Podcast appearances and mentions of joe let

Play Episode Listen Later Jul 29, 2021 66:42

Decluttering Tips For Hoarders with Tracy McCubbin was my guest recently on my podcast, "The Joe Costello Show". She is a decluttering expert and she shared how she got started, what her business does and some tidbits that can really help you get started. Tracy's company has so many service to help people declutter their home, office, home office, etc. She also has other services such as closet audits, garage organization, moving services, senior downsizing, estate decluttering. Please go to https://dclutterfly.com/ and check out how she might be able to help. Tracy has also written a book called "Making Space, Clutter Free: The Last Book on Decluttering You'll Ever Need" which you can buy at Amazon or support this cool book website called BookShop.org. Here's the link to the book: Making Space, Clutter Free: The Last Book on Decluttering You'll Ever Need Also check out OneKidOneWorld which Tracy plays an important role in as the Co-Executive Director Thanks for listening! Joe Tracy McCubbin CEO & Owner of dClutterfly Website: https://dClutterfly.com Instagram: https://www.instagram.com/dclutterfly Instagram: https://www.instagram.com/tracy_mccubbin Facebook: https://www.facebook.com/thisistracymccubbin Private FB Group: https://www.facebook.com/groups/2036212949941199 LinkedIn: https://www.linkedin.com/in/tracy-mccubbin-566829b2/ One Kid One World: https://www.onekidoneworld.org/ Email: info@dClutterfly.com Podcast Music By: Andy Galore, Album: "Out and About", Song: "Chicken & Scotch" 2014 Andy's Links: http://andygalore.com/ https://www.facebook.com/andygalorebass If you enjoy the podcast, would you please consider leaving a short review on Apple Podcasts/iTunes? It takes less than 60 seconds, and it really makes a difference in helping to convince hard-to-get guests. For show notes and past guests, please visit: https://joecostelloglobal.libsyn.com Subscribe, Rate & Review: I would love if you could subscribe to the podcast and leave an honest rating & review. This will encourage other people to listen and allow us to grow as a community. The bigger we get as a community, the bigger the impact we can have on the world. Sign up for Joe's email newsletter at: https://joecostelloglobal.com/#signup For transcripts of episodes, go to: https://joecostelloglobal.lybsyn.com Follow Joe: https://linktr.ee/joecostello Transcript Joe: Tracy, welcome. I'm glad to have you on the podcast. I've been waiting to have you because clutter is is just the worst thing in the world. So I'm excited to talk to you. So welcome to the show. Tracy: Thanks, Joe. I'm super excited to be here, and it's always interesting to meet people sort of who have different expertise and different focuses like everybody have in common everybody. Joe: Yup, Tracy: So Joe: Yup. Tracy: It it's just I love talking to different people about kind of how they can manage their clutter, get ahead of their clutter and live their best life. Joe: Well, I'm excited and I, I follow a pretty strict format in the sense that I really like to know the person and I think my audience likes to know the person. And I think that's how they connect with you. I just don't want the end of this podcast to come and say other this really great woman that was on who understands how to do clutter. I want to know how you got into this and more about you. So can you kind of give us the background leading up to when you started to clarify? Tracy: Yeah, it's a very interesting subject, I like to say that I'm one of those people who all I had a bunch of jobs that turned out to not be my passion, but everything I did along the way brought me here. So I was a personal assistant for a very long time to two different people. I was a bookkeeper for small businesses. I was an administrative assistant to lawyers. I had all these various I took care of my grandmother, helped her manage her finances. So I had all these various kind of office centric jobs. And then when I was working for one of the people I was a personal assistant for, he was a television director. So when he had downtime, friends of his or he for, say, the friends of his oh, my assistant, she can handle anything. So I started helping other people. Somebody's grandmother had passed away and they need to clean up the house. They had a big accounting mess and all of a sudden people started to tell other people and I would get phone calls. And at first I wasn't charging. And then I was charging a little bit. And a friend of mine said, I think you have a business. And I was like, no, I'm just helping people. This is. And he's like, no, that's what a business is. And so I I'm like, all right, let me just see. And I made a little website and I put the word out. And that's fourteen years later at eight employees later and thousands of jobs and everything I did in the past, from acting in commercials to doing bookkeeping to taking care of my grandmother, it all led me to creating this business. And then the big piece of the puzzle, which I didn't even realize when I first started the business and I had to have a client of mine point out I'm the child of a hoarder. Tracy: So my dad is an extreme hoarder. And I have lived my whole life watching him struggle with his relationship to his stuff. So very acutely aware of our relationship to stuff is emotional and but I'm not kidding. It was like ten years into my business when this client of mine, who is a psychiatrist was like, that's so interesting. Have you ever thought of the connection? I was like, what? No, what do you mean? And then you're like, oh. So watching what my father went through and still continues to go through gave me so much empathy to people's struggle and how for so many people there's all this shame around it. I'm messy and I'm disorganized. I'm a bad housekeeper. And my goal and what I realized through clients of my dad is that that's not the case, that there is this emotional attachment. And if you're not aware of that emotional attachment, you're going to keep repeating the same mistake. So it's getting to the root of why you're hanging on to all the stuff and changing your relationship so you can have the home you want to live. So I'm a I'm late to this business. I opened this business in my forties, so I'm also a really good poster child for like if you have something you want to do, don't get stuck in the age. Don't think like I and get this done. My success is all coming my fifty. So I'm um like if you have a passion follow. It doesn't matter where you are in your life. Joe: Yes, and that's what's great, because my audience, at least what I think is my audience is really entrepreneurs like that's most of what I like, because that's where I come from. My heart is in that. So I like that. You said all of what you just said. I encourage people out there that have an idea that having made the commitment to go forward with it. So that was awesome. And I read the part about I didn't know what family, what person it was in your family, but I read that you had a family member who was a hoarder. So I'm glad you brought that up. But I wanted to know, like, what your trajectory was when you started. Like, did you what Tracy: Oh, Joe: Did you want Tracy: This is Joe: To do? Like. Tracy: Oh, this is this is even better if you if this is your conversation, I call myself an accidental entrepreneur, right. That I, I just I had no idea what I was doing. I was like, oh, let me just start a business. That'll be fine. Oh, let me just charge X an hour. Like I just made up some number which was clearly too low. And then I think about a year into my business, I read a book called The MF. That Joe: Yeah, Tracy: Right. Am Joe: Oh, Tracy: I getting Joe: Yeah, Tracy: The name of that. Joe: Yeah, Tracy: Yeah. Joe: It's a great Tracy: And Joe: Book. Tracy: I and I did the math and I was like, wow, I'm working for four dollars an hour. When I when I realized how much time I was putting in and what I was charging and another like I like when I say I had no business, I'd always work for other people, I'd always put things together. But I didn't I didn't go in with this. I didn't have a business plan. And I learned so much along the way. And every misstep was a giant step forward. And the biggest change for me, too, was when somebody said to me, you know, you're not charging for your time, you're charging for your expertise. Joe: Mm hmm. Tracy: And that just switched anything because I had a lifetime of dealing with someone and their staffs. And that just turned the light bulb on like, oh, right. It doesn't matter that this business has only been open for a year. I have 40 some years of doing this. And when I thought that and then I started to read more and realize and I hired a business coach and I started to really shift things around, that's when the business took off. That's when I was like, oh, stepped into the role of being an entrepreneur. And then I started to hire employees. And then I became a boss. Right. Which is a whole other thing. Joe: Yes, Tracy: And how Joe: It Tracy: Do Joe: Is. Tracy: You take care? How do you take care of your employees and how do you serve your clients and how do you not work twenty four hours a day. And so I love being an entrepreneur, but it was it wasn't an easy journey. It's not like, oh, just open your own business. I would do it no other way. And Joe: Mm Tracy: I Joe: Hmm. Tracy: Had to stay really clear about because I fall a bit into the imposter syndrome, like who am I to open a business and who am I to do this? And if they want to know you've worked for work since I was 13. I've had job like I know how to do it. So I had to take all my past experiences and filter them in and realize that even though the path didn't look like a linear line, I didn't get an MBA, I didn't get venture capital. I didn't I have just as much experience, maybe more. So I always tell people, you know, in some ways you're not reinventing the wheel. A lot of people have done this. So gather information, listen to podcasts, read books. I'm a business coach if you need it. Like you can do it. If you have a great idea that know what it's done, you follow it through, follow it through. So Joe: So. Tracy: I feel I feel really I love it. I love running my own business. I love it. It's hard. Joe: Yes, Tracy: It's Joe: It is, Tracy: Hard, Joe: Yeah. Tracy: You know. And some days I really I, I, I just got a text from a client. We helped them with this fundraiser that they were doing and it was a very emotional cause. And my team went and we kind of helped them organize all their stuff for it. And it was just a very grateful text. And when I get those texts, it's like, oh yeah, this is why we do this. This Joe: Yeah. Tracy: Is why we do this. So, yeah, I have a very funny like I it was not a straight line, but all roads have led me here. Joe: So I'm going to just that's where you have to bear with me for a moment, because I want to know more about Tracy, so I want to Tracy: Ok. Joe: Know, like, where you and the kid like like what Tracy: Yeah, Joe: Did you do? Like Tracy: That's Joe: Like Tracy: The Joe: So Tracy: Idea. Joe: I want you to go back a little further. So, Tracy: Ok, Joe: Like, Tracy: Yes, Joe: Go back Tracy: Absolutely. Joe: As far as you want. But I just want to know I want I think it's important because where I am today, everything. And you are saying all the right things for all of the listeners that will listen to this is that everything that you've done in the past just adds to who you've become now? Right. And it'll continue that way. And so many people lose sight of that. And at one point I did I was like, oh, I wasted so much time. And then I look back and I go, wait, that helped. And that helped. And that helped. And I learned a lesson there. And so what did you like? What was what did you want to do? Tracy: Yeah, you know, it's funny, I I was a neat child, I wasn't crazy, crazy, crazy organized, but I had a pretty between my dad being a hoarder and my parents getting divorced. I had a pretty California in the 70s. Like I had a kind of chaotic childhood. There was everywhere. Parenting was being reinvented. School was being we lived in a van for a year, traveled through Joe: If. Tracy: Europe. So I definitely like to make order out of chaos. I definitely like to know, OK, this is my space and I can live in it this way. And I also grew up very close to both of my grandmothers and my grandfather, but they came from the Midwest and Fresno and we're farm farmers. They came from and one of my grandmothers was an immigrant from Scotland and they all lived through the Depression. So my generational experience, the sort of generational trauma of living through the Depression, living through World War Two, you saved every yogurt container. You saved Joe: Mm hmm. Tracy: Every rubberband, learning how my ground both my grandmothers were. You don't put it down, you put it away and you fix. And I learned how to sew and I learned how to change it. I can change the oil in my car and I can change a tire. And I had all these really practical things. And also for me, I think one of the big lessons that really served me in opening my own business when I started working, I started babysitting when I was 12, 13, and I started making my own money and I was like, oh, I can buy that blue, shiny satin hang tan jacket that I really want. No one can tell me, like I learned, especially as a young woman, that money equated freedom. Right. That this money that I made also could make mistakes with it, rack up some credit card debt, like I could do that. But if I work and money comes and I have power over this and my grandmother and I, we bought some stocks and she kind of helped me figure that out. And so it was a really that was one of those life lessons that they don't teach you in school, that this is making my own money. I want to take a trip, then I can do it. And that was and I'm a worker bee hardwired that way. I like to work. So I think it was I think a lot of my childhood was trying to make order out of chaos and having control and having power, you know, and I was very blessed. Like I got to I went to UC Santa Barbara. I went to a great college. I had a lot of opportunities. My family was very pro education. So I traveled the world. So again, it's all these things that at the time like, I don't know, I'm going to live in Italy for a year to study art. The smartest thing. Yeah, it turns out it was Joe: Oh, that's awesome. Tracy: You Joe: When Tracy: Know, Joe: Was Tracy: Turns Joe: That? Tracy: Out I did that my junior year of college, Joe: Wow, Tracy: So. Joe: That was that's awesome. And Tracy: Yeah. Joe: Was there Tracy: So. Joe: Were you was there something that you were wanting to become like? Did you aspire to be or Tracy: You know, Joe: Was? Tracy: Yeah, it was funny, I never I for a while, I thought I wanted to be an actress, and so I took acting classes and I did that. I had to moderate, moderate success, but I didn't like the business side of it. And then I was so for me, it was a lot of figuring out what I didn't want to do. Joe: Uh huh. Tracy: Like I was like, oh, you know, and because I'm a hard worker and I'm industrious, kind of whatever job I had before, like, we'll promote you to manager, we'll make it up. And it was a very much a series of like, oh, I don't want to do this. I don't want to spend the day doing this. And when this business started, it was the first thing that I was like, I want to do this every day, like the rhythm of it, the helping the clients, the feeling of satisfaction when it was done. It was the first I mean, I liked other things that I did, but Joe: Mm Tracy: It Joe: Hmm. Tracy: Wasn't I was like, oh, I want to do this all day, every day. Like, I you know, technically the joke is I would do it for free. Well, there was like a year I did do it for free. It's literally like that is a brutal I'll tell anybody, the entrepreneurs, people starting a business, track your hours, track what you're getting paid, do that math because it'll gut punch you and it'll make you rethink everything. Like Joe: Goup. Tracy: When you realize, oh, I'm working for four dollars an hour. No, no, no, no, no. That's an important lesson for everybody and it makes you really rethink things. So it really wasn't until this until this business started that I realized my purpose. Joe: Right, and if I remember reading correctly, it came out of you being this service assistant to this, right? And then. Tracy: Director Yahya. Joe: Yeah, and then everybody you were helping, everybody saw all the stuff you were doing and it just went from there and then you realized. Tracy: And I'd always been, you know, it always been of service and my grandmother was there, like my grandmother was the lady at the church who kind of did everybody's books and she was a secretary at the church. And we were forever if somebody was sick, I spent a lot of time with her, we would drive over to somebody's house and we'd take them to the post office. So for me, helping people in sort of an admin sense was just a being of service. That's just what we did. We were a nice person. You help your friends. So I never thought about monetizing it. I never thought that it was a service that people desperately needed desperately. I was like, Joe: Right. Tracy: Well, of course, you know how to move yourself. You just pack your boxes. Now, people don't know how to do that. So when I realized that there were so many people that either didn't have the time or the inclination and there was a way to offer the service, get paid, help them know that was the perfect marriage, that was like, oh, this is a something that's desperately needed. And I feel like for kind of where we are in the world, it's interesting. But I think as we get further away from making things ourselves, knowing how to sew, knowing how to cook, that there are more and more people that I mean, they can do things for themselves. They just it's I Joe: I know. Tracy: You know, it's just it's just really interesting. I'm a little worried and I have young nieces and nephews, and so I'm very worried about what they can do. And so I it's just it's interesting that this has become very desperately needed service. Joe: Yeah, OK, so the name of the business is dclutterfly, right, Tracy: Correct, yep, Joe: That Tracy: DClut Joe: It's Tracy: ter Joe: A Tracy: fly. Joe: Mouthful, the cutter Tracy: Oh, trust Joe: Fly. Tracy: Me. Oh, and trust me, here's another thing I'll say to aspiring entrepreneurs. When you name your business, say it out loud all day. So it would be easy to come off the time and then try and spell the website, because that's something else I didn't think about. So when I give people the email, they there's D.. C. There's no Joe: Yeah. Tracy: Easy people leave it up. So do a little bit of market research. Go. Joe: Yeah, Tracy: Can Joe: That Tracy: I, can Joe: It Tracy: I say this. Yeah. Joe: It's so funny, it's all those Tracy: Yeah. Joe: Little things you learn as you're doing it, you print your business cards and people, and especially you get older clients that want the help with some of these services that you have. And the prince too small and you're just like, oh, my God. Tracy: I went I went through that I rebranded the company about two, three years ago and the designers did a beautiful job and I was like, the font is too small and they're like white. And I'm like, oh, I'm like they're like we have like less tags, bigger font. Joe: Yes. Tracy: Like the bulk of my clients are over 50, like make it big. Joe: Right, right. That's awesome. Tracy: I, I just about a year ago I bought my first about a truck, a 17 foot truck because we're so busy and I got it wrapped and it's like my traveling billboard and I was like no bigger, bigger, Joe: Mm Tracy: Bigger Joe: Hmm. Tracy: Phone, no bigger. And the guy that the drug had the rapping place, like, are you sure? I'm like, bigger, bigger, Joe: That's Tracy: Bigger. Joe: Awesome. That's perfect. OK, so your your I know you have clients all over, but you're you're based out of California. Tracy: Yeah, and based in Los Angeles pre pandemic, we were I was in New York a lot traveling a lot post pandemic were starting to travel again. Joe: Mm hmm. Tracy: I'll go anywhere. But right now it's been the book is Los Angeles to New York. Joe: Ok, perfect. So I want to go through the services quick, because I want everyone Tracy: Yeah. Joe: To sort of understand. And so I want to start with the home, the home de cluttering and it also on on the website, his office as well. And that's that's an important piece for me. And I think the audience, because if there are entrepreneurs out there, like my desk was clean a couple of weeks ago and now I'm in the middle of doing a bunch of videos and I have research materials and now it's starting to become something that I can't look at. So. So Tracy: Yep. Joe: Let's start with that. The home deck fluttering, plus the office stuff. And and just a brief explanation of each so that at least we can get an idea Tracy: Yes, Joe: Of what that means. Tracy: That's great. Go home and office cluttering is if your space that you live in or work in is unmanageable. I always tell people the really good litmus test is if you can't tidy up a room and make it presentable where you have somebody else walk in in 20 minutes or less, you have too much stuff. So that services we come in, we help people sort through it. We help people figure out what they need to keep, what they need to let go of, and then creating systems for where it goes. So in an office, where do you keep your printer? Is it near the printer where you keep your paper? How much paper do you need to print out? Can we move you to digital? And if we move you to digital, how do you organize it? How do you find that is a really important thing in offices, in the whole home, but really in your offices, where do you put the things you need to keep so that you can access them when you need them, that you can go and buy? And don't tell me. I know there's people out there that are saying I know where everything is in my office. There's giant piles on their desk. I'm like, that doesn't count. You Joe: Right. Tracy: Can't point to a giant pile and say, oh, I know what's in there. First of all, you don't I'm talking about you won't be able to find it like, Joe: Right. Tracy: You know, creating filing systems or digital filing systems. And it's and again, the really underlying message is this isn't about creating a home that you can put on Instagram or Pinterest. You can if you want. It's about creating a space that works for you. And now if you are working from home pandemic, from home schooling, from home, all you got to make your space work. You just have to make your space work. They've done so many studies, they scientists about the effects of clutter and stress. It just this is all about that. It raises your cortisol so puts you in a fight or flight your brain. I'm sure you've probably talked about this on here, but decision fatigue, where you make so many decisions, your brain just shuts down. Joe: Mm hmm. Tracy: Will every piece of clutter in your house is a decision? Do I need it? Do I not need it? Where does it live? So the physical and mental effects of clutter are very real, very, very, very real. So my purpose isn't, again, to create I'm not saying be a minimalist. I'm not a minimalist. You know, it works for you. But is your home is your office working for you? Is it working for you? Chances are for a lot of people it's not. Joe: Right. Tracy: And that's OK. You may not we don't know what we don't know. Right. So if it's not working and if you have an issue with that or if if it's tough for you, you know, it it's like I always say, if you didn't know how to play the violin, you have beat yourself up like I wasn't born knowing how to play the violin. You might not have been born organized. You might have spatial issues. You might have added. There may be a bunch of things. So let's not beat yourself up for it. Let's educate and get it working for you. Joe: Yeah, you hit it on the head because cluttered just causes me angst, like I hate my garage, I hate walking in my garage, and so I understand it, Tracy: Can you even walk in your garage because only 20. Joe: But it's lucky I can. There's so many of our neighbors that have their cars in their driveway, in the hot sun here in Arizona because they have so much stuff in their garage. And that was like priority number one. My Tracy: Yeah. Joe: Car has to go in the garage. It's one hundred Tracy: Only, Joe: And thirteen outlets like. Tracy: Yeah, only twenty five percent of Americans can park their cars in their garage. Joe: Really? Tracy: Seventy five percent of Americans who have garages cannot park their cars Joe: That's Tracy: That. Joe: Amazing. Tracy: I know, I always say I always say we put our forty thousand fifty thousand dollar cars on the street where we fill our garage with trash. Joe: That's you know what, and you might I don't want to put you on the spot, but I can't imagine what the statistic is of people that have storage units and how many times they visit that unit a year. I just Tracy: It's Joe: I, I could Tracy: It's Joe: Never bring Tracy: A. Joe: Myself to have one. Tracy: This is where I get on my soapbox, this is the thing I get on my cell phone calls Joe: I Tracy: About Joe: Knew this was Tracy: And Joe: Going to kick Tracy: I Joe: Something Tracy: Yeah, Joe: Off here. Tracy: It's a billion dollar industry, a billion dollars. I have been in no exaggeration, hundreds of storage units, hundreds. I have had clients who because I make them do it, I've done the math of what they've spent on that storage unit. Twenty thousand thirty thousand a hundred thousand dollars. I have never once and I say it is no exaggeration, I have never once been in a storage unit or what's in there is worth more than what they paid to store it. It is a colossal waste of money. You will never go there if you have something in storage that you can't access. Why are you storing it? Joe: That's. Tracy: There is it is. I like till I'm blue in the face, I'm like, get rid of it, get rid of it, get rid. I have had clients crumble to their knees when they open it up and see what they've been saving. There's no there's like one or two slight somebody sometimes doing a remodel. There's a few Joe: Mm hmm. Tracy: Where I'm like, oh no, no, maybe. Joe: Yeah, Tracy: Let's Joe: It's. Tracy: See if we can find another way. It is, it is just take money and just burn it because Joe: Correct. Tracy: It is such a waste of money. Joe: Amen. I agree with Tracy: Yeah. Joe: You. I just it's so funny, and I just figured I'd throw that out because I, Tracy: Yeah, Joe: I knew that was going to trigger. Tracy: Yeah, I know, and it's people don't go there and they don't it's just really like if I can convince anything to anybody, just don't have it, don't Joe: Yeah, Tracy: Have it, don't Joe: Yeah. Tracy: Get it. Because once you get it, you're never going to empty. Joe: Ok, real quick on the on the topic of the home and office right now in your business, how much is home and how much is it? When I say office, I'm not talking about Home Office because I'm I would think because of covid home offices are on the rise because so many. Right. So Tracy: Yeah. Joe: But but do you actually go to commercial office spaces to help CEOs Tracy: I do, Joe: And. Tracy: Yeah, yeah, yeah, I mean that in covid has just worn Joe: Hmm. Tracy: Down, Joe: Yep. Tracy: We haven't done any, but we have definitely we definitely will go in like work with big offices, like how do people use their space? How do people do that? I'm going to be really interesting to see if that. Comes back after covid, I Joe: Mm Tracy: Think Joe: Hmm. Tracy: We're going to get a lot of those calls, the way the business sort of shakes out now, I mean, right now we've just been trying to get everybody off. Does that how that was that was like how do you work from home? How do you go from home? That's been a big one, but it's probably it's probably a third of the business is senior downsizing. A third of the businesses are moving services and a third of the business is declaring Joe: Mm hmm. Tracy: Home declaring and then probably 20 percent that is office. I'm excited. I also think that when we go back, how offices work are going to change because everybody's like open floor plan. And now it's like, well, maybe not so much. So I'll be curious to see how that goes. I've also interestingly, too, I've had a couple calls lately about helping already offices, office companies that are moving small, 10 people, companies that are moving and setting up the office spaces before people even get in there. So that's a that's a thing that's starting to happen. And I think it's really how to keep people safe and covid and that kind of stuff. So that's that's always interesting to me. Joe: Perfect. OK, so let's go down the list here, so the next one that I have is closet audit. And Tracy: That's a good one. Joe: I Tracy: Yep. Joe: Know. Tracy: So, yeah, I have a couple of the people who work for me are like they can make it look like the Carrie Bradshaw perfect closet. So we come in, we help you figure out what you wear, what you don't wear. Get rid of the stuff that you don't wear. We donate everything. And then it's organizing like the like color coordinated matching hangers. Like it's really. And the thing first of all, it looks beautiful, but also your clothes are an armor that you go out into the world with. And if you have if you have a business where you have to meet with clients or you have to go in and pitch your services to another company, if you start your day off digging through the laundry basket to put something on, you're starting at a deficit. You're already starting stressed. I wear the same thing to work every day. I have 10 shirts from the same company, ten different colors. I have four pairs of jeans. I have my nice Nike shoes that are comfortable, but they're fashionable. I don't want to think about it. Joe: Yeah. Tracy: I want to get dressed. I wear a nice belt, I look presentable, but I look like I can roll my sleeves up. I figured out what works and I don't think about it. Joe: Mm Tracy: I Joe: Hmm. Tracy: Just don't think about it. And I start my day ready to go. It's not my morning isn't about like, oh, what am I going to wear? What am I. So people have to understand, if your closet is disorganized, it's not serving you right. You're already starting the day. Right? Where are my keys? I packed my lunch and what happens and what people don't understand is, OK, so you're taking your clothes out a laundry basket, you can't find your keys. You're running late. Oh, you didn't make yourself breakfast. So you're going to go through the drive thru. So you're going to eat Egg McMuffin and coffee like you've already set your day up so that you're not at your peak. Joe: He. Tracy: Right. You know, if you knew if your clothes were organized, you could get dressed, then you could make yourself that delicious smoothie that's healthy. You could start your day relaxed. And that's my whole I get out into the world ready to go, not frazzled. And especially if you've got kids like Model Man, those parents with the Zoom schooling like Joe: Oh, Tracy: To Joe: I know, Tracy: Have that, you Joe: Yeah. Tracy: Know, to have that extra to anywhere we can grab time. That's what the goal is. So if your closet's organized, you've just gained yourself fifteen minutes, right? Oh, those are my jeans are those are my shirts are great. Off Joe: Yeah, Tracy: We go. Joe: Yeah. Tracy: So that's a really closet. We love deposits. We love it. We love it. We love it. And we do the really big fancy lady those. But we love closet. Joe: Let me before we get off the closet audit subject are what you do with closets, do you ever get in a situation where you go and and they not only want you to organize, but they want you to actually help design a more efficient closet, and then you Tracy: Yeah, Joe: Have to bring in Tracy: Yeah. Joe: Like a company that does all of the shelving and Tracy: Yep, Joe: Ok. Tracy: Yep, it's it's great, we've I've really started in probably about in the last three or four years of service, I'll consult on construction. So clients that I've worked with for a long time are building new homes or remodeling their homes. So I'll come in in the design phase and meet with the architect and the contractor and say, OK, look, this is how many