustain and maintain it because it wasn’t about ego anymore. It was more about lifestyle. I say to people, why don’t you start out with lifestyle, initially? There is going to be a greater propensity to be able to survive it, and hold on to it for the rest of your life.

You can train your ass off as much as you want, but there’s sort of that fear and anxiety and frustration that comes with the unknown, of not knowing, really truly, what you are going to look like in 90 days, unless you’ve got somebody standing over you looking at every morsel that goes into your mouth and making sure you’re pushing in the envelope with every one of your workouts.

Everybody is different; everybody has different levels of pain threshold and work stress and lack of sleep and lack of access to really healthy, tasty foods, because of cost or whatever. It really does require … When you see how many people are successful, who lose their weight, who change their lifestyle even though they start out with ego first, it’s incredible.

What I would say, and I say to people, like you train today you’re better today. You might not change aesthetically, but you’ve taken care of business. You’ve pumped the oxygen and the blood into your brain. You’ve released [inaudible 00:41:17], all these things that change your outlook about your life. It’s your life. It’s your joy. It’s your happiness. It’s your connection with people. It’s your sense of adventure. It’s your level of energy. All that stuff gives you the day that you want to have and it comes from exercise first, and also making it happen with decent food choices.

If you make horrible food choices and you decide not to move, then life is a struggle. Fitness and eating is the foundation, is the platform to have all the other things that you want. There’s a pyramid, at the bottom is, number one, if I exercise today and eat right today I change my brain chemistry. When my brain chemistry changes, it’s like John Ratey talks about in his book ‘Spark,’ then you have a greater potential to have a better day and then you just repeat, repeat, repeat.

After 30 days and 60 and 90 and you repeat it for the first year, the second year, the third year, all of a sudden you’re one of those people who go to dance class at 95, still skiing at 82, and taking gymnastics for the first time in your 50s, and then you’re a person who looks back at your life and goes, that’s the story. Because the story is not, oh I had another bottle, I banged through a bottle of vodka this week while watching re-runs of ‘I Love Lucy’ and [inaudible 00:42:30] Island. That’s not a life. That’s not a story. If you’re not exercising and eating, then you’re just … and by the way time keeps on ticking. It keeps moving on, moving forward. Your body is aging, your brain is aging. The only way to slow that down is to move and to eat things that fuel you properly.

And of course there’s supplements as well. If you’re working out really hard, and you’re not getting the perfect amount of sleep and you still have a certain amount of stress because of work and stress and family and traffic and everything else, it’s going to be really hard for your body to recover. You’ve got to do the multi-vitamins, you’ve got to do the creatine, you’ve got to do the CoQ10, you’ve got to do the [inaudible 00:43:03], you’ve got to these different things.

“Oh, supplements don’t work.” You don’t need them if you don’t do anything. If you show me one collegiate or professional athlete, or Olympic athlete who doesn’t supplement just right to be able to perform at their highest level, because they’re training 2 hour days, or 3 hour days, they’re genetically gifted. It’s a formula, and when you learn the formula– in my book, ‘The Big Picture,’ it’s in there. It’s not so much a fitness and diet book as it is a lifestyle book to show you what to do so that … I mean, I’m 57.

Steve: You look great.

Tony: Thank you. I did shower. And I still [inaudible 00:43:40]

Steve: Although there is a reading glass you got on.

Tony: They are. I’m lifting them up and my screen is a [inaudible 00:43:46].

Steve: Here’s the thing. I think motivation and business are all intertwined. Once I started getting in shape, I found myself having a lot more energy to actually work more on my businesses and that sort of thing. I almost think that getting into shape is fundamental to anything else in life that you want to do, I don’t know.

Tony: The bottom-line is healthy in-shape people eat right, have bigger lives than people who don’t. There are people who have a lot more money, maybe a lot more stuff, maybe they don’t exercise or eat well at all, and they are successful because they are very smart and they inherited a business or they are just sort of super ambitious or very smart. Let’s say, you didn’t have all of those things. Maybe you don’t have a college education. Maybe you don’t have that sort of family help, or you are not part of an industry where you can make some decent money and have a great life.

If you exercise, start to exercise and start to eat right, the two things you can control, those are the only two by the way. Most people don’t realize that. I’m going to exercise today, I’m going to eat right today. Traffic, I don’t have control of that, family I wish, work I don’t– my boss got me cohunes, weather, none of it, none of it. All that stuff that kind of creates all these conflicts in our lives are more easily dealt with if you make a dietary shift, and you begin to exercise, everything kind of falls into place. You have more patience. You sleep better. Your sex drive improves; your memory in cognition improves. There are so many things that are more mind and emotion about exercising and eating right than even the physical.

Too many of us are exercising because we want to look better, and none of us are exercising because we understand it completely alters our mental and emotional state. The second the workout is over, I don’t know of anybody who finishes a work out and says, “Oh my god, that was a horrible idea.” They just– but it’s making the decision to do it. The worst part of the exercise is the ten to five minutes before, and the first five to ten minutes at the beginning of it. It’s like, “Oh I don’t want to be here. I’m tired. It’s early. I’d rather be sitting down with a cup of coffee and a dash.”

But when you fall into the pattern, I gave up sugar four weeks ago. Now I was eating healthy breakfast, healthy lunch, healthy dinner, working out five or six days a week, but I still had my little sugar addiction. But I noticed that I was moodier. I thought, am I just a moody guy, am I just moody. Is it genetics? I mean, my whole family is moody because everybody eats sugar, everybody eats fried foods, everybody eats soda pop. I was cutting out everything except for the key lime pie, and a chocolate, eat cookies and the chocolate mousse, chocolate mousse.

Steve: I love chocolates mousse.

Tony: I just thought, you know what I’m going to experiment for 30 days. It was the most brutal 30 days. I felt like, I would stand in front of a pantry for ten minutes at a time just looking at the things that I couldn’t eat. But man I won’t eat a cookie or a donut or a brownie or a pie, and it was hard. It was like getting off a crack. I mean– and that’s what happens inside the temple low. The dopamine, it is that huge flash of dopamine which makes you feel good in the minute, but in the end if you look at the sugar that you eat, you will also—it’s like you’ll make a graph of the sugar, oh I had sugar at this hour, and then my mood went down. Like your mood and sugar and process curves go hand in hand.

I’m a pretty upbeat positive guy anyway, because I have a pretty awesome life and I have a job that I love and I’m married to the woman of my dreams. So even with the sugar, I was a pretty happy guy. Now that I’m without it, I just feel like I have a little bit more energy. I sleep a little bit better. I have a little bit more patience, all these little things that have been altered as a result of getting off. Same thing with alcohol, I haven’t had alcohol in years, so I wouldn’t even know.

Steve: Interesting. Yeah, I’ve been off sugar for two years also. It’s been great.

Tony: Yeah, it’s fantastic. And so when it comes to how does it all relate to business, you want to build a foundation. You want to make some basic changes on behavior. When your behavior changes, so does your productivity and energy and that goes up and as that goes up, so sort of that helps your business grow. Why not have that advantage if you can have it? Ultimately it’s about longevity and quality of life too. I mean these are things that everybody wants.

If you’ve got hypertension and diabetes and the potential for stroke and high blood pressure, all these things, and you are working your ass off, and you have all these physical mental and emotional problems, is it worth if you can’t enjoy it. You know what I mean. So you clean up the diet and you start to move. It doesn’t have to be one of my program, I mean heck I love … So I can buy a new couch. But it’s not really about– it’s really about, decide, “Hey I’m a Pilates guy. I’m a yoga person. I love body building.” Figure it out, but add some variety too, because you don’t want to get bored on a plateau, you want to make sure you have variety. When you do that, life is but a dream.

Steve: That’s a great philosophy. Hey, Tony, you rattled off a whole bunch of your products. I just want to give you some time to talk about all the things that you are working on, and where people can find you online.

Tony: Thank you. If you just want my stuff, you know my general stuff, and you are still using kind of old school DVDs and stuff like that, you want to go to beachbody.com. If you want a particular product, it’s pretty basic. You can go to P90X.com or P90X2.com or P90X3.com that’s where you get the products that create beach body which is great. But if you want to learn more about me and the things that I’m doing outside of that, like events, I’m going to be at the Omega Institute, and I do a lot of travelling in Europe. I go to Hawaii and do events. I go to the Orient, and do a lot of stuff in South Korea and Japan.

If you want to know where I’m going and what I’m doing and you want my free newsletter, then you go Tonyhortonlife.com. That’s my website, it’s brand new, and we’re always sprucing it up. The weekly newsletter kind of gives you a lot of the things that you don’t get from the book, because I’m always learning, I’m always growing, I’m always stealing other people’s really good ideas and making them my own. And where I learn something I think, “Oh my God, this is making my life better. It’s making it less complicated.” Here’s the thing, you have to– just like your phone, everyone gets a new phone every once in a while, you have to update your own personal Intel, and I’ve learned that.

This comes from somebody; I used to hold on to stuff for so long. I used to put on the blinders, I used to hope for the best and hope it’s all going to turn out okay. I’m not doing that anymore. I’m still– I’m always learning and growing. When I find something that really, really matters to me, then I make sure that I put it up for everybody once a week. It’s all about motivation, it’s all about diet, it’s all about learning how to do a particular exercise or how to exercise on the road. It’s part of the same basic things that come up all the time that people struggle on. I’m always looking on new angles on which to kind of help people get better.

Also, you can get the book. You can go to Amazon, the big picture. It’s my most recent book. Then of course, my original, my first book Bring It, my second book which is a little audio video book, called Crush It which is a lot of fun. There’s a lot of humor there, and of course the YouTube channel.

Steve: Yes, I was going to say, you are missing the YouTube channel which is my favorite part.

Tony: I was going to get there Steve. Tony Horton fitness and we’ve been kind of stagnant for a little bit on that. Those of you who are listening saying, hey I haven’t seen new content in a while, that’s going to change pretty quickly, because we had this switch over to the on demand stuff. For those of you obviously that just want convenience and access to my entire library, all of my stuff, go to beachbodyondemand.com, which is Beach Body on Demand or BOD.com it will take you there.

The first 30 days are free, free, free, and so that way you can work out ten times a day, it doesn’t cost you a penny. At that point, the cool thing about that is that you can kind of look all the content and go, “Oh, all right.” Then once you sign on, I think it’s $38 a month which is crazy, I mean you have access to all my stuff, Shanty stuff, Chalene stuff. I mean there are hundreds, and hundreds, and hundreds of workouts, and the beautiful thing is you don’t have to buy the entire program; you can just buy– for 38 bucks you can do whatever workout you want. It’s just– I mean it’s the future. That’s where most people are. It gives you tons of access and tons of variety. So you can avoid the boredom and the injuries, and I can tell you will see results even as you get older.

Steve: I’m going to link all that stuff up so you guys don’t have to remember everything that Tony just said.

Tony: People are jotting it down. What was that Tony Horton fitness, oh crap. Thank you for that, thank you Steve for hosting me.

Steve: No problem. Hey, I really appreciate your time Tony. Thanks a lot. This is a great interview. It’s great to hear your philosophies on life and on business. I think these are going to be really valuable to my listeners.

Tony: Steve thank you for having me on. I’m a big fan of yours. I love the work you are doing and I’m very honored to be here today. Hopefully we will change a few minds on how to behave, and how to eat so that the people can become more productive and build their businesses the way they want as healthy happy human beings, not stressed out and people sick and depressed human beings.

Steve: Yeah, it’s all that eating right.

Tony: Exactly right. Thanks man.

Steve: All right, take care Tony.

Tony: Thanks Steve.

Steve: There you have it, Tony Horton of the legendary P90X fitness program. How awesome is that? And what’s even cooler is that Tony is totally down to earth and really entertaining as well, and I hope you enjoyed his story. For more information about this episode, go to mywifequitherjob.com/episode104. And I want to thank fame bit for sponsoring this episode. As I mentioned earlier fame bit is the best place to find YouTubers, instagrammers and other influencers to promote your products online and it works.

One of my podcast guests Emanuel Eli used famebit.com to make over $65,000 in four months with YouTube influencer marketing. It costs as low as 50 bucks to start. The best part is if you use coupon code “my wife” at famebit.com, you will automatically get $25 off your first campaign. So go to famebit.com right now and get famous YouTubers to promote your products with $25 off using coupon code “my wife.”

Once again I also want to remind you that I’m starting my own Ecommerce conference this year called the Sellers Summit, which is going to be held in May 19th in Miami Florida. So if you’re interested in learning about Ecommerce or taking your existing Ecommerce business to the next level, then you must attend. Go to sellerssummit.com for more information.

Finally if you’re interested in starting you own online business, be sure to sign up for my free six day mini course where I show you how my wife and I manage to make over 100K in profit in our first year of business. Go to mywifequitherjob.com for more information, sign up right there on the front page, and I will send you the course right away via email. 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.

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103: How To Go From 0 To 130,000 Instagram Followers In 6 Months With Daniel DiPiazza

103: How To Go From 0 To 130,000 Instagram Followers In 6 Months With Daniel DiPiazza

Today I have my buddy Daniel DiPiazza on the show. Daniel is someone who I met recently at the Import Summit in Orlando and I’m really glad I did. He’s the owner of Rich20Something.com where he teaches young people how to start their own freelance businesses.

And to be honest, the content he puts out comes at great time where kids graduating from college are having problems finding high paying jobs. His site is crazy popular and what’s cool is that he’s built it up in an extremely short period of time.

In addition to Rich20Something.com, he’s also successfully launched a test prep company and bootstrapped a web development firm. He’s worked in marketing and copywriting for well known influencers like Ramit Sethi and his brother Maneesh Sethi who I had on the show back in episode 69.

And finally, he also regularly contributes to publications like Under30CEO, Entrepreneur Magazine and the Huffington post. In short Daniel does a ton of stuff and he’s killing it online with a large email list and over 130,000 followers on instagram in a little over 6 months.

What You’ll Learn

  • How Daniel’s site makes money.
  • How Daniel generates traffic to his site.
  • How Daniel has amassed 130K instagram followers in just 29 weeks.
  • How to use instagram to market your site.
  • What people with very little money to invest can do to make money online.
  • How to get freelance gigs and make money immediately.

Other Resources And Books

Sponsors

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Transcript

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.Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin. I’m happy to announce that I’m holding my own ecommerce conference on May 19th in Miami, Florida this year called the Sellers Summit. Instead of the large crowded conferences that you are used to hearing about, mine will be small and intimate with a focus on learning. So picture small round table workshops instead of large auditoriums with a focus on actionable strategies that will grow your ecommerce business. For more information go to sellerssummit.com and watch the video.

Now, before we begin, I also want to give a quick shout out to famebit.com for being a sponsor of the show. Famebit is the number one market place for influencer marketing with over 20,000 YouTubers, Instagramers, people on Twitter and Vine looking to promote your company in any vertical whether it be, beauty, tech, gaming, pets and more. Yes, you can get famous YouTubers and Instagramers to promote your business for as low as 50 bucks. And the best part is that you don’t really need any money at all to post a campaign and receive free proposals from creators. Now if you’ve listened to my podcast before, one of my guest Emanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing.

And the best part is if you use coupon code “my wife” at famebit.com, you will automatically get $25 off. So go to famebit.com right now, and get famous YouTubers to promote your products. Now on to the show.

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 my buddy Daniel Dipiazza on the show. Now Daniel is someone who I met recently at the import summit in Orlando and I’m really glad that I did. He is the owner of rich20something.com where he teaches young people how to start their own freelance businesses, and to be honest the content that he puts out comes at a great time, because kids are graduating from college right now and they are having problems finding high-paying jobs. Now his site is crazy popular, and what’s cool is that he’s built it up in an extremely short period of time. And in addition to rich20something.com, he is also successfully launched a test prep company and bootstrapped a web development firm.

He has worked in marketing and copywriting for well-known influencers like Ramit Sethi and his brother Manish, who I had on the show way back in episode 69. And finally he also regularly contributes to publications like under 30 CEO, Entrepreneur Magazine and the Huffington Post. And sure Daniel does a ton of stuff, and he is killing it online with a large email list and over 130,000 followers on Instagram in a little over six months. With that welcome to the show Daniel, how are you doing today man?

Daniel: Wait a minute your wife quit her job?

Steve: Yes she did, I just met your wife too, did she quit as well?

Daniel: She didn’t quit, she is the one supporting me actually.

Steve: Is that right.

Daniel: Now that was [inaudible 00:04:02] get you, thank you so much Steve.

Steve: Yeah no problem man, so tell us about rich20something.com, how it got started. I like the story that I heard at the conference, about how you got started and all the stuff?

Daniel: The information is about story. You know what and this is one of those things where Sarah is like you don’t — I mean I guess you could probably know how mad and sick she is with that story at this point. Like I think every great story teller or entrepreneur, comedian, entertainer, everyone has like a collection of like five to seven stories that become their like Joseph Campbell, hear all these Johnny type things.

So you develop like a unique cadence for how you tell them, and you’re like the details while they are very like intriguing details or the same every time, because you want to like find what part of the story hit and repeat them, right? So this part of whole thing is like — it’s a true story and I love talking about it, but man Sarah, she used to hate it more time she is like I hate this, don’t talk about it anymore.

Steve: I’m pretty sure that a lot of the listeners haven’t heard it yes.

Daniel: I know.

Steve: You will be doing them a disservice.

Daniel: I know so they haven’t listened to this anyway, but I’m happy to tell them. Basically the story takes us back to when I was working at this restaurant; it’s called LongHorn Steakhouse which was in Atlanta. And we only have 20 LongHorns in California, I think their sister company is like our garden, red box, so it starts at the restaurant if you can imagine that. I remember it’s like five years ago now, I graduated school a few years before in 2009 and I kind of had worked pretty much every job that was conceivable, assuming that I didn’t want to go back to school to get a graduate degree, and I didn’t want to go into the like the corporate, like cute little things. So essentially I did everything that I could do to kind of make ends meet. I worked in retail; I was the guy holding the sign, flipping the sign up that thing. I worked at UPS with the brown little shorts which I look amazing in.