pairs of shoes they have. This is how long this is. So I love doing Joe: Oh, Tracy: That. Joe: Cool. Tracy: It's I love it. It's a constant fight because architects do not believe people have as much stuff as they have Joe: Mm hmm. Tracy: Contractors don't listen to forever, like the person that's like there's no broom closet, you know, and they're like, oh, you know, Joe: Yep, yep. Tracy: There's no broom closet. They're like, what do you need? A broom closet for it? Like, we need a broom closet. Joe: Right, Tracy: We need a real good bit. Joe: Right. Tracy: So that's been really fun. I have been pitching it. I'm working on my second book, but I have been pitching for a little while. I want to do a book, so I'll probably be down the road a bit. But I want to do a book between myself, an architect, an interior designer and a cabinet worker Joe: Mm hmm. Tracy: About how to remodel or build houses in the most efficient way. So that's Joe: Oh, Tracy: Super exciting. Joe: Yeah, Tracy: Yeah, it's super exciting. Joe: All right, cool. We've already touched upon this a little bit, but garage organizations, brutal. Tracy: Our favorite is Joe: Yeah. Tracy: Brutal, it's brutal. We we do it, we got we have packages one, two, three days a team goes in there. I'm at the point now where I don't do any more garages. Joe: Mm Tracy: I Joe: Hmm. Tracy: Never need to be in a sweaty garage Joe: Yeah, Tracy: Again. Joe: Yeah. Tracy: But my team's really good at it. It's a big and post covid this this one's been really people lots of people have been called in. They're like, we have so much toilet paper, we have so much canned goods. And that was one in terms of this is actually a great entrepreneurial point. This was one of the services that I realized. So one of the things I'm constantly balancing is how do I work on my business and in my business? Joe: Mm hmm. Tracy: In my business is a cult of personality. People want me. People will wait for me, people will pay for me. But I can only work so many hours so I couldn't grow the business if I'm doing it. So I had to find some of the services closets. I hired two people who are amazing at it. Garages are another way. It was a service that I could offer where people got the Tracy McCubbin experience, but I don't have to do it. So it Joe: So. Tracy: Was a way to go vertical. And that was a big learning like, oh right. This is something I can hand off, you know, get my team up to speed on it. And it's a good moneymaker for us and Joe: Yeah. Tracy: It's a really good moneymaker. So it's if you are starting a business and if you especially are sort of a consulting service, what are the services that somebody else can do? But your clients still feel like they're getting you. Joe: Yeah, man, you hit it on the head, it's so hard, they want they want you, you are the brand and it's such a hard thing to break away from and it's such a hard thing to hand over to trust other people. Tracy: Oh, yeah, Joe: Yeah, I get it. Tracy: It's Joe: I get it Tracy: You know, everybody Joe: Now. Tracy: Knows if, Joe: Yeah. Tracy: You know, you know, it's Joe: Yeah. Tracy: Really been in there and especially we were like, oh, wait, you're like it's a six week wait. And now, like, I don't care. And Joe: Yeah, Tracy: I was like, OK. Joe: Yeah, I know it's explain the moving services. Tracy: Yeah, that's been a big that's been our biggest thing during covid because we were essential workers, that we were able to do it and so I started when I started. This is another great entrepreneurial lesson. When I started, I just oversaw the move. So I would just take over, become the client, but the movers. And then we started offering de cluttering before people moved. So all the stuff you didn't want to take with you, let's get rid of it, not pack it up. Then we would unpack and organize into the new houses. So it was like, OK, we'd oversee. We get everything to the new house, we'd unpack and organize. And then I was like, wait, why? If we're doing the de cluttering and we're putting things in piles, why don't we just start doing the packing also? So it was another service that I could add that I didn't have to do. So we now did clutter pack, oversee the move and unpack into the new house. And we deal with very complicated situations like going to two houses or we do a lot after people, but people have passed away people's parents. So the grown kids have full time jobs. They can't be here for two weeks. So we'll empty the whole house, get everything shipped across the country. And so it's been a great. So that was another way to realize to go vertical. Right. Joe: Skep. Tracy: Here's another service I can offer. It doesn't take my time. It dovetails perfectly, we're declaring. So we might as well pack anyway. Know I bought a 17 foot truck. I hired a couple of expert packers and it's been a great part of the business. So I always invite people from my own experience to like, what's the what's the thing that you're outsourcing that could you move it in the house and make it part of your vertical? Joe: Yeah, yeah, it's such a great service because there's a huge gap there, there are great moving companies and they will provide Tracy: Oh. Joe: The services to pack stuff up, but it's just merely taking what's in a cabinet and putting it in a box and taping it up. There's no rhyme or reason. So when you get to the new property, you're like, where is this and where is it back? And you're moving Tracy: Yeah. Joe: A box from that landed in a bedroom that should have been in the kitchen and all. Tracy: And Joe: It's. Tracy: Look, I work with I work with moving companies all the time, I you know, they're amazing at what they do. Those teams work so hard. I have great relationship, about three or four moving local while I have about six and Joe: Mm Tracy: Everything. Joe: Hmm. Tracy: They're fantastic. But the story I always tell when people are like, well, why should I hire you as the movers? Joe: Mm hmm. Tracy: We're a little more expensive them and not much. Ten dollars an hour. And I tell the story of a client of mine who was a musician when on tour movers packed all our stuff up, put it in storage. We unpacked for her. And it was it was I unpacked a box and there were literally like a year old half-Eaten Sarcone and a Starbucks coffee. Joe: Oh. Tracy: And she was like she was like, oh, that's where that where the movers just pack everything Joe: Like, Tracy: In sight. Right? That's what they do there Joe: Yeah, Tracy: Based on time, their speed, Joe: Yeah. Tracy: They're doing it. So for us, we go in, we did clutter, we pack in an organized manner so that everything goes in room. So in a way, I tell people it feels like a more expensive service, but we actually save you on Joe: Mm Tracy: The other Joe: Hmm. Tracy: End Joe: Yeah. Tracy: Because it's super organized. We love it. It's one of my favorite favorite and especially the sounds so strange to say, but helping people after a family member has passed away Joe: Yeah. Tracy: Is it is one of my favorite services. It's so hard. It's so emotional. It's heartbreaking when the liquidation company comes in as your child is not worth saving your coffee cups, are they? They are. It's heart breaking. So to be able to honor the legacy of a family, deal with the, you know, not not pretty part. It's just it's one of my favorite things that we can do for people, Joe: Yeah, that's Tracy: Really, Joe: Really cool. Tracy: Is. Joe: So we can talk about that next sense, you kind of moved into that and then we'll get to the last one. So let's talk about the state. Kicklighter because Tracy: Yeah. Joe: That to me is that along with the other one, which is the senior downsizing, to me, those are both very, very sensitive type situations. Like you said, there's emotions that are involved in and these two things. So how do you deal with that? Tracy: You know, for me, it's I view it as such an important service. I know how difficult it is. I've had to do it for both. My grandparents like to I just know that it really providing a service that not many people do. And we my company is very special. There are a lot of organizing companies out there, but there's not I have been in this business longer than anybody. I, I know what's valuable. I know what's not valuable. I have the sensitivity. Everyone who has worked for me. We're all a little we're all a little damaged. We all have a little trauma in our childhood. We all have something to draw on. We've all been caregivers to family members. So we have so much respect. I just feel so honored that a family would trust us for this. And we just did a family. There were four children. Three of the children were on board. The parents lived into their 90s and it was taught it was time Joe: No. Tracy: For them to go. And there were three of the children were on the same page and one was an outlier and that that one person was making it very difficult for everybody else. And so to be able to step in and a little bit be the bad guy like these, these books aren't worth anything. Yes, they are. It is. It was like, OK, well, let's get the appraiser in. And then the appraisers, they're not worth anything. Joe: Right, Tracy: So being Joe: Right. Tracy: Able to sort of draw from my Rolodex and and my experience, like I've donated I've donated thousands of sets of China. It's not worth anything. I'm Joe: Yeah. Tracy: Sorry. I'm so sorry. It doesn't mean that your holidays when you were growing up weren't important. It doesn't mean that you have the memories that you have. And if you love that China and it brings back those memories, keep it. But if you are keeping it because you think it's the family fortune, then we're going to have a different conversation. Joe: Yeah. Tracy: So I just feel so honored to be a part of it. I've met such interesting people and when this steps into the senior downsizing, when we move seniors from lifelong homes into smaller places, a lot of what we're facing when we declare in these phases is our own mortality, right? Oh, right. We're going to die someday. You know, did my life matter if I don't have the staff? Did I make an impact? So it's very I just feel very, very, very lucky that I get to be a part of this process with people. I hear amazing stories. I met amazing people. We always approach it with love and laughter and humor and respect. And it's just a nobody. Nobody does this. Nobody does this. Joe: Yeah, Tracy: I Joe: Yeah, Tracy: Know Joe: It's Tracy: I Joe: A Tracy: Get Joe: Great Tracy: Phone calls Joe: Service, Tracy: All the time. Joe: Yeah, Tracy: Yeah, Joe: It's Tracy: It's Joe: So Tracy: It's. Joe: It's tricky, it's emotional and elderly people become a little bit they don't trust people. They don't know you're in their house Tracy: They Joe: Or. Tracy: Shouldn't, Joe: No. No. Right. Tracy: They Joe: Yeah, Tracy: Shouldn't, Joe: Right. And so Tracy: They shouldn't. Joe: That's a tricky balance. Tracy: We are one of our favorite things. We just did it last week. We've said we're now we've been working for so long, we're now helping parents of clients. Right. So kind of my mom died. I went to Nashville to help. I went to New York and doing that. But what we've been doing, a lot of which I love, is moving someone into an assisted living or community. So we like it. Like we feel like we're on a TV show. We're like, OK, we've got 12 hours until we get the apartment all set up so that when they're making the move, the drive from the old and they get to the new, their artwork is hung up. Joe: Oh, Tracy: The TV's Joe: That's cool, Tracy: Working, their bed is made Joe: Yeah, yeah. Tracy: So that they walk into this new experience with familiarity. And we love it. We're like running around sweating like they would do it, do Joe: Yeah, Tracy: It. But Joe: Yeah. Tracy: Then they walk in and they see their stuff and it's home. They're not stepping into boxes everywhere. Joe: Yeah. Tracy: So this is this is it's my favorite part of what we I mean, I love everything that we do, but this one's really that's really important. Joe: That's very cool, just the way you describe. That was awesome. A couple of questions out of the way of the business. And then I want to get into the book and then I want to get into Tracy: If. Joe: The chair, the organization, and we're running out of time because this is I love this, but Tracy: It's great, Joe: It's Tracy: It's great. Joe: So if somebody wants to work with your company and in a sense you're based in California, let's just say somebody here in Arizona, I wanted to hire you to come in and clean out my crotch. How does somebody work with you that is in like how do you work in other states with people? Tracy: Yeah, we do it know we pay our rates, they just cover travel costs so we can make it sometimes. Sometimes if I'm in other cities, like in New York, I have two women who I can subcontract to sometimes all subcontract. I'll go myself and maybe bring one of my people and then subcontract to try and use the local companies that do that. I have I'm getting a pretty good network. I mean, I'm very I have very high standards, Joe: Mm hmm. Tracy: So I'm pretty I need somebody to be tried and true. But I can I can make it work. But yeah, it's just it's the same rates. It's not more it's just the travel cost. So Joe: Perfect. Tracy: A lot of times when people they're realizing like, oh, it's actually, you know, the other thing I've started to do for clients to if they if they I got a client who had to go to Florida and they just didn't have a sister, their mom passed away. They didn't have the means to pay my travel costs. So I actually helped interview local people for him. So I'll do that for my clients. Like, let me let me make the first phone calls. Let me have the conversation. And I just because I'm I'm very mama bear about my client if I want Joe: The. Tracy: To and I want to just go to anybody. Joe: Perfect. All right. And you scared me for a moment because you almost sound like you're bleeding into my my last thing about the business, which is the virtual dcluttering. So how do you handle that? Tracy: Yeah, Joe: Is that like Tracy: You Joe: A Tracy: Know, Joe: Face time walking around with an iPad? Tracy: Yeah, Joe: Show me this Tracy: Yeah, Joe: Room. Tracy: Yeah, yeah, we do. So the virtual declaring, it's been a bit of an experiment to make it work. And what I've found is that we it's it's we have to set very specific goals. So oftentimes we break it up into half an hour sessions. One session is about right. Here's what you're going to get accomplished. Here's less paperwork. You have these four boxes of paperwork. What are you going to do with them? I don't as much sit there and sort of go through things with them. It's more about helping them come up with a work plan, what the traps are going to fall into, then a period of time, and then we come back and go over it and they ask me specific questions about what they got stuck at. So it's Joe: Got. Tracy: Really almost the virtual it almost becomes a little bit more time management focused help you come up with a work plan. How can you get it accomplished? I also have I have a private Facebook group called Concreter Clever with Tracy McCubbin. It's a free Facebook. I go live pretty much every Wednesday and people can that's a really great it's a very supportive community. Everybody's read my book. We're all so sometimes people would join their and the group will help them. So that's that's great. They're like, OK, it's Joe: Yeah. Tracy: A lot of accountability this weekend I'm going to tackle. And that's what the virtual turned out to be. Two is a lot of accountability. Joe: That's great. OK, cool. OK. The book came out in 2019 called "Making Space, Clutter Free" and you can get it on. I know you can get it on Amazon. I think I saw two other Tracy: Indie Joe: There was an Tracy: Bound. Joe: Indie Tracy: I think Joe: Band Tracy: It's indie band. Joe: Of. Tracy: Yeah, I send people to either Amazon, there's a really great website called Bookshop Dawg Joe: Ok. Tracy: And it connects all the independent booksellers. So you it's a clearinghouse. And so if you don't want to give the man who just went into space more of your money, bookshop dog is a great way. It's available on Kindle. It's available ebook. It's available as an audio book. I narrated Joe: Oh, great. Tracy: A lot of. Yeah, it was great. A lot of libraries have it. They did a really big push. So your local library has it and it's great. It's great. It's doing really well. It got to be an Amazon bestseller and it's an evergreen book. It is not going out of style, Joe: That's Tracy: So. Joe: Awesome, yeah. The reviews Tracy: Yeah, Joe: Are great. Tracy: Yeah. Joe: Yeah. Tracy: So making space clutter free. The nice thing about it is we really delve into the emotional part so very deep about the emotional part. And then there's an actual work plan, how you tackle the house room by room. So people are really it's just I'm very, very happy with that. And I'm in the process of writing the second book called Make Space for Happiness. And it's a it's about why we shop, why we overshot the holes in our lives that we're trying to fill by shopping. Joe: Mm Tracy: So Joe: Hmm, Tracy: It's a little Joe: That's called. Tracy: I love it. I love it. But it's going to be a little controversial. Joe: That's Tracy: I Joe: All right. Tracy: Feel like I feel like I feel like that man who just went into space is not going to like what I have to say. But, you know, Joe: Well, I like to think about Tracy: You. Joe: The closet that I saw one thing and one thing out, right? Tracy: Yeah, Joe: That's awesome. Tracy: It's very practical, it's very you know, there's a lot of oversimplified I think that part of the feedback I always get and I know from growing up with the parent that I did it. And also some people understand a lot of times reporting is generational. So Joe: He. Tracy: I my I had two other a great uncle. It's a genetic thing. It's a it's an anxiety disorder. I think it's a bit of an addiction. I think that people who hoard get a big dopamine hit when they find something. So there's just a lot of empathy. I'm not judging. I'm not shaming. I under I understand how hard it is. And Joe: Yet. Tracy: So people really respond to that. Joe: Yeah, OK, cool. One last question, I thought it was really cool you had the Clutter Block Quiz on your website and you talk about blocks, right? Clutter blocks. Tracy: Yep, Joe: Can you real Tracy: Yep, Joe: Quickly, can you just. Tracy: Sure, and this is the crux of the book. So basically a clutter block is an emotional story that we tell ourselves about why we can't let go of what we don't want or need. So it's so there are seven of them. And I witnessed this from working with clients for so long. I was like, this is that story again. This person is that same story. This is that. So it ranges everything from my stuff keeps me stuck in the past. Sentimental things that you can't let go of, the stuff I'm avoiding, which is your paperwork, which is me. That's my clutter block. I'm not worth my good stuff. So not using your nice things, saving Joe: Mm. Tracy: My fantasy stuff for my fantasy life. Oh, I'm going to become a rock climber. I'm going to knit, I'm going to buy all that stuff for this stuck with other people's stuff. And when in the book and in a Facebook group, I talk about it when you identify you're like, oh, this is a thing. The perfect example. Last Clutter Block No.7, the stuff I keep paying for, this is storage unit. You bought this stuff and now you're paying to store it. And when you see it that way, like, oh, I'm paying to store stuff I never use. Oh, it's like it's it's illuminated, you know, Joe: Yeah. Tracy: You're like, oh, this is why it's not I'm not a bad person. I'm not a bad person. This is just, you know, we're humans. We're meaning making machines. Right. We just rains on your wedding day that all that stuff. So we make all this meaning out of the stuff that's meaningless and it gets a hold on us. So the clutter blocks are really effective for people really, really affected, like, oh, this is real. This is you know, it's not just me. It's Joe: Yeah. Tracy: Not just me. Joe: Yeah. All right, awesome. Before we move off of your business to the organization you're part of, because I think it's really important to talk about real quick. You've made incredible headway in the press, like being on the shows that you're on. And for the entrepreneurs that are listening to this, you could have just been another de cluttering company in California, right? You've said it yourself, Tracy: Amy. Joe: But you obviously you have a unique approach with all the different services you're passionate about. It's very clear by talking with you and everyone will pick up on that. When they listen to this and when they watch the YouTube video, they're going to tell that, yeah, this is this woman is really has the integrity and really loves what she does and it speaks to her. How did you get the the press and all of the stuff that has catapulted you to be the expert in this field? I mean, it's it's amazing, Tracy: Yeah, Joe: The Tracy: Yeah, Joe: Shows Tracy: Yeah, Joe: You've been on and the podcast Tracy: It's Joe: And. Tracy: Yeah, it's great. So I think the thing the first thing that I got really clear about was a couple of things. One, people need content, TV shows need content. Morning news means content, podcasts meet. Everybody needs content. So even if you have a product or a service, you know, there's a mission statement behind it. There's a reason that you're doing it. So what's the what's the story that you can tell about why your service is going to help? Or how can you tell your mission statement and not even mention your product? If you can talk about the service or what you're offering, you know, how can you talk about it without even mentioning it, then that's the content and people need it. And I'll tell you, you say yes to everything. I have been I mean, my favorite story is like morning news show in Temecula, California, like sandwiched in between the October Fest dancers and the like kid who won the spelling bee, like I said, yes to everything. And I worked on my media training. I worked on the messaging. I really understood that you have to be able to communicate it. And so I just started saying yes. And then it I got a reputation for being good and delivering and I did. I have worked with when the book came out, I did work with a publicist. I found the best person who specializes in non-fiction authors. That's the other thing about PR. If you're going to pay for PR and you sometimes you have to and you're the two things you're paying for someone's Rolodex. So who can they call? Joe: Mm hmm. Tracy: Who do they have connections to? And also you need to find the person who understands what you do. Right? So let's say you have a company where you've invented a new kind of pool cover that will save children's lives, superimportant, Joe: Mm Tracy: Needed. Joe: Hmm. Tracy: Don't hire a publicist who works with beauty products. Joe: All right. Tracy: Right. Like really honed down on what you're offering and can that person help it? And sometimes you need to sometimes you need to pay a marketing person. Sometimes you need to pay a social media manager. We can't do it all. So it's really understanding, understanding how valuable those marketing and publicity dollars are. Right. Because they can get expensive Joe: Oh, Tracy: Fast. Joe: Yeah. Mm hmm. Tracy: You can turn around. And I mean, you people are out there and starting to look at that, you know, problems and say, oh, yeah, we have a ten thousand dollar per month retainer. You're like, oh, so what are their goals? What are their goals for you? How can you help? And I always say this. You can't for those kinds of positions. It's like if you have an agent, right? I have a literary agent. Help me with my book. She takes 10 percent of my money. She does ten percent of the work. Joe: Mm Tracy: I Joe: Hmm. Tracy: Still got to do the 90 percent. So you can't dump and run against. Oh, I have a publicist. I don't have to do it. Now you are working in conjunction with them. It's your product. No one's going to care more about your business than you are. So show up. Say yes to everything. You know, like be realistic. It's like I want to be on Good Morning America. OK, well, you start following the October 1st dancers. You just say yes, you say Joe: Yeah. Tracy: Because first of all, it gives you practice, Joe: At. Tracy: It gives you practice and you hone your message. And and this is where the Internet is fantastic. Reach out to podcasts, you know, get really clear about the content you have to offer. Just cold call people, cold email people. Here's what I want to say. Like people that you listen to where the message across, it's the biggest it's the least fun. The marketing and publicity is the least one part about running a business, I think. But the most important. Joe: Yeah, well, you've done great, it's amazing Tracy: No, Joe: And Tracy: Thank you. Joe: Yeah, it's absolutely awesome. Did I miss anything about the business that you would like to talk about before we move on to the organization? Tracy: The only thing I would say is that if you're out there and if you're struggling with your relationship to your staff, don't be afraid to find help locally. Joe: Love it. Tracy: There's lots of people who are opening this business. Reach out to me. I can give you some questions to ask. So don't be afraid to ask for help. Joe: Perfect. OK, one kid, one world. Tracy: Yeah. Joe: It's super cool. I went and I looked at the website, I watched the videos and can you explain what it does? You know, what what the the mission of it is? And then Tracy: Yeah, Joe: I Tracy: Yeah, Joe: Don't want to forget Tracy: So. Joe: After you do that. I want to understand when a volunteer goes, are they just volunteering their time and you get them there and you get them back or so let's start with Tracy: Sure, Joe: The organization Tracy: Yeah, yeah, Joe: First. Tracy: Yeah, so basically, quick story, my childhood friend of mine, our dads, went to law school together. He went to Darfor and he was in the volunteering in the refugee camps and he realized that the bulk of the people in the refugee camps were women and children and that they were setting up schools and setting up little shops, like trying to get normalise as much as possible and realizing, as we all know, that education is the key. So we ate on that trip. He met a Kenyan doctor, a nurse. They told him about this girl's school in Kenya that needed a science lab. The girls couldn't take their exams because they didn't have a science lab. So he said to me, it's twenty five thousand dollars. Want to help me raise that? Let's throw a party. You know, our our peers were all starting to make money and their careers were taking off. So we threw the party, raise the money. We're like, let's just go and see. Let's just go and see what this is. And we went and it was life changing. Joe: Mm Tracy: Here Joe: Hmm. Tracy: Were these girls. And in Kenya, most of them are orphans because HIV AIDS Joe: Mm hmm. Tracy: And the desire for education. And so there's a lot of organizations that are curriculum based and this and that. And what we were like were like they don't have desks to sit in. There are no there's no room. There's not. So we started focusing on capital improvements. We built buildings, we built dorms, we put desks, we put bookshelves, we pay teachers salaries. We put nurses in the school. We just do the things that they need to stay open. We never build a school from scratch ever. We know nothing about what the community needs. We get in partnership with a community where a school has already been established. We do not affect curriculum, not for us to say Joe: Mm hmm. Tracy: We try and work in schools that have at least a 50 percent girl population because girls education is much underfunded. A big part of what we do is we supplied feminine hygiene products to our girls school because that keeps girls out of school. So we're we work mostly in Kenya and then we have branched out to Central America of Salvador, Nicaragua, Guatemala. And, you know, it's an amazing it's amazing where we started the same year I started my business. So I did both of those. I think we're up to like twenty six schools we rebuilt. And part of our fundraising model is we do volunteer trips. So we go, for instance, to Central America. We fly for a long weekend. We rebuild a suite. We don't we do the big capital improvements before we get there. And then when we're there, we demolish bathrooms and paint murals and get very, very involved. And for us, what we found is that there's sort of two types of donors. There is the vicarious donors who your friend goes and see the work that the friends do and donate that way. And then there are the people who want to see where the money goes, really make a difference. So when you go on a trip with us, you you commit to raising a certain amount of money when you come back. And we always had our goals. We never operated a deficit. We don't ever take on projects that we can't finish. We're very lucky. Both Josh and I have other businesses that we work for free. We don't Joe: Mm Tracy: Take a Joe: Hmm. Tracy: Salary. So we're like we're at like ninety percent of every dollar we raise goes back. And not that, not that. I don't think that nonprofit workers should not be paid. They absolutely should be. But we choose for us. We choose not to. And it's been it's been great. It's been one of where a couple of years ago, our first round of girls started to go to college in nursing school and technical school. And it's it's really amazing. It's a really, really, really amazing covid has been really hard. We haven't been able to go. I think next spring will be our first trip if everything goes OK. Joe: Mm hmm. Tracy: But it's been a really amazing it's been an amazing thing to be a part of. It's been an amazing thing to be a part of. Joe: Yeah, it was really cool, I watched the video and I saw where there was a person taking Polaroids and then everyone and then the Polaroid was there was a square where the Polaroid would go on the piece of paper and each student had to say, I'm going to be a doctor Tracy: Yeah. Joe: There or I'm going to be a nurse, or it was a radical. Tracy: Well, one of the funny things I get I invented invented this exercise, I was realizing, talking to the girls in Kenya, that because they didn't have parents, so many of them, they didn't they never they didn't know how to make a business phone call. They didn't know how to apply for a job because it's like the teachers are teaching them. But there's not that. So I started to do this exercise where they would be the shop owner and I'd be like another volunteer. And I like I'd be the bad like I wouldn't say, you know, I'd say my name really quiet. I wouldn't shake a hand. And you just did these roleplaying exercises of how to apply for a job. When you realize, like, you have to learn that stuff, you don't know you don't know how to call someone and say, hey, here's my name or walk into a shop or say like, I'd like a job and walk in with confidence. And so now it's like day can't wait. Every time we go, we all line Joe: And Tracy: Up Joe: That's Tracy: And they Joe: Called. Tracy: All get to pretend. And, you know, it's such a it's such an amazing just right to have the self-confidence to get go in there and do that. And so it's very practical and we love it. We love Joe: That's Tracy: It. Joe: Awesome, Tracy: We love it. We can't wait to get back. So Joe: I'm Tracy: If anybody Joe: Sure. Tracy: Out there is listening and want to come on a trip with us, one kid, one world dog, tell me you heard me on here and would love to get. Joe: Awesome. OK, I've taken your time. I've gone over, I apologized, Tracy: It's Joe: But Tracy: All right, Joe. We're Joe: This Tracy: Having Joe: Is Tracy: A great conversation. Joe: This was awesome. So let's give everyone the and I'll put it in the show notes, but the website for your business did clarify. Tracy: Yep, yep, so the website is dClutterfly.com, so a d c l u t t e r f l y dot com. See, this is why you say it Joe: Yeah. Tracy: Out before you name your business. The clutter block places on there. You can sign up for my newsletter. It's a great place to find me. I'm very active on Instagram. So Tracy_McCubbin and then if you are looking for some extra love and support, the private Facebook group, which is called "Conquer Yo

A New Book "The Common Path To Uncommon Success" by John Lee Dumas

The Art of Accomplishment

Play Episode Listen Later Mar 3, 2021 22:47

On this episode, I have the privilege to have a conversation with John Lee Dumas, the founder and podcast host of Entrepreneurs On Fire. We talked a little about his journey in creating one of the top entrepreneurial podcasts in the world and then we dove head first into his latest book "The Common Path To Uncommon Success" due on on March 23rd, 2021. It was great to learn from JLD and what he teaches with his Podcasters' Paradise community as well. He has a wealth of knowledge in the all-audio format of podcasting and it's nice to hear how it all began and what's in store for the future. Enjoy this conversation with John Lee Dumas. Joe John Lee Dumas: John Lee Dumas Founder and Host of the award-winning podcast, Entrepreneurs on Fire Website: https://www.eofire.com/ **New Book** - "The Common Path To Uncommon Success" swiy.io/eof (Free courses for Entrepreneurs) swiy.io/freepodcastcourse (Free Podcast Course) swiy.io/eofsubscribe (Subscribe to Entrepreneurs on ) Instagram: https://www.instagram.com/johnleedumas/ Facebook: https://www.facebook.com/johnleedumas1 LinkedIn: https://www.linkedin.com/in/eofire/ Twitter: https://twitter.com/johnleedumas Email: Team@EOFire.com Podcast Music By: Andy Galore, Album: "Out and About", Song: "Chicken & Scotch" 2014 Andy's Links: http://andygalore.com/ https://www.facebook.com/andygalorebass If you enjoy the podcast, would you please consider leaving a short review on Apple Podcasts/iTunes? It takes less than 60 seconds, and it really makes a difference in helping to convince hard-to-get guests. For show notes and past guests, please visit: https://joecostelloglobal.libsyn.com Subscribe, Rate & Review: I would love if you could subscribe to the podcast and leave an honest rating & review. This will encourage other people to listen and allow us to grow as a community. The bigger we get as a community, the bigger the impact we can have on the world. Sign up for Joe's email newsletter at: https://joecostelloglobal.com/#signup For transcripts of episodes, go to: https://joecostelloglobal.lybsyn.com Follow Joe: https://linktr.ee/joecostello Transcript Joe: Ok, I want to welcome my guest today, Mr. John Lee Domus, I have been so excited to have this interview with him and as you will find out, he is the king of podcasting and many other businesses. And I'm almost a year away from my anniversary starting this podcast. My first episode was April 2nd. So nothing could be more fitting than to have this amazing person on the podcast. John, welcome man. JLD: Joe, thank you for the kind of words, brother. It is much appreciated. I'm excited to be here and congrats on a year. Joe: Thank you. I had a little a little lull, we went on a twenty eight day trip and so I couldn't record during that period of time, but JLD: Now, say, Joe: I'm back JLD: If you my if you are my mentee, we would have had you all booked our brother, Joe: The. JLD: You would have done all your episodes done beforehand, they would have been scheduled to go out on cue. You never would have missed a release date. Joe: The other day, I was listening how you say you actually do all of yours in one day, right? So you're done for the week, JLD: One day, Joe: One JLD: One Joe: Day. JLD: Day, batch go all in, crush it and you know, we go on seventy five to 90 day world trips every single year. So on those, you know I'll do like a month of just batch recording so that when I'm gone it's all scheduled. Joe: We're really going to talk about the release of the book, because I'm super excited for my copy, because I preordered I listen to your interview with Hal Elrod. And so I was in the gym. I had my Apple Watch on. I was listening to the podcast and I said, oh, man, he's got a book, OK? JLD: Yeah. Joe: So I rushed home preordered, looking forward to all the other stuff and the bonuses. But if you don't mind, can I ask you some questions first and then we can the rest of the time we can talk about what the book's about and all of that other stuff. JLD: Absolutely, man value first. Joe: Beautiful. OK, so first of all, I wanted to thank you for your service. I know you are a tank commander, 13 months as a tank commander and eight years in the army. JLD: Yeah, eight years in the Army, you know, a few years as a tank commander, but specifically during my 13 month tour of duty in Iraq, I was a tank commander in charge of four tank 16 men. So that was some pretty intense time, I can tell you. Joe: Yeah, it sounds crazy, so thank you for that. It was really unique to listen to the story of how you became who you are today, and it was the whole driving in the car you ran out of podcast. It was it's just an epic story. And and the part about it for me is how did you choose when when we talk about creating a podcast and being very focused on what you or your avatar is and what your audience is. How did you end up choosing giving to the the world of entrepreneurs when in fact, at that time you were you were actually working for the math? Right. JLD: So for me, it was all about, listen, I know from reading the business books, that's on the average of the five people I spend the most time with. And I looked around at that time in my life and I said, my five socks, like they're not evil people, but they're Don Doolittle's there, Debbie Downers. They're just not trying to motivate and inspire anybody. They're just kind of on this kind of miserable trajectory life. And I said, that's my average. That's who I am, too, was on the average of these people. So how do I fix that? And that's when I discovered podcasting and listening to podcasts and surrounding myself with the right people. Even if I was just a listener, just like you at the gym listening to those earbuds, Hal and myself, we were part of your five that day, brother. Did you spend some quality time with us and your average went up as a result? Because obviously he was a fantastic individual and I try pretty hard, too. And that was happening to me as a listener of podcasts. And I said, well, how can I take you to the next level and be the host that's asking those questions like that could be cool. And I would maybe even be getting closer to these people that I admire so much by by having one on one conversations with them. And it was a fantastic journey. I was such a bad podcast. And when I started, I'm sure you can go back to episode one of yourself and be like, oh, I've I've definitely improved since then because that's what we do. Shockingly, we get a little bit better when we actually start doing the thing over and over again. Know not all of us take twenty eight days off to going on vacation, but even when you do, you consider a little bit better stuff. And that was my journey man. Now is we're talking three thousand episodes, over one hundred million listeners, over one point four million monthly listeners of the podcast and just getting started. Joe: It's incredible, and so when you first started, how did you record your interviews, because now we've obviously gotten to the world of Zoom and some people are using the video portion like I am, to also put some YouTube channel for there are some people that just won't listen to podcast. Right. So there's both audience. But what did you how did you do it when you first started? I'm just wondering what went through the process of thinking about all of this. JLD: So I recorded Episode one the exact same way I recorded Episode Three Thousand and one, you give me your Skype I.D. We jump on Skype audio only and we record the interview. That's how I've done every single episode, audio only Skype to Skype making it happen. So, listen, we're all creatures of habits. Skype works for me. I've always used that. Joe: All right, well, cool. You're not interested in doing video and then repurposing it for you to can be just strictly podcast. JLD: Focused, maybe follow Joe: Yeah, JLD: One course until success. I know what I do best Joe: Yeah. JLD: In that audio only interviews and that's how that's how I roll. Joe: Let's take me, for example, I love what you do and I, I am struggling with when I started this podcast, I didn't know what it was going to be. And I own the entertainment booking agency. I went to music school. That's my was my life. And I didn't want that to be what my podcast was about because I've been an entrepreneur since the early well, I would say the early 90s. I like being around these type of people, you being Groseclose, Tony Robbins. All right. So my my focus is definitely going in the direction of being an entrepreneur and having those people. Is it too crowded of a podcast market to be another person interviewing entrepreneurs? JLD: One hundred percent, yes, it Joe: Ok. JLD: Truly is one hundred percent. Listen, I run Podcasters Paradise, I interview the world's most successful entrepreneurs for my podcast, Entrepreneurs on Fire. But my course, my community podcast is Paradise is all about people that join every single day. They're joining from somewhere around the world with a goal of launching their podcast, to create their podcast, to launch our podcast, to grow and to monetize. And the very first thing I tell every single one of them is, why would you want to launch a week pale imitation of somebody else's podcast that's already out there in the world's when you could instead look in the mirror and say, I've lived a life, what unique skill sets do I have? What real value can I provide to the world? And then when you can answer this question, Joe, this is your podcast, which is what is the one solution that I can provide to my audience? That is the number one solution in the world. If you could answer that question about something that you do or something that you're passionate about or something that fires you up and you can create the number one solution to a real problem in this world. That podcast will win when the one thousand and thirty fourth podcasts is launched that tries to copy entrepreneurs on fire or School of greatness or achieve your goal as podcasts. That podcast will loose because you're bringing nothing new to the world. Joe: Mm hmm. JLD: You're bringing no new value to the world. And frankly, your shows and I'm not talking specifically to you, Joe, I'm talking to the listeners who are looking to create their thing. That show is not going to be as good as the other ones I mentioned. So why would people listen to that show when they only have so much time in this world? So how can you be that individual that looks in the mirror and says, I can solve one problem better than anybody else? This is what I'm going all in on, because that's what the world wants. The world wants the best solution to a real problem, not the second best, not the tenth best, the best solution to a real problem. Those people win at a very high level. It's how it's step one of this book, by the way, which I know we're gonna get into more details later. But step one, I get you there. I tell you and I teach you and I show you how to get to your big idea, not somebody else's big idea, your big idea, the idea that's deep within you that you probably never even thought about or uncovered. But it's there. Let me help you get it there, because back in twenty twelve, Joe, my big idea was a podcast that would have failed. So I went down a niche into a business podcast that would have failed to. JLD: There's hundreds of those. I went down a third niche to a business podcast interviewing entrepreneurs. There were seven currently that we're doing that. Did I want to be the eighth best podcast interviewing entrepreneurs? Of course not. That would have failed even back in 2012 when there was just a handful of them. So I said, what can I be the best solution to a real problem? Well, what's the biggest problem that I find with these seven podcasts that are interviewing entrepreneurs? They all come out once a week. That's not enough content for me. I'm at the gym like Joe every single day. I am driving to work. I'm walking my dog. I need a fresh episode waiting for me every single day that doesn't exist in the business podcast world interviewing entrepreneurs. I'm going to become the first daily podcast interviewing entrepreneurs. So guess what, Joe? The day that I launch Entrepreneurs on Fire, it was the best daily podcast interviewing entrepreneurs. It was the worst daily podcast interviewing entrepreneurs. It was the only daily podcast interviewing entrepreneurs. But guess what? It was the best solution to a real problem. Those people like me, by the way, that needed more content, that needed a daily dose of inspiration. That's why I was on fire one. Joe: And it's funny because you chose the format of a half hour length and I would assume is because you were doing it every day, so it would be really hard to go into post-production and do all of that audio editing and everything else with it and have it be longer than a half hour. But then JLD: We Joe: You JLD: Are Joe: Stuck JLD: True, Joe: With JLD: And Joe: It. JLD: You actually kind of stumbled onto another truth is video is a whole nother layer. I mean, that's larger files, editing even harder. You've actually got to, like, sit here and, like, nod and smile when people are talking to you, which kind of seems funny. But, bro, it is massive bandwidth compared to like this video not being on right now and me being able to kind of like, listen to you. I'm still listening. Of course I'm interviewing you. But just like sip my coffee, kind of close my eyes, maybe rub my eyeballs a little bit, do some stretching back here, not have to try to make eye contact with you. And just nodding like this like you're having to do when I talk, like, that's all great videos. Got all of its pros, but doing a seven day week show of that, forget about it. That's Joe: Right, JLD: Why I do the audio. Joe: But you stuck with a half an hour since you started. Is it just who you are or is it the way you're wired that it did it come from your military training? You just have stuff. You picked a plan, you stuck with it. You stayed as a half an hour podcast this entire time. You never veered off and said, OK, now I'll do a one hour here and there. Every single one of yours is right on the money. It's like you cut it right off at 30 JLD: That's Joe: Minutes. JLD: Not true. If you go to my podcast feed right now, you will see that's, you know, some podcasts are 17 minutes, some are twenty three. You know, let's actually go live time right now. I'm going to go ahead and click on my podcast right now. Thirty three. Twenty five. Twenty seven. Twenty five. Twenty nine. Twenty eight. Twenty two. Thirty thirty seven. Forty twenty eight. Twenty three. Those are my last like fifteen episodes like I just read them off right there. That was right from my podcast feed. So for me I definitely use thirty minutes as a goal. You know, that's kind of what I kind of tell people, be honest about. Thirty minutes is kind of my response when people ask how long it's going to take. But I, I'm a big believer in every podcast should be as long as it should be and some of them should be twenty two minutes, some of them should be forty three minutes. And that's why you see those differing time frames, because I'm not actually trying to squeeze anything into a strict time frame. I have the approximate things that I know that works. And I really what I really do is have four to six bullet points. I want to get two for each interview and that's how it happens. It happens to be typically between 20 to 40 minutes is like the safe bet will be somewhere in that range, more likely than not within a twenty five to thirty five minute range. That's kind of the tighter range that we do have. So, you know, although we do have a lot of shows that are really close, that thirty minute mark, it's definitely not a Bible. Joe: Got it. So your new book, The Common Path to Uncommon Success on your website, I went through your big idea exercise, and it was funny because we were just talking about that in order to come up with the solution I can give to the world that makes me at the top podcast in that realm. And I, I went through it and I've gone through things like that before, but I struggled taking the left column and bringing the line over to the right column and making all of these things to come up with that idea, even though you gave time limits to it. I feel like I had to keep going back and doing it. And and I'm not sure that's the right way. But you say you go through that in the book, correct? JLD: Absolutely, it's a process, it is a system, and there are exercises behind it on how you can identify your big idea. So like you mentioned, we have timers, we have processes, there's areas that are being drawn. You're going to look down and be like, what have I just created down here? And you will get to your big idea for many of you for the first time in your life. Joe: Let's talk about the book and who it's for, what the end result of it is supposed to be for anyone that reads it when it's coming out. And I know there's a bunch of bonuses if they preorder. I just want to go through all of this and get the word out there. I'm super excited for my copy, JLD: Thanks, Joe. Joe: Like I said. JLD: No Joe: So JLD: One, I appreciate you preorder, thank you, because Joe: Absolutely. JLD: Preorders make or break book launches. So that's I'm very grateful for that. And what this book is to really answer your question is it is a combination of the three thousand plus interviews that I've now done over the past decade with the world's most successful launch, Nuers. And I've been a mentee to those three thousand mentors learning from every single one of them over these interviews, applying it to my business, which, by the way, is now a multimillion dollar business for eight years in a row. So I've applied a lot of those principles very successfully and I've been able to take those thousands and thousands of hours of conversations, boil them down and see what I've found are these 17 core foundational principles that every successful entrepreneur has in common. Seventeen I looked at and I said, that's a roadmap. This is a 17 step, step by step roadmap to financial freedom and fulfillment. This is the book I have to write. So I sat down over all of our little quarantining of twenty twenty and for eight months in a row, the first two hours of every day, I just wrote and wrote and wrote. And it turned out that in four hundred and eighty writing hours I was able to compile seventy one thousand words. Two hundred and seventy three pages of what comprise this book I'm holding in my hands right now. It is the common path to uncommon success. JLD: It is a 17 step roadmap to your financial freedom and fulfillment. So if that sounds like something that you want, if it sounds like this is a journey you want to embark upon, this is the process to do it. This book. Now, let me warn you, the road is hard. This is filled with exercises and there are examples. And there's a companion course that comes with this for free. But it's work like it is work. And it's hard because guess what? It is hard building a business that you love and that successful. It is hard to create content that you really know is meaningful content. It is hard sharing your voice, your message and your mission with the world. These things are hard, but you know, it's also hard. Broke living paycheck to paycheck, waking up every single day, not really excited about what lies ahead, like being miserable, that's hard to do and I've lived that life as well. So my call to action for people that are watching this right now is choose your heart. Like, which heart do you want to choose? Because it's both both paths so hard whether you take the common path to success and to get to that financial freedom and fulfillment, that's hard. It's also hard being broke and not being able to support your loved ones and and not living up to the dreams that you know, you have and you can achieve, but not doing it. JLD: That's hard to. So choose your hard and my recommendation, choose the common path, uncommon success. This book is going to get you there. And 17 steps. I've also compiled five amazing bonuses for those action takers who preorder the book. So before March. Twenty third, when the book goes live, I'm going to ship all three of my journals, The Freedom Mastery, the podcast journal. I'm going to ship to your door, literally. I'm shipping these to your door for free on my own dime. I am shipping you these three journals for free if you live in the United States. For those people outside, I'm going to email you the beautiful digital packs of all three of these journals. There's four other amazing bonuses and you can find those at Uncommon Success Book Dotcom. When you go there, you'll see endorsements from Gary Vaynerchuk, Seth Godin, Eric Armande, Dora Clark, Neil Patel. You will see the first chapter is there for free. You can read it and you can see like my writing style, there's a video of me jumping into the pool with all my clothes on, describing more details about the book. And again, you could see all five bonuses there. And then, of course, you can preorder uncommon success book. Dotcom Jobrani, thanks for having me on today. Joe: Yeah, man, this is awesome, I appreciate your time. I hope to have you back once I figure out what it is that I'm going to do and JLD: Your two year anniversary was due this. Joe: Ok, and hopefully I'll have this all aligned and everything, but. JLD: But listen, nothing you're doing is is without reason, I mean, every time you do this, you're getting better at your craft, you're improving your building connections, relationships, you're honing your skills. And so when that thing does come up, boom, you're off to the races. Joe: When we reconnect and we do this, that I can hold up the book and say this was my aha moment, this is what turned it around for me, this is what made me actually finally figure out what my big idea was. So that's really what I hope comes out of that for me. And I'm not a spring chicken, so I'm figuring this out sort of late, but JLD: That even Joe: I'm hoping JLD: Though I've got a little more hair than you, I'm not a spring chicken either. Well into my 40s. Joe: I hit 60 next year, so JLD: You look good, bro. Joe: So I'm in trouble if I don't get this going soon. So. Well, I really appreciate your time so much, and I wish you all the best with the book. And again, it's the common path to uncommon success. I'll have all the links in the show notes. We'll have all the links on the YouTube video when I put that out in a few days and I'll make sure I put it on social media. And I really do wish you the most success with this. JLD: Thanks, Joe. I hope you enjoyed this episode and I want to thank you for listening to my podcast. I know you have many options to listen to various podcasts, and I'm honored that you chose to listen to mine. I would love it if you were to rate my podcast Five Stars and write a nice review. It really helps to bring up the rankings of the podcast. Other listeners, once again, thank you so much for listening to the Joe Costello show. I appreciate you very much.