And one of my last jobs or my last job actually was at this restaurant. And for everyone who’s never worked in food service, you should probably do it because it gives you a new kind of respect for whoever that’s bringing your food. But one of the things that most people don’t know is that you don’t actually get paid for any work that’s not serving. So tipped employees get like $2 and somehow change an hour. Not in California, California has a decent minimum wage. But in every other state basically it’s like 2.14 an hour. And what ends up happening is you have also other work to do on the restaurant. Cleaning up the restaurant, pat the stupid low sugar packets in order, I mean loads of whatever the thing is, you get paid like two bucks dollar for that.

And then taxes and social security which we’ll never see, take away all that money and sometimes you actually end up owing the restaurant money, because — sorry owing the like government money, IRS money, because of like the negative balance you have from all these taxes, right? So it’s pretty crazy and I remember specifically the day kind of I had the light bulb go off, I was scoping these butter balls. For me that was the thing they liked to put me on, that was the station they liked me to be on, I don’t why, maybe it’s my cute face.

But they laid out like ten trays of butter for me to scoop or ten like serving trays and each tray had 50 little ramekins which are these plastic dishes, and I was scoping the butter in there. And I get to the end, and I’m like two little ramekins away from finishing so do the math, it’s 498 butter balls not exaggerating. I’m doing the stupid butter balls, and my manager comes up behind me, he is a tall guy, six foot three, his name is Scott, big blonde hair, I think that’s called a towhead right?

So he comes up behind me and he inspects the butter balls, he looks at them, he kind of turns up to the light as if he is really doing something valuable, and he looks at these balls, he says you know what, these balls suck, do them all over again. He starts to take the balls and he dumps all the butter from all 400 plus balls back into this big bat that we had. I guess they were round enough for him; they were maybe too chunky or uneven, whatever.

So at this point he is undoing all the work that I already did get paid for, and I know this sounds like a stupid or maybe like frivolous reason to get mad, or maybe someone’s grandparents would say, oh well that’s just you paying your dues. Me fine, but for me it really pissed me off, and I was like you know what I had to find a way — I had to find a way to get out of here.

I know that I don’t want to go back to school, because there is nothing that I want to pursue at that level of an education like for graduate degree. I didn’t want be a doctor or a lawyer or engineer, so that was out. I didn’t want to go back to work where [inaudible 00:08:49] I saw my friends, but I knew I had to figure something out, and that was the time I had the light bulb and I’m like, okay I got to figure out how I can make something out of the skills I already have. And that was the impetus that got me rolling into starting my first business which we scaled to six figures, and that was the test bulb company.

Steve: Yeah, and we’ll go into a little bit more on that later on when we talk about some advice that you can give to people who are looking to just make a little bit extra money on the side. But I did want to focus initially actually on how you kind of built up rich20something.com. At the conference we kind of shared a couple of numbers and you got this gigantic email list and Instagram. So first off how does your site make money right now?

Daniel: That’s so great — I think my parents should be listening to this because they still don’t get it, they don’t understand.

Steve: Neither is my mom either man.

Daniel: That’s the cool thing too, you never really know who’s — I mean you look at websites you never really know how much money they are making, it’s not always obvious. So rich20something.com if you go to the home page, it’s just a landing page right now, there is a blog as well. But the site makes money through a couple of the products that are developed, and those products are only available if you join the email list.

Even after you join the email list like we don’t initially just sell you stuff, like we give you a lot of free content based on some of the stories I just told you, where I give you exact actionable strategies and tips. And then at the end of that if you feel like it’s a good fit, then I can share the information with you, we can go a little bit deeper with some of the step by step program I have developed around these experiences and tested information.

Steve: Okay so it’s just courses, are you doing any sort if advertising, or affiliate revenue or anything like that?

Daniel: So just courses right now. I have done some affiliate stuff on my side, like other people promote my stuff. I brought in [inaudible 00:10:33] stuff right now and I don’t know when is the time to do that, or if it’s the right time to do that, I don’t know when that’s going to happen, but I probably eventually will. But it’s essentially only courses right now, we do periodic launches, we do — we have some stuff that’s running ever green, but for the most part it’s just courses that is very subtle, it’s not something that piss people all over the head.

Steve: Okay and then so in order to sell these products so you still have to get people onto your site and onto your list, right? What are some of the different ways that you actually generate traffic to your site, like let’s say you got a brand new blog?

Daniel: That’s a great question, so first of all one of the things that are bringing traffic and one of the reasons why I don’t hate talking about it, but always like—I’m always afraid when people ask me about, oh how do I build an email list? The reason I cringe is because I feel like everyone has done it a slightly different way, and I can tell you exactly how I have done it, and you can try the exact thing and it might not work.

Then you’ll get mad, you’ll be like I did exactly what you said, it didn’t work. And I think there is a lot to do with the content — I will answer the question by the way, I will tell you how I do it. But I just want to preference it like anyone who is like — I just want you to know that email — by building an email list, and getting traffic to your site is a very individualized thing, and you could follow a formula, but like you got to find out where you fit in.

So that being said I use three ways by the way, first way is via syndication partners. So over the last few years, and we could dig into this if you want to, but over the last few years I built relationships with a bunch of different — like I guess brand name publishers. So in addition to the ones you named like Huffington Post, Entrepreneur, I also have a column in Time Magazine, Fortune, Forbes, we are working on Ink and Esquire right now. Other CEOs want, but like I did columns in a lot of different highly frequented sites, and they allowed me to write content and write up things that resonate with my audience or resonate with their audience, and then I can include links back to my site. So it took me a while to build those relationships, but that’s a big part of my traffic.

Steve: Can we talk about that real quick on how you even start building those relationships in the first place?

Daniel: Yeah, I would love to. A lot of times it’s not really a secret, the first thing you got to remember about syndication or about getting bigger sites to like pay attention to you and like promote your stuff, is that a lot of these sites, especially sites like Fortune, Time, well they are prestigious names, they are also content course basically, like they need content and there is never enough content.

So well there is like this whole prestigious like essentially like this wall that you can’t surpass, or you can’t surmount, really they need your content and if you know how to approach them you can get to them. What I like to do, I like to think of it a pyramid, and I think of the syndication partners at the bottom as the ones that are easier to get into, and I use those to leverage my way to the top.

So an example of that might be Huffington Post. Huffington Post is a brand name, but it’s quality isn’t perceived as high as Entrepreneur, typically speaking right? So to get into Huffington post, I mean to be honest with you I’ll tell you what I did. I just cold emailed Howe [ph] in Huffington, I’m like hey let me in. Yeah, I said let me in and I’m not the one only one that’s done, I have several friends who have cold emailed her, they are like sure.

So I guess that’s just her way of giving back. But you could easily find the editors at Huffington Post, pitch them and they’ll let you in, and not only will they let you in. You might have pitched them a couple of times with a good concept, but they’ll let you in and once they do that, you have access to their backend and you can pretty much write whenever you want, whatever you want, so that’s the first thing.

And then I use that to step into myself, I jumped in Huffington Post, and once I get some credibility and I built up some articles there, I went to Entrepreneur, and I found some friends who were already there that I already knew, and I was like hey who’s your editor? They give me the name of the editor, and I cold pitched and I was like, hey, look I write for Huffington Post, I have done some cool things, I think I might resonate with your audience, got in there. Once like I’m not leaving anything out, that was really the story.

Steve: Did you have Rich 20 Something at that point with the library of articles?

Daniel: Yes.

Steve: Oh you did okay.

Daniel: And one thing I’ll say, when I say syndication I literally mean syndication, I don’t write new articles for these websites. I take articles I have already written on my website and I repost them on these websites. That allows me to move a lot faster through my systems.

Steve: I see okay, that makes a lot sense then okay, yeah, because I know people that hire copy writers to just reword their existing articles, but it sounds like you are just posting everything verbatim.

Daniel: Yeah, I mean that works too, the only thing I make sure of is that — is published on my site first, then I give it a few weeks just for the SEO juice on my own site and then I repost it. And they need it, so that’s the first way that I get traffic. The second way is the social media, so for me that big social media source is Instagram, and we’ve talked about that a little bit before the call.

Steve: We have and we are going to go into a little bit more depth. Okay so we’ve covered syndication, let’s talk about these 130,000 Instagram followers that you’ve immersed in just 29.5 weeks.

Daniel: Oh my god it’s really…

Steve: I stalked you…

Daniel: You stalked me; well it’s actually 132,000 thank you very much.

Steve: Sorry about that.

Daniel: Our growth is a little bit of excitement pushing us hard, but the first 100,000 of those came in four months, so pretty good right?

Steve: Yeah, no, awesome, yeah, that’s like the understatement essentially.

Daniel: Well one thing about Instagram which I was totally not on board with using it as a platform in the beginning because I thought what’s the use, you can’t post any links in your images, so how am I going to get traffic? And what I realized is that there is only one link on Instagram right now. I’m sure they’ll roll out more as the platform develops, but right now you can really only post one link and that’s in your bio link which is your profile for your Instagram account. And that alone has driven 40,000 opt-ins to me in the past five months or so.

Steve: That is ridiculous.

Daniel: Yeah it’s ridiculous stuff, so you do you want to dig it how I did that?

Steve: Yeah, so let’s talk about the different strategies first of all, okay actually well I’ll just let you talk, and then I’ll interrupt you.

Daniel: Yeah, so anyone who is keeping track, first strategy is syndication, second strategy social media, and for me specifically Instagram okay? So the thing you have to know about Instagram is that it’s kind of like there is two things going on here. One is community building like finding content that people will really like, and then the second thing is promotion, finding a way to drive people back to your site.

I think the most valuable part probably of that isn’t the promotion part, it’s probably the community building, because you have to have a good relationship with your audience so that your engagement is high, so when you actually do post something in promotional they’ll go and do your thing. So that’s the first thing, so essentially what I have done is I looked at what type of account I wanted to create.

There is different types of accounts, there is — there are like — there are accounts that’s just do quotes, there are accounts that are like more of a personal brands where it’s just people taking pictures of their ice cream, or which [inaudible 00:17:35] do I have for the day. There are people who just promote or who just like their fan pages essentially like all Bentleys, they are just pictures of all Bentleys, stuff like that. There are different types of accounts and what I realized– I try to look at what was doing well in the space.

So the first thing I realize is since I’m very approachable in my emails, I’m very approachable with my videos, I realized I kind of probably should position as a personal brand, but I also realized I was hot right now at Instagram and generally in what I considered to be this entrepreneurship lifestyle hustling bubble.

What’s really popular is like motivational quotes, cool pictures of interesting lifestyles and things of the like right. I try to combine my personal brand with some of those other images of like luxury things and motivational things, and it’s come out to be a pretty good mix. If you look at my account adwords or something, it’s a combination of cool pictures, interesting quotes that I find to be meaningful, and also pictures of what I’m am doing in my life.

Steve: Right and an occasional video also, right?

Daniel: And occasional video also yeah. That is what I’ve even moved more into, it just in the past week or so, I’ve started doing a bit more comedy, just humor stuff because humor gets the combination going. People love to see things that make them laugh, and they associate that stuff with you. I try to just be a good mix, but primarily it’s a personal brand so you can see it says restoring something and then the name is Daniel Depiazza, and then the bio, it has a little bit about me and a link to right now my YouTube channel, but typically it’s a link to an opt-in.

I started off just like everyone else, no followers, no credibility on that platform and the first thing I started doing was I started creating great content. One of the apps I use is called Word Swag and Word Swag, if you’ve ever looked on the something and you said man that’s a really beautifully designed image. I wonder if they had a professional designer to do that, or that I thought that was really hard to make in Photoshop. They probably use Word Swag and Word Swag is just a simple application that allows you to arrange beautiful images, and text so…

Steve: You do all this on your phone right?

Daniel: Yes it’s all done on the phone which is– it’s not an invisible limiting factor as you might think, it’s actually pretty easy once you get into it. It’s all about clicking those images and in the beginning what you have to do to get traction on Instagram is you have to follow other people. Many people that I talk to, and my friends who were on Instagram all of us certainly comfortable with this, because it feels like a spamy thing from Twitter from seven years ago, where you follow a million people in a day and hope they follow you back, and then you un-follow them if they don’t follow you, all that crap. Then you get robust to automate that, then you get a whole bunch of followers from India all that kind of stuff. You will need all that follow, unfollow and all that crap and like…

Steve: Yeah I remember.

Daniel: Yeah they’re generally turned off by it, but it’s but that’s not really the process. Basically I use this app called Crowdfire, and what Crowdfire allows you to do, it allows you to essentially make the process of following people a lot easier because on your phone it’s very hard click, click, click, it’s not easy. The desk top application of Instagram doesn’t allow you to actually use the program, it’s very limited.

Crowdfire allows you to use the desktop format to basically find people who fit with your message. Basically what I’ll do is I’ll find other people who have my account, the web users that I would like to attract. One of those accounts might be like my friend Nathan. I found a magazine who by the way taught me pretty much everything I know about Instagram. I’ll look at Nathan’s account and I’ll say all right, Nathan has the type of followers that I want to attract.

Now I’m going to go follow his followers and so I will have already have some content out that resonates with what I know I’m looking for in terms of audience. Then I’ll go follow his followers and Instagram allows you to follow up to 400 people a day, and you can do it in increments of 100 meaning that you can follow 100 people, and then you have to take a break for a few hours. Follow 100 people and take a break, but I maximize that. In the very beginning I maxed that out every single day.

Steve: This is a manual process right, you’re physically clicking?

Daniel: I’m physically clicking at least 400 times a day in the beginning. Eventually you start to build up the amount of people you’re following and about 30 to 40% of those people will follow you back. You start to grow your following you as well. Eventually what happens is the ratio starts to balance out, because what happens on Instagram is you’re only allowed to follow a maximum of 27,000 and 7,500 people depending on I don’t whatever Instagram feels like letting you do that day.

Basically I would follow people, I would max up my following for about four, or five days, then I would spend a day or so un-following people just to keep my ratio balanced. Eventually I got to the point where the number of people I was following was smaller than the number of people that were following me. Eventually the ratio started to grow, and so in the first couple of weeks I got to about two or 3000.

Over the first month I got to maybe four or five, and I grew to probably double that by up to 10 or 12 and in the next month. It typically grows; I guess it would be pretty linearly I guess. It is a pretty predictable growth pattern, and so over the next four months typically it doubled. I guess it would probably be expediential than exponential, because typically it doubled.

For the first three or four months the growth doubled every month, so it was like the first month it was like three to five K and the next month was like five to 12 just using this strategy. Then I would finally improve in terms of space and eventually I would make friends with them. They would help me out by shouting me, but this is the core strategy is following. Then eventually what I started doing was once I got to 30 or 40K I started meeting other people who had much bigger accounts than me in the space.

I just started paying them to shout me out. I reimbursed myself by having like a very, what I call a tri-bio product, and it was like a little nine dollar productivity pack that I put in my bio. Basically I would put the little productivity link in my bio link, and whenever someone signed up to my list they would have an option to buy that. That nine dollars made me with the amount of following I was getting and the amount of work I was putting in, it was a lot of work. I was posting probably eight to 10 times as day in most days.

Steve: Really okay.

Daniel: It’s a lot, it’s a lot, but…

Steve: Is that the frequency that you need to do in the very beginning?

Daniel: In the very beginning yes, it’s about volume and quality just because you have to get those, you have to get that library of content up there and have a lot of things for people to look at and get more engagement. That triple end product really helped me, and I started really being impressed with the account. I was making at least two grand in a month just off the nine dollar triple bio product. I reinvested that money to get other influencers to pay them to shout me, and that threw gas on the flames, and I was like it will grow faster.

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Where can you find people to pay to give you shout outs?

Daniel: Well I mean you can look for influencers in your space. Instagram kind of and I don’t know if I’m supposed to be saying this. I don’t think it matters, everyone knows this, it’s in the space. There’s a little underground market of, there’s an underground economy. A lot of people who have accounts over $100,000 over 100,000 people, always some might have even less 40, 50,000, take money in return for shouts. Basically it’s where they send out an image where in the link, and then in the catch and they say blah-blah-blah about this image, brought to you by my friend, then they probably put you name in there.

They say follow them for more advice, tips or whatever right? And that’s what drives people back to your page, because they get to follow you and then take those few followers and whenever you want to promote your content you say, hey guys I have free bonus, a free mini course, a free guide for you. Check my bio link, and you can use image that just says check my bio link basically, and that will drive people to that link. They’ll sign up for your stuff, and you’ll grow your email list as well.

Steve: Okay and then you mentioned community in the very beginning, when does that kick in?

Daniel: Yeah so one thing that Instagram, you’ll notice as you get more involved is like you’ll see a lot of the same people commenting on your stuff, and also see people liking your stuff. Sometimes the promotional aspect, you have to put aside in order just to get more people talking and more people engaged.

One thing I might do is I might post up an image with no ulterior motive basically just saying, I’ll post up an image that will show a picture and an image that will say tag the person who you think is going to have a, who’s going to be really successful this year. I will get them to tag their friends, I will get them to talk, I will get them to purposely engage them to try to see as many comments as I can get, or post an image of myself, I did this a few months ago.

I posted an image of myself and said hey guys, having that chance to thank you guys individually and I really want to let you know that I appreciate you for following my account and liking and sharing my images. Please introduce yourself in the comments, and tell me where you’re from. I’ll get– I think that post got almost a thousand comments, stuff like that. You just engage them and then again when you want to promote something, it’s much easier.

Steve: Okay and so it looks like at your account that most of your stuff is non promotional. In fact it’s very rare that I saw a promotional post.

Daniel: Yeah I don’t have anything, I don’t really have anything promotional and sometimes I delete the promotional posts, but typically speaking I don’t have anything, I haven’t got anything promotional in a while, because I’m trying to focus on growing my YouTube right now. I haven’t even with folks on the email list, but particularly my ratio is maybe if I am posting, right now I’ve posted about three or 400 a day max. Maybe three times a day and probably once every three days I might post up a promotional post.

Just became I’ve been pretty aggressive like over the past three or four months, I’d love to slow down, but when I was being more aggressive I was probably doing a post every other day with those promotional. After I was done with that I would take it down, so it didn’t cloud up my page.

Steve: What about hashtags and the actually content that you put in a post?

Daniel: Hashtags are something that I think they still work, but one thing you have to be careful about this. There’s a limit of 30 hashtags per cache, and so there are different size, like I think about [inaudible 00:28:51] square is one of them, where you could look up the most popular hashtags in your niche and other people are searching for the hashtag, they will find your post and hopefully find your profile and follow you.

That all works, but I think that Instagram is getting more aggressive with slapping down people who are essentially hashtag savvy. If you put up 30 hashtags, and you put up the same 30 hashtags every time, Instagrammers they don’t like that. I think they’re trying to be more careful about launching that, so I do post hashtags occasionally now, but in don’t do it as much as I used to. I probably would recommend doing it more in the beginning, but as your account gets a little bit more natural momentum; I kind of have stopped doing that as much.

Steve: Okay so would you say the actual caption is very important as well as the image?

Daniel: Yeah, one person that you really look to, I mean I do it okay drop off the off captions. One person does a really great job, if you look at Ruben as they grow prosper, I think grow prosper in his account. He has mastered how to create images that get tons of shares, comments and likes, and his account is mostly, it’s like motivational with a sentimental side. I like to call—I tease him, I like to call him like touchy feely, because he’ll like go grab a Maya Angelo quote and about like a caged bird singing, and like he really knows how to hit that like sweet, very sweat pain pleasure point with his audience, and like really…

Steve: I have to check it out, okay.

Daniel: It’s emotional, but he will put really thoughtful quotes, really thoughtful captions. You’ll notice that like if you look at the longer captions on my post, a lot of those get the most comments, and they result in more likes, because people actually do read your comments. Sometimes I’ll even take extracts from my blog post, or I’ll make a little mini blog post just for a caption, and those tend to do really well. Because I think people are reading them and it allows you to tell a little bit more about your story.

Steve: Yeah I was going to say some of your captions are super long, they’re like mini blog posts in a way.

Daniel: Yeah but that’s the only way to share interesting content with your audience that you find useful, and remember man, if you, just like with our email list. Most people don’t see your stuff, so one thing you notice is that I have 130,000 followers, but the most I’m going to get on a post is like 4 or 5000 likes. That doesn’t happen as much, I think as it used to especially now with Instagram testing out their platform.

They’re changing the algorithms, the way that posts are displayed, but also just because they necessarily put a cap on how many people can see your post. So if you have 130,000 people on your follower list, they throttle that, because if they push out to everyone, one it’s a lot of server activity right, and two just think about the amount of cluster confusion that will come with everyone who’s following anyone getting every post that everyone put up, it’s too much.

Steve: Sure, right.

Daniel: Just like Facebook has now called back, remember when you used to see all your friends’ posts, and now you see five?

Steve: Yeah, okay.

Daniel: It’s the same concept, maybe only five or 6000 of my people actually see my stuff, and that’s why I know that it’s okay to repost. What I will typically is I’ll go when I want to have a post that I am pressed with time or have a really good one that I haven’t shared in a while. I just go back six to eight weeks and find the good one that got some good feedback, and I’ll just repost that with the caption again, because I know that people will be seeing it for the first time.

Steve: Will you remove the old one?

Daniel: Yes.

Steve: Okay.

Daniel: Remove the old one; repost [inaudible 00:32:21].

Steve: Okay so it’s just like blogging, I mean I do that occasionally also.

Daniel: Yeah like you send out a post you sent about a year ago, but you know that people haven’t seen that stuff.

Steve: Right.

Daniel: It’s content.

Steve: Right, and in terms of the frequency, so in the very beginning you said eight or nine of these, and you bring captions, okay.

Daniel: Yeah, a lot but my captions were– it’s hard to be as good as the caption that you put on a lot of them.

Steve: And you have to do all of this on your phone too?

Daniel: Yes, it’s a lot of work.

Steve: And then in terms of the images, you do them on your phone or do you contract those out?

Daniel: I make them on either– so there’re a couple of ways to get images. The Word Swag which I haven’t talked about has great templates for you to use for like quotes if you just want a blank canvas. They also have licensed stock images, you can use because they are actually pretty good. Then you can also do, you can also repost other people’s stuff, so you literally just screen shot it, and then you repost it. Just make sure you attribute to them, like hey I got this from such and such account. I try to stay away from, I used to have a lot more images of like– or images that I thought were probably copyrighted.

Things from photographs, professionally taken photographs of celebrities, things like that where I’m pretty sure that some photographer made money off his picture. What I’ve noticed is that more accounts are also getting slapped for having images or videos that are clearly the work of someone else. I’ve just been more careful with that. I still do have some images on my page that are probably copyrighted, but I used to have a lot more and I’m just being more careful, because for me the account is too big of an asset to risk over copyrighting. Basically Instagram doesn’t give a damn. They will take away your account, they don’t care.

Steve: If that happens can you protest or by taking this stuff down, or is it too late at that point?

Daniel: No there’s always a recourse like I’ve had several friends that’s gotten taken down, and then they can work with Instagram, but that’s too much of a hustle for me, and there’s no guarantee that you’ll get it back either, and they don’t give you a good reason for why they took it away.

Steve: Bottom line, just be safe with your images is what you’re saying?

Daniel: Yeah be safe with your images. Always get stock images. If you have a question about it just probably don’t do it. I posted up a video like a two part video a couple of days ago, and I attributed Complex Magazine. I assumed that that was okay, but like I try to say with anything, like for instance if you want a picture of the rock, take a picture from a screen shot of him in the movie, don’t take it from a professional photographer.

Screen shot Sony Colombia doesn’t care if you take a– if you have a screen shot of him in a movie, but the photographer who’s making his money off with reality pictures probably will care if they found it. It’s probably not a big deal, probably most photographers aren’t looking for that, but I actually [inaudible 00:35:03] the chance, same thing with music, right? If you’re using music that’s on the radio right now, probably not a good idea.

Steve: Yeah I mean YouTube you can’t use any of that, they’ll really crack it down.

Daniel: Yeah they’ll really crack down, so I try to just be safe.

Steve: Okay, hey Daniel let’s switch gears a little bit, talk about the 20 something here. I actually get a lot of people asking me for help, but to be honest since I teach Ecommerce, some of the people who approach me are pretty much broke. Starting a business wouldn’t quite be appropriate for them since they don’t have any money to invest. I know you specialize in this area, so for the people out there with very little money to invest in a business, what would you suggest them to do to make some cash right away.

Daniel: Yeah I mean the number one thing, I mean besides drugs. The number one thing I mean…

Steve: Or sex, drugs, yeah right.

Daniel: Drugs or sex both are acceptable, but borrowing that I get this question a lot as well and people are worried about startup capital, whether that needs going out to give an investor or just raise the money themselves. I think the best thing to start with is a service based business that you can provide for somebody immediately. You got to think about it like this, businesses, no matter if it’s a product or service or idea, all businesses solve problems. They should solve a problem. If you can offer a service to someone that solves a problem, you can charge money for that.

I always start by thinking, what services can I offer that someone else will value, and that’s how I came to do SAT, web development consulting, and that’s how I developed my idea around freelancing. I always think that freelancing is also a good way to go as you build up your ideas, and you create some momentum, that allows you get some cash in the bank. Then if you want to start doing what I call, and I’m using my mere quote figures here, a real business, you want to do that, then you can move on to that.

Steve: Let’s continue on with your story actually. So you got pissed off with your butter balls. What did you do about it?

Daniel: I have a roll of butter balls since, that’s the first thing. I now chop at the square plucks. I mean flash back to that day, I wasn’t ready to quit. People are like; people always ask me, “What did you put in your two weeks [inaudible 00:37:12] right there and then you just stormed out.” No, I was too scared. I wasn’t in a position to quit right there, but I was thinking to myself, “Okay well, what can I do?” I took a couple of weeks to think about it. I realized that one of the skills I had was teaching SAT test prep. This is because– I used to teach this for a company called Kaplan [ph] which I’m sure you are familiar with, [inaudible 00:37:35].

Steve: Come on Asian? Kaplan Princeton Review?

Daniel: Oh Princeton review, that’s like a 90 press review.

Steve: That’s old school.

Daniel: We don’t do press review here, we do Kaplan. I taught for Kaplan in college. I’m flexing my muscles here, because I’m at the top like 95% of all test takers, flexing my own muscle there. I still have to do like basic division on a calculator.

Steve: Dan was a body builder too, a former body builder too.

Daniel: We will talk about all these things. But, I remember a little, a small little memory I had teaching test prep. It was like I went to a student’s house, and I was looking through one of the most [inaudible 00:38:16] on the desk. I realized, “Men, they are paying $100 for me to be here, but capitally they pay me $18 an hour.” When I remembered that, I thought to myself, “Well, this butter ball thing isn’t working out. Maybe I can just do this test prep thing, because I know it’s a highly valuable skill.”

What I realized was at that point if you’ve ever had a job, you probably have a skill someone can pay you, someone’s willing to pay you for, and you can tease out some of your skills that you’ve used at work, or you can think about other hobby skills or interests you have and try to use those to make money. For me I realized test prep was a good option. Don’t worry if you don’t do test prep. That’s fine, I’ll just give you my path and my example. I realized test prep was a good option, and the first thing I did to start my business was what I later coined as the marsupial method. You want to hear about it?

Steve: Yes, the kangaroo method. Go.

Daniel: Why do we call it the marsupial method? What do marsupials do? By the way marsupials is not just kangaroos, like [inaudible 00:39:15] I think are marsupials.

Steve: Koalas are marsupials too.

Daniel: Yeah, koalas are cute but also evil looking. They are marsupials. Marsupials have this pouch where they house a freshly born child for development. It’s like an outside womb. It’s like an outer womb. The whole idea is that the little baby, marsupials in there getting nutrients, getting protected from the environment while the mum hops around basically doing other work. What I was thinking to myself was, “Man, I want to get customers for the tester thing, but I don’t want to put up ads on Craigslist or post up ads in supermarkets. That stuff generally is very slow rowing. It’s not going to kick me off in the way I need to get kicked off especially if I want to leave this job, this restaurant job.”

What I did was, I started thinking to myself okay, who in my area already has my ideal customer, who already has their ear. Who’s already doing business with them and how can I connect with these people to create sort of a win-win situation, and make some money for myself quickly. So what I realized was that there is this whole group of — and you probably know this. This whole group of almost elite academic or admissions coaches, and what they do is — yeah right? It’s their job — even in middle school they start like packaging and prepping these…

Steve: Elementary school man.

Daniel: Really it’s that early that makes me sad. Really because I like ruining a little bit of the childhood, but I can see it in middle school, I can understand.

Steve: Welcome to my world Daniel.

Daniel: Yeah, welcome to my world, I can see like an eighth grade starting to thinking about college, fifth grade is too early. But anyway so these admissions coaches, they help to groom the kids and what they do? They help them format their essays and they are like help them figure out what extracurricular they are going to do, because you are realize if you are thinking about getting into an [inaudible 00:40:57] school, soccer when you’re in high school is too late, most likely. Unless you are like really you are going to save the environment that year, you are not going get in, because people have been preparing for five to seven years before this and packaging themselves.

So there are these admissions coaches who will help students get in. And usually that means that these students are well groomed, they probably have some disposal income, so it’s a really good market because guess what? These admissions coaches don’t teach exam prac, they just outsource that and then what they say is go to Kaplan, go to [inaudible 00:41:31] review. So what I do is I looked up all these private admissions coaches in the area and I said, all right listen guys, listen buddies [ph], I used to teach for Kaplan obviously I have the credentials.

I will come in-house and essentially white label myself for you. And I will become your in-house test prep guide, and in exchange for that you will — I’ll give you some of the money that I make. Also you can now add for their services where you can keep everything branded and in house, so make sure its service that’s much more valuable right? They love this idea because not only — because it doesn’t really matter to them, because basically I was the same as Kaplan to them since I already had that pedigree.

But they can keep all people in-house, keep better track of them and they can make some money on the side, so they were totally into it. So I basically hit up all these — I had all these private based coaches, and we started — basically they started giving me the client list immediately from over night I literally went from no clients to completely full roster. So I let them do all the hard work, they spent years finding these customers, grooming them, getting their ear, and I just stepped in there and started doing my work. There was no like vetting process where the family had to see if I was good enough, if that admission coach said I was the guy, I was the guy. So I started making money immediately and we scaled that to six figures very quickly, because it’s a good market.

Steve: So are these some tactics that you kind of teach in this guide that you offer on your site?

Daniel: Yeah, I mean the more suitable method, you can learn that for free, but that’s — first of all I always went back up and said that don’t worry if you don’t do test prep, or if I taught web design, don’t worry if you don’t do web design. The concepts are their frame works right, they are not like specific to that industry, or that skill set, just think about that.

And as you listen to this podcast guys, don’t sit for this whole progress like, okay, I got to come up with this idea now, like I can’t think of anything, it’s been 15 minutes, really take some time. It’s not like I’m telling you this now in attendance sound bite, but it took a minute to develop the strategy. So don’t feel upset, I just — it wasn’t like a year, a week, a moment, like I really had to think about this.

So like okay well I was going to do Craigslist ads in the beginning. So just take some time to think about your strategy, but that means that yeah, we teach all this in freelance domination which is my course, but this is just a little taste of what you can do if you use systems and leverage to get going, rather than this hitting your head against the wall hoping that it works.

Steve: I’m just curious do you have any other examples of maybe students in your class who have found successful freelance gigs using this method?

Daniel: Like the marsupial method?

Steve: Yeah like outside the test prep, outside of like web design, that sort of thing?

Daniel: Yeah I mean let’s see, I’m trying to think of– and I would like to also – yeah I’m trying to think of something like various ideas that don’t — that aren’t about academics or like test skills that people…

Steve: Yeah, because the hardest problem in my class at least is people coming up with the idea right?

Daniel: Well here is a perfect one. I had one student who she is like a dog walker, pet sitter right? She’s leveraged herself very easily because there are sites specifically for dog walkers and pets sitters, and I’m sure she is probably big in like the…

Steve: Yeah, it is here yeah.

Daniel: Just because a lot of executives who are like busy and they all want dogs, but they don’t want to take care of them. So there is a site called dog bakey [ph] and her name is Sarah. She basically used dog bake to start up her dog walking and pet sitting business, it’s pretty cool, it’s very easy. But sometimes she didn’t want to use that service, because she has to give a cut of her money to that platform, so there’s different ways to find best solutions.

What she started doing, she started doing only two things. One at the apartment complex as some of the locals, not only hers, but some of the ones that were on the area, she started talking to the leasing office, and she basically negotiated getting her cards stack in all the welcome packets for new residents. But she’s a local service and she’s just providing cool much thinner value to that community. What she also started doing was going up to local vets office like within a five or 10 mile radius and including that and not only on the front desk but also in the informational packets that new clients or new patients get passed out.

That increased her business a lot, I think it only like I think she said 60% increase, because she’s able to use– think about it, marsupial method, think about who’s already doing the work. You already have these places that are actively turning over residents, actually turning on people who clearly have pets at a veterinary office. Just get them, partner up with them and in this case she didn’t even need to share any of that money, because they weren’t interested in taking her money.

They just want to provide service for residents especially with a leasing office with a welcome packet. They’re already providing services like a lot of their personal training services, a lot of times they include coupons for restaurants in the area, this is all normal stuff, but no one was doing pet sitting. She’s like no I’m not going to put up fliers. I’m going to go directly to the consumers like direct mail; they’re going to have to look at my stuff. Everybody can overlook a flier in the neighborhood, but when you get a welcome packet, you’re going to read everything in there most likely.

Steve: That is a really good story, that’s ingenious actually.

Daniel: It’s not technical either. Like dog sit pet walking, everyone can do that right? It’s not a technical thing, but she’s making a few thousand dollars extra on the side a month just for taking care of dogs, what she already likes to do anyway so…

Steve: What I like about this is that it’s a win-win for both parties, right?

Daniel: Yeah, and it’s like don’t over think it guys, figure out who already has your ideal customer rather than trying to get all this attention to yourself with no traction. Find who already has traction, and just negotiate with them.

Steve: Great advice Daniel, hey we’ve been chatting for quite a while. I know you’ve got other commitments and a big trip that you’re heading out to New York City or something like that so…

Daniel: Yeah I’m going off to New York.

Steve: I can’t wait to hear about that actually, but if people listening want to get a hold of you or ask you questions or explore what you had to offer, where can they find you?

Daniel: The best ways to find me is rich20something.com, so it’s 20 with the number rich 20 something dot com, and my email address is the same Daniel@rich20something.com as well. I’m extremely responsive.

Steve: What about you instagram account?

Daniel: Its rich20something, all rich20something man, I’ve got a brand consistence.

Steve: Yeah consistent branding there. All right man hey it was a pleasure having you on the show man.

Daniel: Oh you’re the pleasure, you are pleasurable, I like you.

Steve: We didn’t even get to the other cool stories that you had to offer, like how you drove someone to the air force, you drove the president to the air force once, and some of the other cool stories that you interviewed a porn star.

Daniel: [inaudible 00:47:53] well first of all I’ll say those two things. One, I interviewed Obama. I met Obama when he was still cool after he just won the Nobel peace prize. He’s not as cool anymore, but he was still very serious. The porn star thing my girlfriend was very upset about it, so because she was my favorite porn star, she’s like so basically you have…

Steve: You have a favorite porn star?

Daniel: Yeah I had a favorite–see I mean…

Steve: You should not have added that little…

Daniel: I know but she’s like so basically you’re in a relationship with this porn star. I’m like we’re not in a relationship, it was an interview okay, but it was a good interview. You know what one thing guys, if you ever get to meet your favorite porn star or maybe I’m a little, I don’t think I’m the only one who has favorite porn stars, but if you ever get to meet your favorite porn star, just know that it’s going to ruin a little bit your experience for you, because once you see them as a real person, it’s just not the same.

Steve: And just don’t marry– you’re not married yet right, you’re just in…

Daniel: No, I’m not.

Steve: Yeah, do not mention that you have a favorite porn star to your fiancée, that’s just word of advice there.

Daniel: She already knows now, so she never listens to any of my interviews, so this is fine.

Steve: And then you had Lori Groneman which is pretty cool, listen all interviews are on his site by the way, so go check them out.

Daniel: Lori is a beast and she’s so cool. I can’t wait to tell you guys about this story the next time I come on the podcast.

Steve: Right on man. All right take care.