united states school bible entrepreneur zoom army podcasters iraq paradise broke skype twenty new books tony robbins thirty forty apple watches hal seth godin gary vaynerchuk shockingly john lee dumas hal elrod entrepreneurs on fire neil patel debbie downers jld five stars uncommon success common path podcasters paradise joe it free podcast course joe let joe yeah groseclose common path to uncommon success joe all joe absolutely

The Art of Accomplishment — AoA Series #1

Play Episode Listen Later Feb 13, 2021 47:41

The premise of The Art of Accomplishment is simple: it is our heart's capacity that determines our success and happiness in life. Emotional intelligence is the bottleneck to the change we want to see in ourselves and the world. Tapping into our heart's potential opens up the possibility of fulfilling our greatest ambitions without sacrificing our sense of joy and authenticity.We are taught early on that if we accomplish enough stuff we will have the life of our dreams, only to find it is a life that fails to make us happy and fulfill our hopes. In this 9-part series, you will discover that how you get things done is what makes your life far more fulfilling.Not only because you will enjoy the process of an authentic life but because enjoyment and self-awareness are critical tools in making what you accomplish more meaningful and effortless.The Art of Accomplishment podcast series accompanies the online course led by Joe Hudson. More more info, visit artofaccomplishment.com."When you're self aware, it means there is a full expression of you happening. It's why with the great artists, you see their full expression. And they can only get to that self expression, they can only get to that level of ease, by having more and more self awareness."Brett: A lot of people have a sense that self-development and accomplishment are mutually exclusive, that in order to be maximumly productive it's necessary to sacrifice parts of who we are, or to back-burner our own personal evolution. We focus on creating systems for setting and achieving goals. We imagine that by doing this, we'll somehow arrive at our fully developed self without examining where these goals came from in the first place. A question I often hear asked is how will self inquiry help me be productive and lead to more accomplishment?Joe: It's an amazing thing about the human brain, that we really like to create false distinctions. It's something that we do. I think it's because the brain in general its job is to create distinction, it likes to create false distinction. It's very much to me like the way it was in the 1970s when you could either be a businessman or you could be an environmentalist but you couldn't be both, that they were at odds.Then somewhere in the '90s, they figured out, "No, you can do both, that's possible." It's the same thing with this. In fact, they really drive each other. The personal development focus, that course if you will, gets tested in business and gets tested in projects, gets tested in getting things done. You get to learn a lot from where that rubber meets the road and vice-versa; that as you learn how to understand yourself better and other people better, which is the whole point of personal development.Then obviously you get better tools in business and you do better at getting things done. It's why I always use the phrase, art of accomplishment. It's speaking about the fact that accomplishing stuff is more about the how, than it is about what you get done. You can accomplish something and your focus could be like, my job is to earn a million dollars but in actuality you're going to be less likely to earn that million dollars, if you're not focused on the how you're going about it.I'll give you an example of this. My girlfriend in college, her name was Cate and she was a really good tennis player. With her coach, she would serve and try to hit like a basket, one of those baskets that you pick up the balls with. She was good, so she would hit it two or three out of five times. Then one day the coach took the basket off the ground and put a quarter right in the middle where that basket was sitting and said, "Serve and hit the quarter."She didn't hit the quarter once, but she would have hit the basket every single time if it was still sitting on top of that quarter. It's the thing that we see in business all the time which is focusing through the goal is one of the ways to make sure you accomplish your goals.Whether it be being the best company in the world, or whether it means beating the competition, or whether it means trying to change the world for the better through environmental solutions, or whether it means great customer service, whatever it is, having a goal that's beyond the goal that you have, makes the goal more likely to be gotten. It makes the goal more likely to be gotten.Brett: Tell me what makes this an art.Joe: You think about art. Think about it like this, there's accomplishment and accomplishment basically means that you've achieved something successfully. Successful is the first question that you have to ask. What does successfully mean? To me, it means that the task is done holistically. Is it an accomplishment to make $10? If that's my goal, if I also like sacrificed everything I love for that $10? That doesn't make any sense at all, that doesn't feel like accomplishment. It's a holistic success.It means that you're firing on all cylinders, that you're getting the whole thing done. Think about it like a building. Success isn't just getting the building erected. It's a quality building. It's a beautiful building. It's a useful building. That's what makes success. You're looking for the holistic thing. Then if you're thinking about it as far as an art form, then you have to move out of the tyranny of a checklist.Which is like, "I've written something down. Now I have to do it, or I'm going to beat myself up because I haven't done it." It's going to move into how you do it. How is it that I'm going about doing it? That's what makes it an art form. There's very specific things. If you think about art in general, what art does, the artistry of something, it means that you have more ease in doing it. It's a path of self-awareness and you recognize that your consciousness is the product. Brett: Let's get into those further. Tell me more about the ease. There's a lot of things that we want to do that are accomplishments, that just simply are not going to ever be easy, or so we think. Joe: Or so we think. There's a couple of ways that go at the ease part of it. One way to go at the ease part of it is to think about it like there's an old story about a prince coming to a butcher. He says to the butcher, "How often do you sharpen your knives?" The butcher says, "I never sharpen my knives." The Prince goes, "That's impossible. The best butchers in the world have to sharpen their knives at least once a month." The Butler says, "No, no, my blade finds the space between the meat and the bone."It's basically saying how you get things done is with the minimal amount of friction, that the master of a craft is doing it with the least moves. It's not about winning or losing anymore. They're far beyond the winning and losing of something. It's just, how do I do it with the least amount of effort? What's amazing in our society is that we think about effectiveness or efficiency in speed, as humans not as cars. Cars, it's really obvious.The fastest car doesn't mean it's the most efficient car, but we think that if we've gotten done something quickly, then we're very efficient, but efficiency isn't measured by speed. In the human condition, it's measured by enjoyment. We are efficient when we are enjoying ourselves. It means the least amount of effort is necessary. The least amount of fuel is necessary to make something happen. If you're accomplishing something with that kind of ease, when you're accomplishing something with enjoyment, which is how we measure that ease, then you're in the artistry of it. That's what I mean by ease.Brett: That makes a lot of sense, because the opposite of ease is that you are actually fighting yourself in some way. There's a part of you that doesn't want to do the thing, another part of you that does want to do the thing. There's dissonance there and a loss of efficiency. It's interesting to think of efficiency as ease or measured by ease.Joe: Exactly. Which is beautifully put, because what you're saying there is that the friction is mostly caused by the lack of self-awareness. When you understand what you are, when you are aware of how you work, there's a lot less friction. That's why the second part is so important. The artistry brings you closer to yourself.If you've ever met a great artist and there's a way, at least when they're working, at the very least when they're working, you see this self-awareness, this presence that occurs and that's what it means. That self-awareness, it brings you closer to yourself. It calls you into something deeper. It has to be a full expression of you. It's self-awareness. When you're self-aware, it means that there's a full expression of you happening. It's with the great artists, you see their full expression. They don't feel muted or stilted. They can only get to that self-expression, they can only get to that level of ease by having more and more self-awareness and the self-awareness of how they work.Brett: That sounds similar to what might happen if somebody's looking at a to-do list of things they want to get done and they think efficiency is efficiently knocking out all the boxes, but what might be actually more efficient is asking themselves why they want to get that list done in the first place. Maybe, if there's one question they could ask themselves that removes half of that list, that is actually an increase in efficiency.It sounds like this is the personal version of doing that, like, "Why is it that I want to be getting these things done? Why is it that I want to be successful? What does success actually bring to me?"Joe: That's a beautiful point. That's exactly right. When I look at my list every morning, I always think about what can I do that will make this whole list irrelevant or easier? It's the same thing with the medalist in life. There's a beautiful technique that you can use, which is, "Okay, if I get that done, am I happy then?" Then my mind will usually go, "No, I'll need this," and say, "Okay, well, if I get that done, will I be happy then?" It can just go on and on.Brett: It's like making the one decision that can eliminate 100 other decisions. Finding, perhaps in many of these cases, the one need within us that resolves 100 other secondary needs that we thought we needed to fill.Joe: That's exactly it and that's what self-awareness does just by its nature.Brett: Great. You mentioned that your consciousness is the product that you're working on in that case. Let's dig into that a little bit more.Joe: That's the last part of what makes it an art form, is that, if you're looking at a piece of art, there's a way in which you can feel like a painting, you can feel how the artist was when they were painting. When the artist acknowledges that, then what the artist can do is really understand that their consciousness is what is being consumed. It doesn't matter if it's Facebook, or Ford, or Van Gogh, we're feeling the consciousness of those people who made it.We're feeling that experience. If they were anxious and nervous, then we're perpetuating anxiousness and nervousness. If they were worried about not having enough, they're going to make sure that we are worried about not having enough, when we use that product or when we consume their consciousness.[crosstalk]Brett: That seems even more true these days, as a lot more consumers are thinking about products that they feel much more personally aligned with rather than just, "Oh, look, it's a jug of milk." It's like, "No, because this is a jug of milk that treats cows in the way that is more agreeable to me." Or, "This is the company that is working on making more fuel-efficient or electric cars and that's something that really speaks to me." What you're saying is that, even a company, even a product, is a piece of art and that the consciousness of its creators should come through in that.Joe: It does. You just can't help it. There's a great quote that my friend Steve used to say to me, he said, "At the peak of a poet's career, he is a businessman and the peak of a businessman's career, he is a poet," or she is a poet or she is a businessman. It is an absolute truth, that how we get something done affects what the end product of our doing is. It's as simple as if we rush to sweep the porch, or if we enjoy sweeping the porch. We're going to get two different jobs done and it's going to look different at the end of it.Our consciousness affects it and it's the acknowledgment that that's the case, that the real gift that we're giving to the world is in the product, that's tangible, it's the product of our consciousness that we're delivering. Acknowledging that the consciousness is part of the equation of the product, that it is in part the product that we are producing and that other people are consuming, is what makes it an art form, not just a doing.Brett: I think another great example of that would be in software development. Any software that's developed by a team that's frenetically running around trying to finish completing their backlog, product and engineering aren't communicating with each other very well. That product is going to end up having that consciousness writ large in its implementation in bugs and missed-- like features that don't make sense, et cetera.Joe: Exactly. That's right.Brett: Let's talk a little bit more about our consciousness as the product of this work. A lot of people would see that as odds with business because the focus is moving away from perhaps the business itself towards yourself. What would you say to them?Joe: Again, it's a lot like the '70s with the environmentalist. You can make money cutting down trees. You can make money planting trees. You can make money making all of your product artistic. You can make money making all of your product as cheap as possible. There's a thousand ways to make money. Just walk down the street of any city and everything you look at has got 7 or 8 or 10 people making money behind it.There's infinite ways of making money. The idea that how we are when we make the money isn't part of that equation is just silliness. It's something that happens when people don't want to feel their whole experience and they make the excuse that, "Oh, it's just business." Or they make the excuse that I had to do this because it's business. The craziest thing is, you look at incredibly successful businessmen who are just merciless in their desire for winning competition or for quality or for customer service. They will never allow a team to not deliver or allow a team to sacrifice the important things.Yet, as soon as the idea is like, "Oh, we can all be growing as humans," or that we can all be having full expression here comes up, they're like, "No, I can't do that." We can out-compete. We can build a billion-dollar company. We can out-compete over-resourced competition, but we can't also do it in such a way that we really enjoy ourselves. It's a ridiculous notion and it comes from an inner thought that they have that they can't be their full selves and be successful. That they had to cut off a part of themselves to be successful. That normally just comes from the fact that they had to cut out a part of themselves to make mom and dad happy. That's where it's really coming from. It's just very limited thinking.Brett: A belief that productivity and achievement requires sacrifice. If you're feeling sacrificed, that might mean you're on the right track to achievement.Joe: Let's take a look at that one for a second. Who sacrificed more, the men who created Google or the men who created Benelli Tires? Who worked harder? Who put their family at bigger risk? It's just nonsensical to think who worked harder. It's nonsensical to think that there is that level of sacrifice needed. There's people who make millions of dollars without it, millions of dollars with it. It's what do you enjoy? It's what do you love?If you love working 80 hours a week and you love that kind of productivity, don't tell everybody it's necessary. Just say it's what you did and you loved it. I listened to Elon Musk talk about this and he said, you have to work all the time and I thought to myself, "You had to work all the time when you had one company. Now you have three companies or four companies, or five companies and you're still working all the time, which really means that you only had to work 25% of the time to do the company that you originally did. You didn't have to work all the time. You're proving it."Brett: That's a really good point. A lot of people say that they have to get a paycheck and so all this art sounds great, but they're not in that position or maybe they're not running their own company. Maybe they're in some hierarchy in some organization or even if they do have their own company, they're just, "Well, I have to make money. I have to make money now. I have to make money with this particular runway. I just don't have time to make this an art."Joe: [laughs] I lived in Los Angeles for a while, I live next to this first generation from Central America family, just sweethearts. The son, when he decided it was time to go out to work, he was 18 years old and he worked at a subway. When he was working at the subway, he just did it with pizzazz. He did it with friendliness, he did it with joy. He did it with a bit of like a singing-- he was just one of those characters.You've had the experience, you've gone into someplace and there's somebody on the other side of the counter who's enjoying themselves and they're maybe singing or they got a little pizzazz, he was one of those people. He worked there I think for three weeks until somebody walked in and was like, "Hey, I have a restaurant and I need someone." Then within another six months, he was the Sous chef. Then he just kept on going.I don't know where he is now but that was the example to me, that it doesn't matter what you're doing. If you do it with artistry, you're creating the world that you want. The idea that you can't do that in any situation-- I mean, Mandela did it in a prison. How he wanted to be. The artistry that he was delivering to humanity was there when he was in a prison. To think that you can't do it because you're in a bureaucracy, it's just as limited of the thinking as a businessman saying, "We can't be whole humans and do business."The crazy thing about that that I think people don't recognize is if you think you can't do it because of your situation, then you're owning the position of a victim. It's like somebody whose life is oppressing them. If you have that position, there's only two people who really want to spend time with you, other victims and people who abuse you, because that's the only people who you have that value for.Other victims will be like, "Great, yes, we're oppressed. Let's all talk about how oppressed we are." The abusers are like, "Cool, you feel like you're oppressed? Great, I will oppress you. That's exactly what I need to get my world cranking." The mentality of that invites it, just like all of our mentalities invite the world that we see, to become real.Brett: Right. That could be an entire episode of its own and I'm sure it will be. How does a person get to this place then?Joe: There's three bits on how a person gets to seeing all of their accomplishment as art, to seeing that there's an art of accomplishment. The first is an intention. I don't call it a goal. I don't call it a mandate. It's just holding it in your consciousness that this is where I want to be. It's like looking at a map and saying Los Angeles is where I want to be, or San Francisco is where I want to be. It doesn't require any more weight than that.Brett: It's like an implementation agnostic goal.Joe: Yes, exactly. That's right. If you dig into that a little bit-- there's this story about an admiral. I can't remember his name, who it was, taken in the POW camps in Vietnam and he was asked, "Who got out of the camps?" He said, "That's easy. It was the people who knew they would get out." The interviewer asked then, “Who didn't get out of the camps?” He answered, "That's easy. It's the optimists."The interviewer was confused and said, "Optimist? What do you mean? How is that different than your first answer?" He said, "The optimists were the ones who thought they'd get out by Christmas, or by Easter, or by the rainy season. They were the ones that didn't make it." The intention is just holding that intention out there, knowing that you're going to arrive there. That's the first bit. The second bit is take it all as an iteration. There's no failure. There's no success.There's just I am learning by iterating and experimenting, iterating and experimenting, iterating and experimenting. I don't have to be hard on myself to learn lessons. I don't have to be hard on myself, because I had a certain timeframe. It's just a very gentle iteration, iteration, iteration, just the way you would think an artist would do after a 20-year career. They kept on playing, kept on trying and new and crazier things came out. Then the last part is to know that it's not really a doing.You asked, how does a person get there? It's not a doing, it's an undoing. We're just basically learning to undo a whole bunch of training and be in a natural state. I'll give you a great example of it. If you put your two hands together and put it like, let's say that the palms of your hands in front of your face and try as hard as you can to pull your hands apart.If your hands are apart right now, you're not trying, you're doing, so forget the doing and just go to the trying and try as hard as you can to pull your hands apart. Now without thinking about it, feel the exact opposite thing that you feel when you're trying. That's what it means to undo, you're undoing. That's what you do. To make all of your accomplishment artistry, to make life the art of accomplishment, then you're undoing.Brett: It's interesting. As I did that, during the trying, there's like a sense of planning going on throughout my entire system. Imagining which muscles I would move and how to move my hands apart. I can do all of that without actually moving at all. It feels like a good metaphor for beating myself up over a to-do list.Joe: Exactly. That's exactly it. Awesome. That's great.Brett: Then what are we undoing exactly and what does that help us accomplish, or how does that help us to accomplish things?Joe: The main thing that you're undoing is this misconception that you aren't inherently good. Basically, what we're undoing is a whole bunch of limiting beliefs. There's probably about seven main limiting beliefs, but they're all resting on one limiting belief. The one limiting belief is that you're not inherently good, that you have to put effort to make yourself good enough, of value, better, that it's not your natural place, that you're not there yet.If you think about an oak tree, when is an oak tree good enough? Is the oak tree good enough when it's an acorn or when it's 2 years old or when it's 150 years old or when it's collapsing, when it's becoming dirt, when is it good enough? When is it not inherently good? That's the thing that we think about ourselves is that we have someplace to be to get inherently good and or some way of being and what's actually preventing us from acting in an inherently good way is only the idea that we're not, it's only the idea that we've done something wrong--Brett: Right. I think that's a really good point, because there's a really big pitfall that I've experienced in personal development or trying to become more productive or work on my systems of accomplishment, where we start to see how everybody else is doing things and we're like, "Oh man. I need to get from where I am to where they are by somehow making myself better, because I'm not good enough. If only I had this person's system or that person's motivation and drive or that person's clarity. If I could get there, then I would be able to get things done," which just really does reinforce that, "Oh, I'm just not there yet. I just don't have it in me." Silently.Joe: Exactly, which just slows down the whole system. A baby doesn't think that they're bad, because they're crawling, they're going to walk. They don't need to think that they're bad, because they're crawling. It's just a natural part of the developmental cycle and there's that form of goodness and there's also the other form of goodness, which is every time you defend something in yourself, there's some way that you're believing that you're not inherently good, that you have to defend something about yourself.I don't mean defense like someone tries to throw a punch, you block it. I mean defense like someone accuses you of being bad and you think you have to justify something. What would make you need to justify something? If somebody came to you and said the sky is purple at noon, the sky is purple, would you really need to defend the fact that the sky was blue? There's some inherent belief system that there's something, that there's a shame, that there's something wrong with us and that's part of the inherent goodness that once you understand that that is your natural state, there's so much less to be doing, so much less.I'll give you an example for a second about how it works. Let's say one of the limiting beliefs that I see people do all the time is that perfection is more important than connection. They think that they need to be perfect because they think that they're not good enough or their thing needs to be perfect or their presentation needs to be perfect or their product needs to be perfect or the date needs to go perfect or whatever it is.They focus on that trying to make it perfect instead of how do I connect. They choose perfection over connection. If they choose connection, they're far more successful and they will choose it naturally if they don't think that they have to be perfect to be good enough or to be good. Specifically, how this works is, you can try to create the perfect product or you can try to create a product that's in connection with your customer and to stay in connection with your customer. The second is going to do much better than the perfect product. If you have a first date and you're trying to be perfect, that's not going to go so well.Even if they happen to have a second date for you, you've been trying to be perfect so they're not dating you, they're dating some idealized version of yourself and eventually that shit's going to go sideways. Whereas, if you just go for the connection, if you say, "Oh, how do I connect with this person? Let's see if it's a match." Then it's a far more productive stance. The place where it's most articulated is in meditation where people try to have the perfect experience of meditating instead of being in connection with themselves. It's the difference between torture and meditation. Meditation is connection. Managing yourself is torture.Brett: I spent a long time in meditation doing maybe an hour practice every day just because I was really stressed out about work and beating myself up over to-do list, the usual. I would meditate more and more and find that it would call my mind, but my goal in meditation was to call my mind not to feel what I needed to feel. That really just pulled me away from the emotions that were trying to help me update to my situation.Joe: I find that if you're trying to manage your experience, it's pulling you away from yourself instead of being with what you are and enjoying it.Brett: Tell me some more of those limiting beliefs.Joe: There's a couple others that I can think about. There is improvement instead of being authentic. That's the one that you mentioned earlier in the podcast, where you were talking about wanting to be better at this or better than that, instead of wanting to know what you actually are. I want to be enlightened instead of wanting to know what I am. Wanting to be enlightened path is a far slower path than wanting to know what I am.I want to work successfully 60 hours a week is far less effective than understanding what your natural rhythm is and what your natural way of being most productive is. It's that constant question of like trying to improve yourself instead of find out what your authenticity is.Brett: Or I want a hundred million users versus I want this to improve people's lives.Joe: Right. If it's authentic that you want a hundred million users, if that's really the thing that's going to charge you, then that might be your authenticity, but then the question is, what do you have to do that is authentic to you to get them, instead of how do I make my podcasts so great that they get them, that I get the users?Brett: What are some others?Joe: Other ones is shoulds before wants. I find people always are trying to motivate themselves with their shoulds instead of with their wants and wants are far more motivating and far more effective at getting us places. If you think about the first seven years of your life, you couldn't even have shoulds and then all of a sudden, shoulds show up and all your development slows down. You get more development in the first seven years of your life than you do pretty much at any other time of your life.It's when you stop following your wants and you start following your shoulds that everything gets slowed down. Again, like with both of these, the only way you would think, oh, I need to improve, instead of, I need to be authentic, is if you think that you're not inherently good. The only way you would think I should do that, instead of, I want to do that is because you think that you aren't inherently good.There's seven of them but the other one that's just coming to mind right now is the one we spoke about, defense versus love. That most of us immediately move to defend ourselves rather than love the person. The quintessential example of this is the boss tells you what you need to do to improve and most people get defensive, instead of saying to themselves, "Oh my goodness, my boss just took a social risk on me. Potentially risked our relationship, because he cared or she cared enough to help me be successful." We don't think, "Oh well, thanks. Thanks for taking the risk of telling me that."Brett: That's quite a flip on the usual script.Joe: Right, because we move from defense instead of love. These are all the ways and we only have to do that if we think we're not inherently good. That's what they are.Brett: How does seeing your inherent goodness tie into the art part of this art of accomplishment?Joe: If you see that you're inherently good, then obviously things become more enjoyable and more easy because there's less fight that you have with yourself. That's just simple. The more that you focus on your enjoyment, the more you stop having to fight with yourself. There is this quote that, "In a war with yourself, you're always going to lose." That enjoyment comes to a large degree because you're fighting with yourself has ceased or has slowed down. That happens when you see your inherent goodness. That's part of how that works.Then when you fully realize, that your consciousness is what is coming through whatever product you're creating, then the question is what's the consciousness that you want to give to other folks. If you're coming from a place of understanding your inherent goodness, then that's the product that you're going to be creating. It's one that ties people into their inherent goodness. It's not so limiting as one might think. Meaning, take a look at some of the great artists of our day. I'll use a comedian because it's the--Brett: For example?Joe: I'll give us an example because some people might not call him an artist but Jim Carrey. If you listen to his story and this is so much the case, it's like they were going about their career. It wasn't going so well. Then all of a sudden they just were like, "I am going all the way. I am not going to hold back. I am going to take the big risk of my full expression. I'm going to basically trust that if I just go all the way with myself, things are going to work out. I'm going to trust that goodness." All of a sudden, bolder and bolder things come out of the artist. Jim Carrey is an example of this.When we watch it, we think it's confidence. We're like, "Oh my God, that guy could do all that crazy stuff. How confident must he be?" It's really a confidence in something that's beyond them. It's a confidence in their inherent goodness. When you see that in people, we just naturally want to follow it. We just naturally want to be a part of that. It's why we see so much of that in some of the greatest movers and shakers of our time. People who've accomplished just amazing things in their lives is that full trust. I guess one of the ways to look at it, is to see it as it's like channeling. You can only channel if you trust what's coming through you.That channeling is what it starts to feel like when you're deeply in the art of accomplishment. A way to look at the art of accomplishment is like in some traditions they would call it channeling. They would call it cleaning out your tube so that you could have greater access to the thing that's moving through all of us. The animator of all life. Neurology would call it alpha waves but it's not flow state. Being in that flow state can only come when you can rely on your inherent goodness. If you're judging yourself, you're questioning yourself and you're in a fight with yourself, you can't be an alpha. You can't be in flow state.Brett: Another good way to describe that I think is just something, this idea of channeling is acting from something that's coming from outside of your identity of yourself. A lot of artists-- we were talking about artistry here. A lot of musicians have talked about how when they were in the flow and they were writing some of their biggest hits, they felt like it wasn't them doing the writing. It was just the words were coming through them. Joe: We've all had this experience. We've all had the experience of playing music without having to think about it or just channeling the emails and just knowing exactly what to write. We've all had the experience of being in that flow state and that only comes when we can trust our inherent goodness.Brett: I think that's the feeling people are trying to get at, when they're knocking out a to-do list, finding themselves in that flow. I think a lot of this is just it's not about the to-do list, it's about what it is that you actually want to be doing.Joe: It's about allowing the lack of fight to be in your system. Our system by nature doesn't want to fight with itself. To allow that to happen really allows the flow state to occur. The final bit is as I think you already mentioned it, it's the self-awareness, which is the only way that we're ever going to see that we're inherently good is for us to see what we inherently are. It requires us to drop the stories of ourselves and the ideas of ourselves and it requires us to love the ego right into oblivion.That self-awareness is what allows us to see that we're not just channeling it, we are it. That we thought we were small, but what we really are is part of everything. When we see ourselves as everything, when our identity switches from the little me to the whole, then the inherent goodness is all. Everything is in that inherent goodness. There's just a piece that comes with it. That's why, when you see those artists who have 50 years at the carving table and you see just this piece in them, the piece of artistry, of a deep artistry, that's where it comes from.Brett: As we start to view accomplishment more as an art, what is going to change about the way that we do things and how do we address that fear that might exist, that getting into this personal development stuff is going to make us even for a period of time, less productive? If we have a 18-hour Workday right now and that's the thing that we're doing and it just feels like the whole house of cards is going to collapse if we just take one day off from that, what's the step forward?Joe: That's a great question. They did this great study in the US Army. The study was that they took two tests that were the same test, but different reliable and whatnot. They took a group of soldiers in boot camp and they just worked them to death and had them sleep-deprived. Then they put them in front of the test and they did the test and then they let them rest for a couple of days, RNR and then they came back. They weren't sleep-deprived and they did the test.They asked the soldiers of these two tests, which one did you think you scored better at and which one do you think you did quicker? 80% of the people thought that they had done quicker work and more accurate work on the first test when they were sleep-deprived. In actuality, 100% of them did better when they had rest and they were not being rushed through the whole situation. It tells us that we have a mental illusion that happens, like an optical illusion. We think that when we're busy and we were sleep-deprived and we're running around checking off boxes, we think we're more efficient when in actuality we're not. Brett: The multitasking studies as well, where they proved that people really do not multitask. They just think they multitask, but their performance actually degrades.Joe: Exactly. It's exactly the same principle. The first thing is to acknowledge that situation. Then to start to disassociate the idea of ease with productivity. Some people, because they're only productive when they're in friction, they think that productivity is friction. To see, to really find real ways of measuring, "Are you getting the stuff done and not working as hard or enjoying yourself more?" They really find that out.It's interesting. This culture, it's, "You didn't work 60 hours, why are you lazy?" In other cultures that have been doing particularly Southern Europe, they're like, "You had to work 60 hours to get your job done? Why are you so incompetent?" It's just a completely different way to take a look at it. That's the first thing to know. The second part of your question is how do things change? Well, you get bigger things done. You get things that are more aligned in your system done. You don't sacrifice your well-being from the accomplishment of your career or your money but you don't sacrifice your career and your money, so that you can have better well-being.The dichotomy starts to go away and you see that your work is a means to an end of your well-being. That the well-being is a means and an end to your work. That they become the same thing. They stop becoming separate in your system. The nervous system starts to relax. You start doing things like, "Oh, I can move this lever here and I just have to wait for a couple of months and everything will fall into place." Or, "I could put two weeks in and I will have it done in one month instead of two."You start to see these little leverage points. You start to see the world more as a system. The way the artist talk about it is-- like carving artists, they'll talk about, that they see the work in the wood, before they even get started. It's not about, "I have an idea of what I want it to look like and I'm going to carve it into the wood." It's like the wood is telling me what it wants to be carved into. What it wants to be made into.That's the experience of life in general. Is that you're following. The Daoists talk about it as the way of water. Water doesn't require any effort to get to the ocean. It just follows. It just goes to the lowest point. It is effortless in its way. It is more powerful than any sword. Try to fight water with a sword and you'll know. That's the way that it starts to feel. That life starts to feel.Brett: So, what you were saying earlier, is that a lot of this work is actually an undoing. An undoing of the limiting misconceptions of self?Joe: If you look at the martial arts, they really subscribe a lot of the same theory to what I'm talking about. One of the ways is that your whole body is relaxed until the moment of impact. If I was going to tense the whole time and hit you, my punch is a lot less powerful than if I'm relaxed the whole time and then tense right before I hit you. It's conserving your energy and making you stronger at the same time. Making your movement have more impact. We somehow think walking around tense all the time is going to make us more effective. It's just ridiculous.Brett: Right. Also keep us narrowed and focused too. If we're walking around tense about all the things that we're thinking about getting done, we're not asking the bigger questions, that really help us find that one decision that can eliminate a hundred decisions. A lot of what you're talking about, this idea of breaking down these misconceptions of the self and trusting and leaning back into our inherent goodness. Letting go of the trying and just being in the doing.A lot of that allows us, our entire nervous system and our minds to relax and see outside of the boxes of any of the shorter-term tasks of thinking that we're doing which, really helps us to really guide our lives out of grander scale and then drive our businesses. Kids spend several months working on go, go, go. Getting one particular project done. Pushing one feature, that part way through the process we could have easily, if we had a big enough view, determined the landscape had changed and that this is becoming a waste of effort.Joe: It happens on fractal levels. It happens on, "Wow, I've just spent 20 years creating a life that I don't want." It happens on, "I just spent two months doing a project, that my boss really didn't give a shit if I did and I just spent the last two minutes worrying about something that I could have spent creating something."Brett: I think that's one of the things that makes this so counterintuitive is that often it's just much easier to think, "Oh, I'm almost there. I just need to do this, that and the other things, that are in line with my past 20 years of plan and that would get me there," which is a much easier thing to experience for many, than the recognition that maybe 20 years of my life has been spent further and further away from my authenticity.Joe: Right and getting me there is the crux. That's the bit, the idea that where you are right now isn't good enough. You see this all the time in business where you see somebody who's been successful talking to somebody who's trying to be successful. The person who's trying to be successful is like, "Well, you're able to be so confident, so being able to say yes or no to things, so nonchalant about opportunities, because you already have success." There's some truth to that. There's no doubt about it, but what I've seen is that the people who hold that position, invite the success, more than they get it.What I notice in my business is that the more that I became picky, the more that I decided it just wasn't worth it if I didn't do the thing that I wanted to do. I started rejecting clients, or I started rejecting investments, or I started rejecting really good deals, then all of a sudden, more and more good deals, more and more good clients started showing up. That comes when you aren't in that place of fear that you need to prove something. To be good enough, to be loved, it comes when you can trust your inherent goodness.Brett: I think that speaks a lot to this reciprocal nature of accomplishment versus personal development, where it seems that, many of us think that accomplishment is going to give us the confidence and so if we just go for accomplishment first, then we'll have the confidence. What you're saying is that we can build the confidence. We can build not just a false sense of confidence, but if we are confident in who we actually are, then that will lead to the accomplishment, which then can feedback-- because there is a little bit of feedback loop.Like you said, once you've been successful doing something, it definitely helps you feel that way. We can actually work on that personal side directly and everything else is downstream of there.Joe: I wouldn't even call it confidence. It's like the closest word that our society knows to put on it, because confidence feels like-- at least the way it's interpreted is "I'm good enough or da, da, da." It's not really I'm good enough. It's just, I know what I am. I just know what I am. I know what I like. I know what I want and I am committed to being a full expression of that.That's the key thing and that knowing who you are and really finding out, that's what the real cool part about the whole journey is, right? Because to do that, you have to see that you're inherently good. Then to do that, you have to see what you inherently are and then that requires us to drop these stories and our ideas of ourselves and it requires us to just allow the ego to be loved into oblivion. Brett: That transforms us into an artist.Joe: Yes and the artist transforms us into that. To see ourselves as everything, allows us to have that energy when we move in the world instead of to see ourselves as this limited thing.Brett: Great. Well, thanks again for your time.Joe: Thank you. A pleasure.Thanks for listening to The Art of Accomplishment podcast. If you enjoyed what you heard today, please subscribe. We would love your feedback, so feel free to send us questions and comments. To reach us, join our newsletter, learn more about VIEW, or to take a course, visit: artofaccomplishment.com