Daniel: Yeah take care, I appreciate.

Steve: Hope you enjoyed that episode. Daniel is a hustler and I really admire his passion and how he’s able to spread his energy to everyone that he meets. His success on Instagram is really just a small example of what he’s achieved, so you should definitely go and check out his site and get inspire. For more information about this episode, go to mywifequitherjob.com/episode103.

And once again I’m starting my own ecommerce conference this year, and it’s called the Sellers Summit. It’s going to be held in May 19th in Miami Florida. If you’re interested in learning about ecommerce or taking your existing ecommerce business to the next level, then you must attend. Go to sellerssummit.com for more information.

I also want to thank Famebit for sponsoring this episode. As I mentioned earlier Famebit is the best place to find YouTubers, Instagrammers and other influencers to promote your products online and it works. One of my podcast guests Emmanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing, and it costs as low as 50 bucks to start. The best part is if you use coupon code mywife@famebit.com, you will automatically get $25 off. Go to famebit.com right now and get famous YouTubers to promote your products.

Finally 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 100K in profit in our first year of business. Go to mywifequitherjob.com for more information, sign up right there on the front page, and I will send you the course right away via email. 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.

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Ready To Get Serious About Starting An Online Business?


If you are really considering starting your own online business, then you have to check out my free mini course on How To Create A Niche Online Store In 5 Easy Steps.

In this 6 day mini course, I reveal the steps that my wife and I took to earn 100 thousand dollars in the span of just a year. Best of all, it's absolutely free!

102: How to Start A Multi Million Dollar Clothing Line With Edmund Lowman

102: How to Start A Multi Million Dollar Clothing Line With Edmund Lowman

I’m really excited to have Edmund Lowman on the show. Edmund is someone who I met at the Import Summit in Orlando and after chatting with the guy for a while at the conference, I learned that he’s got a pretty awesome story to share.

First off he’s a former rockstar who was part of a wildly successful rock band called Red Jump Suit Apparatus. In fact, I believe that his rock band made him a multimillionaire in his 20’s. Then he realized that the rockstar life was not for him, lost all of his money and had to work his way back up from pretty much ground zero.

Today Edmund owns a variety of seven figure companies. First off, he started Kekai Express which is a company that helps companies find great products and reliable suppliers.

Two, he runs a multi-million dollar fashion production and design house called IFG. And finally, he also owns the most popular hostel chain in Thailand called Slumber Party Hostels.

What You’ll Learn

  • How to source, validate and market a clothing line.
  • How to get your clothing in from of large chains like H&M and Zara.
  • The 2 main options on how to sell your clothes
  • What Edmund would do today to start a clothing line
  • How to find goods to sell online and how to import them and make money.
  • What the main criteria is for selecting a product to sell.
  • How to validate your product before you start.
  • Where to source your products from. Where to find vendors and the scripts to contact them.
  • How to attract quality suppliers. How to tell if someone is a middleman or a trading company.
  • Online services that Edmund uses for his business that he can’t live without.

Other Resources And Books

Sponsors

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Transcript

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.Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before we begin. I’m happy to announce that I’m holding my own ecommerce conference on May 19th in Miami, Florida this year called the Sellers Summit. Instead of the large crowded conferences that you are used to hearing about, mine will be small and intimate with a focus on learning. So picture small round table workshops instead of large auditoriums with a focus on actionable strategies that will grow your ecommerce business. For more information go to sellerssummit.com and watch the video.

Now, before we begin, I also want to give a quick shout out to famebit.com for being a sponsor of the show. Famebit is the number one market place for influencer marketing with over 20,000 YouTubers, Instagramers, people on Twitter and Vine looking to promote your company in any vertical whether it be, beauty tech, gaming, pets and more. Yes, you can get famous YouTubers and Instagramers to promote your business for as low as $50. And the best part is that you don’t really need any money at all to post a campaign and receive free proposals from creators. Now if you’ve listened to my podcast before, one of my guest, Emanuel Eleyae used famebit.com to make over $65,000 in four months with YouTube influencer marketing.

And the best part is if you use coupon code “my wife” at famebit.com, you will automatically get $25 off. So go to famebit.com right now, and get famous YouTubers to promote your products. Now on to the show.

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 really excited to have Edmund Lowman on the show. Now Edmund is someone who I met at the Import Summit in Orlando, and after chatting with the guy for quite a while at the conference I learned that he’s got a pretty awesome story to share. First off he’s a former rock star, who was part of a wild B successful rock band called Red Jumpsuit Apparatus. In fact I believe the rock band made him a multimillionaire in his twenties, then he realized that the rock star lifestyle was not for him, lost all of his money and had to work his way back up from pretty much ground zero.

Today actually Edmund owns a variety of seven figure companies. So first off he started Kekai Express, which is a company that helps other companies find great products and reliable suppliers. Two, he runs a multimillion dollar fashion production and design house called IFG. Finally, and this is kind of random, he also owns the most popular hostel chain in Thailand. Now Edmund’s got a ton of experience, but today, we are kind of going to focus his China sourcing company and maybe his fashion company, and basically how he sources great products from China for his clients. And with that, welcome to the show Edmund, how are you doing today man?

Edmund: I’m doing well, and yourself?

Steve: I’m doing very well. Here’s something I just want to comment on real quick. When I heard that you were a former member of a rock band, I kind of had some preconceived notions about your personality. So for example, when we were out partying, I kind of half expected you to get wasted and start like going on, jumping on top of the bar, and going nuts. But only half of that happened. You got wasted, but you didn’t do any of those crazy stuff.

Edmund: I’m usually the one that actually– everyone always thinks that. Everyone always think that they are going to get me wasted, and I’m always the one that leaves early and doesn’t get wasted.

Steve: Yes, just for the listeners, it turns out Edmund is actually super down to earth, easy to talk to and he knows his stuff. Normally, if you guys have been listening to my podcast, I don’t usually like to focus too much on the back story of my interviewees, but Edmund just got an incredible story. And so Edmund, give us like the rock star back story, and how that kind of led to Kekai Express.

Edmund: The rock star back story. Huh, yeah, basically where to start. I had a band. And I had several different bands actually. There’s even more to the story. I was in a bunch of bands before that. I had a few record deals before that even. Then, I just kind of like, how life works. Businesswise, it’s just like being an entrepreneur eventually if you keep trying, one of the ideas works, and that’s what happens with this band. It just happened to work. We went on tour. We had a top twenty song on billboard. You know did everything that rock stars are supposed to do. It just wasn’t for me. It was very unfulfilling I found.

Steve: In what way?

Edmund: Just you’re kind of like a circus animal. It’s like, you are plated around, you play the same song twenty times every single day. You don’t really have any time to– you have no free time. That was the most depressing part actually. I thought it was so depressing that I was traveling the world to all these amazing places, and I wasn’t seeing anything. It was like I was seeing the inside of hotel rooms, the inside of radio stations and the inside of amphitheatres, and auditoriums and they are all pretty much like the same in every country. So that was very exciting.

Steve: Interesting, but I imagine you did it for the fame, right?

Edmund: I think– good question. That’s good question Steve.

Steve: Well, then you made a lot of money too, right?

Edmund: Yeah, I think. I can’t say obviously, but I think in the beginning I got in with pure incisions of I just realized I loved the music. As I got older, and as I started again to college and you realize– I guess for me like money was never– when I was younger, I’m not saying that I came from a super wealthy family, but I can from like a middle class family, so it was never like money was never a big stress in my life. And so I got to college and I started realizing, “Oh you have some money to live in the world.” I think at that point it became a little bit more about the money, whereas before that it wasn’t really, that wasn’t my reason for getting into music.

Steve: Okay, but you did make a lot of money with the band and then you ended up losing it somehow, right?

Edmund: Yup, exactly. We had a big lawsuit with a bunch of former band members over this song that was our hit song, and basically everything was gone overnight.

Steve: Yes, so I mean everything is gone and it just– so how does losing all of your money, you are in this rock band that you don’t enjoy being in anymore, how does that kind of lead to China sourcing. It’s kind of random.

Edmund: Yeah, yeah. Okay, so it wasn’t a direct. It wasn’t a direct like it just happened overnight thing. What happened was I had lost all the money. I still had a little bit left, and so I decided to go to Germany to go see my brother. He was living there and working as a professor at a university. So I decided to go see my brother. While I was there, I probably shouldn’t say this on a podcast, but [inaudible 00:07:56].

I kind of figured out that you could import cigars and [inaudible 00:08:04] are Cuban cigars and you could get them through as long as you took the labels off the cigars. So I started selling Cuban cigars online. And so it started like my first like real life business. I was like, “Oh, I can make money outside of a band.” And so I started selling cigars online and found out very quickly that that was a really bad idea, because I was going to get to federal prison forever and ever.

Steve: Technicalities, technicalities.

Edmund: Technicalities, technicalities. I mean what are [inaudible 00:08:33] burgers for anyways? So I shut down the business, but I actually acquired a little bit of money from that. I had a friend who was living in China. His family owned a fashion company. This fashion company, probably for a lot of you guys remember, it was called Asprey.

Steve: Yeah totally.

Edmund: Asprey was a huge company. They were part of Asprey in China. They did all the production over there. You know it was this [inaudible 00:09:01] family. Basically he invited me over. “Come over, I think you could help us out with the business development side.” I don’t know why I was the choice of all the people, but for whatever reason, he said, “I think you could probably help us out with business development side of things, and most of the ecommerce,” because they saw what I had done with my website. So they were very…

Steve: Your cigar company?

Edmund: My cigar company. And they were like, “Okay, that was interesting. I think we can use ecommerce and online store online marketing whatever, we think we can use that in our business.” So I went over there and my friend and I basically in a probably alcohol fueled conversation, decided that really what was going to be happening next over the next few years was to trust fashion, which is companies like Abercrombie and Gap and Zara, H&M, all these guys, they are just trending out clothes like nonstop. I was of the opinion that there was no way they were doing all this in house. This was all assumption at this point.

The amount of people you would need and the amount of infrastructure you would need to do that, and the margins in fashion, I just didn’t believe that they were doing it themselves, and I was right. And so we decided to hire a designer out of, just straight out of fashion school in Italy. We just went and goggled what’s the biggest fashion school in Italy. Then we called this school and found out who’s the top ten people that would graduate this year.

We had this guy like, “Hey look, we want to go after these three companies. So here’s X amount of money.” I think we gave him like five to ten thousand dollars, “Go on a shopping spree, buy as many clothes as you want from these companies, and we want you to bring it back here, and we want you to make clothes very similar to what they are selling right now,” which is what he did. Through friends of friends I had some connections at Zara a H&M, and at and some other big companies, and we got all these buyers to come into the show room. We basically sold them their shit back to them.

Steve: Interesting. So they didn’t recognize their own design. I mean these are different designs obviously.

Edmund: Yeah, they are different, but they are close enough.

Steve: I see, okay wow. Okay, so these large companies now like the Zara, they actually buy their clothing designs from you guys?

Edmund: Yeah, not always but most, a lot of the time. We get a lot of the designs are done through us for men’s fashion.

Steve: Okay, so this is IFG, did that come first?

Edmund: Yeah, IFG came first.

Steve: Okay and then how did that transition over to Kekai Express?

Edmund: So what happened was we were producing like massive amounts of designs. So we were doing like 2000 designs per season, so like almost 4000 a year. Let’s say 1500 to 2000. So what happened was our designers and our buyers were like, hammering really hard for like three to six months. I had like three months and then they had three months off, because of the way we were doing our production.

Basically, my partner and I were sitting around and I was getting a lot of emails from friends like, “Hey can you look for this for me. I know you are in China. Hey can you look for this for me I know you are in China.” And eventually I was like, “Dude, why don’t we just put a couple of our buyers on this while they don’t have any time right now.”

And the first thing that was brought to us was these touch screen monitors. So I was like, why don’t we see if we can source through this guy, it was a friend of a friend. We found like insanely cheaper. I think they are selling or buying them in America for like $425 and he was like if I can get them for like $375 to the door, like we’d be killing it. I was like, yeah, let’s look for him. We found it for like $175. And I was like guess what, I found them for $350, I got you. And so we are like, hey the sourcing thing. That’s not a bad idea. We just made like $40,000 in 20 minutes. Let’s do this some more.

Steve: Interesting, so these are all like random events that kind of happened to you. You didn’t start out saying, “Hey, I’m going to start a sourcing company.” It just kind of fell on your lap so to speak?

Edmund: It sort of fell on my lap. I mean, it seems like everything happens that way for me, I don’t know why.

Steve: In like both of these cases too, right? Like the clothing company and the sourcing company.

Edmund: Yeah, and actually the band as well to be honest like in retrospect.

Steve: Do you recommend this like procedure for starting businesses?

Edmund: Not at all. Okay, here’s the thing. Actually with the clothing company, sorry– and I’m sorry if I’m moving around, you guys are hearing a lot of noise. I’m at my good friend Will’s house right now, and his cat’s going crazy as you are probably hearing.

Steve: He’s a cat man.

Edmund: He’s got twenty of them, it’s weird.

Steve: Interesting, everybody thought.

Edmund: Here’s the thing, for my outside perspective, it sounds like they fell on my lap. But actually going to China in the first place was a pretty huge risk. I had a very stable life living in Germany. I had a girlfriend. Everything was good. I could have stayed there forever, and the quality of life was great there. I had a basically few more months and I could get citizenship. Not citizenship, but like permanent residency. It was a huge risk and a huge decision for me to go to China.

That alone was a risk. I took a small amount of money to go there and try to start something. Even the story of how once I got there, there was all this chaos. The day I got there basically the family’s company got invaded by the government. A bunch of family had to like leave that day. My friend and I lived in like this terrible apartment for months, and months and months trying to get the business going again.

It wasn’t– it sounds easy and nice, but I think like any success story, if anyone asks you about your blog, they probably are going to be like, “Wow man, you are crushing it. That’s awesome, that it just worked out for you.” But I’m sure there’s years, and years of work behind what you’ve got until now. It’s easier to look at it…

Steve: Oh yeah for sure.

Edmund: When you are not the one doing the work it’s easy to look and go, “Oh yeah that must have been great.” Yeah, we put in a lot of work. I would not suggest to anyone just jump in and hope that things fall in their lap, because it’s not the way it works.

Steve: Here’s the thing Edmund, a lot of my listeners are actually– I ran a class too where people want to sell their stuff online and actually a lot of people want to start to their own clothing line and have their own fashion line. I always tell them that selling clothing is tough. I thought since you kind of do that for a living. I wanted in your perspective, if you were to start a clothing line today, like how would you start?

Edmund: Okay, how would I start today? There’s sort of two ways you could do it. Way number one which if it was me personally, this is– no, that’s too very simplified. Okay, way number one is this. Way number one is you go either, if you are going to do in China, or whether you are going to do it locally, it doesn’t matter, you go to a local seamstress.

This is a side note too. This is what really interesting about fashion. A lot of people think that it’s like a restaurant. Have you ever gone and you sat at a restaurant and you are sitting in the front and you’ve never been to the kitchen. And you are sitting in the front, “Oh men, it might be this mysterious thing. This fancy steak is coming out with red wine reduction and rolls made of potatoes and oh men, it must be crazy back there. How did they do this?”

And you get back in the back and it’s some short white guy, picking his nose and kicking your steak. And you are like, “Oh wow, it’s not as mysterious as I thought it was.” This is how I feel about fashion as well. Is that people go, “Oh men, it must be all this stuff that goes into it, producing these shirts and clothes and blah, blah, blah.” It’s some fat white guy picking his nose.

Steve: I thought it would be some Chinese guy doing it actually.

Edmund: Actually yeah. It’s the Chou family; your descendants are over there. In China or locally, everybody thinks I have to go to China, I got to go here. But you can just as easily go to a local tailor or a local seamstress if you are trying to get prototypes made at least. And they can make the stuff for you. Anyone who knows how to saw– I think even you told me like in the beginning, you learnt how to saw. You did all your monogramming, right?

Steve: I did but that’s all done by the machine, not by me, but yeah.

Edmund: But still, it’s not like it’s this crazy complicated thing. I would guess that probably if I came over and sat for a weekend with you and learnt how to embroider, probably by the end of the weekend I can probably do some basic stuff, right?

Steve: Oh yeah for sure.

Edmund: It’s the same thing with fashion. It’s not really this crazy thing. I mean there’s more technical designs, but it’s not that crazy. Anyone who knows how to sow can probably make what you are looking to get made, so you can go to China, but you can also just go to a local seamstress and have them prototype your things. Then after that, the next step, this is where you have…

Steve: Well, let’s talk about the prototype real quick. So let’s say I don’t have any background in clothing design, what do I tell the person to prototype, do I just give him assurance, say make something similar to it like kind of what you did?

Edmund: You’d be shocked I would say especially with fast fashion, 99% of their stuff is not new designs. What most fashion houses do is they go out and they buy samples. They call them samples. So basically they go into Zara for example, and they buy a bunch of shirts off the racks and say, I like this, I like this, I like this. And then they take them to a company like ours or they take them to the local seamstress and say, “Okay, I really like this design. I like the material, but maybe can we move this pocket. I don’t like the pocket. Let’s get rid of that. And that tag, let’s move that tag. And instead of making it swimmy happy dolphins, let’s make it angry scorpions.” Just simple stuff like that and they just modify the existing shirt, or the existing design. Sort of like if you like pimp your ride, kind of the same thing.

Steve: So they probably just rip apart the clothing and then create a pattern out of it based on your…

Edmund: Yeah, so you can do that way as well. Sometimes, they’ll create a pattern out of it, sometimes if they already have the basic design they know what the pattern is. But if you take it to like a local seamstress, they can definitely cut it up and make a pattern out of whatever you take to them. If you say like, this is the base. This is what I really like. Make a pattern out of this. They can do it. Or an even easier way is you can go on like Fiverr, or you can go on Odesk.

Steve: Fiverr?

Edmund: Yeah, trust me man, people do it all the time. Hire someone; say hey, “Take a picture of the shirts.” Say, “Hey can you Photoshop this for me. I want to put this, this and this,” if you have no Photoshop skills. If you have Photoshop skills you can do it yourself. Put it on to like a PDF and show them exactly what you want the sizing, where you want to move things and very easily a seamstress can copy that, as long as they have like a base shirt to work off of and they have a design that you’re showing them, they can definitely do it.