A Conversation with Jazz Great, Papa John DeFrancesco

Play Episode Listen Later Aug 7, 2020 47:29

I sat down with my dear friend, the great Hammond B3 organist, Papa John DeFrancesco. When I first starting exploring the music scene in Phoenix, AZ after moving here in 2004, I came across this cool club called Bobby C's near downtown Phoenix. On Sundays, they would serve the most amazing Southern food and they had Papa John and band playing jazz that I hadn't heard since I left New York City. Papa John, if you haven't already guessed, is the father of the great organist Joey DeFrancesco. Papa John and I took to each other right away and he used to let me sit in and we became life long friends. When the drum chair opened up with his band, I got the call and we've been playing together ever since. I hope you enjoy this conversation with this beautiful person and amazing jazz organist. He's a treasure and I'm honored to call him a friend and mentor. Connect with Papa John DeFrancesco: Personal Facebook Page: https://www.facebook.com/john.defrancesco3 Facebook Fan Page: https://www.facebook.com/Papa-John-DeFrancesco-101631944618/ Papa John's CDs: "Desert Heat" - https://amzn.to/2BXx9JF "All in the Family" - https://amzn.to/39V5aH2 "Comin' Home" - https://amzn.to/3ibVnj4 "Big Shot" - https://amzn.to/33oo5sJ "A Philadelphia Story" - https://amzn.to/2XrsFm6 "Hip Cake Walk" - https://amzn.to/3fC4nfH "Walkin Uptown" - https://amzn.to/3keUMyz "Jumpin'" - https://amzn.to/33ooiw1 "Doodlin" - https://amzn.to/3ftpmB2 Podcast Music By: Andy Galore, Album: "Out and About", Song: "Chicken & Scotch" 2014 Andy's Links: http://andygalore.com/ https://www.facebook.com/andygalorebass If you enjoy the podcast, would you please consider leaving a short review on Apple Podcasts/iTunes? It takes less than 60 seconds, and it really makes a difference in helping to convince hard-to-get guests. For show notes and past guests, please visit: https://joecostelloglobal.com/#thejoecostelloshow Subscribe, Rate & Review: I would love if you could subscribe to the podcast and leave an honest rating & review. This will encourage other people to listen and allow us to grow as a community. The bigger we get as a community, the bigger the impact we can have on the world. Sign up for Joe's email newsletter at: https://joecostelloglobal.com/#signup For transcripts of episodes, go to: https://joecostelloglobal.com/#thejoecostelloshow Follow Joe: Twitter: https://twitter.com/jcostelloglobal Instagram: https://www.instagram.com/jcostelloglobal/ Facebook: https://www.facebook.com/jcostelloglobal/ YouTube: https://www.youtube.com/channel/UCUZsrJsf8-1dS6ddAa9Sr1Q?view_as=subscriber Transcript Papa John: Right now, I'm praying. Joe: Hey, everybody, welcome to the Joe Costello show. I'm really happy that you're here and you are giving me your ears and listening to the podcast. I have a very special dear friend, special guest, amazing jazz musician, my dear friend, Papa John DeFrancesco. Welcome, Papa John. How are you doing, man? Papa John: Yes, I'm doing good, I'm talking to you. Joe: So Papa John: My Joe: Nice Papa John: Main Joe: To see your Papa John: Man. Joe: Face there. Papa John: Good to see you, Joe. Joe: Yeah, man, so how are you doing? Papa John: Then. Joe: How are you doing? Papa John: I'm doing good, Joe. Every day is a better day. Man. Joe: That's good, yeah. Papa John: I got the say Angel me so she's Joe: I Papa John: Like. Joe: Know, I know Papa John: Putting up with my crap Joe: You Papa John: The. Joe: And you're doing Papa John: The. Joe: Some swimming, right? You're staying cool. Papa John: Yeah, in the past, we had Joe: Yeah, Papa John: A big bathtub Joe: Yeah, Papa John: Man, Joe: Is it warm? Papa John: The pool was like ninety seven man eighty nine the other day. Joe: Oh, my gosh. Papa John: I know you when you first go in, you cool off Joe: Yeah, Papa John: And then you get warm. Joe: Yeah. Papa John: And then you come out and you're cool for about 30 seconds. Joe: Welcome to Arizona. Papa John: Is beautiful that. Joe: Yeah, so, man, I'm really excited, I want to give my own quick sort of history of you and I and and then and then I want to kind of go back to where you started and how we both actually had similar influences with our our fathers being Papa John: I Joe: Musicians Papa John: Saw that Joe: And stuff. Papa John: In. Joe: Yeah. Yeah. So for me, so I moved to I moved to Arizona, Scottsdale, Arizona in two thousand four, didn't really know what the scene was, did and didn't play much, didn't go out to do anything. And then all of a sudden I heard about this cool place called Bobby C's Papa John: Oh, my God, that was the place, man. Joe: Yeah, and I walk in the door and it's just all Southern cooking and you're behind the B3 and you have all these great musicians playing with you. And I just say, WOW!. And I think we started making it a Sunday ritual that we would go there every Sunday Papa John: Yeah, Joe: And hang out. Papa John: You Joe: Yeah, Papa John: Were there Joe: Yeah. Papa John: With Joe: And Papa John: Their Joe: Then Papa John: Brother. Joe: And everybody was nice enough to some point I got to sit in and then I got to got to sit in a little bit more and Papa John: We Joe: Then Papa John: To talk. Joe: Yeah. Papa John: And Joe: We Papa John: You Joe: Had. Papa John: Would never say you were a drummer when I found that out. Get your butt off your back. Joe: I was keeping it on the down low, there was a lot of Papa John: Yeah. Joe: Great players there. I didn't want to, you know, Papa John: Your Joe: I wanted Papa John: Great Joe: That Papa John: Player, Joe: Just Papa John: Joe. Joe: Thanks man. That means a lot coming from you, as you know. Papa John: Now we play, I tell you what, I enjoy working with the. Joe: Well, thank Papa John: You're Joe: You. Papa John: You're you're one of the very few people you played music with that listen. Joe: Well, thank Papa John: You Joe: You. Papa John: Know that deal, you get up there and nobody is listening Joe: Yeah, well, Papa John: Everybody Joe: I appreciate Papa John: Playing in Joe: It. Papa John: A different place played a different band Joe: Yeah, Papa John: And. Joe: Yeah, well, Papa John: Well, let's Joe: That Papa John: Go, let's go, Joe: I Papa John: Let's Joe: Appreciate Papa John: Go. Joe: That and yeah, and I feel the same way because literally I didn't know many people around town but you and you and I've said this to you before and but I don't think it has sunk into your thick skull that you literally gave me like a chance and a more opportunity Papa John: Oh, Joe: Than Papa John: My God. Joe: Most people have ever given me in my musical career. Papa John: Oh, Joe: And that's Papa John: My Joe: The truth. Papa John: God, Joe: It's the truth. Papa John: You're going to make me cry live Joe: No, Papa John: In. Joe: No, no, it's the truth, I was nobody I was in and after sitting in for a while and you would always let me sit in and then and then we started playing together, like, regularly. Papa John: Yeah, Joe: Right. And Papa John: Yeah. Joe: That was cool. I was like, wow, I'm playing with one of the jazz greats on the B3. And it means a lot to me. And my father Papa John: Na Joe: Was proud. Papa John: Na Joe: My parents Papa John: Na, Joe: Were Papa John: Then Joe: Proud. Papa John: Your Joe: Yeah. Papa John: Dad was cool man Joe: Yeah, it meant a lot. So Papa John: We had a Joe: Yeah, we had a blast. Papa John: Mutual man like we got into some nice grooves. Joe: Yeah, we did, Papa John: Now, Joe: Yeah, we Papa John: Boy, Joe: We had some nice gigs. Papa John: Nice, nice gig, Joe: Well, Papa John: Good Joe: Hopefully, Papa John: Music. Yeah. Joe: Hopefully there'll be more coming up once the world gets back to some sort of Papa John: And. Joe: Whatever. I don't know what it's going to be, but. Right. Papa John: God help us to get back, Joe: All right, Papa John: It Joe: Cool. Papa John: Always does by then I'll be one hundred and forty cases of that. Joe: They long as you're here with us, that's cool. We Papa John: Ah Man Joe: Don't care, so. Papa John: Beautiful Joe Joe: So let's go back and tell me how this started for you, because I know besides music, like I said, we we talked about what what part of this you want to talk about. And if it's all Papa John: Would Joe: Music Papa John: Anyone? Joe: Or you want to you want to talk about anything else. So tell me about your father or how this music started for you. Papa John: It's very similar, I guess, here, but I was I wanted to play man, and so he said I told him I wanted to play the saxophone. I was about six five. He said it's too big for you, so he started me out on clarinet. I started playing clarinet and then I heard this guy named Louis Armstrong. Trumpet player. I saw I play trumpet. He said I got 15 million saxophones in there. You want to play trumpet? Though he got when I bought me a trumpet, I was about 10 years old i guess. He taught me how to play. And. Next person I saw that kind of play school band in school, and there is a lot of good friends I met when I was a junior in high school and Joe: And where was Papa John: The next. Joe: This, was this all Philadelphia? Papa John: Niagara Falls, New Joe: Oh, Papa John: York. Joe: That's right, I totally forgot Niagara Papa John: And Joe: Falls. Papa John: A New York woman, we're Joe: That's Papa John: Both from Joe: Right. Papa John: New York Joe: I know, Papa John: State. Joe: But I forgot that's where you started out. Papa John: Niagara Falls, New York, man, it was a real beautiful city at one time. And I was always but I dug it, I love airplanes and cars Joe: I know Papa John: And Joe: You like cars. Papa John: Yeah, and music was right at the top three. I love and you know, it was cool about the music my dad taught me, but it would also take me to all these air shows because, you know, I, liked airplanes my mom about you coming Jen, Jenny my mom. Where, to look at airplanes and I go shopping or something. So but most of my my life is the music that you go out and you hear somebody and you go nuts. And then my next biggest thing was in 1959 when I saw Jimmy Smith Joe: Where was that? Papa John: That was in Buffalo, Kleinhans Music Hall, The Trio too, Donald Bailey and Kenny Burrell, Joe: WOW! Papa John: Stanley Turrentine came later. But I saw, man those cats were dealing. Holy Cow!, that organ, ya know, it's spiritual side. And it just grabbed me, but Joe: That was Papa John: I Joe: Fifty Papa John: Didn't get. Joe: Nine, you said. Papa John: Yeah, and I didn't do nothing till the 60's with the organ, but I was playing trumpet the whole time. Big band singing, all that, you know the deal. Then, I got married and the kids started coming, so I was still playing. But not the full-time I was like, well, not for three or four nights a week. Places were jumping then, you know. Joe: And this was all still Niagara Falls. Papa John: Niagara Falls, the left Niagara Falls in 1967, went to Philly, went to Philly in '57. Joe: What made you go there? Papa John: I was I was my uncle has got to get a job at Boeing aircraft, and he asked me for Niagara Falls is starting to go down and. It was on the ground, and so, yeah, I worked on airplanes and cars, so, you know, it got that bad. I met a bunch of horn players down there. Right. I was in town for two months and I met a guy at work, Am I talking to much Joe? Joe: No, this is what you're here to do. You're here to tell your story, I want to hear it in this. This is all at Boeing. Papa John: Now and I wish you could play organ man. Absolutely. I know you went downtown one time for a session and in Chester you can't get an organ player with him and said this cats gotta go. If you go, you've got to come up here, man. And then we did a lot of road thing at that time. They had Cabaret's they use to call them Cabaret's I did a ton of those Joe: So Papa John: Other people, man. Joe: So when did you start the organ? Papa John: Nineteen sixty three, wait, sixty four Joe: Sixty four. Papa John: I come home from work day and my wife had one, she got it for me. Joe: Oh, wow. And this is still Niagara Falls because you didn't go to Philly Papa John: No. Joe: Until 67. Papa John: Yeah, it was still there. She thought of all of this, too bar in organ called My house was never the same since man. Joe: And are you completely self-taught? Papa John: Yes, and the organ yeah, on my dad, I had a basic knowledge of me, but, you know, horn, not chords you're playing chords like, I was trying to transfer all that Joe: Right. Papa John: And it was tough, but. Joe: Well, then the tough part, too, especially for the B3 players, is the independence in the left hand right playing the base line and then being able to solo over it. Papa John: Split your brain in half man. And you thinking and you do it too. Joe: Explain to me how the organ ended up in, I know you said Laurene bought one, but was it because you saw like were you listening people like Jimmy Smith? Papa John: Oh, Joe: Was that after Papa John: Man. Joe: You saw him? You were just bit by the bug. And that was Papa John: Not Joe: That. That was it. Papa John: Every album that would come out, I get from Jimmy and then I tell Jack McGuff and there was a lot of burner's out there Ganpati. I mean there was a ton then, you know, Charles Earling and I met all these guys so now we're out doing some serious. I learned so much. Joe: So what was that first organ that was in the house? Papa John: Or the spin it. Joe: He has no say couldn't have been a full B3. I like Laurene. Papa John: Now, it was a Spinet Joe: Ok. Papa John: And then I bought Leslie. But it still wasn't a B man. And I found a B for sale, so I sold all my stuff, but B and then that's how I really learned how to play like on this thing man [plays organ] Joe: Exactly. So what was your first real gig on it? It was somewhere in Philadelphia with this when you met these guys. Papa John: On the organ?, on the B?, back in Niagara Falls, I had the organ in Niagara Falls, yeah. Once I got to B3, I got out and started playing, I love a man, I was still learning. I mean, the coordination, the coordination is tough Joe Joe: The coordination is tough, the hauling the thing around is tough. Papa John: Well, that's why I had to get surgery on my back. No, that wasn't much but you're hauling that son of a gun man, Joe: Yeah. Papa John: You know, I bought vans. I bought my old van, used to be rented trailer, mostly with trailer till I came out with vans and got a van. You know, it was it was funny, man. You go, well, I've got to move organ, the drummer said "I go get a pack of cigarettes." Joe: Exactly. Papa John: I'll be right back because I get to go get a loaf of bread. I'll be right back. Joe: Yeah, Papa John: Yeah, Joe: Yeah. Papa John: But it was quite experience lugging that monster. Joe: Yeah, so did you bring so you had a B3 in Niagara Falls, did you bring that with you to Philly? Papa John: Yes. Yeah, Joe: And then Papa John: That's. Joe: Where is that where is that now? Papa John: And at the Musical Museum. Joe: That's the original one. Papa John: Yes, the one that we played that night when we when we did the gig. Joe: Yeah. Papa John: At my first box man. Joe: Oh, my gosh, I didn't even realize that. Papa John: Nineteen sixty six by. Joe: Wow. Papa John: That's Joe: Yes, Papa John: My Joe: So Papa John: Yeah. Joe: So everybody for everybody listening in here in Phoenix, Arizona, there's the Musical Instrument Museum. It's called The MIM for short. Papa John's original B3 is there on display. They probably move it in and out on display. Right. Sometimes they'll do it's not permanent. Papa John: Yeah, Joe: They keep it there. Papa John: There, but it was Joey's first organ too ya know Joe: That's Papa John: That. Joe: Really cool. Papa John: Yeah, well, my fathers horns there at one time now playing them, yeah, was that was the first to go that the number one man we had redone. It was like. From being out on the road, being banged around, we had a guy redo it, that's the one man. Joe: Well, I didn't know that, so that that night we did that concert there, that was your we literally play it on your very first B3 organ. Man, Papa John: We're going, yeah, Joe: Oh man, Papa John: Man. Yeah. Joe: I didn't know that. I just thought that was just one of them. I didn't know that was THEE one. Papa John: That's the one I never got rid of it, never. Joe: Wow, Papa John: Never, Joe: That's incredible. Papa John: I would not you know, I could have sold that, that's Daisy, we had a name and we know what the name was, "Oh, boy." Joe: Oh, boy, Papa John: Yeah, Joe: Nice. Papa John: Come on, we had to go Ol Boy Joe: That Papa John: Mad, Joe: Is Papa John: Matt. Joe: So funny, so in those days when you weren't playing out, that was, was it always inside the house the way yours is now in your house, like you're literally sitting behind your B3 three now at your house? Papa John: And I am. It was Joe: Or. Papa John: Either in the house or in the van. Joe: Ok. Papa John: You know, one or the other, and mostly if if it was along, never had much time to take it out of the van, you know, Joe: And Papa John: It was Joe: A lot, Papa John: A go. Joe: Right? Papa John: Yeah, the only time I'd bring it down would be maintenance. You replace tubes, do the wiring and it was traveling. Joe: Did you work on it yourself, because I know a lot of you B3 organ players, man, you know Papa John: They're. Joe: You know that instrument because you can't trust that anybody else in the room is going to know what's going on. Papa John: That's right, Joe: Right, we've had Papa John: The. Joe: A member of Bobby C's, we had like something weird happen one day. Papa John: And try to remember what? Joe: And I remember you just you took off the front lid and people were in there and not people, Papa John: Yeah. Joe: But but you were kind of telling somebody, hey, just try this or whatever, and next thing you know, it's working again. Papa John: That's from years and years and years of that, putting that instrument through its bad. I mean, patience. I got a story we were playing upstairs, so we took the organ upstairs. We were taking it up. So we put two by fours on each side so we could slide it up Joe: Oh, Papa John: And Joe: Like. Papa John: A rope and the leg and the guys up front in the back pushing and all of a sudden the rope broke. I said, what? So I run down, jump. It was like lined up with a door outside door, so I jumped out the door, jumped out the door. I heard it coming down, breaking all there was Joe: Oh, Papa John: There was lights on the sides Joe: Oh, Papa John: Broke every one. Joe: My God. Papa John: Everyone came flying out almost out the door on its back. Joe: My gosh, that's like those those cartoons, that piano like it's like the Three Stooges move in a piano. Papa John: It is, it is, Joe: Oh, Papa John: And Joe: My gosh. Papa John: Flipped it over, put the tubes back in they were all loose and brought it back and went right to work, Joe: I'm sure Papa John: Played a Joe: It's Papa John: Delayed. Joe: Amazing, it's amazing. Papa John: Now it's cursing everybody, Joe: Oh, Papa John: man. Joe: Gosh. So when you you started playing in Niagara Falls on Papa John: Right, Joe: The organ and Papa John: Right. Joe: You were still playing trumpet at the same time. Papa John: Yes. Joe: Ok, and then were you also maybe while you were playing organ in a band on stage, did you ever actually pull out the trumpet, play a trumpet solo also? Papa John: Yes, yes, Joe: You did. It's called. Papa John: Because I was still learning to organ man that and I said, man, I, I've got to do something else, throw me out the gate. Joe: Oh, my Papa John: So Joe: Gosh. Papa John: I was vocalizing and playing hard, but little by little. Left, left, left. the B captured my soul, man. I just I love the instrument man. Joe: So when you were first starting to play and you had to deal with the whole left hand independence and then laying down the chords and then potentially even soloing with your right hand over the left hand bass, Papa John: They Joe: Did you? Papa John: Move in all the time. Joe: Yeah. Papa John: Yeah. Joe: Did you have in your early groups that you played in, were there bass players in those groups where you Papa John: With Joe: Didn't have Papa John: The Joe: To worry? Papa John: organ. Joe: Yeah. Papa John: Not when I got the organ man. Joe: Really? So you never. Papa John: Even with that, even with the Spinet of playing the pedal, playing the pedal. Joe: Really? Papa John: So I thought that's how you played the B3 until I got hip. I never once I got the organ. Maybe a couple times in the beginning. Yeah, I have to admit, it was a couple few gigs, man. Yeah, couldn't Joe: Yeah, Papa John: Play it, I mean. Joe: I would think you'd want that safety net in the beginning when Papa John: I Joe: You're not. Papa John: Did. You brought it back, you brought it, you just brought that guy had a base electric base, he had like a fender, I guess. Yeah, because I was like sloppy Joes and, you know. Not you Joe: No, no, no, no. Papa John: Might think my hands were going like the bottom is trying to play with the top and it can I tell you, if you lay off of this a while, your coordination takes a minute to come back. Joe: That instrument will kick your ass. Papa John: Oh, double time. And. Joe: So these gigs early on in Niagara Falls, where they were a trio gigs, were they like organ Papa John: Quartet. Joe: Or organ guitar, drums or what was the combo? Papa John: That mostly that, and then it got to Jack's one word that good, I saw it again man, you know, so then it was Jack's trio with the guitar and then we got the sax it was a quartet Joe: Ok, so let's go ahead now back to Philly and you're there, you're you're working for Boeing, right? And you are working on airplanes and helicopters. Wow, OK. Papa John: Chinooks. Joe: And then and your playing out at night, about four or five nights a week. Papa John: Yeah, but yeah, but it got very hectic, they were it was during Vietnam that. Now, where they started working 12 hour days, 6 days a week 7. So I still played on the weekends and I have to keep playing, I would be I'd be kind of mental, Joe: Yeah, now I hear Papa John: You Joe: You Papa John: Know. Joe: And at this point, do you have any kids yet? Papa John: Yeah, have two. Joe: So you had did you have any before you left Niagara Falls? Papa John: Cheryl and Johnny Joe: You did so they were born in Niagara Falls and then was Papa John: Joey Joe: Joey Papa John: You're was born here. Joe: In Philly. Got Papa John: Yeah. Joe: It. OK. All Papa John: And Joe: Right. Papa John: then then reality started to coming around Joe: Yeah, yeah. Papa John: Oh, I got to do this traveling, babies. You know what I got to say? This man, my wife never gave ultimatums. I've been blessed a lot. So I just feel so blessed man. Go through all this stuff and the kids all turned out great. Lucky, I'm blessed! people say they're lucky and blessed and lucky. Joe: We're in Philly, you're working really hard for Boeing because the Vietnam War is happening, you Papa John: Yeah. Joe: Have you have two children. I know Johnny is the oldest or Papa John: Cheryl. Joe: The Cheryls's the oldest. Papa John: Johnny Second. Joe: Then Johnny is the middle. That's why Johnny and I get along, because we're both middle Papa John: Those middle Joe: See! Ballbusters Papa John: Aged. Joe: Both of us just Papa John: Now, Joe: Right in the middle. Papa John: What about the baseball bat boy? He Joe: And Papa John: Was Joe: Then Papa John: A big Joe: And Papa John: Bob. Joe: Then Joey enjoys the youngest. Papa John: We did just go. You're going to be 50 this year. Joe: Wow. Papa John: Johnny is fifty five and Cheryl's fifty eight. Joe: So she and I are the same age. Papa John: Yeah, 1962. Joe: Yeah. Papa John: Now, October, she was born. Joe: Yeah, I was February, so Papa John: There Joe: I'm even Papa John: Is a Joe: I'm even older than her see Papa John: Couple months, and you could have been my kid man! Joe: Yeah, there you go. Papa John: Now lighting up! Joe: All right, sorry. Papa John: Nah man Joe: So we're there, we're in Philly, you're working, playing Papa John: Yeah. Joe: A little bit, but works, you know, a lot of work going on. So you're busy. Do you remember who was the first, most famous person you played with? Papa John: You try to think of, well, I played with Jimmy Smith, we played together Bobby C's to do what we did, an organ thing man. That was to me, that's my favorite. That was my. Joe: So that was Papa John: I Joe: Like, Papa John: Love the cat and Joe: Yeah. Papa John: Then George Benson and Steve Gadd. Now all them guys, I dug all those guys other cats too Jack McDuff God, he was a neat person, man. We did a lot jams, me, Jack, Gene Ludwig. Joe: I used to go see Jack McDuff up in Harlem when I lived in New York. Papa John: You were going to the right spot man that cat, what a soulful player he was. A lot of the guys that come up and play, you know, Bobby C's, we would cats come there and once they tell me name, Oh, Joe: I know Papa John: We Joe: It was. Papa John: Get a lot of cats came in like there was a guitar player there one day that played with Miles Davis . Joe: Now, we used to get a lot of incredible Papa John: Yeah, Joe: People, it was, you know, Papa John: It was a great spot. Joe: Yeah, we need another another place like that. Papa John: But that would be that wouldn't that be fun Joe: Yeah, Papa John: To Joe: But Papa John: Trade bands in and out Joe: But you played with a bunch of people like well before you came to Arizona, I mean, you're with all those Papa John: The. Joe: Heavyweights in Philly and you were telling me how even Dennis Chambers and you were really good Papa John: Dennis. Joe: Friends, right? Yeah, Papa John: Yeah, yeah, it's a real good. Joe: Right. Papa John: Your Joe: And Papa John: Good friends. Joe: And I remember when I was at the NAMM Show out in Anaheim, you had that residency gig during the week of the NAMM Show at Steamers. Papa John: Yeah, I did. Yeah, we just played the. Joe: Arturo Sandoval was on it, Papa John: Yeah, and Joe: Right, Ramon Papa John: No, Joe: Banda right? Papa John: He passed away, man. Ramone played, yeah, there was a guitar player can't think of his name, but he was a heavyweight too Joe: Oh, yeah, Papa John: Like Joe: Yeah. Papa John: We all get our shots. How about Joe Pesci? Joe: That's right, he sang, he Papa John: Yeah, Joe: Sang that night I was there sitting Papa John: Yeah, Joe: Right in front. Papa John: Yeah, Joe: That's a Papa John: Joe. Joe: Night that actually you let me sit in that night. So I got to play with Arturo and the rest of the guys. Yeah. Papa John: get your as up! Joe: Yeah, yeah, that was fun because there are a lot of I think I think that night, to be honest with you, I think if I remember correctly, Marcus Miller was sitting in the audience. Papa John: Yeah he was Joe: So Papa John: Were. Joe: Like when you pointed and I was already looked around the room and Joe Pesci was singing with you and I'm like, whoa, wait a second. But it was fun. I had it was a good time. Papa John: Joey too. Joe: That's right, Joey was on stage to right? Papa John: Yeah, yeah, what a night everybody was up there. That place is closed man. Joe: Yeah, Papa John: Is Joe: Yeah, Papa John: damn shame Joe: I know. Papa John: damn shame Joe: Yeah, so when you were in Philly, did you get up to New York, much to play. Papa John: Played a little bit in New York. Yeah, not not a lot, but a lot. I met a lot of cats in New York, I a lot of good players, but I did play there trying to think of some of the rooms. Joe: I know Philly had such a strong scene that, you know, Papa John: Ah man Joe: You probably Papa John: It Joe: Never Papa John: Was. Joe: Had to leave there to go play New York because it had its own. Papa John: We had and then I played to shore. I played in Atlantic City, I played at the Club Harlem with Manny Cambell and the Fiestas, and it was great man the ban was good too. He Be played vibes. We had a conga drummer, drummer, a horn player and a woman singer man, and in the back room there was a front room. We were playing in front of the bar, the back room, Sammy Davis Jr. playing with big band back there. Yeah, I mean, Club Harlem, Kentucky Avenue man. Across the street, Gracie, Wild Bill Davis was there. Joe: And this was a separate room from any of the casinos. Papa John: Yeah, there was no casinos man this is 1966, '67 Kentucky was like all the clubs, like you went to Harlem or Buffalo and all that, that that's what Kentucky Avenue was all, had all the bands and mostly organ groups that was hot thing, man I got pictures, my wife and I got picture with her of people coming around and get a picture, remember that? Yeah, you got a picture taken, Joe: Oh, you mean Papa John: There were. Joe: Like at the table, like they would do that, yeah, yeah, yeah, yeah, yes. It's also. Papa John: Back in the old days man, the old days man, let's see, you were just a baby because you were my daughter's age, I use to take the kids. I could get them into places. I'd take um. Joe: Yep, yeah, my father would do the same. Papa John: Yeah man people would look, he was cool, he knew? He Joe: Yeah, Papa John: Knew. Joe: Yeah, it's the only way, right? It's the exposure. Papa John: Now, the kids loved it, Johnny played, Joey played, Cheryl played for a while, Joe: What she Papa John: You Joe: Play. Papa John: Know, Alto sax yeah in junior high. Joe: Yeah, and it was Johnny always drawn to the guitar. Papa John: Yeah, in fact he played trumpet for awhile. Yeah, and my dad was my dad was living with us, and then he got guitar and my dad could play his ass off too my dad, one of those old time musicians man Joe: Yeah, did he play in the in the army or the in the war during the war time or. No. Papa John: Too old man. He played with all the big bands like back, and he played with the Dorsey Brothers before the were famous when they were together, he told me they would argue from morning till night. I said, you sure they Joe: Yeah, Papa John: Weren't Italian? Joe: Exactly. Oh, nobody has seen anything until they see you and Joey and Johnny together in the same room. That right Papa John: Up Joe: There, that is gold reality TV right there, if I if I can produce that show. Papa John: Get a show, get one! Joe: Oh, Papa John: The. Joe: My gosh. Papa John: You are. Joe: Oh, my gosh. Papa John: We have to make you a part of it that you couldn't just sit out there and produce. Joe: So let's talk about your CDs, because I want to make sure I have the count right, but I count nine. Papa John: Nine. Joe: Yeah, Papa John: You Joe: That's Papa John: Got Joe: What I. Papa John: It, I got it, my wife put him in a picture frame. Joe: So do you have nine too is that, is that the count you have? Papa John: I that's that's what I have nine Joe: Yeah, because I have Papa John: That's on my own. Joe: So if I go from 19, so the first one I have is 1990 for "Doodlin". Is that correct? Papa John: That's it. That's the one that Joe: Yeah, Papa John: Was ninety Joe: It says nine. Papa John: Nine, Joe: It says Papa John: Yeah. Joe: 94. And then "Comin' Home" was released in 95. Papa John: That's the next one. Joe: And then "All in the Family" was ninety eight, and then I have "Hip Cakewalk", which was Papa John: That's Joe: Two thousand Papa John: It Joe: Two Papa John: For Joe: Thousand Papa John: Us, Joe: One. Papa John: Right? Joe: Right, and then I have "Walking Uptown" two thousand four. Papa John: That's one of my favorite one to go. Joe: And then there's two in two thousand six. There Papa John: "Jumpin'", Joe: Is. Papa John: "Jumpin'". And dadaji. Joe: "Desert Heat". That's correct, and then then we have two thousand nine, which is "Big Shot." Papa John: "Big Shot". Yeah, Joe: And then Papa John: I Joe: The Papa John: Forgot Joe: "Philadelphia Papa John: About that, Joe: Story" in 2011. Papa John: Yeah. That's the last one. Joe: That's the last one you put up a post, I think, on Facebook that that cool album cover. Does that mean there's something in the works? Papa John: I did that, I did that picture, by the way, I have an app that said, I'm going to go out here and start, man. I must have got a million hits. Joe: I know, Papa John: One day I'm coming out. We'll get it. Joe: See? Papa John: I just that's what I was doing, that somehow this is our clock. Joe: Oh, I see it moving in the background. Papa John: Yeah, my sister-in-law got it for us. I forgot about it. I would I would have turned it off and we had we had a dog and it's got all the Joe: That's Papa John: It's Joe: Also. Papa John: Got all the seasons on it Christmas. I don't know what that is pretty but I got them all memorized Joe: Yeah, Papa John: [scats] Joe: Yeah, how it Papa John: It's Joe: Long ago Papa John: Over. Joe: How long is that going to play? You know, we Papa John: It's Joe: Only Papa John: Over right now. Joe: We only have an hour. Papa John: There it goes. Hey, man, we only have an hour. Lighten up, take a break, you Joe: It's Papa John: Union Joe: Take a break. Papa John: Take a break? Joe: Is there any thoughts of, I mean or any conversation of a new new CD? Papa John: Yeah, I talked to Clark, Clark calls me about once a month. Wants to know how you feelin' and then he says, well, "When you come in the studio, Pop?", I got a bunch of stuff too I could do. I mean, I've been I don't you get ready now and have your ass in there. Unless you don't have time for. Joe: I always whataya kiddin' me...it would would be an Papa John: I Joe: Honor. Papa John: Love Joe: I'm Papa John: The. Joe: Looking at the names of all these people on these CDs and I'm like, damn, my name's not on that one, wait a second, my name's not on that one, no I'm only, kidding. Papa John: They were all done on the East Coast except Desert Heat and was with the Banda Brothers. Joe: Yeah, yeah, that Papa John: That Joe: Was special. Papa John: Was yeah, that was 05, I think, wasn't it, '06 Joe: In desert, he was '06, Papa John: Yeah, Joe: Yeah, Papa John: That's when I moved here Joe: Oh, that's when it was so it was two years after I moved here. Got it. Papa John: Yeah, that's right. You know how happy I am for you when I see all the stuff you're doing, man, I pray for this stuff for you. Joe: I'm just hustling, man, I got Papa John: Now, Joe: To just keep Papa John: Why Joe: I Papa John: You Joe: Don't Papa John: Got Joe: Like Papa John: The right? Joe: I don't like I don't like letting any grass grow under my feet. Papa John: And Joe, that's why you're going to do it, man. Joe: Yeah, well, you know what, it's I'm Papa John: That's Joe: Getting pretty Papa John: Why you're Joe: Old Papa John: Going to do Joe: If Papa John: It. Joe: Something doesn't happen soon. Papa John: Well, you can't go by now, what's going on, you knowthe epidemic or whatever the hell it is that's messed up, and the politicians, they're Joe: Yeah, Papa John: All nuts. Joe: Yeah. Papa John: I mean, so. And you're still making it. You're still doing it, man. So Joe: Well... Papa John: This is like a piece of cake after everything's straightens out. Joe: Let's hope so. We got to get back to playin' is what we had to do. Papa John: Love to man Joe: It's like Papa John: Our. Joe: Oxygen for us, you know, taking this away from us is this brutal. Papa John: You know, come here and playin' myself, and after a minute, like I tried a drum machine and I want to throw it through the window. Yeah, I try I just want to have something to play with somebody just. Joe: That's what we should do. I just throw my stuff in the car, come down there, we'll just do a little Sunday pasta dinner, but we'll Papa John: Yeah. Joe: We'll work up an appetite before that. Papa John: That would be fun Joe, I'm in! Joe: Swim a little bit. Papa John: It is our masks mandatory? Joe: No, I haven't been anywhere, you haven't been anywhere, right? Papa John: I feel like cabin fever, man, but I want to stick it out Joe: Yeah, you just Papa John: I'm Joe: Got to stay Papa John: Going Joe: Safe. Papa John: Nowhere. Joe: Yeah, both of you just need to stay safe. And Papa John: Yeah, Joe: How are Papa John: You, Joe: You going Papa John: Too. Joe: Out? Are you going out to get groceries and things like that or you having them delivered or what are you doing? Papa John: Laurine calls ahead and she goes, they throw him in the car in Joe: Good, Papa John: The back and Joe: Good, Papa John: Then she drives off Joe: Good. Papa John: Right now. Everybody out there that masks everybody Joe: Yeah, Papa John: Down here. Joe: Now Papa John: So. Joe: We wear it wherever we go, so Papa John: So do we... Joe: We'll cold, so did I miss anything that you wanted to talk about? I mean. Papa John: Well, just talking about my time on the railroad, Amtrak. Joe: Amtrak, that's right, that was after Boeing. Papa John: Way after I was playing in between all of that and then I went to Amtrak was the big one...I started as an electrician man, I start I had to learn, you have to go to school and stuff. And we needed I had my kids all grown up. And you're, like starting to go through grade school and middle school as Laurene and I are going to hang out, man. The railroad had a friend she had friends, lot of people on the railroad, and I got the job on the railroad in nineteen seventy seven. Joe: And there was a gap in between Boeing and that, so why did you leave Boeing? Just tired Papa John: Layoffs Joe: Of it. Papa John: Every 10 minutes. Government, government job and I went to Seven-Up for a while to the district sales manager and playing constantly, playing down the shore six nights. At Amtrak I became a supervisor at a big job, kept movin' and I was there 20, almost 30 years. Joe: As an electrician for Amtrak? Papa John: Let's do it in the beginning and end with electrical supervisor. We built substations, took care of all the new construction, but I was still playing Joe. I mean, my job, I was playing constantly. I had to come in to work, Saturday morning, we had to work every once in a while and I come in. Where are we? What is this? Where you go to get playin' and go to have breakfast or have a cup of coffee? So by the time you got home... Joe: Time to go right to the job. Papa John: Great. The music never stopped me, but thank God I went to the railroad because the railroad retirement is ridiculous. Joe: Yes, Papa John: So Joe: Something to be said for that, right? You know. Papa John: Yeah. I mean I never expected that. Never. That was so far from any of my thoughts. My Joe: Help. Papa John: Dad used to say when your dad said go to school, put something in that back pocket Joe: That's Papa John: What do Joe: Right, Papa John: You mean, good news, right? Joe: Yeah. Papa John: I was at your school, Fredonia, man. Joe: Yeah, because you were right out there, right? Papa John: Yeah, yeah, yeah, yeah, I, Joe: Yeah. Papa John: I worked, I did gigs there, I played yeah, well, I knew the guy who ran the station WBZ or something Joe: We forget what it is now. Papa John: Yeah, Fredonia is when I was out there, Don Menza was there, all cats who played with big bands, but that's a great music school man. Joe: Yeah, it was good when when I went, we were we were at at the peak of of what was happening with, you know, we had a student run jazz ensemble and competed at the Notre Dame Collegiate Jazz Festival, and those were run by the school. And we ran it ourself, you know. Papa John: The students you guys had a couple Joe: Yeah, it was fun. Papa John: You had some good players there, singers, players, if you wanted have somebody, go to the school, you had a great reputation Joe: Yeah, I got Papa John: And Joe: To play Papa John: Then. Joe: At the Tralfamadore Papa John: But Joe: Or. Papa John: Tralfamadore? Joe: Right. Papa John: The Tralf?. Joe: Isn't that what it was, The Tralf? That's what we called it. Right. For short, The Tralf. Yeah. Papa John: That's something man! Joe: And I spent when I was at Fredonia, I spent a summer in the Canadian side of Niagara Falls Papa John: Oh, Joe: Playing Papa John: Yeah, Joe: At that Papa John: We're. Joe: Amusement park that's right on the other side. Papa John: Right on the other side, I know, right off Lundie's Lane Joe: Yeah, and we played this little we did this doo wop show, it was Papa John: Of Joe: All Papa John: The. Joe: This company came and auditioned people at all the music schools for summer Papa John: Yeah, Joe: Jobs. Papa John: And Joe: So Papa John: You Joe: We Papa John: Got Joe: Got to hire. Papa John: Your. Joe: We got hired as a band. So it was my buddy on trumpet and a bass Papa John: The. Joe: Player friend, the sax player friend. And then we went there and played and we backed up these these two couples, that guy and girls Papa John: Right. Joe: That were doing this doo wop dancing and singing on the stage. Papa John: Ha Joe: We were Papa John: That's cool! Joe: The backup band behind them. We played a place called Lilly Langtry's Papa John: I know that is, oh Lilly...that's on Lundie's Land, you go up Lundie's Lane, the wax museum and. Joe: Correct, That's right. We actually were friends, so when we were when we were there because we lived there for the summer and these little apartments, the I think it was the either the tallest man in the world or tallest woman in the world. We Papa John: The woman. Joe: Literally yeah, we became friends with her and we would actually hang out at her apartment. And Papa John: She was cool man Joe: That's so Papa John: Or Joe: Funny. Papa John: That boy or girl, rah Joe: Yes, Papa John: Rah Joe: Yes. Yes, Papa John: Is just great Joe: Yes. Papa John: To leave it to me, to remember that stuff. Joe: It's so funny. Papa John: Remember the yard of beer? You went to the Yard In The Park when you had a yard of beer. Joe: I don't I don't know if I remember that. Papa John: The glass was a yard long filled it up. Joe: It's like those things that they walk around Atlantic City with, I mean, Papa John: Yeah, Joe: Las Papa John: Where Joe: Vegas, Papa John: They get Joe: Those huge. Papa John: Yard In The Park, it was called, Joe: That's so funny. Papa John: I played all over the place and Toronto, but you had a good gig. Joe: I don't know about that, but Papa John: It was a good gig. Joe: It was it was OK for at the time we had some fun. So. Papa John: What year was that Joe, do you remember? Joe: It had to be eighty two or three. Papa John: Oh, you are young. You're like my daughter. Joe: Yeah, I yeah, I'm surprised, I remember that I don't remember stuff that far back, but. Papa John: I remember not if it's if I want to remember that Joe: Yeah, Papa John: This done that, then Joe: Yeah. Papa John: Railroad, I retired. The pension is crazy. Joe: And what was this what year was that, Papa John: '05 Joe: And then literally a year later, you moving out to Arizona? Papa John: Yes Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: Papa John: Joe: There's our organ guitar trio once Johnny gets out here and a couple of years, Papa John: Yeah, Joe: Right. Papa John: We'll have some serious fun when. Joe: Hopefully we won't run out of places to play once we get kicked out of each one for being crazy. Papa John: Hopefully we WILL get kicked out. No, no, no, gigs are special you know, we keep maintain part of the business man. You don't want to screw that up. Joe: So cool. So 2006, you retire Amtrak two thousand five, you pack up, move out two thousand six Papa John: Sold Joe: And Papa John: The crib back home, I Joe: You're. Papa John: Had a nice I had a nice crib too, that. Joe: But then you come out here and then and then we finally get to meet at one point, and then we play a bunch of gigs around town and. Yeah. Papa John: Yeah, we did. We played a lot man. You have to gigs you were getting gigs left and right. I went out there and start hustling your ass off. Joe: Hey, you have to, right? Papa John: Yeah. Joe: Can't sit by the phone. Papa John: No, what!? Joe: That's the that's the one thing that I just Papa John: Is Joe: Can't sit Papa John: All Joe: By the phone. Papa John: We'd be dead now you can use got to go out after man, but if you wait for the apple to drop off the tree, you'll starve to death, you got to go up and get it. His big thing was education and save your money Joe: And Papa John: To Joe: Save your money, well, you made Papa John: Get Joe: Him Papa John: An Joe: Proud Papa John: Education. Joe: Because you listen, you got yourself a nice a nice retirement package, right? Papa John: Well, I got lucky on that one man God, Thank Joe: You still Papa John: You. Joe: You still were able to maintain playing, Papa John: Yeah, Joe: You got an education Papa John: Oh, Joe: In the electrical field. Papa John: But Joe: What kind of car you have now? Papa John: Oh. Thirty nine Pontiac Joe: Yeah, Papa John: Hot Rod Joe: Yeah. Papa John: Yeah, man's got a big motor in three fifty chevy. All reworked, everything, everything's new and it's like a new car. Joe: How many times you get it out? Papa John: Well, right now, Johnny comes out, we take it out to terrorize the neighborhood, him and I put that car together. Joe: Oh, yeah. Papa John: Yeah, cut the frame off for a new frame underneath, it has disc breaks, power steering, Joe: What is Papa John: Big Joe: It again? Papa John: Motor, a thirty nine, nineteen thirty nine Pontiac, two door sedan. It's just it's a duplicate of a thirty nine Chevy. Joe: What is it like, is it blue or purple, one of the two, Papa John: Yeah, Joe: Which Papa John: Blue. Joe: One? Blue. Papa John: Yeah, Joe: Yeah. Papa John: Well, when you come down, will have to go out for a cruise man Joe: Yeah, I'd love to take that thing out. Papa John: It's fun man Joe: All right, Papa John: It's. Joe: We'll do it. We have a plan now. So we have a Papa John: Yeah. Joe: We have a Sunday pasta dinner. Papa John: A Sunday dinner, baby. Joe: But we jam first. And then we hop in the pool, get cooled off, then we come in and we eat our faces off. Papa John: Right, Joe: And then we Papa John: And. Joe: Go out for a little cruise when it gets Papa John: That's Joe: Cool Papa John: Right, Joe: Out, there Papa John: That's Joe: You go. Papa John: Well when we get done eating, we might not be able to move. Joe: That's true. So you might want to get everything done before we wat. Papa John: That one day you were making something, what was braciole that you make braciole? Joe: I have Papa John: You Joe: No. Papa John: Were cooking something, man. I don't know what it was Joe: I have no idea. I just made a killer designer for Jo Ellen's birthday Papa John: That. Joe: A couple of weeks ago. Yeah. Oh, maybe that's what it was. I put up Papa John: Yeah, Joe: The pot of the Papa John: I Joe: Sauce, Papa John: Love that Joe: The sauce boiling or the gravy, as we call it. Papa John: You call gravy. Joe: Yeah. I don't know if Papa John: You Joe: We're Papa John: Sauce Joe: Not Papa John: Tomato, Joe: Sure Papa John: Tomato, potato, potato, Joe: Exactly. Papa John: But some. Joe: You got to let us know if you're going to do a new recording so we can make sure we let everyone know. And like I said, as soon as all this pandemic stuff Papa John: No. Joe: Disappears, we see if we can get ourselves a gig or a concert somewhere again and get going. Papa John: Concert, Joe: Right. Papa John: I'd like to do that, yeah. Joe: We should get back at The MIM. Do another show up Papa John: I Joe: There. Papa John: Like the yeah, man, we could Joe: Yeah. Yeah. Papa John: Get a yeah, it was okay last time with nice man. Joe: Is there anything else that I missed? Papa John: Yeah, the gig in Albuquerque, wherever we were. Joe: Oh, my gosh. Papa John: Should have made a left turn at Albuquerque Joe: Oh, my gosh. Papa John: The Las Cruces Joe: Right, then we drive all the way there, we set up and then it poured Papa John: It rained Joe: And we couldn't play, right? We couldn't Papa John: That Joe: Play Papa John: They paid and Joe: And Papa John: We got Joe: They play. Papa John: Paid. Joe: So it was basically like a paid little two day trip. Papa John: Two day trip with pay Joe: Yeah, yeah, yeah, well, Papa John: That was terrible. I wanted to play. Joe: No, I know. Papa John: Well, I know we weren't going to play when a guy took the B3. He said it's raining, you guys aren't playing, put it in a van. They left. I guess we're not playing. Joe: Remember, we tried to even talk one of the bars around that outdoor stage to let us play. Papa John: Across the street, yeah. Joe: Yeah, it's like we're already got paid, so just move it all into your place in play inside. Oh, gosh. Papa John: We didn't get. Joe: We can't say we didn't try. Papa John: That's where I met that trumpet player, he's on the East Coast now. Joe: Cool! Papa John: This has been a nice pod... Joe: Thanks, Papa John: Of Joe: Man. Papa John: Spaghetti meatballs. Joe: They go Papa John: And little braciole Joe: Right? Papa John: Yeah, Joe: I'm Papa John: My Joe: Really Papa John: Wife Joe: Excited Papa John: Made Joe: That you Papa John: It. Joe: Came on what'd she say. Papa John: My wife made angel hair bolognese Sunday Joe: Nice. Papa John: Scrambled meat. Joe: Yeah. Papa John: I'm glad I came on too Joe Joe: Yeah, man, it's nice Papa John: I Joe: To Papa John: Love Joe: See your face Papa John: That you Joe: That Papa John: Like that and I like Joe: I Papa John: Your face too Joe. Joe: Haven't seen you in so long, so. Papa John: I know there Joe: Yeah. Papa John: Has been a year!? Joe: I don't know. Could be, gosh. Papa John: No Joe: Like Papa John: Time. Joe: I said, my brain doesn't go backwards too well, so Papa John: Time man time Joe: I know Papa John: Is. Joe: I hear Papa John: Time Joe: Yeah. Papa John: Is on my mind, yes it is Ya know what, we should do all that stuff, do I get all those coveres I Joe: Yeah, Papa John: Love doing it to. Joe: Yeah, Papa John: My favorite Joe: Well, Papa John: Was Sly, Sly and the Family Stone. Joe: Um. Papa John: I use to love those...cover that stuff Joe: Yeah, Papa John: [sings] You might have... Joe: Well, we'll we'll have a chance again. Papa John: I hope so, man. Joe: We will. So, listen, man, I really appreciate you doing this. Papa John: Anything for, you know, you're the man, you're my friend, one of my best friends. Joe: It's nice to see you. It really is, it's nice to talk with you. Papa John: Nice to talk to you, too, man Joe: Yeah, man. All right. Well, again, thank you. You you're one of the best. And Papa John: No. Joe: You you've you've been incredible to me. So I appreciate you and I love you. And I thank you for being here. Papa John: Thank you, Joe, Joe: Ok, Papa John: And Joe: Man. Papa John: I love you, too, brother. Joe: All right, and we'll talk soon and we'll play soon Papa John: Hopefully has, God Bless! Joe: All right, man, thank you. Papa John: All right, bye bye... Joe: Bye...