Steve: Okay. So once you got that what’s the next step?

Edmund: Okay, then obviously you want to produce or you want to sell, so this is where my, you can go left or you can go right. If you go to the last that would be going to some of the biggest, I don’t know what that means, you can get some of the bigger is what I’m trying to say, some of the bigger fashion shows. Not like fashion week, but these are like wholesale fashion shows where the buyers from all of these big companies go to either source clothes or even to just source new fashion design companies.

There’s one called The Project Show in New York and I believe it’s also in Vegas, there is another one called the Magic Show which is also in New York and Vegas if I remember correctly, maybe it’s just in Vegas. There is another one called Bread ‘n’ Batter, that’s a massive one in Germany, there’s all these big fashion shows per year, and if you remember actually Daymond John talked about this during the Import Summit, when he spoke. He said he went there and he didn’t have any money so he was just was like walking around the show showing people his clothes.

He was wearing his clothes and talking to people and taking their business cards and trying to get them back to his hotel room to show his clothes, and that works. You can hustle and that’s really in business especially when you have no money, your only option is to hustle, and not be afraid and not be shy to go out to people and say hey this is my product, do you want to buy it, because otherwise no one is – if you just put it on the website and hope people are going to come, it’s not going to work.

That’s one way, go there, and try to meet some people, collect some emails, collect some cards, unless you have $100,000 in and you want to buy booths you can also do that, but that’s quite a bit of money.

Steve: Yeah, actually before we go on to the other side I was just curious what the margins are like on clothing, so how much does it cost to produce let’s say a typical T-Shirt, how much would the clothing company buy from you for and how much it would sell?

Edmund: It’s really all over the place, a typical – because shirts, actually like a T-Shirt are pretty hard to make money on.

Steve: Like a burn down let’s say.

Edmund: A burn down would be where you make money, it really depends on the quality, they can be as cheap as…

Steve: I’m just trying to get an idea of the market.

Edmund: I mean the market let’s use like 75% to 100%, you could say like maybe you buy them for $6 to $12 really depending on quality, quality obviously is a huge factor,. If I was producing for 6 then I should be able to sell it for anywhere between $10 to $14 depending on the company, and also depending on both, because I mean if someone huge comes in and buys it and we will sell it for 8 because they are buying 200,000 pieces, it really depends.

The other side of it too is sometimes especially when you are working with bigger clients like you’ll lose money on some piece because you are making money on other pieces. So it’s like okay we want all of these pieces, and you’ll say it’s okay we’re going to lose money on this shirt and this shirt and this shirt, but hey we’re killing it on this shirt and this shirt, and so basically it evens out, it’s a game of chess.

Steve: Okay, it sounds like the pricing is just like a traditional retail model, double for whole sale, and then double it again for retail.

Edmund: Exactly.

Steve: What’s the other side?

Edmund: Depending a lot on the book.

Steve: Of course.

Edmund: If they’re buying massive amounts then obviously they are going to push you way hard on the pricing.

Steve: Sure, that totally makes sense.

Edmund: The other way, if I were going to produce something today, would be the beginning part is actually the same, then I would go to either back to the seamstress, or I would go to try to source for a factory in China and put a little bit of skin in the game, how much you can afford and start getting some samples made and getting them online. And even with this I have kind of two varying schools of thought, one way would be to go around to local boutiques to try to get some preorders so that you are not spending your own money, I’m not a big fan of spending my own money.

I would probably do it that way, I would try to maybe get to some boutiques, maybe go to some smaller like – even locally, I know people have fashion shows, so there’s like Massey shows or there’s wedding shows where they show off all the new bridal stuff depending on what you are doing. I would maybe try to get one of those too and just try to walk around and show other people what you are doing.

If you couldn’t do that and you just feel you can’t go around and talk to people then the other way I would do it is get 10 to 50 pieces made of each product you are trying to sell and get it up on Amazon, get it up on Etsy, get it up on eBay, get it up on your site and so try to push it that way. It’s just that I think with the online model especially when no one knows who you are, it’s a lot more labor intensive, like you really have to get a lot out there and convince people to buy your stuff, whereas when you meet people face to face it’s much easier in my opinion at the beginning at least to get them to buy your stuff and take a chance on you.

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Okay so let’s go onto those two ways a little more deeply, so you walk into a boutique where you just ask for the owner and say hey I got some clothes to show you?

Edmund: Yeah that’s what I would do.

Steve: Like what’s the, is that how really it works?

Edmund: Well I don’t know, I have never done it before, but I think it would, you are saying how I would do it, this is how I would do it. I’ve never personally had in my own fashion brand where I was just selling to stores like we always had like a – We always went route one, where we went to all project shows and all the wholesale shows like Bread ‘n’ Butter, and we sold, took book orders like right off the bat, even though we didn’t know what we were doing.

Actually I had a lot of, it was like a kindle spirit with Daymond John because even though obviously my company was not as big as FUBU was, his story to how he got started is very-very similar to how we got started. I was like okay I guess that’s a pretty proven model that works, the only thing with that is that it doesn’t really – like a lot of people want that instant gratification of seeing their product in a store right away, that’s the goal, kind of like hearing your song on the radio.

It’s like okay that’s I’ve made it, but in a lot of ways that’s not really making it, that means that you’ve got a really developed supply chain and if you start off that way I think it can even be a bit of a nightmare, whereas when you get to these project shows who knows who’s buying your tuff. It might be someone in Lebanon, it might be someone in France, it might be someone who has a small boutique in California. You’re probably not going to instantly walk in a shop and start seeing your stuff, but that model is the base of building one your financial foundation, and your supply chain that can move you into getting your stuff all over the place in my opinion.

Steve: So you were at one of these big shows, what are the negotiations like especially when you don’t know what you are doing?

Edmund: When we did that we kind of went all in, we had– we bought a booth, so I think…

Steve: You bought a booth, okay.

Edmund: Yeah, it was expensive, there was, we got a small booth, crappy little booth and I think it was like 60 grand, and it was basically all the money we had. We were like okay we got to make it work, and we were just there all day just hustling. Anyone who walked by we were like hey man check out our clothes, check this out, product new fashion company in China blah, blah, blah buy my stuff, and typically the way it works is there’s one of two things.

Even at this time we didn’t even have an office because we were so broke, and we had all this trouble with the [inaudible 00:28:24] basically was kind of set up incorrectly in China. We like rented out like this – you can rent out sometimes during the fair like these fake offices, where someone will set a reception, you can put your logo up on the wall and these conference rooms, and blah, blah, blah.

Steve: Interesting.

Edmund: This is what we had, so people come in, they look at your clothes, oh yeah this is cool, and some cases they might say yeah we really like what you have, let’s sit down and talk numbers right now, or they might say this is pretty cool, can we come to your show room, which we paid for this office so that we can have a showroom. So we would bring people the showroom, walk around, show them everything, and at that point typically what they do is if they really liked it they’d start to make an order.

They made an order and after they made the order they would have like five days to transfer the deposit, and after that’s done we start production. It’s interesting in business, that’s what you’ll always find, at least I do, that there’s this like magical moment when someone hands you their money and you think it’s going to be like this big crazy thing and fireworks are going to go off, and it’s something really technical and it’s just like no give me my money dude, that’s it, okay let’s do this.

Steve: Usually when someone hands you money, I’m like oh crap.

Edmund: That’s how I am too, but that’s the point it’s just like it’s nothing really that mysterious, it’s just like oh shit now I really have to go do this.

Steve: I was under the impression that you were selling your designs and not actually having to produce your own stuff.

Edmund: It depends, so excuse me I drink some water. We do both, the way it works for someone like H&M comes in, here’s how it works. They come in, they start just like shopping in a mall, they start pulling off the designs that they like, and they start putting them on the racks, and they’ll have like the H&M racks. We say, okay we like all these designs, we will like to buy these, what’s your pricing on them? And we say, okay, this is our pricing. They say okay cool, they’ll go away for like four, five days, they’ll come back and say okay, well, this is our opinion. Sometimes they only take the pricing its crazy, they really know production. Sometimes they just say this is what we like and they take pictures of it and then they go off.

And they come back and say, okay, this is what we think this costs this, this is what this costs, this is what this costs. And they give us the pricing. We look at the pricing and we say okay, yeah, we can work with that or no we can’t work with that. If we can work with it then lots of time they’ll say, okay you guys go ahead and produce it, and we’ll actually produce it for them. Or if it’s at this time where it’s like we think that it costs us for example we say it costs $10, and they said hey, we are coming in at $7. We’ll say, okay, there is no way we are going to be able to produce this and make money; do you guys want to buy it? And sometimes they’ll buy the design.

Steve: What to stop them from just stealing it?

Edmund: Nothing, a long term relationship I suppose, but yeah, there is nothing stopping anyone from just walking in and taking picture and running off. But yeah, we haven’t had it happen; I don’t think it would happen; it would be just tarnishing the relationship so bad. I don’t think it would be worth it to them.

Steve: Okay, so here is the thing, there is a lot of people who contact me, they want to sell their own clothes, but they’ve opted or option number two to produce their own stuff and just list something on Amazon and their own site. The problem with that is when you are unknown, clothing all kind of looks very similar to — there is a lot of designs, but they all kind of blend together after a while. So if you were going with option number two, like how the heck do you get the word out there, is it just leg work at that point?

Edmund: Honestly I think it’s really similar to what you do with your bargain and what I do with standard price which is you have to put in the work. I have heard so many people say to me, oh yeah, so we are going to put up a website, and we are going to sell online and duh-duh-duh. I’ll say, okay, well, that’s cool, how you are going to get people to your website? Well, yeah, well are going to have this website and it’s going to be online, yeah, I get that part. How people are going to get to your website, because it’s one thing to put up a website, like that’s great now. But you have to be producing content or value that make people want to go visit your website. People don’t just go randomly search for mywifequitherjob.com like that’s not how it happened, right?

You had to start putting up value and things that people are interested in. So if it were me and I was actually going to start ground zero of fashion blog right now, what I would do is I would first start a blog. I would start writing about fashion, I would start Instagram account and Pinterest account. I would start pinning clothes that I think are cool. And then start putting pins up with my clothes, like with links back to — I think with Pinterest now you can actually link it back to your website right?

Steve: Yeah, well, absolutely yeah.

Edmund: Yeah, so I would start putting pins up with clothes that are mine that are cool, make sure they are like really beautiful pictures. I’m not a huge — I don’t have a huge amount of knowledge about Pinterest, but I have seen how it works for other companies. And it seems like when you have really beautiful sleek cool pictures people click on it, like, okay, what is this, I want to buy this.

So I would really get my stuff out there on Pinterest, with Instagram, even Periscope. I think Periscope is an amazing tool you and I started using it recently a bit. If I was in fashion I would do a Periscope like, hey, I’m going to show you guys today live how to design a shirt or hey, I’m going to show you guys today how to do a stitch and actually show people how things work.

And these kinds of things will start getting people interested in what you are doing. And not only that, it will position you as an expert. Once you are positioned as the expert and whatever your field is, people are going to start coming to you not only for advice on how to do it, but two on looking on what you are selling, they go cool this guy obviously he is an expert, so I’m going to buy his stuff. So that’s how it goes.

Steve: Yeah here is the thing, that takes time right? Like for me it took me like two years I think before I started developing a following on my blog. A lot of people just don’t have this patience, and what’s tough about clothing. So when we started our store, we got a lot of early sales on through like buying ads right? But with clothing does that work as well?

Edmund: Doing what?

Steve: Like let’s say I can’t just buy adwords ad for like button down shirts and expect to get sales right?

Edmund: I don’t know, I never tried it…

Steve: You never tried it okay.

Edmund: Yeah, because I mean like my business model and I’m sorry if this is disappointing your listeners, my business model is so opposite of that. But I guess if it were me, and I don’t know I do Facebook ads and adwords stuff or other things. I would think in theory you probably could put them up and it might work, your conversion rate would probably be really crappy and you probably spend a lot of money getting people to your website.

Maybe if it was something like Facebook ads and Pinterest ads, you might be able to get people to your site, but again it’s really developing that name that people know and trust. It’s hard to get people to buy something online from someone they have no idea who they are. Already buying stuff online it’s a little bit scary for a lot of people. I would say Amazon; eBay would probably be the best ways to try to get sales in the beginning.

But I also don’t believe in get rich quick, and I don’t like people who pitch it, I just don’t think that’s how it works. You can’t just go put stuff up online and hope that’s it’s going to work tomorrow, it’s not. And people who say that it’s my opinion are lying too; I think that you have to put in some work, and it’s going to take some time.

I don’t know if it’s going two years, but I would say it’s going to take a couple of months of really pumping out some content, getting on different — like doing what I’m doing now and getting on podcast. And knowing people so they let you on the show, and getting your name out there a bit. And then you can start really pushing it, I just don’t…

Steve: You are pretty annoying yeah, it’s true. Sorry I cut you off there, I was going to say yeah so okay…

Edmund: In all fairness in the beginning about three years ago or so when I was first trying to kind of like get into this world of online marketing. And even though I don’t even have a blog or anything, I do stuff with other people. But I was really annoying with Noah, like hey man like put me on your blog man, like let me do an interview; let me come speak at your conference.

Finally he’s like just leave me alone. And I think that’s what it takes, if you are not pretty consistent then don’t do it you are wasting your time. If you are going to give half, half, and you are going to work a little bit on it, it’s going to be the kind of side project that you don’t care about that much. And when it’s convenient you work on it, then dude don’t waste your time, because it’s probably not going to work. It’s got to be something like you have a full time job, plus you do this. This is what it takes, this is hustling, this is how you make money, and if you are not willing to do that, then don’t do it.

Steve: Yeah, I just want to touch on one of your points there, is getting your name out there. A lot of people who just sell stuff online don’t do that right? They kind of just list it, and they drive some ads to it and they expect it to sell when in fact when you kind of develop deeper relationships with people through other blogging, or any of the various mediums it doesn’t really matter what you do, they are much more likely to buy from you no matter what you decide to sell. And even if like you decide to sell something completely different, it’s easier to steer that audience over to the new product that you are going to sell.

Edmund: Definitely I mean once you have a relationship with somebody you’re way more willing — not only willing to buy from them, but less likely to return it. So once you’ve decided if I buy something on Amazon from some company I have never heard of, when it gets to my doorstep I’m going to be very skeptical from the moment I open that box to when I start using the product.
And I think I’m going to be way more likely to return it, whereas if I already have a relationship with whatever that product is, I’m going to be way less likely to return it because my expectations are already managed. I already basically know what I’m getting. When I don’t know what I’m getting, my expectations can be all over the place.

Steve: Yeah, totally, hey, Edmund we got off track a little bit because I wanted to talk a little bit about your sourcing also. No this is good stuff. I want to talk a little bit about sourcing like let’s say you got this contract and you got to buy a lot of clothes, where do you find your vendors?

Edmund: Okay, so sourcing I can give you all kinds of [inaudible 00:38:12] if you want. For us obviously our offices are located in china, so the way we go about it is probably a little bit different. But even with an operation outside, a lot of times we use Alibaba simple as that. We go on there and we look for people on our study.

We start looking at like the way I look at it I look like are they gold supplier, which that is a just a box symbol, but it’s getting more and more strict to get that symbol. I see do they accept trade insurance, I see how they handle onsite check. And I’m still looking at it that way, I find really-really good suppliers and I start contacting people, I send out designs and see if they are able to do what I want to do, then I ask for a sample.

This is the thing too especially with clothing. In the beginning if you are trying to source clothes; it is going to be expensive to get a sample. We have people ask us for samples all the time. Making samples for a Fashion Company completely sucks. Just so everyone out there knows and there is no…

Steve: How much are we talking about for a sample for like a burn down let’s say?

Edmund: I mean it just depends, like on the company, on the quality, how bad they want your business, like if someone asks me for a burn up I’d pay like 100-200 bucks easy, because it’s going to annoy the crap out of me to do it. It means that I have to take a worker who can be producing 20 or 30 shirts completely off the line, 20 or 30 shirts that are going to make us quite a bit more money and get this order done.

I have to take them completely off the line, I have to have them focus on only your sample, and hopefully it gets done right the first couple of times. It might three, four, five times to do it, so at least a day of work maybe more. And it’s just not efficient at all. Even when we do it we charge a lot and people usually don’t do samples with us. However there are a lot of people that do just do samples. They are called sample houses and they’ll actually make samples for you.

Even if the factory doesn’t make the sample for you, you can take them a sample of your product and as long as it’s a good factory they should build a copy if it exactly. Even then you still want to get at least like a small production run at the beginning, so maybe five to 10 shirts so that you’re not going all in and finding out that they have no idea what they’re doing. Yeah it’s worth it in my opinion and I don’t know if your experiences have differed, but my experience is that it’s worth it to pay the factory a little bit more to do a couple samples for you in the beginning.

Steve: Yeah absolutely.

Edmund: Then make the money back later, and also the thing is too with a lot of factories especially if you’re talking bigger orders, they’ll ask you for money upfront. Okay like you want these samples give us 200 or $300 we’ll make these samples for you. You say okay like no problem, but hey if I do this order with you and everything goes well will you please just count this sampling fee off the final order, and all the time people go yeah no problem. They just don’t want you to go and get the samples and run off forever because people do, do that and the factories just like you’ve been banned in china. The factories have been banned so they’re very cautious about doing free work.

Steve: Yeah absolutely I was just curious though on Alibaba like sometimes you get some Chinese dude who just wakes up, goes on the street, buys some stuff, and then ships it to you. Do you do any sort, like how do you sort out the real guys from some of the fakers?

Edmund: Yeah no problem and there’s a few ways you can do it. Like when you actually go into Alibaba, if they’ve had what’s called an onsite check which I always look for, there’s a little blue symbol on the bottom of two hands shaking. You can click on that and it will show you actually the onsite report on that factory, so it means that either someone from Alibaba’s inspection team or third party inspection team has actually gone into that factory, and they’ve given a full report like what is their actual uplift capacity, is there ability or is there potential to expand later if to a company that is huge.

What are the conditions of the factory, are they over staffed, are they under staffed, do they have enough staff, what’s the condition. I mean it tells you everything. So typically I always click on those to see what they say about the factory, and if that doesn’t work, if they don’t have an onsite check then the next thing you do is hire a company, an inspection company just to go out there and verify that the factory is there.

Those companies will charge you like a hundred or 200 bucks. They’ll go out there they’ll look through the whole factory and they’ll come back and give you report on what they think of the factory. That’s personally how I would do it. You can also I mean I’ve lived in china long enough that I’d say okay yeah you can also look up the address and this and that, and you can call and see that the reality is as the great Steve Chou once told me never trust a Chinese person.

Steve: I probably did say that actually.

Edmund: There’s just so many ways that you could easily. I mean it’s the other side of the world and the walls aren’t the same as they are here, and definitely business morals aren’t the same as they are in the states. I am not saying this to scare you, I’m just saying is if it were myself I would at least spend the money to get an inspection company if they don’t have a check to go out there and check it out, because it’s not worth it to go send like1000 or 20000 or whatever amount of money to some person that you’ve never met before only to find out that they’re buying clothes out of the back of someone’s car, like you don’t want that to happen.

Steve: Do you have any comments on Alibaba verses Global Sources verses going to a trade show, like the Canton Fair verses like using Panjiva or in this yeah.

Edmund: Okay, so Global Sources and Panjiva I’ve heard of both of them, I’ve never used either. The sites that I’ve used are Alibaba, made in China and gone to Canton Fair. I personally think and it’s hard to say. I have two really varying opinions on this, because on the one side it’s like yeah it’s great to go to Canton Fair, it’s really great to go and meet the person face to face especially in China, because china is so much about relationships. If you have the means to do that then by all means you should go do it, because I think that’s the best way to have a great relationship with the Chinese factories.

Go see the factory, meet them, go out to dinner with them, do the whole song and dance that is China and the factories really will have a lot of respect for you just for making a trip out there. On the other side I also realize that not everyone can afford to go to China, or can take the time or whatever, and I totally get it. If that’s your case then I personally believe Alibaba is the best option though I haven’t really used Global Sources. I know this site, but I haven’t really used it so I can’t comment on it too much, but I can say that Alibaba is getting really strong in protecting the buyer.

It used to be very factory centric which is the factory can get away with murder on Alibaba and since their IPO they’ve released some really great products and more coming out, where they’re really trying to protect the buyer more. So things like trade assurance, protects payment 100%, protects quality 100%, protects your shipment 100%. They’re coming out with a new thing called secure pay which is going to be like you can actually pay for goods through their own proprietary system with a credit card which will be insane for people who like to collect miles that will be great.

Steve: That’s true yeah.

Edmund: Theirs is this I think Alibaba is really, it seems like in my opinion they’re pushing to make it a safer platform which will be interesting to see how it works, but so far I think they’re doing a good job.

Steve: I’m also curious how you deal with quality control.

Edmund: Okay so with IFG we have our own in house QC that will QC things as well as we also deal a lot with inspection companies, because obviously when we’re producing stuff it’s for outside companies, so we have companies coming in and inspect us. That’s one way you deal with it. With Kekai Express the way we deal with it is we have our own QC guys as well which is we call them production managers, so what they’ll do is if there’s a production run happening, depending on the factory and depending on how much we’ve worked with them and how much money is on the line.

We’ll send them actually to the factory to monitor the production, and basically they’ll just stand there and watch the lines see how things are being made. They’ll take pictures, they’ll pull a product off the line to make sure it looks like it’s good. They’ll do– I mean it’s hard to say like us for fashion example like I will say fashion; because there is so many different products you can source.

For fashion if it was production run for shirts, they will pull clothes off the line, they will test the fabric to make sure it’s really the fabric that they’re saying that it is because sometimes the biggest problem people have in China is they say they’re getting like 80/20 cotton blend, and it turns out that they’re getting 80/20 polyester blends.

Steve: Dude that’s happened to us, yeah, pain in the ass.

Edmund: Yeah it’s a huge pain in the ass when you think you’re getting 80% cotton and you end up getting 80% polyester, it’s obviously a very different material, and it’s a very different experience for the customer especially. They will pull the fabric off the line; they will do what we call burn testing. You can actually burn the fabric and see the way it burns with a lighter, you can see what it is. They do pretty simple burn test to make sure it is what it is, whether it’s not.

They would check the stitching to make sure that the stitching is nice clean stitching, because obviously there’s a bunch of different types of stitches that you can do which gets deep into fashion. Make sure that the stitching is what we asked for, make sure that you know different pieces of different garments have to be done with a certain type of stitch; otherwise it’s really easy to fall apart.

Steve: If you were like a person in America you would just hire someone to this absolutely.

Edmund: Yeah I am sorry I am getting very deep into this, like next. If it was– if I am a person in America and I am not living in China, yeah I would hire someone like V-Trust, we use them a lot they’re a great company. They’re very solid, they’re also very strong in textiles, and we would send them a sample. Ideally the best way to do is you send the V-Trust a sample of what’s getting made, so this is exactly what we want. If you can, send them an inspect sheet, send them a design sheet.

The more information you can give to them the better the job they’re going to do. You can also just send them email and say hey, does this look okay and they’ll tell you their opinion, but the best way is the more information you give them the more accurate their inspection will be, and those guys are super on point. I mean they’ll send you like a 40 page report on a couple of pieces of garments telling you exactly how it’s put together. No matter what you’ll never get a perfect production run like that’s just not how production works, but V-Trust will give you very-very accurately what is going on with your production.

Steve: What is an acceptable defect rate for clothing let’s say?

Edmund: Yeah, I think three to five percent is.

Steve: Three to five percent, okay.

Edmund: If it gets anything over that, I mean three percent is what we aim for, sometimes five percent happens, but I think over that with any factory if you’re getting over five percent that’s not good.

Steve: Okay.

Edmund: I mean I’ve seen people that run on like say 10%, and I am just like how are you guys– that’s just so inefficient, but yeah we run three to five.

Steve: Okay, cool hey I mean we’ve been chatting for a while. I want to be respectful of your time. Thanks a lot for coming on. If anyone out there who is looking to start a clothing line or importing from China where can they find you?

Edmund: Yeah you can email me at Edmund E-D-M-U-N-D@startupbros.com so S-T-A-R-T-B-R-O-S-U-P. Wait I did it the wrong way, S-T-A-R-T-U-P-B-R-O-S dot com, so startupbros.com, and yeah I’d love to hear from you guys, follow me on Twitter all that good stuff, I don’t know how this works.

Steve: What’s your Twitter handle man, you’ve got to tell me your Twitter handle and your Periscope handle.

Edmund: Yeah it’s Edmund Lowman E-D-M-U-N-D-L-O-W-M-A-N you can follow me on Twitter, you can add me on Facebook, email me at startupbros and always Steve Chou maybe he’ll give you my phone number, stuff like that.

Steve: Yeah what’s funny is Edmund just bosed or doing periscope. I think you’ve done two or three. I’ve only done one at this point but it’s been kind of fun.

Edmund: It’s interesting isn’t it? It’s like you’re just broadcasting whatever out into the world and people watch and they comment.

Steve: I feel like I am doing standup comedy. I’m just like on the stage, I can’t really see anyone though.

Edmund: Yeah you were funny there, your Periscope was quite funny.

Steve: Thanks man.

Edmund: It’s also interesting, like it feels sort of like the Truman show, doesn’t it?

Steve: It does, yeah totally. It’s a weird feeling and hopefully it will benefit the business like in some way.

Edmund: Yeah I periscoped myself eating dinner the other night, I had thirty people watching me.

Steve: I saw that I was going to join, but I was like your title was watch me eat or something like that right?

Edmund: Yeah that’s what I was doing, I was eating nachos, I’m drinking a margarita and people watched.

Steve: Did you say anything or?

Edmund: Yeah I talked a little bit. I was just curious, I was like how, what’s the most ridiculous thing we can put up and just see what people will watch. I was like watch me eat, will people watch that, and they did.

Steve: Yeah I wasn’t sold on that one.

Edmund: Yeah.

Steve: All right dude well hey thanks for coming on the show man.

Edmund: Yeah it was a pleasure and good luck to everyone out there.

Steve: All right take case.

Edmund: Later.

Steve: Hope you enjoyed that episode. I get a lot of emails from readers who want to start their own clothing line and the information that Edmund revealed today is priceless. For more information about this episode, go to mywifequitherjob.com/episode102.

And once again I’m starting my own ecommerce conference this year it’s called the Sellers Summit, which is going to be held in may 19th in Miami Florida. If you’re interested in learning about ecommerce or taking your existing ecommerce business to the next level, then you must attend. Go to sellerssummit.com for more information.

I also want to thank Famebit for sponsoring this episode. As I mentioned earlier Famebit is the best place to find YouTubers, Instagrammers and other influencers to promote your products online and it works. One of my podcast guests Emmanuel Eleyae used famebit.com to make over $65000 in four months with YouTube influencer marketing, and it costs as low as 50 bucks to start. The best part is if you use coupon code mywife@famebit.com you will automatically get $25 off. Go to famebit.com right now and get famous YouTubers to promote your products.

Finally 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 100K in profit in our first year of business. Go to mywifequitherjob.com for more information, sign up right there on the front page, and I will send you the course right away via email. Thanks for listening.

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

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101: Will It Fly? How To Validate Your Business Before You Invest With Pat Flynn

101: Will It Fly? How To Validate Your Business Before You Invest With Pat Flynn

Today I’m thrilled to have my buddy Pat Flynn back on the show. Now I’ve had Pat on the show once before on episode 41 where we talked about how to make money with every online business model out there.

In fact, Pat was gracious enough to come dressed for the occasion as he wore Stanford cardinal red and a beat cal button during the interview. I mean how cool is that? To be able to forsake his own college for a superior school is just a testament to his awesomeness.

Anyway, Pat runs the very popular blog SmartPassiveIncome.com and what’s cool about Pat is that there’s always something new going on with his businesses.

Last month, he brought in almost 108 thousand dollars from various sources such as affiliate marketing, iphone apps, ebook sales, software sales, podcast sponsorships…you name it and he’s done it.

And this time around, he’s releasing a brand new book called Will It Fly, which covers a very important topic related to business.

What You’ll Learn

  • Pat’s vision behind the book
  • The 4 steps of business validation
  • How to formulate a unique value proposition
  • How to come up with a mission statement
  • How to evaluate market conditions
  • How to validate your idea before getting started

Other Resources And Books

Sponsors

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Transcript

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.Now if you enjoy this podcast please leave me a review on iTunes and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now if you enjoy this podcast please leave me a review on iTunes, and if you want to learn how to start 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 100k in profit in our first year of business. Go to www.mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away via email.

Now before I begin, I just want to give a quick shout out to famebit.com for being a sponsor of the show. Famebit is the number one market place for influencer marketing, with over 20,000 Youtubers, Instagramers, people on Twitter and via LinkedIn to promote your company in any vertical, whether it would be beauty, tech, gaming, pets and more.

Yes, you can get famous Youtubers and Instagramers to promote your business for as a low as $50. And the best part is that you don’t really need any money at all to post a campaign and receive free proposals from creators. Now if you’ve listened to my podcast before one of my guests Emmanuel Elayae used famebit.com to make over $65,000 in four months with YouTube influencer marketing. And the best part is if you use coupon code mywife@famebit.com, you will automatically get $25 off your first campaign. So go to famebit.com right now, and get famous you tubers to promote your products, now onto the show.

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 my buddy Pat Flynn back on the show. Now I’ve had Pat on the show once before on episode 41 where we talked about how to make money with every online business model out there. And in fact Pat was gracious enough to come dressed for the occasion as he wore at Stanford cardinal red [inaudible 00:02:31] during the interview. I mean how cool is that to be able to forsake his own college for a superior school is just a testimony to his awesomeness. Anyway, Pat runs the very popular blog, Smart Passive Income.com, and what’s cool about Pat is there’s always something new going on with his businesses.

So last month he brought in almost $108,000 from various sources such as affiliate marketing, iPhone apps, eBook sales, you name it, and this time around he’s actually releasing a brand new book about a very important topic related to business. And with that welcome back to the show Pat. How are you doing today man?

Pat: I’m doing well and you know I got handed to the cardinal for beating [inaudible 00:03:11] this year during the big game. I want to thank you for wearing your golden blue for the interview when you are on my show. So I appreciate that with little phone finger, that was great.

Steve: The phone finger was classic.

Pat: We have like a Photoshop for it going on. But I do it in my own Photoshop skills I must say.

Steve: I know a lot of people on the audience probably know who you are already, but if you won’t mind telling us kind of what you’ve been up to lately, that would be awesome.

Pat: Yeah totally. So I’ve been up to a lot of things. Moving into 2016 I wanted to think of what I could do differently than what I’ve done before. To help me figure out what to do, I’ve looked at my audience to see what it is I can improve, and what is necessary to better provide value to them, all those sort of things. So I looked in a couple of sports to help me figure that out.

The first one is really cool because I have another podcast called the Ask Pat show or Ask Pat and askPat.com. And on that show, I answer voicemail questions from my audience five days a week. As a cool by product of this I get these questions coming in from my audience all the time and they are voicemails. So I get to hear their voice and hear their struggles and all the stuff. I hand select a few for the show, but I get dozens every day.

By far the number one question that I had over the past two years of doing that show is, how do I know if what I’m working on is going to work? And that was a really difficult question for me to answer on a fifteen minute podcast. So I actually tried to do that, and I figured out this is a huge topic. I need to see how else I can do this. So I thought about turning that in to a blog post or an eBook or something and then, I did a survey also.

This is the second part of it that I was looking into my audience to figure what to do. And I just confirmed that this was like a huge topic that people needed to know more information about, “How do I know if this idea I’m working on or this idea I have is actually worth pursuing. How do I know it’s not going to fail or it’s the one that going to work in the market.”

And so I decided to write a book about it and it was a fun interesting topic to write about because actually I’m not the first person to talk about this. I don’t know if you remember in The 4 Hour Work Week by Tim Ferriss, he has a chapter called testing the news where he just, in one chapter, it’s a very small thing. But he talked about how for instance he paid Google for Google ad words to get cold traffic to a website where he was selling something. I think it was French Sherwood shirt or something, and he was validating that business idea.

One of this see if people were interested in it first before building it out. And so he actually kept track of how many people clicked on the buy now button. And that was how he could tell whether or not this is something people wanted because that was a sign that yes, they were actually going to pay money for it. And that chapter was so short, but so many people talked about that and have used that to help them validate business ideas. And there’s a lot of other ways to do it that have popped up since 2007, and I wanted to explore that.

I wanted to put it out there and share that with everybody in a nice step by step kind of manner. I think I talked about it very well. I’m very excited to share this book with people which is called Will It Fly: How to test your next business idea so you don’t waste your time and money, because really that’s what it’s all about. It’s about wasting time. You don’t want to waste time. A lot of us who are entrepreneurs and even us who are going to be entrepreneurs, we know that time is our number one asset. We do want to just focus on the things that we know that are going to work out in the end.

And I kind of broke this book up into two major parts in terms of validation. There’s the obvious one which is how do you know if this thing that you are working on is going to be well received in the market? How does it compete versus everybody else who’s already out there, all those sort of things. But the second part and the most important part, which is why I start with this, which is how do you know if that idea is actually going to fit with the you. Like, how does that validate your strengths? How does it actually complement where you are going and where you want to be? A lot of times– I know you and I we both go to conferences and at the end of the day, usually after the conferences is over, we are sitting in a bar somewhere, and we have these chats and we get pretty deep with what we talk about.

A lot of times these conversations are about like, how is life and stuff. And I know through just personal conversations with people, that a lot of successful entrepreneurs are unhappy. And they are unhappy because they are at the top of the ladder, but it’s not the ladder they want to be on top of, the business that they chose is not complementing their life. They go out into entrepreneurship to have control and they’ve lost control. Or they are doing something that they don’t feel fulfilled about. So I want to catch people early in this book. I’m really excited with what’s it’s become, because it’s going to help a ton of people.

And the cool thing about this is you know, I don’t know if you coach people Steve, but I coach a few people and my students are like, a lot of times, they just simply need permission. They need– it’s like that’s great. Go do it, really? Okay. Okay. Somebody gave me permission to do it, so I’m going to do it. I want this book to be sort of that permission giver for people like yeah that idea is great, like it’s checked out. It’s gone through all these litmus tests. It’s kind of like taking these experiments and actually then going full scale after you’ve started with small scale experiments. It’s either that or people go through the book and they are like, wow this was actually a really bad idea. I’m so glad I didn’t waste two years of my life and money on it, and I figured this out now instead of later.

That’s what kind of what the book is about. That’s really been my one thing over the last year. You know, I do have other things I’ve been trying to make the systems and the stuff within my business better, the teams. I’ve been expanding my team. I hired a content manager which has been completely helpful for helping me plan into the future in terms of content and helping me figure out what to write, when and how to incorporate it into the different launches and things I’ve been coming out with. Even down to, I know…

Steve: You have someone handling your email now, I know right?

Pat: Yeah, Jessica. I feature her in episode 155 of my podcast. I interviewed her because she was such a huge weight off my shoulders. Like she, oh my gosh, I had nearly 10,000 unread emails when I hired her.

Steve: I got 24,000 right now actually. I need her. I need a Jessica.

Pat: Are you serious? Oh my gosh.

Steve: In fact how much are you paying her? May be I’ll have to make an offer.

Pat: Yeah, I can make that connection for you, she’s like amazing. She was able to help me create a system where now I go into my email and I don’t even look at my inbox, I go into my “urgent box” and that’s what I need to see and only the things that I need to see. You know, she goes in there and reads most of my emails beforehand unless they kind of bypass the inbox and go directly into my urgent box based on who I’m getting emails from. But there’s a lot of systems in place, and you can listen into that in episode 115. But I’ve had her, I have Jenner who is my content manager. And really just focusing on the systems moving forward to make sure that my time is spent exactly where it needs to be spent which is kind of so much of the theme for this book.

Steve: So on the topic of validation; it’s actually where I find most people screw up at least in the world of ecommerce. Not validating your product kind of usually leads to like a garage full of products that don’t sell. I had this one reader who actually recently brought in really nice lady. She had been running her jewelry business for six years. She has her stuff listed on Etsy, Amazon, eBay, but she’s actually only had a couple of sales in six years. Now, six years is a long time, right? What do you think Pat. Do you think it’s fair to say that her business isn’t working?