christmas god tv new york family new york city conversations man land canadian home arizona government philadelphia toronto left italian kentucky pop vietnam jazz buffalo cd places southern east coast boeing trio thirty cds vietnam war alto trumpets albuquerque anaheim scottsdale chester god bless cabaret atlantic city miles davis chevy sly niagara falls papa johns louis armstrong joes amtrak fiestas joe pesci b3 family stone mim pontiac lighten three stooges big shot sammy davis jr holy cow jimmy smith ramone marcus miller joe cool namm show steve gadd fredonia hammond b3 steamers kenny burrell wbz joey defrancesco dennis chambers ganpati defrancesco seven up bobby c joe it joe long desert heat jo ellen joe you joe let joe yeah musical instrument museum joe well dorsey brothers joe how joe so joe thanks joe good joe nice joe all joe did joe now tralf joe my god

Maria Luna - CEO of BRAVO Pay

Play Episode Listen Later Jul 15, 2020 47:08

I sat down with CEO Maria Luna from BRAVO Tip or Pay soon to be BRAVO Pay. We finally reconnected after meeting each other in 2016 when she was very kind and supported a venture I was working on here in Phoenix, AZ. The BRAVO app falls in the payment technologies category and is available as both an iPhone and Android app. Initially, the app was created for hard working people and creatives to get tipped for their services and it has now grown into a payment powerhouse. The new version adds so many more features including social media, social connection, fan pages, store fronts and has literally morphed into an all-inclusive app for anyone who works for themselves or has the ability to make money on their directly with their clients and followers. Unlike the competitors who share your information inside their apps like your name, email, phone # and have deep marketing pockets and charge large fees, BRAVO stands out as caring for all who work hard and deliver great service without giving up your identity and taking money out of your pockets with unfair fees. Maria is so sincere and you can tell that her goal is uplifting everyone and that sole purpose is more important to her than making a single dime. I hope you enjoy our conversation and more importantly, I hope you download the BRAVO app and start using it for all your payments, tipping and social interactions when it comes to promoting your goods and services. https://www.youtube.com/watch?v=OIY2hkhIiZs Maria Luna: BRAVO Pay: https://trybravo.com/ Connect with Maria: LinkedIn Personal: https://www.linkedin.com/in/mlunaceobravopay/ LinkedIn Business: https://www.linkedin.com/company/trybravopay/ YouTube: https://www.youtube.com/channel/UCqzMQ63Znk4H4wKwO496F9A Facebook: https://www.facebook.com/bravopay Instagram: https://www.instagrm.com/bravo_pay Twitter: https://twitter.com/Bravo ********** Podcast Music By: Andy Galore, Album: "Out and About", Song: "Chicken & Scotch" 2014 Andy's Links: http://andygalore.com/ https://www.facebook.com/andygalorebass ********** If you enjoy the podcast, would you please consider leaving a short review on Apple Podcasts/iTunes? It takes less than 60 seconds, and it really makes a difference in helping to convince hard-to-get guests. For show notes and past guests, please visit: https://joecostelloglobal.com/#thejoecostelloshow Subscribe, Rate & Review:I would love if you could subscribe to the podcast and leave an honest rating & review. This will encourage other people to listen and allow us to grow as a community. The bigger we get as a community, the bigger the impact we can have on the world. Sign up for Joe's email newsletter at: https://joecostelloglobal.com/#signup For transcripts of episodes, go to: https://joecostelloglobal.com/#thejoecostelloshow Follow Joe: Twitter: https://twitter.com/jcostelloglobal Instagram: https://www.instagram.com/jcostelloglobal/ Facebook: https://www.facebook.com/jcostelloglobal/ YouTube: https://www.youtube.com/channel/UCUZsrJsf8-1dS6ddAa9Sr1Q?view_as=subscriber Transcript Maria Luna: Joe: Hey, everybody, welcome. I'm excited for my guest today. I have Maria Luna from Bravo. She is going to explain the app and everything about it. Maria and I met, I think, back in twenty sixteen, and I haven't talked to her in quite some time, but they have definitely done a ton of stuff since then. And we're going to get into all that. I'm not going to spoil it. But Maria, welcome and thank you so much for being here. Maria: Thank you. The pleasure is all mine. Joe: There's plenty of interviews with your history and all of your growing up stories about your mother, how she made money and how this is so dear to your heart. The concept of what you built and then your own education, a bachelor's degree, masters degree. So there's plenty of places people can see all that. I really. For me. I love the app so much. And you were so gracious to be a part of my life in 2016. We had opened up a small performance school. And I really want to use this time mostly to get the word out about Bravo and allow you to explain where you've come from and where it's going. I know that there's a new iteration of it since 2016. I didn't even notice in 2016 or actually I didn't even know if this had happened since then. But we're going to talk about Shark Tank, which is cool. I don't know how much you can talk about it, but so you can just say, I can't talk about that. But I just I have some questions about all of that. But again, let's let's start with just the basic concept of what the app does and then we'll get into I know all these other questions will come up. Maria: Awesome, we'll thank you for the opportunity. So with an honor and a pleasure, whenever I invited to speak about our company, it's it's really a team effort. Unfortunately, I'm the majority of the cases on the face of the company, but there's so many amazing people in the team. I want to recognize their work and I'll be happy to answer anything about Bravo and our history and where we're going. More than anything. Joe: Great. Well, again, I think the best place to start is I think there's everyone's going to have some initial confusion when they hear about the app and they then go. But what about and I'm not going to mention any of the other apps that are on that same sort of platform or potentially do somewhat of the same thing, because I know there's a very distinct difference with Bravo. So I need you to explain what Bravo brings to the table where it's different than the the other apps air quotes Maria: Well. Joe: That are happening or what other people might use. Maria: Ok. More than happy. So starting with our journey and our purpose. When we started Bravo, the main purpose is to financially empower anybody that depends on cash payments, tips or content creators and freelancers to make a living. And you say, well, there's many ways of doing that. Yes. But what we bring different to the table. Number one, with Bravo, you your data is not the product. So we do not monetize on our users data. And that has massive implications in your security and the security of your data. And the money. So starting with that, we are super different based on how private, how protective and secure we are for our users. But beyond that, and the purpose to financially empower that takes me to the next version of Bravo. We create first a minimum viable product. And then a beta where we wanted to prove, OK. There is this perfect way. We're two perfect strangers can meet each other, page other and not exchange a single point of data. And that was to take Bravo to the market and prove that there was a need for a super private way for two strangers to connect each other and continue with their lives while taking bravo to the market. And we have listened unlocked to our users and we started to see a lot of verticals popping up beyond the typical tipping situation where you're tipping your valet or anybody that gives you great service. And then we started to see a lot of increase use age in musicians. Broadcasters can benefit from brow. We're seeing some very important podcasts and podcasters using Bravo. Maria: Any type of freelancers, photographers, yoga instructors, trainers. And then we listen to their pain points. And what are those pain points? OK. Whenever they go and put their content out to monetize, to to make a living. All of the platforms out there start either taking a lot from certain income. So they're costly to use their platforms and they start having tiers that make it super complicated. So, for example, if I have ten thousand users, I have access to these tools. But if I don't, I, I do not make the money or I depend on ads. And then they start hiding your content so that you have to pay to be visible and will listen to all of those pain points. And then we did focus groups. We tested things. We went back to them and we made sure that all of the tools to monetize combining that social aspect of it. Let me bring your my content out and let me be financially empowered by my fans or my supporters are in one platform and in a fair price, not hiding anybody's content. So you work hard for your followers or your supporters. I'm not going to hide your content. I'm going to provide those tools and democratize the tools. Why do you need to wait until your super big to have access to to the tools? And that's what we're bringing to the market in our next item nation, which is a perfect combination of sharing who you are monetizing directly from your fan base and providing a store item where you can sell pretty much anything. Joe: Yeah, that's really cool. And along with this new version, is that part of the name change that I saw or did that happen a while ago? Maria: Well, as a company, we because we went very focus on one side of the market. One one niche inside the market, which was tipping. Joe: Mm hmm. Maria: We first position bravo there because we knew that there is a pawn. Right. Tipping was the tip of the iceberg. So we knew that the first thing we could solve right away was that interaction of two strangers. But the vision is way bigger. And it was to eventually become this platform that around the world, anybody can be financially empowered directly from somebody that wants to either pay them for one time. And now we're adding recurring revenue. And we're also opening tools so that you can have your own store inside Bravo, if you will, to to sell anything like experiences. One use case would be I'm a musician and I'm going to say on this concert, I am going to open 10 spaces for people to buy a backstage experience and they can go and buy it on Bravo presented and have their picture taken with their favorite artist. Things like that. So the sky's the limit. Your imagination is the limit. Joe: Right. So is it now called Bravo Pay? Is that official, the Maria: We Joe: Official? Maria: Are evolving now. The Joe: Ok. Maria: Name to the final purpose, which is way bigger than just sending Joe: Tipping. Maria: One time gratuity. So we're evolving the name to Bravo pay. Joe: Awesome. OK, so can I give you some scenarios so that I again, I want this to be I think the marketplace in the sort of pay apps is a little clouded. Or people get used to something and it's a habit forming type thing and they don't they don't want to change and they might not understand that they might be paying fees that they don't need to pay or they're sharing information that they don't need. That's probably the most important thing that Bravo brings to the table unless I've missed something. But that's the thing that I keep hearing, is that it's an anonymous exchange of money, in a sense. Maria: On this version, on our next restoration, on top of that, which is great for your safety and security, what we're adding is that intersection of of social finance of you happen, that direct support from your customer and and your fan base and expanding the tools, democratizing the tools that in any other platform are costly or dependent ads, or they hide your content so that you have to then pay more. Joe: Great. So, again, for clarity, I want to. I want to say that before the new version comes out, though, the huge part of Bravo was not having to exchange any personal information in order for someone to pay you or for you to get paid. Is that correct? Maria: Correct. The security Joe: Ok. Maria: Of being a total. Joe: Right. And so now the new version is you're stacking on the social layer that has been missing because it's just basically was a tipping paying app. But now you're adding in. If you have Bravo, you have all you're capturing all the social tribe that follows you. You're allowed to interact with them. So you're adding other layers that could be more helpful to everybody, but definitely artistic types and creatives for sure. Maria: Correct. And let let me paint the picture for different use cases. Let's Joe: Ok. Maria: Say I'm a yoga instructor and I am on the app and now my my students can not only premium Bravo, but then I can offer it experiences to them through the app that I can sell in my store. So I create a store item for everything that I am going to offer. And like a super private class or an advanced class or anything that I want to offer, I can do it inside the app. I can also grow my my user base or my followers by sharing what I do on the app so I can then also put videos and pictures and content that can be featured on the app and can be also shared to anyone that it's on the app. So we're doing that intersection of social content and payments. Joe: Wow. So it's not just social connection and payments. It's actually you're allowing content. And are you allowing. Are you saying you're allowing even like a store front situation? Maria: Yes, you can create a store on the only thing it's like because of the different regulations of the different platforms, the store items have to be for something physical or something that is not an app purchase. So I can buy things like I like I mentioned the experience of a backstage meeting or I can buy a special class, something that it's not digital. I can buy it on the app, merch, a t shirt, anything that I want to create on a store item for. Joe: That's great. That's really. So it's really come like much different than what I knew. Maria: Oh, yes. The division, it's big and again, because the purpose is to financially empower everyone on all of these tools are offered in a very democratized way. If you use the recurring tools or the additional tools to monetize, Brummell will keep a five percent, but you keep a ninety five percent of the income. And for the gratuity payments, you keep a hundred percent of. Joe: Right, sorry, member. The the actual formula is it's a two percent fee going to the person that's actually making the payment. Right. So it's a Maria: Which which is another differentiator, because Joe: Right. Maria: Let's say if you're going to make a payment with other platforms, you in order for that transaction to be free, and then when I say, quote unquote, free, it's because you are the product most of the time. But let's say if you're going to pay with those platforms, you can only pay with a debit card or retrieving the money directly from your bank account. Bravo allows credit card payments at a two percent fee, which is Joe: Yeah. Unheard of. Maria: Unheard of in the market. Well, yes. Joe: Yeah, it doesn't happen. And it's funny because the listeners and eventually I take this and I put it on my You Tube channel because some people just don't. I don't want the content to be lost for people who don't listen to podcast. But you and I are both in Arizona. And I first saw Bravo when I would pull up to various restaurants and the valet would have a sign and I would look at it and would say, bravo, you know, tipping and whatever the sign said or used to say or still says, I'm not sure. But again, for the users, I want them to understand that what has to happen is both parties have to have the app on their phone, which is a free app. It's downloadable on either Android or iPhone. Right. And the initial way that the payment occurs is by the Jeep finding that person via G.P.S.. Maria: There's Joe: Right. Maria: Two ways if I am near you. I can you find you by proximity because of the G.P.S. capabilities. But we also have a search tab that I can find you by your username. And that's another way we protect your privacy, because my name is Murray. I will not. But on the app, if bananas is not taken, I can be bananas. So that gives another layer of security. Obviously we're in the payments industry in the back end. We need to know who you are because there are laws and regulations. Joe: Mm hmm. Maria: We need to know our customers there so KYC know your customer regulations. So in the back end, we know who you are, but the person that it's paying you doesn't need to know, you know, your real information if you don't want to. Joe: Right. Maria: Your handle is customizable. Joe: Sure. And I think that, again, money. I don't want to say this in the wrong way. Money is great. But money. Physical money is really dirty. Like Maria: It's Joe: The handle. Maria: 30 Joe: It's nasty. Maria: Now, the call, the make makes us realize they're doing more. Joe: Right. So this is a very cool thing because the timing of it where I now have a fairly sizable booking agency in Arizona. And then we expanded into Colorado last summer. So now we're in two states and we have over 500 forms of entertainment on our roster, everything from literally a instrumental guitarist to synchronize swimmers in a pool all the way up to A-list entertainment. And so for us and our entertainers were in that time right now where they are very you know, they all need to go back to work because that's how they make their living. Most of ours are full time entertainers, but they don't want people coming up to them to necessarily request songs because they get right on top of you there, or sometimes they'll even come up. I've seen people come up and they're right in your ear while you're playing a song you're trying to set. It's just ridiculous. Maria: Yeah. Joe: But on top of it, having people come close to put in a tip and put that money in a tip jar, and then you have to handle all that money later on at the end of the night. So this is a huge way to get rid of that whole they don't have to get out of their seat, that you don't have to handle dirty money. And it's just another great reason why, you know, not only the entertainers should all have the app, but consumers should start to look to put it on their phone and they're going to see more more opportunities pop up where they don't have to go, pat their pockets and go, oh, I don't have any cash. It's just right. It's all done. Maria: Correct. Joe: Yeah. Maria: And that is the general purpose. We want everybody to work hard for their money. That has something to bring to the world. Either service or your art, your talent to be to have a decent way of living. So we want to facilitate that interaction where I can. I see. I love what you do and I just tip you or pay you. But now, on top of a one time gratuity, we're adding the ability for me to subscribe to you as a fan and then on a monthly basis support what you do. So do us a podcast or I can subscribe on a monthly basis, you know, support what you do. But I also we're offering and bringing to the table partnerships like right now. We partnered with so many virtual concerts. There's a group, Facebook, that does a blues night every single night, and they're accepting the tips via Bravo. And a lot of people tell me, you know. What is next? So what is next is all of these tools that we are providing to put even more money on the hands of the creators, the artists and the service workers. And then we are going to be rolling out a marketing campaign state by state, to bring the word out in a disciplined way. I'm very proud to say that we we took problem from a bootstrap organic movement to now a movement that is going not only in the USA, but we're going to expanding to Europe, we're going to expanding to Latin America eventually. So Canada will say so. Yeah, you're going to hear more about us. Joe: Yeah, and I want the listeners to know that I knew you when. Because it's true. It's and and the fact that you and your husband, Hector, the both of you are real people like you've come from understanding that this is a situation where you're you're you're making money at something. But more of it is that you're helping people like it's a very sincere movement. This is not a gouging situation. Maria: Well, I would say it's a team effort, like the idea was conceived in a trip that hit there I was we were we wanted to tip our tour guide. We couldn't we didn't have cash. And that's where the idea was born. It took me back to the days of my mother living Joe: Yeah. Maria: On tips and all of that. And then we wanted to create an easy way for people to connect and pay. And then the vision was eventually this could help not only in the ticketing situations, but people that depend on other people to pay at a distance or take a bigger level. But we wanted to go very disciplined. It was the two of us at the very beginning. Joe: Mm hmm. Maria: I mean, Elmer joined us. Hector is a self-taught coder, although he's a physician. So he did the initial wire frames. Then Elmer joined us as a chief technology officer. And now we have six engineers of of world class quality. Joe: Wow. Maria: We have a team. We have Adam that then joined us in the marketing side and sales side. Travis Kohlberg, that it's he is super young, but probably one of the most creative social content creators in the world that he's working with big names. I can I don't dare to say it because, I mean, I don't know how private these projects are, but as big as it gets and we're so fortunate that he is part of the team as well. So super talented, passionate people. And we started with twenty five users by invitation. I think I knew you a little bit after that. Joe: Sure. Maria: And we have been told everything. We have been told that brand is going to crush you. They have, you know, millions and millions and billions of dollars. And unlike we're driven by a purpose, we're not here to take anybody out of market. We are creating our own opportunities. And the more the merrier, the more tools that people have to make money. And let's all competing. In fairness, I'm not afraid of big money or big pockets because we are driven by that purpose. We created a grass roots with twenty five users now. Now we're over two hundred and fifty thousand people all over USA and growing. And that is because of a true excited people talking to their customers and their fan base. Joe: Yeah, that's great. I'm really happy for you. I want to. Can we talk about the subscription piece of it just Maria: Because. Joe: So that I so that I understand? I want to make sure that the users, both the person getting the money and the person paying, understand that the app is free and they just put in whatever their information and then they can create, like you say, create their handle, which basically makes them somewhat anonymous or hidden. But then you offer a subscription based. Maria: And that it's coming. It's not available to Joe: Ok. Maria: Everyone yet. However, Joe: Ok. Maria: All of our brand ambassadors are testing it and very soon we're going to open it for a number of thousands of people. General public that that one, too, tested. We're going to open it for testing before releasing it to the whole wide world. And then it's a beautiful thing. Now we're allowing people to first check us out. So you don't even need to create an account to see. And that's we are changing also our tag name to explore, pay, earn, because that describes better what you can do on the app. Joe: Mm hmm. Maria: So you can explore different profiles. So you create your profile. I'm going to be able to see your profile even before I decide, OK, I'm going to actually sign up to sign up. You provide very little information, your name, your last name, your email. You enter and you can even enter with your credentials with Facebook twitch, many Apple. We're allowing people just boom. I entered with my own credentials and then you can explore the content, whatever you are offering on the app. Your videos, your pictures, all of that, it's free. I don't need to pay for all that to the content creators. What we allow them to do is create a subscription model. So let's say your diehard fans or customers can then subscribe to support you and you can offer them physical experiences or things or merch or anything that it's not an in app purchase. You can offer them on the app by creating sport items. So more to come. We are going to start releasing little by little. We already started a teaser campaign of what's coming on Joe: Mm hmm. Maria: Social media Bravo page. But we're going to very soon open it for people to test themselves. Joe: Yeah, that's great. So one of the things that I saw was Richard Sherman. Is he a spokesperson for Bravo? Maria: I am so fortunate, again, that we started with so many passionate users, but then they brought Richard Sherman is one of the kindest, nicest human beings ever. And he he shared with me that even though he's very conscientious of the importance of of empowering, financially empowering people, he dedicates time to educate his fellow friends on players, on the importance of finance and good education on your own finances. So he loved the idea and he joined us. He's part of our advisory team to better understand that world of athletes, because that's another thing. You create content. You can be a problem. Not only you have to be on service. I'm an athlete. Think about all of the athletes right now sitting at home waiting to be called to work. And now they can have this opportunity that on the app they share who they are, they share the routines, they can share everything, and then they can have that special connection with their fans. Something else we're adding on. It's the ability to chat with your favorite person, but it's at will. So let's say you can say to my customers, I'm going to chat with them Fridays at 1:00 p.m. and then you can turn it off as well. Joe: Yeah, that's great. And I just before we get away from Richard Sherman, I want to make sure that the listeners, because not everyone's going to know him if they don't watch football. But he's a he's an amazing NFL football player. Maria: With the San Francisco 49ers. Joe: That's it. All right. Maria: Yes, yes, he's a cornerback for Joe: Yeah. Maria: The San Francisco 49ers. Joe: To Maria: And Joe: Try. Maria: But again, beyond the big figure that he is inside of the NFL. He is a way bigger human being. He has his own charity. He's he's an amazing person. Joe: That's great. It's great to hear I was really when I saw that, I was like, wow, this is man, Murray is blowing it up and I just. It's crazy. Maria: Really, it's the whole the whole team and the passion behind it. Joe: Yeah, it's really, really exciting. I'm glad. Oh, so when is the new version? I think you said you're starting to kind of send it out here and there to different Maria: Well, Joe: People. Maria: Right now, all of our brand ambassadors have it in their hands. So they're they're testing it for us. And we gathered all of their feedback to make it even stronger on the next phase. Very soon we're going to release it to their fan base. So they're going to be able to provide a code to their fan base to test it. And we are going to also do a campaign so people can request to test it before we release it to the general public. Joe: And is there a release date? Maria: We're not going to announce it yet because Joe: Ok. Maria: There's many factors, and once you are in technology, you know that there are many factors around the launch. And we wanted to make it again, like everything we have done in a lack of grassroots. So we want to bring both our ambassadors, the ambassadors, Zoom, bowling their fan base. We're going to open it to people that are curious when tested and we want to use their voices. So if I talk to you, I can talk for many hours. But if a friend of yours or somebody you admire tells you this is a secure, perfect way for us to have this connection, then it's a more personalized thing. Joe: So you've mentioned a couple of times about a brand ambassador. Can you explain to me what that is and how someone would find out about it and how to become one? Maria: Well, we call them Jubran Ambassadors, but they're so gracious. They're just people that that love our kirp really much Joe: So Maria: Up. Joe: I can be a brand ambassador. Maria: Yes. You're hired. No. Yes. It's people that are passionate enough to join our movement and we call them Bravo family. And they just they just tested with their with their fan base because ultimately it's a tool to be empowered financially, directly by their supporters in the future as we grow. We will open opportunities for. To be paid to be a brand ambassador. But so far, it's a very grassroots. We have famous people like Madonna's guitarist. This woman want to give money Joe: Yes. Maria: Is one Joe: I saw Monty Maria: Rapper. Joe: And on the Shark Tank episode. Maria: Yes. Joe: Yeah. Maria: And he's still he's like a like a brother. I love him so much. I would have a richer. We have Mike Studd, which is a platinum recording artist, and he also has a podcast called Y and Kay. We have John Kilmer's that does a podcast with him. We have Alice Cooper, Solid Rock. We Joe: Oh, Maria: Have Joe: Awesome. Maria: Lee Jansen that it's a professional golf player. Jarrett under Meehl, which is a band that it's amazing. If you haven't heard your music, find you a band. I can't keep going on and on. There's there's many and comedian Brad Bryant Toffler, so many that I am I will be unfair if I leave somebody out. Joe: Right. Maria: But. Joe: No, I get it, I get it. Yeah. It's so funny. I know for Ruka and I know Jared Jared in the middle. Just because, you know, they're Arizona based, but. Yeah. That's awesome. I have a question that I don't want to forget to ask. How does somebody know that that person has Bravo? And I know that at one point when we know you and I met and in 2016 and we had it, there were stickers and there were signage. And so does that all of that still happen? Is that still available to someone? Maria: We can, but court called it temporarily changed the scene. And Joe: Ok. Maria: I'm very proud to say that the spy, that many restaurants have been affected and we have been partnering with some like Helio Raisin. It's a local restaurant that we partnered with two to help as much as we can. But all of that market dried up very soon. And then we started then to see a lot of growth in the virtual world, like like the blues artist that I mentioned and the musicians and whatnot. So we have been growing despite all of this tragedy. And my heart goes out to everybody that it's suffering from from this cold it. But the main point to be said is that that changed the arena. So now the physical interaction doesn't happen as much, though, paid by proximity. So most of the things are virtual. And the way people let them know was talking about it, like you can find no. Awful. Joe: Ok. Yeah. So if a performer let's so I already have people back at work at a local resort here called the Phoenician. So it would be a matter of them getting into the habit of saying, Maria: You Joe: Hey, Maria: Can remember Joe: You know, Maria: The. Joe: Yeah, just if you like what you hear, please hit me up on Bravo. Just something simple like that. Yeah, Maria: Now Joe: Well, that's Maria: It Joe: Great. Maria: Is, but I guess I can mention it is a movement. And normally the person that it's the receiving side has the power to to to bring the message to the people. They. Joe: Yeah, yeah, and it's funny because you mentioned the virtual stuff. And obviously I have a lot of entertainers locally in town that I know that I see up on any of the various platforms doing their live sessions with the hope of making any amount of tips whatsoever to just keep their head above water. So it more than ever, it's important to a have an app like Bravo to be able to receive those tips. And the fact that you're not gouging them with these huge fees. And so everything that a fan or a customer pays, they have it all goes to them. And it's just it's a great thing. So I just I can't stress it enough because I just think that you're in a different realm and I know that you're sincere and it's very much comes from the heart, which is in the business world. That's a hard mixture of having a heart and still wanting to be successful. Maria: I Joe: But. Maria: Don't know what they have to fight, like Joe: I. Maria: Henry Ford said once, a business that only makes money, it's a poor business. And I totally live by that. Joe: Yeah. Maria: You can. I have to be responsible with my stakeholders. And obviously, we're adding now more ways to monetize forever. The receiving side gets the one time gratuities for free and then the recurring revenue because we need to provide other tools. They keep running five percent. But beyond making money, why not be that responsible partner in society where everybody is uplifted with you? That that's Joe: Yeah, Maria: What actually. Joe: Yeah. And you are that person, so thank you for that. I appreciate it for sure. OK, so Maria: But Joe: Now. Maria: Now you're hired as an ambassador Joe: Ok. Maria: To Joe: All right. I'm holding Maria: The. Joe: You to it. All right. So I want to talk about Shark Tank because Maria: Of course. Joe: I didn't know it totally caught me by surprise. And I'm a huge shark tank fan. I follow all of them on social media. I comment all the time on a lot of stuff, on Laurie Laurie stuff and on Damon's stuff. They seem to really be up there a lot. Those are the two that I and you know, the likes. I mean, I don't know if it's them in the background doing it, but it seems sincere, like they they seem like they might be the ones answering the comments or are liking them or not. But who knows. But I have the date of November 5th. Twenty seventeen. Is that correct? Maria: That's correct. Joe: Ok. And I understand the way it happened was you had won a tech award at some other. Maria: Right through San Francisco, Joe: What was it again? Maria: Techcrunch Disrupt in San Francisco, the audience speak. Bravo was their favorite startup. Joe: Yeah. And so from there, my understanding was one of the producers from Shark Tank saw that, heard heard about it, whatever, and invited you on. Maria: Yes, they invited us to to to start the process. But after that, you just like anybody else, so you don't have any special privilege. You still have to submit your versions and everything. And then you go through a very lengthy process all the way until they select the final people presenting. And we were in that group. It was a great experience. And they're they're good people. They're fun. They're they're they're good human beings. Joe: So when you say a lengthy process, what what is that? Maria: I mean, I cannot share because I would I have a confidentiality Joe: Yep, Maria: Agreement, I can there's things that I can not share. Joe: Yep. Maria: But let me. It is not that you just submitted one audition and you're in. That's as much as I can say there. It's a process. Joe: Sure. Maria: It's an Joe: Ok. Maria: Ongoing process where they filter different. The offers are are real. All the conversations are real. And like in any business situation after the show, then there's the conversation continues. Joe: Yes. Maria: And then some companies move on with the offers and some companies are not necessarily depending on on additional discussions. Joe: Mm hmm. Maria: But I have to say they were very fair throughout the process. Everybody makes their own decisions based on what is best for the future. Joe: So Laurie said, and I quote. You were Maria: Lori. Joe: Here. You were one of the most impressive people she has ever seen on the carpet. Maria: She was very generous to say that. And I have to say this about her. I always say that whenever you say something good about a person or bad. Unfortunately. But I tend not to say or try not to say anything bad about anybody. But whenever somebody says something good is because they see that doubting themselves. And Laurita is a good person. So she is all about women empowerment. And I think she was super kind and generous of saying that. And I thank her for that. Joe: How nervous were you? Maria: I have to say the truth at the moment that you're pitching, there's this all adrenaline that it's in you that you're going to an automatic mode. And I'm the kind of person that I don't take no for an answer easily at least. Oh, I went there to bring it before that. I was extremely nervous, like any other human being, because there's many things. I mean, obviously, I saw other chapters where they pretty much crush the Joe: Right. Maria: Spinners. But my team and this is we're having a great team behind you. It's so important. Heck, they're out on Karoline, everybody. My team kept me focused on one thing. The people that do poorly on the show, it's because they don't know their business for a reason or they don't prepare well. But we built this from the ground up. I deal with the finances when the accounting, everything. So from day one. So I knew the numbers. I knew my stuff. And I knew my purpose and the purpose of everybody in the team. So that that took care of of the, you know, having the confidence. I mean, in life, what what can happen is not going to kill you. It's going to make you stronger if it goes by. Joe: It's a. Maria: Fortunately, when. Well, and it opened great doors for us. Joe: I have to tell you, I could be an amazing entrepreneur. I think if I only had the financial side of things together and I think that's probably my biggest downfall. And I'm trying. It's just so hard for me. But the fact that, like everyone that goes on Shark Tank, you go in with. We want this amount of money for this percentage of the company or whatever type of deal. But Muzi, it's that, right? It's we want X for X and you after the end. So the first thing happened is Barbara sort of interrupted you as you were about to explain some stuff and just said, I'm out. Whatever she said it was. And then Kevin thought the space was complicated. So he was out. Alex very cordial. He was just like, if it's not on the back of a napkin, I can't understand that. But me, the back of an envelope, I forget. Maria: Oh, my God. Do you remember it better than I Joe: Yeah, Maria: Do? Joe: Well, I just I had to watch it because I wanted to make sure that I really understood what happened. And then I could see Lori and Mark whispering and ultimately they made you the offer. But the thing that impressed me the most was you were so calm. And when they gave you the offer, it wasn't even like you turned to Hector and did one of those Pylos that everyone doesn't share. You were like you knew the numbers so well that you knew what you could give up and what you couldn't give up. And you counter offered, like, so quickly and so precisely. Damn, I want to know how to do that. Maria: Well, I think it's, um, it's a combination of you have other people that that were with us, friends and family that believed in us and invested also in the company. So you have to have them also in mind and have a bare minimum that will bring value to the people that believed in your first. Right. So that that was part of it. And. And having a, you know, a plan for what was acceptable and what wasn't. Joe: Yeah, it was amazing. I was just like, wow, I would have crumbled when when Barbara first Centera, I would have been like, oh, it threw me off and I would have just been all over the place. But you were just right right there. I say, go, go, Maria. It's like. Maria: They're very gracious. It's just like, oh, well, obviously it's a show, so they baby to make it super endearing, like there were places where I saw policies and I'm like, they make it, you know, super exciting. And that's that's why they're successful. They're they're very good at anything. Joe: Yeah, it was great. OK. So let me recap. So what is the Web site for the app Maria: Look, Joe: At? Maria: You can go to try. Bravo dot com right now, because we started this campaign, you're going to see a video. Is an upgraded experience coming soon? But I tried Bravo dot com. If they want to contact us, they can write to support. I try like when you try something new. I try bravo dot com support. I tried Robillard. Com and and contact us. And also we're very responsive on Instagram. Well you can find us. That's Bromwell underscore pay. And Facebook and Twitter. Joe: Yeah, and I'll. Maria: We're on TCW. Joe: Perfect. So and I'll go and put all the links in the show notes so that it'll be easily accessible by everyone. So again, to make it super, super clear for everyone so they don't go and go. What about. I hate to use this to use that word again. The selling point for Bravo is that it's a very safe, secure, practically or basically anonymous way to pay and accept money from from anyone. So. Maria: Yes. And then in all of those payment applications, which Bravo, that's a small part of Bravo were more than just payments. But those payment applications are are designed for friends and family to pay each other because you need to trust the person. If if I don't trust you, I better not receive the money because once I pay or I it's it's a done deal. And then. But with Bravo, more robust way to pay a stranger, for starters. But then the next version of Bravo, which is super robust, where you can share who you are. Share your content directly. Contact your fan base or your fan base. Contact you and then offer exclusive experiences or merch on the same. Joe: It's really exciting. I am, Maria: The majority of the money, it's a recurring Joe: Yes. Maria: And keep a hundred percent if it's a one time thing. Joe: That's a big, big plus. So I'm really excited for you and Hector and the whole team. I feel like we're family because we go back so far. And I felt like it was the beginning. Even though I know you start I think it was 2014 was the inception of. Maria: Well, we've we formed the company in 2014, but our minimum viable product. We brought it to the market in 2015. Joe: So a year later, I met you. So and here we are, 20, 20. And you guys are just crushing it. And I'm really happy for you. Maria: Thank you. Thank Joe: So Maria: You. Joe: I'll put in all the links in the show notes. And this way everyone can find you and reach out and I'll make sure this gets on all the various platforms that I push this out to. I'm almost at 5000 friends on my Facebook. Me musician page. So they will see this and hopefully we can convert them over and have them start using Bravo. And keep. Maria: Let them join Joe: Yeah. Maria: The movement. Joe: Let them join the movement. I love it. Well, I can't thank you enough for your time. I know you're super busy, but stay healthy. Much success to you. I'm really excited for you both. And the team. Maria: Thank you. Let's continue the conversation. I don't want to lose contact with you. Joe: I know it's been too long. Right. Maria: Yes. Yes. Joe: All right. Maria: It's really Joe: Well, Maria: A pleasure Joe: Thank Maria: To see Joe: You Maria: You. Joe: So much. Maria: All right. Take care.

united states god money europe apple nfl san francisco zoom colorado arizona iphone web android twenty latin america heck bravo shark tank awful tipping jeep alice cooper jarrett richard sherman elmer unheard broadcasters kyc phoenician solid rock ruka robillard tcw pylos joe it joe you joe let joe yeah joe well joe how joe so joe there maria you joe all maria it joe here