Pat: Her business isn’t working, but there’s a reason that she’s been doing this for so long and I would say there’s a little bit of passion behind which she is doing, she sees it more than just a business. That totally can be great, but it also if you are trying to run a business that can earn profit, passion can also screw you up. There has to be some sort of business aspect on the other end of it which means you have to be making money one way or the other. So you know, I’m curious to see how her garage looks like, and how much inventory is there. Did she need all that in the beginning, or did she need to just start with a few prototypes and other things at first just to make sure that this is something that people would want to buy.

Steve: Yeah, here’s actually another question that a reader sent in, actually specifically for you because I kind of told people that you were coming on. So if you wouldn’t mind yeah, so Steve and Pat big fun of your show. I’ve been rooting for the same football team for six years now, but they keep losing the big game to the Stanford Cardinal year after year. Should I just give up all together and wear the Stanford colors with pride. I mean six years is a long time, right?

Pat: Well, let’s talk about this a little bit. No, because– no never, never go.

Steve: Six years without a win. It’s time you get. You didn’t answer the first question correctly either by the way. You were supposed to tell the lady to give up.

Pat: No, it’s not about giving up; it’s about reassessing where you are at, and what it is that people want. Really, that’s where it all starts. It starts with the market researching and understanding what people want and actually using transactions to validate, because maybe she did try validating. And this is what a lot of people do. They go to their friends. They go to their families and say, “Is this something you would be interested in?” And they say, “Yeah totally, I’d buy that.” But when it comes down to actually putting money on the table, they don’t. And that’s also where a lot of people screw up.

So I don’t know how she went into this, but she’s done traditionally what a lot of people do which is they built something, maybe they heard it was a good idea. Maybe somebody said it would be, and they go to rooftops and they scream like “buy my products.” And then nobody buys it and they wonder why. The validation process is an iterative process where along the way you can see where the points of failure are, and you can figure out where to fix it from there, or if you should continue moving or not and then no on that Stanford thing, ever.

Steve: So I would say that the people– so I ran a class that teaches ecommerce and I would say that the people who kind of run into problems fall in to two camps. Those that rush in without research, kind of wasting money on stuff that doesn’t sell, they get discouraged and then they quit. And on the other side of the spectrum, there’s people that never start because they don’t want to choose the wrong idea, they don’t want to fail. They are kind of scared about the competition. They don’t have the money or resources and generally they are just kind of scared to start.

Pat: I mean that’s most entrepreneurs. I mean, you think about people out there who are scared to start and all the amazing things that they can do, it almost makes me sad. I mean, what if there’s a person out there who has the cure for cancer, but they are just too scared of the publicity that would come with it or the failure. But you have the cure for cancer. I’m not saying that ecommerce is essentially the same as a cure for cancer, but it might be. I mean you are solving a person’s pain or problem with the product that you are promoting and putting out there and creating. So you are actually doing your potential customer a disservice hopefully because you aren’t creating something that is actually helpful.

When it comes to competition, the fact that you are coming in later than everybody else is actually a huge advantage. I talk about this in the book, because you get a bird’s eye perspective. You get to do some more research where you get to see, what I like to call your market map, your three Ps. You discover all the places where people are at and you target on each. You discover all the people who are starting out already, and also all the products they are buying already. When you create this map, you get a bird’s eye perspective of everything that’s going on, and you actually begin to start to know about that market better than the people who are already there. You can see what the problems are. You can see where the issues are, where the holes are. It’s very easy for you to see what’s missing.

And then you go in and you talk to some customers and you talk to people in that potential market and you see exactly and you hear from their own voice what it is that they need. That way when you go into the space, you are not just guessing, you are not just creating something based on a win. You are going there knowing that this is something that people want. And that’s really what validation is all about. It’s taking that guessing game out.

I mean, I want people to go out into this book with an idea in mind and go through the litmus test where the people who go read this book and get new ideas along the way. But what happens and every time I’ve ran people through this process, when I’ve validated this book and the principles in it, their idea mops. And it mops because it stops being our idea and becomes an idea for our audience, and it turns into something that will work for them if you actually execute. That’s another big thing; the idea is just part of it.

Steve: I was hoping actually we could just kind of go through step by step through your framework. I know you’ve released a product of your own in the past, the podcast player. And you followed the same principles that you talk in the book.

Pat: Yes. The other thing on that specific example though is because, and why that one is really important, is because I made a huge mistake back in 2010 with software. That was my first foray into software and I rushed into it. I didn’t do validation. Two of my friends released WordPress plug-ins all within about a couple of miles from each other and each of them were making six figures a month from those releases, and that’s why I got into it because I was like, wow, this is an incredible opportunity. This is working for you guys.

I am going to come up with some plug-in ideas and sell it, because I have this platform at smartpassiveincome.com. It’s going to go really well, right? And so the first thing I do is come up with ideas really first, and then I kept them secret. That’s the first mistake that people make. It’s like, they keep it a secret. And I wanted to keep it a secret because A) I was too afraid of telling other people about my great ideas and having them steal it which will never happen, and B) I wanted it to be like this huge reveal on my day one, you know from launch. “Oh my god, look at Pat’s amazing plug-in. Let’s all buy it.” That obviously never happened because I didn’t release it.

I spent $15,000 trying to develop two at the same time. That was how greedy I was. That goes back to the purpose of creating in the first place. It wasn’t to help people. It was actually to just try and make money. And every time I chase the money, I’ve always failed. Every time I’ve put my clients first it’s always been a win. So that was a huge lesson there. But also because I rushed into it, because I didn’t validate it, and because I didn’t go through some of the steps in the book which is like, what is this idea actually mean.

You know, we have these ideas in our brains. Our brain does a really good job of getting inspired and coming up with things, but it doesn’t do a very good job of ordering them. We think these things all over the place. And I tried to portray that in an email to these developers and because of that they just didn’t understand exactly what I wanted. I didn’t even understand what I wanted. And when they came with something, it was not what I had envisioned. And there was no way to match my vision, because I didn’t really have one. I just like, hey make this for me. And it just didn’t work out, but again, because I didn’t validate in the beginning.

Steve: You didn’t try to sell it at all though, right?

Pat: No, no, it was just terrible. I mean, I literally shared it after it was built. And people were like, “Yeah, that’s okay.” And that was, oh man, this is not going to go so well. I should have done that first. I should have just had the idea, shared it with a few people on my audience, share it with a few of my friends and colleagues to see if this was actually something that they would want. And when you speak about your idea with other people, they start to pull calls on it. They start to tell you what could be better; they start to tell you what’s not so good about it. That’s what we did with the smart podcast later.

You know, I actually built this thing for myself and then I actually wanted to share it with others, because they all said that they wanted in, but then when I came down to it I wanted to see whether they would pay for it and that’s where the beta group came in. Then we released as a WordPress plug-in. But I released it in a sort of an MVP model which is a minimal viable product. All these ideas I had in my head in terms of what I wanted to include in it, they wouldn’t validate it. I went to that beta group to see what it is that they would want and actually it turned out to be completely different. So I was so glad that they were there at the beginning. I guess I can just walk you through the process.

Steve: Yes, let’s take a step back. So step one, I know the first chapter in your book is called mission design. What do you mean by that?

Pat: So mission design is kind of stepping away from this idea. Like, yes, it’s about validating your idea, but it’s about looking inward and seeing where you want to go, and does this idea then actually complement that. Does it fit into that trajectory that you want to go on? Does it fit into your five year plan? The mission design is really all about these, there’s three thought experiments within mission design that are really important for you to think about so that you know where you are going.

It’s like, the analogy I use in the book and you know, there’s a few flight analogies in the Will It Fly writing. It’s because we’re always in the launch stuff, but launching is just the start of it. How do you know if it’s going to take off and fly, that’s why it’s called Will It Fly. This is really like how do you know if this is going to fly for you? And so the first test is really important, because it helps you determine like what would be perfect, what would be a perfect flight in five years.

So the thought experiment is like Steve, let’s say you and I for whatever reason we’ve lost our connection. We don’t talk for however many years, and then all of a sudden we find each other, crossing each other at an airport. It’s five years, I’m like “Dude, Steve, like how’s everything? So good to see you, how is life?” And you say, “Life is amazing. It’s everything I ever wanted to be right now.” And I go, “That’s awesome. Tell me why? Like what’s happening in your life right now?”

If you think about that, what would you say? I mean, the way that you break this down is you fold a piece of paper into four sections so you have four portions. And you right down your top four categories of your life that are most important to you. So for me it’s family, professional, finances and health, and then under each of those categories, you literally write down, what would make you say that life is awesome and perfect five years from now. This is not like a wish list or anything. It’s like you are literally thinking what would be perfect right now for five years from now.

And this sheet that you create becomes the basis for all the decisions that you make. It has been so helpful for me, because actually for me I get all these new opportunities coming my way, and a lot of times we get like googly [ph] eye with certain opportunities, but then I look at my sheet and I see, well, that actually won’t be a good fit for me. Like for instance I have this opportunity to create a hosting company right now for podcasts, which makes complete sense for me and who I am in my business in terms of where I’m at in podcasting world and all that stuff. It could potentially make millions of dollars and I have it on air space already, I mean every customer at [inaudible 00:20:07] podcast can become one of these people.

But it just doesn’t make sense for me right now with my family and my health, because all the things that I listed it would take me away from that. I would need to put a lot more time and effort into the professional and finance part, but it would take away from my health and family part.

Steve: So is the framework that you are talking about more for a kind of higher level goals, like we are just talking about the podcast player. Obviously these things are just too deep for a product focus idea, right?

Pat: Yes, but the product then becomes one component of you leading up to that. So that’s the first thing. And then there other things, for example, like– so that experiment kind of you looking into the future. The other one, you look into the past and you look at all the different jobs that you’ve had and different vocations and careers and maybe volunteer work and teams that you’ve joined, and you think about what you liked and dislike about those things, because a lot of times we move through life without really thinking about what we like.

We just do that whatever it is we are doing right now, but when you look in the past, you kind of get this parameter of the things that you like and the things that you dislike. And you can make sure that the things that you continue to do from that point forward match up in line with the things that you like and not with things you dislike. And for instance, I’ve run through this experiment for a lot of people who love to be sort of behind the scenes.

They love making things work, but they are not really into putting themselves out there in front of the world, so they are more likely to be happy with building a business on the back end, something a little bit more on sort of the ecommerce side where they are not necessarily the face or brand of their business, but they are on the back side creating things and putting things out there into the world. Whereas me for example, I love being in front of people, I love talking and being the personality, so that’s why, Smart Passive Income, even though that’s what it’s called, everybody knows that that’s Pat Flynn site, because I put myself out there.
4
So there’s a few other exercises and mission designs that are never really important. But I think what most people might be interested in are how to take this idea and actually develop it and get into a place where you can then validate it and actually having people pay for it before you actually build it. And so to start with that, it really starts in what I like to call the development lab. So it’s creating this idea, but then actually mind mapping out and then figuring out what its purpose is.

And there’s a really cool exercise where if you have this idea, I want you to write a whole page worth of, what is this that this thing is? What is it that it does, who is it for? What are the benefits, what are the features? And then take that one page and try to squeeze it down into one paragraph. Can you get all those essentials out of that page into one paragraph? And then one more time, turning it into one sentence that becomes the thing that you are doing and why you are doing what you are doing now, and who is it for.

And that’s a really good exercise to help shape your mind around why is it what you are doing, and what is this that you are creating? And then from there, that’s what you take and then talk about with other people. And through those conversations, you can really have people like I said help poke holes in that thing. So if you have an ecommerce idea for a product for example, just talk about it with people. And say, see what– like literally go to Starbucks and be like, “Hey, can I buy you coffee?” “What’s the catch?” “I have this idea for a product; I just want to get your honest opinion about.”

That is a golden opportunity for you. And the cool thing is it’s a stranger. You won’t ever see them again. You won’t really know– you won’t really care what they have to say, but it’s going to be so important for you and what you move forward with. And even though they might poke holes in it, that’s good information for you that you can use moving forward.

Steve: So you don’t advice going to people that you know or your friends for opinions?

Pat: I think it’s still helpful, but your target customer or just random strangers is where you can get the unbiased kind of information from. If you go to your friends and family, they are going to want to tell you what you want to hear, but not necessarily what you need to hear.

Steve: What about finding people that are in your target market right? If you go to Starbucks or something, that person might not be your ideal customer, right?

Pat: No, but they can still give you some good advice, but you are right. I think the best place to go to is to find people in your target audience. And so there’s actually an exercise in the book, I actually talked about earlier which is your market mapping. There’s specific steps on finding places online and offline to find where those people are.

Forums are great, forums I think are the most underutilized tool on the web, because there is just a plethora of information on a specific niche, people who are pouring their hearts out telling stories, asking questions. It’s like going through their problems and people who are all in that space talking about it. Because a lot of people don’t realize how important forums are because it’s where you connect with other people like you.

And if you can go into those forums and use the search functions, there’s some really cool search functions you can use in Google to scope out some really cool things. So for example, if you want to find out problems that your target audience is having, you can look up certain phrases in those forums using Google. And Google will spit out every thread in that forum where those certain phrases were used. So I can say for example, let’s use, I don’t know, just any forum. Let’s use the fire fishing forum for example. If I want to look at a certain phrase– sorry I just heard my daughter crying.

Steve: Yeah, I hear that.

Pat: She’s like don’t give away this tip, Still the trick Google is, you know how when you put quotations around a word Google spits out the top search results for that exact phrase. Well you can do the same thing, but look through a specific website for that exact phrase, sorry.

Steve: Pat is still recovering from the cold by the way, just so you guys know.

Pat: I am, but that’s okay. So you put a certain phrase in quotations, space site colon, and then whatever URL, so firefishing.com. And that will then spit out every inference of that phrase in that forum on Google.

Steve: I used to do this all the time for the wedding forums to figure out what brides were looking for actually.

Pat: You are familiar with this. So it’s…

Steve: I was Christine [inaudible 00:25:56] on the forums. I never went [inaudible 00:26:00] but yeah.

Pat: You don’t even need to be a part of the forums to find that information although you could go in. But those forums are really helpful, because then you can go in there, you can talk to people, you can build authority. Actually there was a forum in the Lead Exam space that I became an authority in, and that really helped to launch the Lead Exam website that I had. And I didn’t go in there and I didn’t start promoting right away.

I went in there, I built friendships, I added value, I answered people’s questions, I became a resource for people and then all over a sudden people got interested on what I had to say and what I offered, and that’s when my business started to grow from there. But that’s where you can find people. Plus there’s also websites and you can look through iTunes, there’s a search engine. Amazon is a search engine; you can find a lot of authority figures there who you can then look at who their followers are, Facebook graphs, which is a fantastic resource to find people too.

And then again it’s just about putting yourself out there, making cold calls is actually one of the best strategies you can use too and that’s a tough thing to do. But I know some of you who are listening to my show might remember Dane Maxwell’s episode in episode 46 where he used to cold call small businesses and just ask them, “What are your biggest struggles? What is something you do every day that you hate? What’s a software that you use to help you, and what do you wish was done better with?” Those are all idea extractions and questions that tell him what needs to be done, and he can go in there and build that software for them.

Steve: You know it’s funny. Cold calling is actually quite difficult, because a lot of times they don’t want to talk to you, and you end up dealing with a lot of objections. We do that for our business too. We cold call event planners, and kind of ask them if they need any of our services. It is tough.

Pat: It is tough and that’s why I feel like now you can utilize social media to actually initiate those conversations, or emails to just establish a relationship first before you call them out of nowhere. If you can provide value in the same way, or at the same time, then you they are going to be more likely to reciprocate at least by just having a small conversation with you and then you can go from there.

Steve: So one of the biggest mistakes for the students in my class at least is that they go in with a product that they are interested in and it has a market for, but there’s nothing unique about their product, it kind of just blends in with the rest. So what are some of your frameworks for figuring out what’s going to make your thing special?

Pat: So the market plan will help you because you get to see all the products that are out there. But one of my favorite things to do is go on Amazon, I know a lot of you use Amazon as your foot billing platform. Look at the competitors products and look at the three star reviews for all those products. The five star reviews are okay and you know a lot of times it’s just like super fans, and you get some good information three too. And the one star review maybe had a bad experience or whatever.

The three star reviews is where you can get the most honest information. You know because it’s a three star review. There is going to be things they like about it and things they dislike about it. A lot of times you come across these reviews that literally say, here are the pros of this and here’s are the cons of this.

I also like to, if I were in the ecommerce space, which I might get into in the future, I would literally buy those products and use them and see what they are like, and see what I can do to make them even better and then talk to people about what those ideas are. Say, “What if you had this but it also included that, how much would that affect your love for this product, or how much do you feel that would change your thoughts about what this actually can do for you? Again those conversations are so important to have.

And then also then taking a little bit of initiative and making a prototype of what that next thing might be and see if it’s actually something that people would– gauge their reactions. That’s the most important thing and why I love the one on one in person reactions or conversations, because you can literally see in a split second what their thoughts are and gauge their body language on what a new feature might do to your product. Those conversations are really important.

Steve: So in the context of your podcast player, did you go through and test a whole bunch of different players and then asked people what they liked and disliked about the existing ones?

Pat: Well, the interesting thing about that one was all the players out there were just simply a play button and a stop button. So it was easy for me to determine what other features could be included to differentiate it, but then it was a lot about which ones are most important. Then we actually went in and actually surveyed a bunch of people and said okay out of these lists or out of this list of features that can be included in this product which ones are most important to you.

Steve: Okay.

Pat: Then we got the top ones there, people added their own and some of them were kind of outlandish and some of them were right on the money. Again I wouldn’t have known that if it wasn’t for those conversations, and those conversations can be hard to deal, I mean I had one on one conversations through Skype, but also we ran a survey with some of our beta group, we tried to figure that information out. Those in person conversations which are the most helpful they can be very– you can get very nervous leading up to that.