Negotiating Terms With Suppliers to Save Cash Flow with Dan Ashburn

Play Episode Listen Later May 12, 2020 41:45

On today's episode of Quiet Light, Dan Ashburn joins us to discuss negotiating terms with your suppliers. Dan is the co-founder of Titan Network, the Mastermind for Amazon sellers, the China Magic, the immersive Mastermind discussed in another episode. Tune in to pick up some awesome tips about how to save cash and boost the overall value of your business. Topics: How he came up with this concept. Why face-to-face interaction is important. Forecasting sales, inventory requirements, and pay-out per unit. Using market data to help with forecasting. The formula/numbers Dan uses. Making sure your offer is win-win. Timing your requests. Having perseverance when it comes to your requests. Traveling to China. Transcription: Mark: Shortly after you buy a business, you're obviously looking for any opportunities to increase your return on investment. Sometimes that's through growth, sometimes that's through different ways of cutting expenses. But oftentimes looking at your suppliers and the terms that you have with your suppliers can be an easy way to free up free cash flow or get better terms or be able to even get different rates. But how do you go about actually negotiating those terms? How do you approach the suppliers, especially when the relationship is new? If you're on the sell side, the same sort of questions applies; how do you approach suppliers in a way where you can increase your return on investment by negotiating better terms? Joe, I know you talked to someone about this and have some good tips here. Joe: Yeah, Dan Ashburn from Titan Network. You know what? Just in the podcast, I'll just tell you right now, Dan goes through a step by step process to basically walk people through what to do, how to do it and get better terms with your supplier. And the ultimate result, whether you've got a straight-up e-commerce business, a Shopify store, or an Amazon business, or whatever it might be, even retailers that are out there importing from overseas. I hear it over and over again that when you make the right connection in the right way with your supplier, you can get better terms. The end result is more cash flow. More cash flow means you've got the ability to buy more inventory as you try to keep up with growth, which is often a good problem to have. But Dan talks about it quite a bit in there. And the piece that is forgotten and not all that talked about is people are always trying to drive top-line revenue. But if you can negotiate better terms with your supplier and then get a better reduction in the cost of goods sold, it's going to boost your overall value as well. Joe: Hey, folks, Joe Valley here from Quiet Light Brokerage, and today, I've got Dan Ashburn on the line with me. Dan is the co-founder of Titan Network and I think China Magic as well amongst another a number of other pretty fancy titles and credits to your LinkedIn profile here that I'm looking at, Dan, but that's as far as I get with fancy introductions so why don't you tell the folks that are listening about yourself and about your background and what you do? Dan: Yeah, sure. Thanks for having me, Joe. So, yeah, I'm the co-founder of Titan Network Mastermind for Amazon Sellers, co-founder, and co-organizer of China Magic, which is a trip where we take 100 people twice a year to source products over in China. We've taken over 500 people now and the co-creator more recently of Amazing Selling Machine. And then my team and I are responsible for delivering eight figures in sales on Amazon per year through my brand management agency. Joe: That's an awful lot. How do you do all that and not lose all your hair? You got a nice head of hair there. So this is a prod for people to go to the YouTube channel as well. Dan: Yeah, for sure. So I have a good team around me. I've got a good management team. I've got an executive assistant who makes me look really good. And then, yeah, I just got good people around me so it's pretty cool. Joe: Okay. There are not a whole lot of Amazon sellers that we have on the podcast and that I deal with on a regular basis; I've been doing this for eight years that have a beautiful British accent. So tell me about that aspect of it. You've got; I don't know how many you said in terms of Amazon sellers, 1,600 that you work with or something like that. How many are typically US-based versus Europe based? Dan: Yeah, it's a great question. I'd still say the majority of the market is in the US. I'd probably say it's a 70/30 split right now. However, Europe is growing and it's growing fast as markets like Germany, etcetera pick up. And if you combine the combined sales volume of Europe to the US, then it's a good opportunity. And Europe is definitely picking up. A lot of the Europeans are obviously using US as their main channel as the US seller are then coming out over into the European market to diversify. Joe: Okay. So a quick side note before we get into the meat of this discussion is that Amazon has just made it a whole lot easier to transfer a European seller account. So that's real positive news. It doesn't necessarily have to be a stock sale anymore. It can be an asset sale and it's easy to transfer so positive stuff there. But today we're talking about a little bit of your China Magic experience and your China experience in general and negotiating terms with your suppliers to improve cash flow and to improve your bottom line and boost valuations, which is a breath of fresh air because you can't; you wrote that line when we talked about it because most people don't think about valuations when they're working with suppliers and things of that nature but you do. Dan: Yes. So you've had Scott Dietz on a number of times now. Scott was very much a mentor of mine over the last few years and something Scott really instilled in me is what's good for selling your business is good for building and running your business. So installing that, combined with the challenges that I come across so many sellers have; there's one thing in this business that stops growth and that's cash flow, its cash on hand. We all know there are only three ways really to grow the business, sell more of the same products, sell additional products, or sell the same products in new marketplaces are really only the three ways. All three of those ways take cash and they take cash flow. So we very quickly; my team and I launched this, my team and I really set our minds over the last couple of years to how do we solve this problem for the accounts that we're involved in, the brands that we have stakes in, and the people that we're working with across Titan Network, China Magic, etcetera to really solve this problem. And that's where this working with a supplier to fund that growth, that whole concept really came from. And I'm really proud to say that the last year or so, the last 18 months, we've been getting some pretty impressive results where suppliers are letting us go north percent down, 10% on shipment, 90% two or three months thereafter so it's really positive. Joe: One of the things I hear often is, yeah, I just got back from a trip from China. I was able to do this. I'm getting better terms here. I reduced my cost of goods sold here. I ate way too much and drank way too much and I feel like I'm a member of their family now. Is that what everybody has to do? Do they have to get on a plane and go to China to meet the manufacturer and supplier or is it just something that helps but there are other ways to do it? Dan: Look, there are other ways; there are always other ways to do it. You can get this done over a Skype call or a Zoom chat like we're having now but if you're serious about growing the business and you want to go in and get the times that you want, then every time in every case, physically being there in China in the room, staring the person in the face, building a real relationship with that person gets the better result every time. And where we've had a good result virtually, it's always been as a result of following up physically with someone. So we've already been earlier in the year or we may be met them at the last Canton Fair but there's always been that physical interaction. And I think what people underestimate about China is the business culture out there is relationship-driven. It's all about building that relationship. It's all about going and having that male drink and some of the alcohol stuff that they put in front of you to really build up that relationship. And there's so many benefits to that relationship much further beyond payment terms and cost of goods sold even down to stuff like it's coming up to Chinese New Year that productions run is full. And because you have that relationship, they bump you to the front of the production line, which keeps you in stock. Joe: So let's get to specifics for the audience then. For people that are; and talk to them as if maybe they're your clients, they may be somebody that just bought an Amazon business from Quiet Light Brokerage or they're somebody that listens and is getting expert advice from folks like you. What are the first few steps that somebody should take? And I know this is general information for general people, specific would be if you were talking to one. What do you advise somebody to do? Dan: Okay, cool. So first off, we need to understand what terms do we need to achieve and what are we aiming for? What's our goal? So the first steps or so of executing this process before you got to China or before you attempt to do this virtually is we need to put together a sales forecast. We need to understand what am I expecting to sell over the next 12 months and include uplift for Q4 based on historical dates or if you're selling seasonal products, make sure you're including all of that uptick and then break down what you plan to order. So once you forecasted those sales, understand what inventory requirements you have and what your current order rate would look like with your supplier over the course of that year. Then figure out with that information what is the payout per unit on your sales? So you need to calculate the Amazon payout per unit after all fees and marketing costs. So within our brands, we work to operating 10% advertising contribution or true A-costs whatever you want to call it. And we factor all of that in and we figure out after storage fees and etcetera, what is our P&L per unit? Joe: Did you say 10% advertising; is that what that was? Dan: Yeah. So as a PPC contribution, margin, or a true A-cost; whatever you want to call it. Once we're out of the launch phase and we're in some maintenance we factor in a 10% margin for advertising. Joe: It's great, we do key financial metrics anytime we list a business for sale and typically see the ad cost somewhere in that 8 to 12, 8 to 15% range so 10% is a good number. Before you go on too far, so you've talked about doing a sales forecast and of course, that leads into inventory need forecast. The question often comes up, what's the best software if there is such software for inventory management and sales forecasts? Do you use some or do you create it with Excel spreadsheets? Dan: So we keep it simple. We do all of this in Google Sheets. We have adopted a new inventory management system and I'm pretty impressed with it if you wanted to talk about that. But we do all of this in a basic Google Sheet template. And if you want, Joe, I can have that template sent out to your subscribers. But yeah, we just use a Google template, we use a Google sheet and we just manually plotting in numbers, manually forecasting out. It's nothing fancy. If we want to work with someone at more advanced than we'll offset pull in an accountant or a bookkeeper; someone that's more savvy with the numbers. But we're just using historical data to forecast the future 12 months. Joe: And you're pulling that data from Amazon or from QuickBooks; where are you pulling it from? Dan: Yeah. Typically, depending on the account that we're working with or depending on whether it's an in-house brand or a joint venture type relationship, we will take the initial data from Amazon. So we'll take your initial sales data. And then if we can sanitize that data with actual validated bookkeeping records, then obviously we will do that. But for the sake of this exercise, it doesn't need to be 100% accurate. This is a forecast and everyone knows; I think what everyone gets is they get that analysis paralysis on forecasts. Because I think what if I don't meet the forecast or how do I know what it's going to sell? You've got to take the best guess and if you haven't got 12 months of trailing data, go use tools like Keeper to look at your number one like for like competitors trailing 12 months of data. Just use data in the market to be able to inform your own self forecast. Joe: So doing a cash flow forecast or I'm sorry sales forecast leads into what your inventory needs are. You're doing that in Google Sheets and what's next from there? Dan: So before we can move onto the next stage, we then have to figure out what our payout per unit is, because these three pieces of data, the sales forecast, and the inventory need forecast as you call it, and then the payout per unit factoring in a rough 10% advertising contribution. That gives us all the information that we need to be able to produce an accurate cash flow forecast. So what sellers I find out doing most that aren't taking on external cash or external funding, they're kind of running on this system of hope. They kind of think or hope they'll have the cash in the bank for the next inventory order, but they're not really forecasting enough ahead to say, will I have enough cash on hand to be able to fund my next inventory order to meet demand of growth and not run out our stock at the same time? But without those three data points, without knowing how many you're going to sell, what inventory you need to meet that demand, and what your cash payout per unit is, you can't put together a cash flow forecast. So once you've got those three data points, we then put together our cash flow forecast. So to give you sort of a demonstration of this, we base it on our current term. So let's say typical terms, 30% deposit, and 70% before shipping. That's pretty much most the market. Joe: Pretty standard. Dan: Yeah. So we will forecast our cash flow based on those terms for the products that we want to negotiate. So you might have one product with a supplier or you might have 10 but you just do it for the group of products that you're talking about with the supplier. So we'll have the sales forecast at the top of that cash flow forecast. Then we'll have a payout forecast which is based on sales. It's just that payout per unit multiplied by the number of units we expect to sell in that month. That gives us our total cash pile for that given month. We then factor in some fixed costs. So things like employees, software, training, salaries, costs that we know we're always going to have. And then we might factor in some ad-hoc costs like travel conferences, going to China Magic twice a year. God, I'm plugging that. So we factor in those hard costs and then that gives us a forecast month by month, January through December. If we go for the annual calendar year of what our cash on hand looks like. Then we just have to plugin based on what we know we have to order what cash output; what cash outlay do we need to factor in based on 30/70 payment terms. That then gives us an accurate view of where we're going to have a deficit on cash, where we're going to be up on cash, and what that looks like for the next twelve months. Does that make sense? Joe: It does. You sound like a grown-up here, running a business with real numbers and doing some analysis. Dan: I'm trying to. Joe: Congratulations. And that's what you teach the folks at Titan Network as well. You're going through this with them Dan: Yeah. Joe: And do you produce video walkthroughs on how to do this with examples? Dan: Yeah. So we've got like the whole step by step. Within Titan, we have something called masterclasses and we've got an entire master class on supply payment negotiation with all the templates, negotiation, soft scripts, ways of approaching; I'll give you some secret sauce in a minute but even like a presentation that we use to present this information to the supplier, all of that is all inside of Titan. And our Titan members; I mean, the results that we're getting, someone got a 50 grand credit line off the back of this. Joe: Wow. Dan: I can't count how many now; it's got to be 20, 30 members in the last few months alone that are getting terms, even just improved terms like 20% down because the raw material costs are quite high, but then they're not paying 40% until 30 days after shipping and the remaining 40% until 60 days after shipping, which means they've been selling the product likely for 30 days before that balance is due, which just opens up so much opportunity because you can afford to sell more product cause you can order more inventory. You can afford to expand into new markets because you can afford more inventories. Or you can afford to launch new products. And for anyone that's doing some serious money in this business, they know launching products is the fastest way to grow it. So, yeah, I mean, the results are quite stellar and we're doing some good things in time for sure. Joe: It's all good stuff. Everybody listening certainly needs to do it if they're not doing it now. So once you've got all this information, the forecast and estimates and things of that nature what do you do with it? Dan: So once we've created that cash flow forecast based on our current terms, so 30/70 we then produce a second forecast and we play around with those terms. So the example of I'm looking as a reference in front of me here is 20% deposit, 35% 60 days after shipping, 45% 90 days after shipping. And this is actually a live case study on one of the ASINs that we run. So we will adjust the cash flow to the new terms to then demonstrate what that does for our cash flow. And at this point, this is all internal. This is all internal reporting, preparation to support and enable the negotiation. So I know here, just look, I'll read us some numbers because obviously, I can't cast the screen. On our 30/70 our cash on hand column across the bottom January was in this example 5,000, February is 3,000, March goes into a 2,000 deficit, April goes into a 4,000 deficit because we've paid out that 30% deposit on this inventory order. Joe: Can you just with those numbers do you have a ballpark total revenue figure as well? I'm just curious. Dan: Yeah, we do. So down here we've got a total payout figure in this example because we haven't got the retail cost in here. We just track basically what cash flow we receive from Amazon so it's on the end of the column. But if it scales up; this was an example of a new product launch achieving 300 in the first month to a thousand units in the 12 months; very, very conservative forecast. Joe: Okay, so what happens when you flip this to the new terms that you're trying to achieve? Dan: So interestingly, the cash outcome; so at this point, we're not forecasting what additional inventory we can get so the cash outcome at the end is the same. So December, for instance, in the 30/70 on this example, the cash outcome for December, cash on hand sorry is 79,000. It started at 4,000. In the after states 20/35/45 again it's 79,000 at the end of the year in terms of cash on hand. But the difference is I don't have a single deficit in my 12-month run because I've been able to achieve better payment terms. So that's sort of step one of this process, cash flow forecasting existing terms and saying where your deficits are and then making sure that you can negotiate payment terms that mean you never run out of cash. You never need to go into any credit line, credit cards, any sort of equity or debt financing, because you're always going to have positive cash on hand to fund the growth of your business. Joe: So what do you have to say to those people that are listening saying, okay, I got this, I'm just going to ask for these better terms and they don't do this work and they don't do a presentation the way that you want, what it is their supply going to say? Dan: It's funny, actually, because one of the things we normally go to; this is a typical role play and if I ever talk about this on a stage and you lied and or anything like that, this is how it typically goes. You send an email that goes, hey, I need some better terms. Can I pay you the balance after shipping? The supplier email backs no. You sit there drinking FML like, what am I going to do? Yeah, most people just go give me better terms, a supplier goes no. And if you think about it, these factories; these suppliers, how many brands are asking them daily? How many of their customers because they're supplying hundreds if not thousands of customers. Joe: Yeah. Dan: I'm just saying give me better terms. I hope you sat there as a factory owner going well what's in it for me? Joe: Right. Dan: You have to answer that question of what's in it for me. It's got to be a win-win relationship. Joe: Let's get to it then. The next stage is I mean, obviously, you're seeing so no deficits, which is great. The entrepreneur is sleeping better at night. They've got a little more cash for themselves, but also cash to probably buy more inventories which is what's in it for the vendor, right? Dan: Absolutely. So with everything we do, we have to approach these relationships as a win-win deal. Having been to China more than a dozen times now, I've taken over 500 people. I have been involved in a number of these negotiations at lower levels and much higher levels. It is all about the relationship. It's all about the win-win. And you have to present what's in it for them. Why should they risk that workflow, their cash flow? Because I sense you're asking them to fund your business. Why should they risk that inaudible[00:20:16.2]. So the outcome for everyone has to be a benefit. So the way we do that is there's a five-step process to presenting a win-win. And this is what we break down into a presentation and we've got templates for etcetera. So Step 1 is the opportunity and the conversation that you're trying to get across is there's a big opportunity to make more sales. That's kind of the message you're trying to get across. And the reason it's better to do this in person as well is you can take; if you've got like a logistics manager or sourcing agent on the ground. All of our Titan members benefit from Titan sourcing, so we provide this to them on the fly. But yeah, if you've got that on the ground, you can then have that person translate but also be like an internal ambassador for this process. So step 1, the opportunity. There's a big opportunity to make more sales. Step 2, the challenge. The challenge is I can't order enough inventories to fund and meet the demand of my growth because of cash flow. And that's the challenge that you need to communicate. You can't fund your growth because of cash flow, and that's limiting your ability to grow because your sale is outgrowing your cash impact. I lose sales and as a result, the supplier, the factory that you're dealing with is going to get smaller orders. The solution is better terms so we can order more inventories. The whole objective here is better payment terms, more cash on hand, and allowing you to order more inventory just to grow faster; to compound that growth faster, the benefit, larger orders for the supplier, more sales for us. So that's kind of the five-step story that your supplier, your factory really needs to understand from this process. I'll read… Joe: Read them off. Yeah, you were just going to do it. Yeah, read them off real quick one more time. Dan: Opportunity, challenge, impact, solution, benefits. So they really need to understand each one of those points and then we're going to break down exactly how we do that. Joe: Okay. So look, I haven't been to China before and I want to ask you about that a little bit, but I know that there are benefits for the manufacturer because you're going to be placing more orders. What's their recourse if you don't pay on those notes or is the risk so low because you've been there, you've met with them, didn't rush on building a relationship. Dan: So you're not going to get this sort of payment terms on your first order. We have, however, had a number of success stories on their first order, even just slight movements like 20/80 on the payment terms or a slight reduction in COGS because we're guaranteeing more orders. We are getting some traction on first orders. This is more for sellers who are probably more your audience, Joe, who are sort of gearing towards exit. I've got an established relationship inaudible[00:22:54.8] the second to third order is kind of the sweet spot that you can start bringing this up. And if you bring it on early in the relationship, every time you place a bigger order, you can revisit these terms, you can revisit the relationship. So for the factory, yes, of course, there is risk involved, but they're weighing up the relationship with you and there are other insurances and stuff that you can bring up without getting too technical. You kept their eyes on ways of ensuring the order and stuff which can give a lot more confidence to the supplier but we don't do that most of the time. It's just purely based on the relationship and your order history. Joe: Okay, so any more steps after the 5 that you talked about there? Dan: Yeah there is. So that's the story we've got to present but when it comes to actually presenting that you've got to back that story with data. So they have to believe you and they need to see the numbers for themselves to tick that logical box. You've ticked the emotional box, you've got the relationship. They believed your story. Now you've got to present the data to back your story. So the six-step process to presenting the win-win, one is the growth potential, two is a product by product sales forecast. So that forecast to we produced in the beginning, we're just going to take the sales aspects of it and present that in a nice presentation. We're going to then present the order values to meet that demand and we're going to show them the before and after. We don't get into showing them the internal cash flow or the profit or anything like that. We just show them on the current payment terms this is what we can afford to order, on the new payment terms this is what we can afford to order. And what they're going to say is an order of say, 5,000, 10,000 units but with the new payment terms, I might be able to order 20,000, 25,000 units. So they're going to see a drastic change in the volume of units that you're able to order if they just work with you on the payment terms. Now, once we've done that, there's two other points. We always present what out of stock means. So most factories and suppliers don't really understand what it means when you're out stuck financially from a sales perspective. Sure they're being hammered; you're sort of getting on email, you're getting on Skype, you're doing you thing saying well I need this order, can you push it? Can you put it to the front of your production line and you're sort of pressuring them. But because you're pressuring them so much they're not really thinking about the impact on sales. So you can show the cost of being out of stock from a point of re-launching, lost sales velocity, lost growth. So maybe you've lost a couple of places in rank which has actually brought your growth percentage down, the momentum of growth. And for them, they're not going to be getting as frequent orders because that volume is down, meaning you're not placing as bigger orders. So you can still present the loss to them as well, which is a nice sort of stick to underpin the whole thing. And then finally you go right to solve this problem; this challenge, to order more from you and to recover was it, defend against that potential loss of being out of stock. These are the payment terms I need. And you just present the data to back the story. And it's quite easy, there's a whole template towards it in terms of how we do that. You can use screenshots out of your Amazon seller central accounts to back the data; you can use Keeper screenshots within the presentation as well as just sort of showing screenshots of that spreadsheet you really want to be showing the analytical graphs to back that data because it really gives that visual representation. Joe: I'm sorry so let's just put in the; so for every 10 people that go through this process and try to renegotiate terms to go through the full process, they do it right. They do the projections. They do everything that you've talked about so far, which I think is eleven steps after they're doing the sales forecast, do 9 out of 10 of them get better terms or 10 out of 10 or 2 out of 10; what are the odds? Just put it into a realistic perspective for the audience. Dan: So if you are already working with the supplier, you're already in communication. You're not just… Joe: Yeah, let's assume that somebody has been placing two, three, four, five orders. A lot of people if they hadn't done this, they'd been placing the order for two or three years. Dan: Yeah, so that person I would be as confident to say that eight in 10 people. I am yet to come across a relationship of that stature that's established with good communication where you won't end up better off. Now, you might not get the terms that you want straight out the gate, but I guarantee if they value your business, which they should do by that point you've got a relationship, you will end up off in a better place. So 90 to 100% of people will end up better off. 80% of people will execute to a point where it impacts customer for sure. Joe: And this includes a trip to China because you're presenting it in person? Dan: Yeah, this is like optimum. You've gone to China. Think about how many requests these factories and suppliers get from brands in the west as they say it asking. And then think about the percentage of people that actually get on a flight, fly to China, sit in the office, drink sake and do all that good stuff. That is going to be like 98 and 2%. So who are they going to prioritize? They're going to prioritize those showing real commitment. Business is about commitment. Business is about doing what you said you would do. And I think that's all this is. It's as simple as that. Joe: Yeah, the 80% of people that have established brands can certainly get better terms with these vendors. Are you seeing; obviously they're ordering more and with higher volume orders comes lower cost of goods sold. How do you negotiate a lower cost of goods sold? Is it strictly volume based or do you make that part of this overall presentation that you're looking for terms and lower COGS at certain levels? Dan: Yes. So what we do is we hold that conversation. So in any negotiation, you need the person you're negotiating with to say yes a few times. You need to get them to agree and we need to chip away at the yeses. So what we do is we hold that COGS conversation right until the end. So once we've gone through showing the growth potential, the product by product sales forecasts, showing the order values to meet the demand before and after if they give us these terms, the impacts of being out of stock, and then say this is the payment terms we want and always start higher, by the way. Always start higher than you actually need because there will always be a piece of negotiation. They will turn around and say, yes, hopefully. That's the goal. That's our amount in agreement. It might not be what you want, but they might say, well, on this one, we'll give you this and if you meet the demand, then on the next one we'll give you this. We might be a bit of an up curve. We then turn around and just say so now I'm placing a bigger order, I get a better price, right? And you'll find about half the time they'll smile and laugh at you and say, yes, the other half the time they'll say, let's talk about that in the next order. But yeah, you have to put a bit tongue-in-cheek in whether you have to build the relationship, play on the relationship. Joe: Is this done over dinner or is it done over a desk; how do you see it most often done? Dan: Typically, it would be done; in most cases, it's going to be over some sort of food environment, some suppliers and factories would like to get the business done and then go for dinner. Most likes to get the relationship piece in first. They want to sort of learn about you, your family. They want to give you some food, take you to lunch. And then during that process, we'll then bring it down to the conversation. Now, it's important to say it won't always happen there and then in the room. A lot of the time you'll present this, you'll throw in that thing at the end that says, so now I'm placing a bigger order do I get a better price and be a bit cheeky with it. And a lot of the time they're going to turn around and say well, look, we need to run our raw material costs. We need to look our production workflow. We need to speak to our internal production manager. We'll get back to you within a few days. So depending on how long you're in China, it could be back when you were in America or back in Europe. You'll jump on Skype and they'll go, okay, cool we've run the numbers. It makes sense. Yes, we can do that. So it kind of happens like a bit of a fluid conversation during the social aspects. Sometimes you'll sit in an office and just get it done. But most of the time it would be over some sort of lunch or something like that. Joe: I got you. Okay, any other steps that you want to review? Dan: No, we're good. So really just remember, it's a win-win. Do your internal prep; what they say is the success is in the preparation, success in the planning. Do your planning, and then make sure you're presenting it in a way that presents it as a win to them. And yes, you can achieve this virtually over the internet, but you're going to have 100% better results. And if it's okay, Joe, I've got some examples here, actually. Joe: Yeah. Dan: So Case Study 1, 30% deposit, 70% before shipping, after 0% deposit, 100% percent 60 days after shipping. Joe: That's a beautiful outcome. I can't imagine anybody would be upset about that. Dan: No, it's cool. That was actually inaudible[00:31:13.0] and my business partner and Sarah, who's head of Titan Sourcing that negotiated that one. The next one was 30% deposit, 70% before shipping after we got a 30% deposit because the raw material costs were quite high on this product, which you have to still work with them on, and then it was 20% percent before shipping. So we pay sort of 50% and then we got 50% percent 30 days after arrival at Amazon FBA, which meant we had 30 days of sales before having to pay the remaining 50%. Case Study 30% deposit, 70% on the approved inspection report. That was a bit of a quality assurance thing there. After we got a 20% deposit, 35% 60 days after shipping, 45% 90 days after shipping so that was a nice one. And then finally, the fourth one and I've got some bonus tips at the end if you want them, Joe, 20% deposit, 80% before shipping. That was the terms we had so it was a bit nicer on the frontend. After we got a 10% deposit, 40% on landing in the USA, and 50% 60 days after landing. Joe: Wow. Dan: And these are typical; I can stand there and say now these are just four cases that we've done we've got a whole Titan network full of members that are doing the same. Joe: Yeah. No, I want to hear about the bonus tips. Also want to hear briefly about China Magic and maybe we can have Athena on to talk about it. Just let me ask; go ahead into the bonus tips and then then I want to talk briefly about China Magic. Dan: Yeah, sure. Because there's loads of benefits above and beyond obviously COGS and terms. Joe: Yeah. Dan: Okay, so tips to success face to face always will produce a better result. They often pay for the trip and that's what you got. Think if you're looking at a cost offset, you'll often get to pay for the trip in the renegotiation. Always ask for more than you need; really important. You probably won't shake hands there and then as I said. Make sure if you come to see the boss, you don't want to be waiting on a middle person or a middle man so they then you have to go and sort of do the translation. You want to be in front doing the deal with the boss. Before you go into that environment, before you even head out to China, if you've got a representative from that factory or you've got a sourcing agent that handles that relationship for you, then get them onside. So run through the presentation with them first so that when they're in the room, they've already done the thinking, they're already standing there, and they can get the buy-in of the boss in the room. Consider consolidating your orders to one supplier. It gives you more buying power. And one thing we're a big fan of in Titan and in China Magic is leveraging an outside adviser. Because then you can play the whole good cop bad cop. If you want to maintain a good relationship you can bring in someone that's like an external advisor to crack the weight a little bit and you can call them your finance person. You can call them whatever you want to. That allows you to do that. And remember, every relationship and supplier cash flow is different so you have to really; don't just tell them what you want, understand what they need, and bring the two together. And this is counter-intuitive but it's often being willing to pay more to achieve the terms especially in the beginning. So one thing you can do is if they're not budging, you can afford to give them a dollar bum pull over here now on a product to get them to nudge on the payment terms which is still going to give you more cash on hand and then come back to renegotiating the COGS once you're up at the higher volume because you've been off to some of the growth. Joe: I like it. Dan: And also take gifts as well; take presents. It works. It depends; there are controversial views on this. So Kian Golzari for instance who is a sort of an expert on China Magic everything; he's doing sourcing and product development. Kian loves; he's from Scotland, he's from Edinburgh, he loves taking some Scotch whiskey with him. Other people take chocolate. There's the whole red envelope with some cash in it for the children but that one's a bit more controversial. But yeah, just my advice would be take something that's important; not important but personal to you, and then that creates a talking point and it creates more of a relationship and a bond. Joe: Okay, that sounds great. I think one of the most important things I see people that are running great businesses and eventually sell them, they're great businesses, do great for buyers. They really have been to China and they always wind up with either better terms or better COGS. It sounds like a scary place to me, though. I've never been so is China a scary place? Dan: It really isn't. So when I first got involved in the early days with China Magic I went out there as a guest speaker and then ended up becoming a co-organizer with Athena. I thought the same but when you land; if you think like Guangzhou where the Canton Fair is. That's where we go. It's the biggest product sourcing Fair in the world. I think they start setting up 5 million products on display during the Canton Fair. They're used to receiving hundreds of thousands, if not millions of westerners through that fair over the course of 12 months. The airlines are efficient. The flights are cheap. I mean from the US, the flights are $500 on a good day it's $400. Joe: Wow. Dan: Yes. I mean, it's really cheap. That's for obviously economy. I got a first-class ticket; I mean first-class pod for two grand. Joe: Wow. Dan: So yeah I mean it's cheap. We head out there and we're picked up by a nice comfortable bus and we stay in the Four Seasons Hotel which was rated Forbes Best Business Hotel in the world 2019; the one where we go. So they look after us. We've got five staff service and food, good internet. We then head over to the fair. This isn't a market; there are other markets like Ebru and stuff which are a bit more like rack markets, Canton Fair is a professional establishment. All of the suppliers there are paying serious money to have a booth at this fair. So if they don't speak English themselves, they'll employ English speaking representatives. So you can have a really good conversation there. Sometimes you have to work with a bit of culture and there are definitely cultural barriers that you have to learn, like receiving a business card with two hands and showing that respect. It goes much further and Ken covers all this in China Magic. We go into depth like we spend some of that four hours just going into how to have a conversation with a supplier so that they know you are educated. But yeah I mean, to cut a long story short, it really isn't. Like I walk around in my shorts and my t-shirt, I go down and they've got little smoothie bars now I'm on the streets by the hotel. It's quite a pleasant place. Joe: Fantastic. How do people learn more about Titan Network and then China Magic and again I think we ought to probably have somebody on for China Magic and what that event is all about because it's; I don't know, it's the next step. I don't know if I would want to go on my own and I assume that you would not recommend that. You go with a group that does this on a regular basis. So tell us about how more people learn about Titan Network and in particular this cash flow management renegotiation, all of the different steps that you've talked about. Dan: Yeah, sure. So if you want to know more about Titan Network, we're an invite-only membership organization for Amazon sellers. We're going from strength to strength. And the thing about Titan Network is it's created by sellers for sellers. So it's not about any one person's success. It's not like a guru led thing. You can learn it at TitanNetwork.com. That's where you go and learn about Titan Network. And if you feel like you want to find your tribe and your family, then take a look there and you can apply for Titan Network. If you want to learn more about China Magic go to ChinaMagicTrip.com. It's got the full trip details on it. I'm going to give you access to a little special link. If you go to ChinaMagicTrip.com/masterclass we go into a bit more depth on these payment terms upon negotiation stuff. And it's got off-screen shares. You can actually see some of the slides. And that's all out there free of charge so you can go and take a look at that. Yeah, I'd love to do a follow up about China Magic. I'll bring Kian on, I'll bring Athena on and go into the depths of like not just payment terms and cash flow, but how do you build these relationships and how do you find these factories that you're not going to find in Ali Baba, how do you improve the quality, how do you differentiate products in 2020; yeah, we could talk about a lot. Joe: Well, I think it's a great service to the people that are Amazon sellers or even just not Amazon sellers, other people that sell-off of Amazon need better terms as well. Dan: Yeah. We're seeing Shopify sellers. We're seeing a lot of these influencers on Instagram that are realizing they've got an audience. If they apply a physical product to that audience, they're going to make money. We're seeing all these guys come along now because it doesn't matter whether you're selling on Amazon or Shopify, physical products are physical products. And to your point about going alone, there are seasoned travelers out there that will have no issue in visiting China themselves. But for me, it's about return on my time, a return on investment on my time so if I can go with 75 like-minded sellers at a similar point the journey led by multiple seven and eight-figure sellers, get shown 30 years' worth of sourcing experience across Marcy, Kian, myself and the team in a couple of days; so condense that learning period, get the COGS on payment terms on it and every single evening mastermind for four hours a night on every single area of the business, that to me is a bigger return on my time than just going over to China myself. So that's kind of my view on it. Joe: Yeah, if I was in the e-commerce world myself, I'd be in. I'd want to bring my son though so he enjoys the world travel. Maybe in another life, I'm out of the e-commerce business myself. I'm an entrepreneur at Quiet Light Brokerage only. So listen Dan, I appreciate all the time you spent here. I think its great advice and I know from experience that people that exit their business for the maximum value end up doing a lot of the things you've talked about so thank you. I appreciate it. Dan: Yeah, no there's just a final closing point now. We should tie this back to valuation. So you'd go how does this make my business worth more? Well, I think I'll just spin-off three raises in my head to maybe cut this in. One is it's going to make you more attractive as you've got solid foundation relationships with your supply chain and you're not relying on Alibaba or some sourcing agent. Buyers want to know you've got the full foundation. Two if you've got more margin, you've got more profit, more profit, bigger valuation. And three, if you've got better cash flow and more cash flow on hand, you can compound that freight faster which means you achieve your valuation faster. So that's how they tie it back to valuation. Joe: And again, I say it and I'll stop saying because Mark keeps correcting me there's no fifth pillar. All of the things that you're talking about make you a better business person; somebody that others will trust because you're instilling confidence in them that will bring you better value as well. People if they trust you they're willing to pay more for your business. So Dan, great stuff, thanks so much for coming on the podcast. Dan: I appreciate it, Joe. Thanks for the time. Resources: Titan Network China Magic Masterclass China Magic Trip Quiet Light Podcast@quietlightbrokerage.com