I think even that goes along with what you said earlier, some people are just sacred and it’s really scary, but that’s part of the process of becoming an entrepreneur. It’s not going to just land in your lap, you have to do the work, and you have to go out there and get uncomfortable because that’s where all the awesome stuff happens is when you get uncomfortable. If you are comfortable the entire time, it probably means you aren’t doing what you needed to do.

Steve: The process that you went through, it sounds like you sent out a list, created a beta group of people who were interested, and then you proposed to a much smaller group a list of features that you had them evaluate essentially right?

Pat: Here’s the validation process, so this is part four which is called the flight simulator where you’re actually doing a small scale experiment with this idea that you have that you’ve kind of flushed out already. You’ve determined based on conversations, based on research, based on what this would be. This is kind of like where your myth is and myth busters right? What you want to put to the test.

The first step is you get in front of an audience. If you have an audience already great, if you have existing customers perfect, that’s where you start. If you don’t I should give you eight different ways, actually nine different ways that you can get in front of an audience even if it’s not yours. I think this is where a lot of other instructions on validation falls short is they often assume that you have an audience already. There’s a lot of different strategies from paid advertising to getting on other people’s shows to kick starter and suing platforms like that to get in front of an audience and validate your product too.

That’s a first step, and then from there if you get in front of your audience or you have an audience already for example, then it’s about hyper targeting. What I mean by that is you have this audience already, but your solution is going to be only for a certain people with a certain problem, and you have to have people in that audience to essentially raise your hand and say yeah I have that problem or I could use something like that. Again you’re hyper targeting because those are the people you want to actually test and have conversations with when you propose your idea which is the next step.

You want to share the solution with them and then come back to them a little bit later and say, okay well I’ve had a few people that were interested in this. If there were indeed people who were interested, and then you say okay, well I need to know for sure that this is actually something that you are interested in. If you are I am trying to get 20 people to actually preorder this, which will give me notification like yes this is something to build, and if I don’t get that I’m am not going to build it.

I mean again you’re being very honest about this, this is kind of what’s different than the ten fairest model, which is like you have a buy now button which looks real, but you’re just gauging that quick note. This way you’re actually having conversations with people and you’re saying this is what I propose, this is what you all said you’re interested in. If you are preorder it here or PayPal me this money here which is what some people do actually. If I get 20 people, then I am going to build it, if not I will just simply refund your money.

Steve: Incidentally that’s actually how I launched my class. I got on like a webinar and I said I am going to build this course, prepay me and I’ll develop it, and 35 people signed up right away, and then I was like crap I guess I have to build this now.

Pat: Yeah, but that’s is good you know it’s going to work instead of where a lot of people do is they would build that course first, and then say hey guys I’ve got this new course, are you interested? And then maybe they’re not. In that way you knew because there were 35 people that were interested, so you did have validation to move forward there. I liked how you said you used the webinar because that’s another strategy to get in front of an audience whether you have your own.

You get them on a webinar, or you paid to have cold traffic get in to this webinar and they get to see you and of course on that webinar I’m sure you provided a ton of value. Then you had your pitch at the end, and then people were interested and that’s actually, I have several examples of people who have done this in all different kinds of ways in the book. A couple of people have used the webinar strategy very well. Some people just went out and hustled and talked to a bunch of people in person. I know that Kagan actually I don’t know if you know this, but he validated a beef jerky subscription company called Sumo Jerky.

Steve: Yes.

Pat: He validated that as a challenge and that was done in 24 hours. He earned a thousand dollars profit. That was his challenge to see if he could earn a thousand dollars profit in 24 hours for an idea that his audience gave him. That idea was a jerky service company, and he went out there and now that company he actually handed out that company off to somebody named Ryan to become a CEO, who’s now a chief jerk in that company as Noah says, and that company earns five figures a month now and…

Steve: That’s crazy.

Pat: If he didn’t validate it wouldn’t have been built, but he validated it, and that told him to put more resources into it and build it out full scale.

Steve: Let me ask you this, so let’s say you had zero audience and you wanted to market your podcast player, what method would you personally have used to get feedback about your player?

Pat: Well I would start with building a list of who the podcasters are out there, and then also who the podcasters are out there who have influence to other podcasters, because that would be really important to know. I would get in front of those people, talk to them maybe even get in person with them at a conference or so and take them out to dinner, and then tell them about what this idea is, and actually give them a copy to use and actually set it up completely for them maybe, even on a sand box site to show them what it looked like so they can see if it’s actually that’s my prototype for them, and they can get a fill for what it’s like.

Then I can say hey if this is something you’re interested in, I’d love to give it to you for half off. If I collect 20 people or however many people depending on how many people you reach out to. Essentially you want to get eight to 12% say yes and actually pay you based off the amount of people you ask. That’s sort of like in alignment with the earlier doctor graph.

Steve: It’s funny that you mention going to conferences, because it is kind of hard as a nobody to just randomly reach out to people and have them respond to you right?

Pat: It is but it’s not possible right.

Steve: Right.

Pat: But when you’re there in person its like people are going to be rude and say…

Steve: Yeah exactly.

Pat: No, I’m not going to talk to you right now, but they will shake your hand and even if that’s not where you have this conversation, you at least made a point of contact. Then when you follow up with them later, even if you call them it’s no longer a cold call anymore. That’s why conferences are a great place to go, but even if it’s not a conference establishing that relationship on social media, sending an email out or starting as a person who runs a guest post or maybe you talk about and reveal all this incredible information.

Again asking for nothing in return, but then you later then talk about this opportunity. That’s how a lot of people have gotten in front of me is we build a relationship together, and then I later find out that I have this really cool thing that’s is going on, and I ended up buying it or using it, and then of course later promoting it to my audience.

Steve: We’ve kind of covered steps one and two. Three is kind of market conditions right, which is determining the level of competition and what’s out there?

Pat: Yes.

Steve: We’ve kind of it seems like we’ve kind of mixed all the different steps together.

Pat: Yeah, we kind of did.

Steve: Is there anything that we missed in that spot and kind of just gauging the competition and what the market is like?

Pat: Yeah I mean one of my favorite things to do is come up with your customer plan P-L-A-N. This is something I came up with which is sort of an alternative to your customer avatar. Obviously knowing your avatar is important, and avatar is sort of a made up person that you create who is your ideal customer who you can know about them. A lot of people will give this person a name, and a life and what their problems are.

That’s key I think it’s important to know who your audience is, but every time I’ve tried to create my own customer avatar, it’s felt a little weird to me. I don’t know if you feel the same way, but it’s like I know that person is fake right? Like it’s a made up person and I never truly feel connected to that person. Which is why I feel like it’s important to go out there and actually get to know a few people who are who have those struggles, so you…

Steve: My avatar has always been wrong.

Pat: Has it always been wrong just because you make it up and it’s not…

Steve: We make it up, and then it turns out not to be the right market, and then we just switch on the fly after we have a couple of customers. I don’t know if that’s how your experience?

Pat: No it is.

Steve: Okay.

Pat: I like how you say that it was after when you got customers, after you got people who actually are in your target audience, and you’ve gotten to know them or at least get an understanding of their buying habits and what not. The customer plan the P-L-A-N is not going to– the P is the problems. You’ve got to know what the problems are. Every business is just a solution to a person’s problem, and the better you understand those problems the more likely it is you’re going to succeed right? Then it’s the language, that’s the L and that’s really important, because the language is what your use to connect with that person on your sales page and conversations and tweets.

You’ve got to know how they describe those problems or what they say. You’ve got to understand the language of your audience, and that’s really important especially if you’re going into a space that you know nothing about, because then if you start talking about this solution that you have, even if though it’s a great solution if you don’t know the way that that audience talks, you’re just going to seem like you don’t belong there. You need to know the language.

Steve: On that language point before you go on. Yeah so incidentally I use that technique when people start asking me questions I would use their language and put that on my sales page, and that actually ended up helping improve conversations on myself.

Pat: Like to really copy paste it, right?

Steve: Almost copy paste.

Pat: Yeah, you can do that. I mean the survey that I ran in July I literally copy pasted parts and put them in my email sequence, like for subject lines and bullet points and the response rate has been huge. I jumped from a 35% open rate to about a 75% open rate on sending those emails which is crazy. The language is super-super important. Then the A is one of my favorites which is the anecdotes or the stories, and this is where you can start to get like really into the feelings and really into the head of who are your target about customers. It’s actually like pin pointing a few people in your target audience and getting just to know them and what their story is.

Some of the best questions you could ask in those conversations, I got this from [inaudible 00:40:05] from you know MPR and startup because he was talking about– he’s a great interviewer right, and one of his favorite questions to ask is tell me about a story when blank. That’s one of the most powerful questions because then your option is going to get, “Oh well I did this and this.” It’s like oh well, it was Saturday morning, it was kind of– you get this whole spectrum of really the whole setting of everything.

That’s really important to know when you are looking to get into the heads of your customer and then the N is the need. Based on the problems and the language and the stories you can really come up with what truly that need is that you’re trying to solve, and again when you get to know that part of your audience the plan it does become your plan. You get to create that thing to really help them, and then other part of the market map going back to the three Ps that I talked about earlier.

You’ve got the places the people and the products. If you were to just simply do that, like if you were do that right now and list just the top 20 places your audience is at, the top 20 people the other influencers in the space, and the top 20 products that they use better on a Amazon or elsewhere. I mean that is such an incredible tool that you can use because okay you’ve got the list of places. Those are places you can advertise, those are places you could guest post on. Those are places that you could do retargeting on, or any of that stuff. The people, those are people who you can JV with, you could have as a guest on your show or be a guest on their show.

You could connect with on Twitter and follow up and build that relationship. You could scope them out on at conferences, and the products those are potentially products that yes your competitors, but you can also be an affiliate with them or work out deals with them, or at least get an understanding of what the top products are that people are buying, and what’s wrong with them so you can come out and them build something that’s even better.

Steve: I was curious on you anecdotes, can you give me an example of someone you would target for example maybe in the context of your podcast player an anecdote example.

Pat: Yeah so you know to discover the anecdotes for that one it’s a little bit tougher, because nobody really even thinks about the podcast player, but the story is about the podcast and how they’re trying to grow it and how they’re trying to make the experience better for their audience, and how they’re struggling. I have these conversations all the time with people about their podcasts. It might be– I can’t pin point a person specifically right now, but there are people out there who are coming up with brand new podcasts, they have a new show, they have a new noteworthy and they just want as many people to listen to their show as possible.

Digging deeper into that, part of the information that I’m giving to people that people might not know which is what you’re doing when you come out with a product a lot of times is for this one is specifically is that a lot of people didn’t know that a lot of people listen to your show on your website as opposed to on iTunes or in Stinchar.

Steve: Right.

Pat: Even though we want them to listen to there, I have dated a backup to the fact that people are listening on your website, and so what is that experience like for people who are listening, who is listening on your website. Well it’s a play button and a stop button and a volume button and that’s it. Well what if there is was an opportunity there in that call to action that moment that usually it’s a first impression that people have to make that experience even better.

The conversation or the story might not be the podcast star, maybe it’s about the podcast listener who is listening on the website. Yeah press play button and I read this show notes and that was it. Well that is a boring experience like how can we enhance to make that story even better?

Steve: Yeah the reason why I asked that question is because in the context of my email autoresponder I had started telling stories about my life related to business. Once I started doing that I found that people started buying my stuff after reading these anecdotes. For example I told a story about how I almost didn’t ask my out my wife and take that chance, and it’s kind of related to business right talking that leap.

Pat: Totally.

Steve: I had other stories about when I first had my kid, I did all this book reading and I thought that I knew how to take care of my child and then the kid came out, and then I didn’t know what I was doing and it all helped. For some, I think those stories actually had an effect on my conversion rate, but I couldn’t really exactly measure it, I don’t know is that kind of what the A stands for in you plan or…

Pat: Yeah totally.

Steve: Okay.

Pat: It’s just getting to– because like you said when you started sharing your stories your audience got to know you better and trust you better. When you learn about the stories of your target audience, or the people who are going to be using the product you get to understand them better. You get to really feel for them and trust them and what they’re saying because it gets placed in this context. Also in just as a side note like using your own stories in your marketing is great, I mean Will It Fly is full of stories, I am pretty sure you’ve…

Steve: It starts with a story right?

Pat: Yeah it starts with a story about my son who on his third birthday I taught him how to fold the paper aero plane, which was like the coolest thing for me when I was a child, so I wanted to pass sit on to him. I folded just a plain dark design, I flew it across the room, and he was just like, Oh my God amazed. Like any three year old boy who saw his dad do something cool, he wants to do the same thing, so he like immediately grabbed a piece of paper, and even before I could give him instructions he kind of like started folding, like going through the emotions, but obviously it just ended up becoming this, it looked like a boat really more than a plane.

He threw it and it didn’t fly anywhere of course, and he flew it again and he ended up saying I hate paper aero planes. I was like no like you’ve got to, you need somebody to teach you these things and these principles first. It needs wings and all these things. I think that’s how a lot of people build their businesses, it’s like they see other people doing something and its cool, and they try to emulate it, and then the first moment it goes bad or doesn’t work they just give up.

Steve: Yeah totally.

Pat: You have to get that instruction, you have to go through a process of folding one, and then folding the other an then actually having that plane before you can fly and make it work. Now you know ever since I taught [inaudible 00:45:40] how to do it properly, he’s has been coming up with all these new designs and trying things out. He understands now that failure is a part of the process, and that’s what entrepreneurship is, but also getting advice and learning from somebody who’s done it before is also really important too.

Steve: At this point we’ve talked about validating the idea, the value preposition, the mission design. What is the next step after we validate it?

Pat: Well if you validate it, well then it’s like…

Steve: Just start selling.

Pat: All the systems go. I mean not just start selling, but then you building it out and actually work with those people to turn it into something that they would use and your other targeted customers would use. I mean a lot of people get the validation part right, but then they just build and then they start putting in their own things into it and no. You have this amazing resource from your existing customers who have paid you money already, talk to them.

They’re going to want to know and keep up with what you’re up to, so keep in constant contact with them, creating a small private facebook group for those people so they can stay connected to you and what you’re up to, providing news updates. It’s just like on kickstarter right? It’s the exact same thing as kickstarter and actually kickstarter is a great platform for validating although it comes with these all other things like fulfillment of pledge things, and actually going too big at first which is why I don’t recommend it. Like kickstarter, after the– I don’t know if you’ve ever backed anything on kick starter Steve?

Steve: I have yeah.

Pat: You’re paying for something essential that isn’t built yet, and over the course of the period when the contest ends and you get that item, they are giving you updates on the manufacturing process, they’re giving you insights, and at the same time they’re also building that relationship with you in addition to just keeping you filled in on when that thing is going to come and arrive at your doorstep.

You can do the same thing with your audience too, and by the time you get to that point you’ve build up this thing, you know the systems, you’ve created it in a way that your target audience wants, and it just becomes this thing that you can scale. Scaling is different for all types of businesses obviously, from consultation work and private stuff to just digital mass production, but that’s where you go from there.

Steve: It seems like all these principles that you’ve talked about apply to pretty much anything regardless of what type of product, whether it’s a service or product or a physical product, right yeah.

Pat: Totally, like if you’re doing a service you would actually be doing that service for somebody and seeing if A) they would want it. If they don’t want it, then you don’t have to worry about everything else, but if they do then you go and you do it and you work with them to see if it was done well and what could be done better. Again you’re doing it with just a few people before you do it with masses.

Steve: Yeah that’s great Pat. We’ve been chatting for quite a while already, surprising actually.

Pat: Yeah, I can’t believe it.

Steve: Yeah, so when does the book come out, where can you get it, and if anyone has any questions for you where can they reach you?

Pat: Thanks Steve well the book comes out February 1st, which I am like super stoked about it and very nervous. This book was really hard for me to do actually, because I’ve been blogging for almost seven years now, and I can write a 5000 word blog post in half a day or a day, easy, but this book was just a challenge for me. I think it was a challenge because I wanted it to be great.

I am very happy with what I’ve come up with what I came up with, and so willitflybook.com, you can check out the book. It comes out February 1st. You can preorder it before then, or order it of course afterwards. Willitflybook.com, and you can connect with me on Twitter @patflynn if you have any quick questions about it, and I’d love to answer and I am here for you guys.

Steve: Yeah and I am giving away recaps to Stanford fans only, so if you’re a [inaudible 00:49:08] unfortunately the offer doesn’t apply.

Pat: I don’t, oh man.

Steve: I just came up with that by the way.

Pat: That good, oh man that’s funny.

Steve: I’m just curious before we go why a book, because it’s a tremendous amount of work. Why a book and not a series of YouTube videos or something like that?

Pat: Totally great thought. The book I feel a lot of people read books right, and a lot of people feel like the book is the start of a lot of things for them, and this book I wanted it to be different than other books. It does have a lot of actionable information; it does have a lot of exercises. One of my pet uses of books are books that tell you why and what, but not necessarily how.

This book does tell you how and I feel like it’s a low easy non threatening sort of a starting point for people. That’s why I wanted it to be a book, and there is of course other things coming and courses and other things coming out later, but the book I felt like was a low buried entry into entrepreneurship, and if I could be there to help hold people’s hands along the way, then it’s going to maximize my impact and maximize the amount of people who actually follow through.

Steve: Cool, sounds like a good reason, well hey thanks Pat for coming on the show, really appreciate you coming on.

Pat: Thanks for having me.

Steve: All right, take care.

Well there you have it, and I hope you got a lot out of this episode. Most of the people who fail at their business neglect to validate their niches before investing significant time and money into a venture. By experimenting and selling early and often, you will eventually find out what works, so pick up Pat’s book which will be available next week.

For more information about this episode go to mywifequitherjob.com/episode101. And once again I want to thank Famebit for sponsoring this episode. As I mentioned earlier Famebit is the best place to find Youtubers, Instagramers and other influencers to promote your products online, and it works. One of my podcast guests Emanuel Elayae used famebit.com to make over $65,000 in four months with YouTube influencer marketing, and it costs as low as 50 bucks. And the best part is if you use coupon code mywife@famebit.com you will automatically get $25 off. So go to famebit.com right now and get famous Youtubers to promote your products.

And finally if you are 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 100K in profit in our first year of business. Go to mywifequitherjob.com, sign up right there on the front page, and I’ll send you the mini course right away. Thanks for listening.

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

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