How Visiting China (and how) Can Boost Your Revenue & Cash Flows

Play Episode Listen Later Apr 15, 2020 32:22

On this episode of Quiet Light, we discuss Athena Severi's immersive Mastermind group, China Magic, and her work as an entrepreneur. Episode Highlights: Being a "connector of people". The roots of China Magic. Why it's important to trust the wisdom of others. The China Magic schedule. Splitting the China Magic Mastermind into smaller groups. The Canton Fair. The percentage of women at Mastermind events. Transcription: Mark: I think one of the interesting things about the online world and online businesses is that online business owners tend to be more inclined to be a part of mastermind groups and to gather together and share information with each other. And these groups tend to range from small and informal; I know I'm part of a small mastermind group that would get together like once every few months for lunch to really evolve even to a point; Joe, I know you talked to Athena Severi is that right? Joe: Yeah. Mark: She takes people to China for 12 days as part of her mastermind group to educate and teach people and have people get comfortable with working in China, direct with Chinese manufacturers and teach them how to go about doing that. How did that conversation go? Joe: Yeah, well, great. Look, two things here, number one, it's so good to have a female entrepreneur on the podcast. There's just not enough in the e-commerce space and Athena is one of them. She's a terrific entrepreneur that connected with Kevin King, who we know, the Titan Network and her group, China Magic. At one point, she had an Amazon business and went over to China through a group thing and found it to be not very helpful, essentially abrasive and going about negotiating in a sort of Wall Street manner; the way that it really doesn't work. So she brought in some experts. She comes from the event planning world and she created China Magic and takes, I think its 50 people over to China for the Canton Fair for a 12-day event. Every night they have a mastermind group where they're talking about selling on Amazon. They have people go into the fair and walk around with you and help you find products, negotiate and talk with people in a way that builds lasting relationships. They travel to different cities. They do so many things and they brought in some amazing people that are mentors that go on the trip as well. And they also build lifelong relationships with the people that go. To top it off they stay at the Ritz-Carlton at like the 90th floor; it's pretty amazing. Mark: That sounds fun. Joe: And it's not unreasonably priced for a trip to China and all you get. I think she should be charging more. But one of the key things that I hear over and over and over again is that for an entrepreneur who has made the trip, made the effort to go to China and meet with their manufacturer, they come out with a better relationship with their manufacturer, better terms that improve cash flow, that allows them to invest more in more SKUs or more marketing. And what Athena does is she takes all the risk and mystery out of booking that trip to China. Personally, I would never want to do it on my own. She takes it all out. I would definitely go if I was an e-commerce entrepreneur through China Magic; I'll definitely do. Mark: Sounds great. Joe: Let's go through it. Joe: Hey, folks. Joe Valley here from Quiet Light Brokerage and today I have Athena Severi with me. She is the founder of China Magic. But I'm not going to say much more than that. Athena, welcome to the Quiet Light Podcast. Athena: Joe, it's an honor to be here. Thanks so much for having me. Joe: I didn't want to say much more because I want you to tell us who the heck you are. That's what we do here. I don't want to read a script. I want you to tell us what your background is, who you are, and then we'll go from there. Athena: Okay, cool. So I am naturally a connector of people. I build communities. And I've always created very unique event experiences where I connect people with people who are very brilliant, intelligent, and successful in their world. And because of that, I created some pretty interesting and unique experiences, including this will be called China Magic. Joe: Yeah, I think Kevin King introduced us for the very first time and he said, Joe, this lady collects people, which is an interesting thing to say. But then we talked about China Magic and you've talked about it and look, I've not run my own e-commerce site since 2010 when I sold. Now it's conflict, in my opinion, to online because I'm a broker, I'm between, in the middle. Even if I had my own e-commerce site I don't know if I'd want to get on a plane and go to China because it's just so overwhelming. But you kind of run this show and help people get over that overwhelming aspect of it. Can you talk about how China Magic started and what you do for people on the way there? Athena: Yeah. Joe: Because the audience is they're SaaS and they're content owners as well but for the e-commerce owners that think and know; we've talked about it, how to get better deals is to get on a plane and go to China and negotiate with the manufacturer, meet with them, becomes friends with them, become part of the family. But nobody really wants to do that. It's a big undertaking. So you help people with that. So tell us about China Magic a little bit. Athena: Sure. So just to kind of backtrack a little bit, I worked for a consulting firm in corporate America for some time and then I got introduced to the Amazon world. And I actually released a couple of products that went well. I actually quit my six-figure job selling on Amazon. So I would struggle quite a bit because I was actually in; I still am in the yoga accessory world and I dealt with fabrics and colors and sizes and different things that communication with China would always just take a long time. I get a sample sent to me if it was a bit off it would take a couple more weeks before they could actually remake it, send it back to me. And I was struggling with my own growth as a business because of that. And also, I always wanted to kind of design things a bit and not be the same as everybody else. So I think because of that, I was actually at a conference and someone mentioned going to China. And I never even thought of going to China before but I realized that's a big part of being in e-com is the quality of your products, the price point that you can get your products, like your supply chain and the suppliers that you deal with is such a huge factor when it comes to your business. And I noticed that there was a lot of Amazon sellers who were like very successfully and done millions of dollars on Amazon, but they weren't experts at sourcing and they had never been to China themselves. So I was actually quite intrigued by the idea of going on my own. Joe: How did you pull it off for the first time if you've never been, did you go with others or did you go by yourself? Athena: I did actually go with others. So the gentleman who is kind of pitching the idea of China, he really sold me on the fact that in order to really grow my brand, it's good to go directly and to meet suppliers. So I signed up for this trip and spent quite a bit of money. It was a three-day trip and we went to a place called Ebru. And even before we got there, I noticed there was a lot missing. Like no one told us what to pack, how to prepare for visa, how to connect with the fellow members; like there was missing a lot of pizzazz and being that I actually have a background in events and then networking and then taking care of people; I worked with celebrities, I've built huge conferences and events like my whole life; that's my background. Joe: Are you counting Kevin King as a celebrity right now? That's obviously… Athena: No. Joe: No? Okay, just checking. Athena: He's his own world but yeah, yeah, yeah. Joe: Okay. Athena: No, I mean like I worked with artists at a place that's called celebrities in revert for years so, like, I know how to red carpet people, how to take care of people, I know the power of connection and community so I was really expecting more of that. I was expecting to be mentored. And what I found when I got there is that they had a different point of view on how to deal with China. The person who was leading was talking about how you present yourself, this is big business and you really talk down the price and you go in there very hardcore, very aggressively, very western and… Joe: The opposite of everything I've ever heard. Athena: Exactly. So I was sitting there and I was not an expert in China whatsoever but I do know human beings and I thought this is very strange. So I actually wanted to do a test and one of the mentors that were on the trip was supposed to go to and source a few products using that method, going in and being the big dog and talking big things and I was like, you know, I'm going to go the other direction, I'm going to go very human being. So I went in, oh, my gosh, is that your daughter? Oh, how lovely. How are you today? Like actually building rapport and then talking about products, talking about the future, building a real relationship. And then towards the end, when things are already being sort of like that connection is there and the creativity and the future is there then I start talking about how can we do this and how could that work and what price point can we get this at? Do you see what I mean? Like a completely different way. They're going in and being like, how much is this and what can you do for me? And I was getting much better pricing. I was getting much better inputs and creativity and they were showing me things that they weren't showing everyone else. They weren't on the shelves and I was like, this is very interesting. So I noticed that also there wasn't much mentoring. They sent us out with these guys who were sort of high school students to translate for us and they didn't have a background in negotiating. They didn't actually understand sourcing so it's like I was brand new to the subject of China, these guys were brand new to the subject of negotiating and the blind is leading the blind. And so that was the trip I went on. And so I thought, you know what, this could be so much better. This could be amazing. And I went to the organizers and said, hey this is my background. And as it was, I was already bringing in the groups with me. I was like mentoring them I was keeping them upbeat, I was creating the networking, I was just that's who I am. So anyway, the point is that I offered to partner with them. I was like let's get together, let's make this beautiful. And they're like, you know what we're happy with the way this trip is. And I'm like, okay, cool. And I was like I'm going to just do my own. I'm going to bring in some friends and they're like yeah, yeah, cool. And so my first China Magic I brought 50 people to China and we extended it to a 12-day experience. Joe: Wow. let's talk about the benefit of going to China for an e-commerce entrepreneur and first, let's define who they are. Is it somebody that already has an e-commerce business that is going to meet with their manufacturer and work on new terms and so, so forth and find new products or is it, somebody that's just beginning, doesn't even have a website yet or a product and they're sourcing it for the first time. Who's the ideal candidate to join and go to China on China Magic's trips? Athena: Sure. So to me, if you want to be professional as an Amazon seller and you want to be able to have that sort of relationship and that creativity, it doesn't matter if you're brand new to Amazon or if you have scaled up to doing seven figures, eight-figures. Because what we've done in China and I can kind of tell you more about that in a bit is we actually cater to every sort of stage that people are in in their journey because you're going to be looking at sourcing in a completely different way. So, I mean, China Magic has progressed tremendously. We've already done six trips at this point. But to kind of backtrack a little bit and to kind of answer that question a little better I brought in people who were doing millions of dollars on Amazon and because they had never met with their manufacturer, they were actually able to get such a reduction on the cost of their products, such better terms, like these are people who've been working with the same supplier for two years, three years, and they would meet with them and by the end, like they were doing, 30% down 70% on shipping and they were able to get that down to like 10%, 20% down and then 30 days after landing, paying another 35% and then the rest 60 days or 90 days after. And what that does for someone's cash flow is amazing, especially when you're doing bigger numbers. And obviously coming from your perspective as a broker, that really helps with cash flow and it really helps growth. Joe: Yeah and it allows them to grow the business for sure. I think it's critically important. I've heard so many times how people go to China and really connect with their manufacturer and come up with better terms and better pricing. And even if it's just a dollar off cost of goods sold that you sell, 2,000 a month of that particular unit, that's $24,000 a year in savings. And then eventually when you do sell the business if it's at a three-time multiple, that's adding nearly $75,000 on the list price of the business. And you can put as many zeros before or after that as you want, it's important to do. All right so let's talk about the logistics of 50 people going to China but it's your first trip? Athena: Yeah, it was my first trip. And because I'm crazy, I booked every single person's flight myself. Joe: Oh my. Athena: Yeah, like I'm just a wild girl. Joe: You don't do that now, though, right? Athena: No, no, no. I don't do that now. Joe: Okay. Athena: Yeah, I mean, I think the thing that was most magic about China Magic is I connected with a gentleman named Marty Sherman who's been going to China for over 20 years. And this guy understands China on a level I'd never even come across before. And he really believes in developing relationships. And so the very first thing that we do in China Magic is we talk about the culture. We talk about how to really navigate the waters and how to actually approach people. And it's amazing, again, like these guys are professional entrepreneurs, they're professional business owners, they think they understand their suppliers, they think they understand how to do business. But then when you actually talk to someone who's been on the ground in China for over 20 years, the lessons he's learned and the things that he's been able to develop is so incredible. So that's really the power of finding amazing mentors and leaders when it comes to their field because they understand it better than any of us do, just the same way that you understand what you do so much better. Like maybe some guy sold his business or a couple of businesses or whatever versus someone who's actually seen the sale of hundreds, do you know what I mean? Like their professionalism that you gain from having done something over and over and over again. So what I was looking for when I started China Magic were people who were just absolute geniuses when it came to sourcing. So I actually met a guy; this is a crazy story but have you heard of Kian Golzari, Joe? Joe: No, I don't think I have. So does that make me uninformed; should I know about this? Athena: No, no, no. You're wonderful. You know, a lot of people. Okay, so one of the mentors that I had on China Magic asked if this guy could come visit and I was like, yeah sure. And he kind of hung out in China Magic and towards the end of our trip, he's like, do you mind if I put a little presentation together for everybody? I'm like yeah sure. So on this presentation, he starts talking; the guy's sources for the NFL, the NBA, Google… Joe: Wow. Athena: Inaudible[00:15:58.3] his own family's company that has at least 2,500 SKUs, I mean, he's literally a sourcing guide, right? And he became one of my closest friends and now he's my other main guys. I have got Marty, the one that's been going for over 20 years. And I've got Kian Golzari because the formula that I always used is like, if you want to fast forward your business a few years then you want to be around people who are extremely knowledgeable and successful because you can't even put a dollar amount on the value of having gone through so many mistakes, made so many bad choices, learn from all those mistakes; the network of these guys had like it's just crazy. So when people come to China Magic, a big part of the magic is connecting with people like Kian and like Marty and I think that makes a massive difference. Joe: Well, I just wrote down networking then you said there was connecting because we've talked about this before. There's a lot of time that 50 or 75 or 100 people that are going on a trip like this spend together. And the connecting of those relationships goes beyond just renegotiating or getting better terms and more SKUs with your manufacturers. A lot of people are making lifelong connections on these trips as well with fellow e-commerce entrepreneurs, right? Athena: Oh, gosh, completely. Like we've got people who met three and a half years ago at my first trip, they're still connected to this day. There's still some of them that have developed partnerships. And one thing that's very interesting is when you connect at that level Joe when you travel to a foreign country when you're with each other for that long, a lot of the social veneer comes off. You cannot get that relationship at like a conference in the hallway having lunch here and there. So because of that, people really start to open up and they start to share and that abundance mindset really clicks and that trust really clicks. And so I've traveled the world for five and a half years to build up this network. When you walk into China Magic like people come in as strangers and they literally leave as family and it's just like that gave me goosebumps. It is literally; you couldn't even; like you have to experience it to see the level of connection people have. And then those relationships are so valuable later on. Like you just see them helping each other and giving each other resources all the time; yeah, so it's a beautiful thing to see. Joe: So someone doesn't have to know anything about China; how to get in and out, you help them with that entire process from the visa to the booking of the hotel. So you may not do that yourself for their airline. Athena: Yeah. Joe: Is it you show up, you give them some guidance and they're off and on their own or is it pretty much they're told where to go and what to do all along the way? Athena: Okay, so we have kind of perfected this world. It's almost an art. We've got several group flights that we organize. We've got one from the UK, we've got one from the US, and we've got one from Australia. And it just depends on where our members are coming from. And so we organize our group flights. Everyone's on the same flight and then we have everyone get picked up in beautiful bus freight and then we get to the Four Seasons who love us to death and we are like their favorite humans. And they're waiting for us with Pellegrino and cappuccinos; they know how to take care of us. And so what we do on our very first day is we go and get everyone to the Canton Fair. We go to the Canton Fair by the way, and we go in there with mentors. I bring a ton of these mentors. And these are multi seven, eight-figure, we even have a nine-figure seller coming on our next China Magic. And so we walk in there with them, show them around; get them what it's like to see what it looks like. And then on the first night, we orient them to China, to negotiation, and then the next day, we actually go into the fair with them. So we are mentoring small groups of them throughout the trip. And then when they kind of graduate out and they feel confident, they kind of go on their own. But I have my guys on the ground constantly; we have a sourcing team of about 100 people. We've got connections to factories that are not on the grid; about 4,000 factories you can't even find in Alibaba or even at Canton. So if people are having trouble finding something, we actually utilize the vast network that we've built. So we really are very present for them the entire time. And a part of China that I didn't even mention is it's not just about China like we actually do content every single night about Amazon; so from A to Z, everything from branding to PPC to marketing to every single topic in Amazon is all covered within those 12 days. And we split everybody up into these itty bitty groups, and this is why we cater to everyone. We actually work with like if you're a top seller, you're going to want to talk to other top sellers about pain points that you're struggling with at that level. If you're new to your journey, you need a lot of hand-holding, you need a lot of help, and also, it's not going to mix them so we never do that. We have different content for different levels. And so you literally go in there and you're just going to be with a group of people that are in a similar part of their journey, being literally walked through the journey with some of the top brains in the entire industry throughout the entire 12 days. Joe: And is it always the Canton Fair? Athena: Yeah, so we always go to the Canton Fair. We go to Phase 2 Canton, which is amazing because you go and you're literally walking through booths and booths and booths of product, you're connecting with factories. Joe: What does Phase 2 mean versus I suppose Phase 1? Athena: Phase 2 is where you find like a lot of beauty products, a lot of kitchen products, a lot of household products, baby products. Phase 3 is more about travel, about sports, about different; so each phase of the Canton Fair has its own products and you can go to CantonFair.net and actually take a look at which phase is most appropriate. Joe: Okay. Athena: So what happens is like let's say most of your products are from Phase 2, you would utilize Phase 3 to go do factory visits which is another thing that we talk a lot about. It's like actually going and visiting with your factory, visiting with your suppliers, and we walk you through an exact way to negotiate and to project the future and create these amazing partnerships. Joe: So Phase 3 is a different China Magic trip where they're going to visit the manufacturers or was that a part of Phase 2? I was confused there. Athena: Oh no, no, I'm sorry. So Canton Fair is the largest fair in the world when it comes to sourcing and it goes through three phases. There's Phase 1, 2 and 3. We go to Phase 2 and then we go to Hong Kong for a few days and we go see global sources and do more sourcing there and we do more content there. Then we come back for Phase 3 of Canton. And so that's just a whole; like basically, they set up, they take away their products, and then a whole new world gets created in that next phase because they just got too many products to be able to do it all at one time. Joe: I got you. What about going out and visiting your manufacturers if they were off the grid or if they're not at the Canton Fair or are they all there? Athena: Oh, well, it just depends. Some people are there, some people aren't. But we highly recommend to go visit your factory and then we do a factory visit for those who don't have a supplier yet. And we actually went to a packaging factory that does packaging for like Adidas, Nike, Nescafe, or they got connections, this amazing world of like factories that we can take people to that we really recommend for people. We actually show them the exact step by step on how to go and visit with your manufacturer, how to go and like see the people that are building your products, how to actually build your products with them so that they can see you on the floors, you get an idea, and then Kian goes into like understanding how to like; let's say you're building a backpack, there's all these components, right? So how to look at each component over the world and there's ways to increase quality, to get innovative, to save money. So we teach people really that understanding of sourcing at a level to where you become an expert even within the first few days of China Magic. And this is stuff that like a lot of people are missing, like really, they're missing this within their business and they're missing a ton of product; I'm sorry, a ton of profit because there might be ways to save a lot of money on their products or there might be ways to innovate them and charge a higher premium for them or because they're not in there on the floor dealing with their products, understanding their supplier, it really might be leaving a lot on the table. Joe: How much time in advance do they have to plan a trip like this? Athena: I've had people sign up as quick as two weeks before but we get sold out so fast; like we're actually already sold out for our next trip months, months in advance. And the amazing thing about it is it's mainly word of mouth. We didn't even do any sort of advertising campaign or anything like that. We literally did a couple of Facebook Lives from China and we got like 90% sold out just from that. Because what we're doing in China Magic it is magic and I think people want to be a part of that. Joe: Are there any resources I assume on your website; what is the URL for China Magic that might be… Athena: They can go to ChinaMagicTrip.com. Joe: Okay, there's a trip in there. Athena: We have a waiting list, you can get on that waiting list. Joe: Do you have resources on the website for people that still are too scared to go to China or not ready or can't afford it yet or just starting out; any information that helps them with negotiation tips and things of that nature and dealing with a manufacturer from afar? Athena: Absolutely. So we do have a webinar series that we put together. So if they go to ChinaMagicTrip.com they can get on our list. And then also if they want to reach out to me, they can just go ahead and AthenaSeveri@gmail.com that's my personal e-mail if they want to. Joe: Oh you did it; you just gave out your personal e-mail address. Athena: I did. I don't mind. I have tons of people reach out to me all the time. They can find me on Facebook; they can find me on Instagram. I make myself very available. I actually talk to almost every single person that's ever been on China Magic. I've had a personal conversation with them before they even get going on our trip because I want to make sure that they're inaudible[00:25:48.6] abundance mindset so yeah. Joe: I don't doubt that for a moment. I can see it happening. Athena: Yeah. Joe: Every single person; just out of curiosity it's a woman, female-run operation, which is wonderful in this e-commerce male-dominated world that we live in. Athena: Yeah. Joe: But when it comes to ratios in terms of male versus female in terms of people that go on the trip, is it still heavily male-oriented or are there plenty of women entrepreneurs that go as well? Athena: I'm so proud of this, the trip I was on out of 60 people, three of them are women; the women that went on that wasn't my own. Joe: Okay. Athena: Today more than 50% of our trip is women. Joe: Beautiful. Athena: Because I take perfect care of them; I princess out the trip for them and they feel confident because they know me. They know I'll take care of them and I do. So, yeah, we've got amazing women on our trip. Joe: Excellent, and you've connected with Titan Network as well, right? And China Magic has kind of flowed into Titan. I had Dan on a podcast a couple of weeks ago talking about negotiating terms with manufacturers. Athena: That's right. Joe: So this is kind of a good evolution too. So what's the connection between Titan and China Magic? Athena: Yeah. Dan Ashburn is my partner with both China and Titan. So what happened was people would go for those 12 days and they would get so spoiled by the mentoring that we do because we do a lot of hands-on mentoring that the quality of our mentors are amazing. And so the only issue we were having with China Magic is that it would end after 12 days and we would see the amount of progress that was made. It's not just the sourcing, but like people that understand the rest of it and how to build a multimillion-dollar business; like you get to spend an hour with them talking about your business, the progress you make in that hour is just amazing. So what we did with Titan Network is we actually created sort of that mentoring and the magic of China but we did it all year long. So we added events and masterminds and weekly coaching and a lot of hands-on mentoring and Dan is just a freaking genius; I could not have built this without him. And we've basically recruited all of our top mentors from over the years and they're now part of Titan as well. Joe: Excellent. Let's answer the question a lot of people are asking; a ballpark, you can't give an exact figure because it's changing all the time but how much is it going to cost somebody to go on a China Magic trip, ballpark range? I'm putting you on the spot here I know. Athena: Yeah, because our pricing is changing. Honestly, we've been under-pricing for way too long. So I'd say a ballpark is around 8, we've done it as low as 6 for our… Joe: I was just going to say, even if it's 10, it seems like an incredible investment for people to make in their business because they're going to make that back in better terms, better cash flow, great knowledge, great friendships. And people go to mastermind events and spend an awful lot of money, here it seems like a 12-day mastermind event where you're really experiencing a completely different part of the world. Athena: 100%. And we also; I didn't even mention this but even before we get to China, we're doing training with them or mentoring them. We've got a Facebook group for connecting everybody so they actually get to know each other before they even head to China. So that's all included as well. So, yeah, I really I believe in what we do 100%, the lives we've changed; I mean, I have people who came on my original trip and they found a product that has been profiting them $30,000 $40,000 a month since inaudible[00:29:19.1] like it's just ridiculous that… Joe: I get the feeling, Athena, that you actually get more joy out of helping people than counting dollars, is that…? Athena: Oh, I'm terrible like Dan has to like keep me on track because I just have like a big heart and I'm always like, oh you want to come okay well let's work it out just because yeah it really is my happiest place. I think my happiest thing ever is seeing these amazing people that are like our mentors leaders, because a lot of them came from my attendees. A lot of these guys were attendees on my trip. They just happened to be more helpful, had bigger hearts, and had amazing success stories. So then I graduate them into being mentors and it's sort of the circle of life that's so pretty. And then they go and help other people and like, oh, man, it's like a dream come true to be in this industry, honestly. Joe: Oh that's fantastic. I'm going to wrap it up here. I'm glad we finally got you on the podcast. We were introduced I want to say three or four years ago and we keep bumping into each other. Athena: I know. Joe: So thank you for coming on. I'm excited here. Tell me again how people find out about China Magic; ChinaMagicTrip.com or net? Athena: Yeah so it's ChinaMagicTrip.com if they want to learn about Titan, if they're too scared to go to China, they can always go to TitanNetwork.com to connect with me there as well. My phone number is out there, like really, I give my heart and soul to my people and make sure that they're super taken care of. So I'm here for you guys and like I mentioned earlier, if you're beginning your journey, we can take care of you, if you're sort of in that intermediate zone looking to scale or even if you're very, very successful, even if you're looking to sell your business in six months you're like coming to China will benefit you in so many ways. Joe: I couldn't agree more. And for those that are wondering, yes, it is an add-back. If you don't know what an add-back is, reach out to us, we can help. You should know in an add-back is at this stage of listening. Athena: Joe, I just want to mention thank you so much for all that you do for the industry. You put your heart out there. I see how much value you add. It's like you could just do the thing that you're there to do but I see how much you help people grow and expand and it's just wonderful. So thanks for all that you do for community as well. Joe: Thank you for saying that. I very much appreciate it. Thanks, Athena. Talk to you soon. Athena: Yeah, thanks for having me. Resources: China Magic AthenaSeveri@gmail.com Titan Network Quiet Light Podcast@quietlightbrokerage.com

america amazon australia uk china nfl talk nba chinese hong kong wall street phase boost honestly revenue saas personally mastermind adidas visiting alibaba canton splitting four seasons ppc ritz carlton pellegrino skus kevin king cash flows ebru nescafe quiet light brokerage joe valley canton fair quiet light joe you joe let joe yeah joe well episode highlights being joe how joe so joe do quiet light podcast

Do You Know The Value Of Your Greatest Asset? Here's How You Can.

Play Episode Listen Later Mar 24, 2020 47:59

One of the biggest challenges we face as business brokers is getting sellers to understand that we too are entrepreneurs. Getting people to do a valuation is one of the biggest hurdles because many think that just staying afloat is the goal, and the rest will come later. Sometimes later is too late. Today Joe and Mark are back sharing how to get valuation right. At Quiet Light we work hard to educate and help people find the growth paths that will get them the most value for their business in the event of a sale. We have a ton of experience in giving valuations and can guide current and future sellers to profit. When you build a great business with buyers in mind it will make the transfer so much easier. Episode Highlights: Why a business owner should plan an exit strategy early in the business building process. The benefits and tradeoffs of entrepreneurship. How long in advance someone should plan their valuation. How much it costs to do a valuation. The threefold beneficiaries of the valuation. The importance of the end goal while building. How the valuation process benefits the potential buyer. Ways selling a cohesively built business creates valuable relationships. The level of detail that is essential to a full valuation. Accounting tips for a better valuation as you go. How the valuation process gives owners paths hidden profits. The other three of a successful business How the invisible fifth pillar makes a difference in the overall value of your business. Mark's quick wrap-up of the importance of a valuation. Transcription: Joe: Mark, one of the biggest challenges that we have as business brokers is conveying to people that we're entrepreneurs first. We've all been in their shoes. We're technically still entrepreneurs, right? We run Quiet Light Brokerage. And getting people to get beyond the mindset of running their business and saying I'm not ready to sell I don't to have a conversation about exiting to actually thinking well in advance of an exit is one of the biggest challenges and honestly, it's frustrating. It's frustrating for me and that's why we work so hard to educate and help and we do this podcast so we can get more people thinking well in advance of their exit. But I want to ask you as the original founder of Quiet Light Brokerage, the man with so many stories to tell, why in your opinion should somebody even plan their exit and give it thought well in advance of selling their business; what are the benefits? Mark: Boy that's a big question and I could actually give you a number of benefits and since you put me on the spot I don't have them in order in terms of what I would think would be the most important. But I'll start with this one which I think might not be the most important reason but I think it might be the most applicable for most people. It will resonate with most people and that's this, having a business that is valuable in an exit usually means you have a very valuable business to own. That's the number one reason in my opinion. So let me explain that and flesh that out a little bit. Obviously, if somebody is willing to buy your business for quite a bit of money; let's say they're willing to pay a four-time or five-time multiple, what they're seeing there as a business that is desirable to own, it is going to grow, and it's going to kick off a lot of cash in the future which obviously if you come to me or come to any entrepreneur and say do you want to own a business that doesn't require a ton of work has a lot of upsides and is consistently throwing off money most people would say yes, right? If we talk about the four pillars which we do so often here, do you want to own a business that has a low-risk profile and good growth prospects as the two first pillars? Yes, most of us want to. So the first reason I would say is when you go through the process of planning to sell even if you decide not to sell your business the result of it is that you have a business which is more stable, you know the growth paths available to your business, and you have great documentation in place for the business. So that'll be my number one reason right out the gate. And I don't know if you want to discuss that or I can give you a couple of others if you want. Joe: Yeah well let's first tell the folks listening that there is no special guest today it's you and me and we're going to talk through… Mark: I'm special Joe. You're special. I am special. Joe: Actually, I just gave you hosting privileges on this. Mark: So we're special. Joe: Technically I'm the guest and then I'm not special. Hey, we're not having anybody on today because Mark and I have a ton of experience at this. We do valuations every day so we want to talk about the reason to have one done and then what we do. We'll talk about what goes into it, and what we discovered, and what we learned along the way. So yes Mark if you want to talk first about that first example that you gave an elaborate on it a little bit we can do that and then go into some details on what it's like to get a valuation and what we do here at Quiet Light Brokerage when we put someone through the process. Mark: Oh sure. Actually, I do want to get to the other reason because these are the two that were kind of vying for my attention when you first asked that question. The second reason is that you just really don't know what the future holds. In the 14 years of doing this; at the time of this podcast almost 14 and a half years that I'm doing this, the number of clients that I've run into that are unprepared for the sale is exceedingly high and the number of clients that are unprepared who wish they had planned in advance is almost universal. So if you find that you're unprepared to sell you you've reached that point where you want to and you realize you aren't there yet there's often some sort of regret. It's kind of like thinking about the person who goes into the dentist for a root canal wishing that they had visited the dentist more frequently before. That inconvenience at the time would have paid off. Or for the person reaching retirement age wishing they had done more to plan their retirement. There are so many of these examples where especially entrepreneurs would get focused on the here and now today which is important. Obviously, we need to take care of that without the eye towards tomorrow that when tomorrow comes it often takes you by surprise. For entrepreneurs, we're in such a really cool spot. We have an opportunity to generate income that frankly people in the regular business world or regular careers don't have the opportunity to make. The tradeoff is some of that stability that you would get in the corporate office world and maybe some of the benefits and everything else that goes along with that. But for us, the benefit; the gain is the income potential but also what most people fail to see is the value of the asset that they are building in and of its own right and that alone can lead to early retirement, that can lead to being able to invest in much larger projects, that can be catapulted into something significantly bigger. But it does not happen if you build an asset which can't be sold. And so not only is it good to own a business like this because it follows basic business principles of having a low-risk profile and high growth opportunities and is usually very well documented which is a good thing; it ties into those two elements but it also gives you financial flexibility for the future and also career flexibility for the future as well. And if you don't do it the flip side is you can build yourself a prison which I'm sure you've seen a few people build prisons for themselves and their businesses. Joe: That's very, very hard. You want the independence and life of an entrepreneur and you've built yourself a business prison that you can't get out of and you just can't get ahead. But let's ask this; people ask me these questions all the time, we have a conversation about exits and valuations all the time so I mean I'd just grow you with a few here. Number one how long in advance should somebody do evaluation and plan their exit? We always hear I'm not ready to sell, why should I talk to you now? Mark: At least 12 months, right? I'm working with a client right now and they wanted to do evaluations, see where they're at financially and I said that's great send me your P&Ls and your balance sheets and they did which is awesome. I had a chance to review them and I had some further questions for them. Nothing came back so I bugged them about it and nothing came back. I finally bugged them again and they said well you know what we're doing is we're actually going through and we're eliminating some of these discretionary expenses, we're going to be doing this, that, the other thing and alarms are going off of my head because I see them taking some tax that they probably shouldn't be, right? Okay, I understand where you're going. For example one of the things that they're doing is they're cutting back on advertising spending in order to grow their bottom-line earnings. Well, let me ask you, Joe, what happens when you cut back on advertising? Joe: That's a big no-no. It's convergent graph lines, right? Discretionary earnings go up and your total revenue goes down. Mark: Right. Yeah. Nobody likes that alligator going to the left. Because if you see a graph where the revenue is going down or earning is going up we know that earning is going to go down in the future or to regain the momentum you have to outspend on advertising in most cases. To make it a more efficient one thing but that's on another. So how long; sorry, you asked me a question and you know me, I won't shut up. 12 months at a minimum? I would recommend 24, even 36 if you can just because if there's big changes that you want to make; let's say that you really want to explore that new product line, give yourself some runway to be able to plan that out. Joe: Okay, how much does it cost to do a valuation? Mark: Well it doesn't cost anything. Joe: Why? If it's free what's it worth. I don't understand. What's the business model? You're doing valuations for nothing. Mark: Oh you convinced me. If somebody wants to do a valuation of myself you're going to be paying a lot of money. So for us, it makes sense, right? I mean the number of times when I've started Quiet Light and was working with clients in the early days so many clients were being turned away because; not in saying I won't work with you but I would do the valuation. They say I'm ready to sell my business and I take a look at it and Joe you know the conversation. You and I had this conversation. And I looked at your business and I said okay right now it's worth X but Joe if you wait a little bit time, do some of the things that you're doing right now, actually, you're doing a lot of good things, just wait a little bit you're going to add this much value to your business. Other people it's a little bit different, right? It's hey you know what you have your name, you are a doctor and you are selling an information guide about how to take care of athlete's foot. And your name is plastered all over this. Well, guess what? That's not a transferable business because everyone's buying it based on your name. So I'm going to have trouble selling your business and if we do sell it it's going to come at a discount. But Mr. Doctor athlete's foot if you take your name off of this and show us that it can run for 12 months just as well if not better than it is right now without your name plastered all over it instead of getting maybe a 1½ multiple you're going to get like a 3.2 or 3.3. Joe: And who does that benefit? Mark: That benefits the client. Joe: There are three parties that it benefits. Mark: I'm being quizzed here. Joe: You are being quizzed. So it benefits the guy who's running the business, it benefits Quiet Light Brokerage which is a weird model, right? We do it for free folks but in the long run, it benefits us because you're going to have a more valuable business. But there's this third party that benefits as well and that third party… Mark: Is the buyer. Joe: Right. They might eventually become our clients as well too. So it's an odd model. As my mentor said, Joe, it seems like you guys are giving things away for free on a hope and a prayer that they'll come back to you someday. And I said exactly Walter that's what we're doing and it works very well. We're building relationships and building trust and we're helping first. And strangely the more people we help the more our business grows and the more valuable their businesses become and the more buyers buy great businesses. And it's an endless positive cycle and works very well. With that said I remember being at eCommerceFuel a few years ago and I came back; I sat at the bar with one of the presenters, I cannot pronounce his name. All I know is he swore a lot on stage but he was really good. He was really good and I had a beer with him afterwards and he said something like well I'd have a valuation done but honestly it's free I'd feel like I'm committed to you. I'm obligated to you because I didn't pay you. If I pay you I can just walk away. And it's an interesting viewpoint but we are all about relationships and we want to help. We want to get it done. And the more conversations we can have well in advance of a sale selfishly it makes it a lot easier for us when it comes to the time to list your business. I'm in the middle of a valuation right now where there are two brands in one seller account and there's a royalty arrangement and they have a coaching business and different LLCs. It's just a mess and the add-back schedule is getting deep and long. It's almost as long as the P&L itself which raises the antenna of the buyers. We don't want that. We want to have this clean business presentation as possible. So I'm with you 12, 24, 36 months in advance. Have the conversation. Get an education on the value and the process of maximizing the value of what is likely your most valuable asset. I was having a conversation with Mike Jackness a few weeks ago and we're doing a presentation it was actually at eCommerceFuel and he said the problem is you can't talk too much about exits and planning with these guys. They're doing all they can just to keep the wheels on the bus, to keep revenue going, and not run out of inventory, and do all these different things. I'm like yes, yes, yes, but when they have a clear vision of the value of the business and the view of an eventual exit when the wheel falls off and they've got to put it back on it's a lot easier because they still know where they're going. Otherwise, they're just wandering aimlessly trying not to run out of inventory; solving problems without an end goal in mind which is it's exhausting sometimes. Mark: Yeah and I want to comment on one aspect here about the idea of benefiting the buyer because if you're a business owner you might be thinking well I don't really care about the buyer at the end of the day. I mean I care but when you talk to entrepreneurs and sellers sometimes the approach they take is yeah I hope that the buyer does well with it but that's definitely a footnote compared to what they get out of the sale and understandably so. I'm not criticizing anyone who has that sort of attitude. But in your opinion, Joe why should the seller care about whether or not the buyer gets a good deal? Not a good deal as far as discounted but a good business that they can make a good return on investment on. Joe: Yeah that's actually not very complicated. It's when you do the right thing you will be rewarded. If you build a great business that checks all of the four pillar boxes, that really highlights all of the financial key metrics in a very, very positive way; and these are things that we do in the valuation folks when all of those things are you know 8s, 9s, 10s or a really solid green light guess what? That buyer is going to pay you more for the business. They're going to pay a higher multiple with better terms and it's going to be an easier transaction for you. Most people that are selling their businesses sometimes it comes down to okay like Quiet Light Brokerage we had 2½ offers for every listing that we put out there in 2019. So buyers are liking our listings, they're liking the way the packages are put together because we work with our clients for a long time and sellers sometimes have a choice. And sometimes they want to choose who is going to be easier in the transition afterwards. When you build a great business and you think of your eventual buyer in mind that transition is going to be easy because you've got SOPs in place, you've got a long communication with your broker advisor here at Quiet Light that's going to talk to you about all of those different things and making that transition easier because that's one of the four pillars; the transferability of the business and all the things that generate revenue for it. So now you're asking a short question and I'm giving you a long answer, it's the buyer will pay you more, as simple as that. Mark: The buyer will pay you more. I would also add on there that I think we are quick to dismiss the power of relationships and the people that you're going to meet when you go to sell your business. These are really important things. I had a situation; as you know I have another business besides Quiet Light Brokerage that doesn't take up a lot of my time but I ran into an issue the other day. It was a really complex difficult issue but the seller and I are friends at this point. We know each other pretty well and I hadn't run into this before. So I sent him an e-mail and said hey how have we dealt with this before he came back with a nice long response and insightful and everything else. It was a really good resource for me to have and he and I are on good terms because he's treated me fairly all along and built a business that was worth buying, to begin with. He's a valuable asset and if I ever want to do new things in this space he would be somebody that I would look to partner with because he's already skilled in this area. And when you're selling your business you're typically selling to somebody who is highly skilled and a successful entrepreneur in their own right. Isn't that a good person to have you in your Rolodex? I don't want to overemphasize this point and say this is the only reason you want to do it. I think what you listed Joe what you explained I think that is really where you want to put the focus and emphasis. But there's a whole host of ancillary benefits to creating a transaction that benefits yourself first, the broker who is going to be working with you and your team your partner with you, and also that buyer making sure that they have a business that they're going to be able to succeed with. Joe: Let's talk about what we actually do in evaluation. Mark: Sure. Joe: I'm going to kick this off. One of the first things that; I've got a call this afternoon at 4:00 today I'm doing an initial valuation call with a couple of very experienced entrepreneurs. The first thing we need are financials. So as an entrepreneur, as a business owner, if you're not able to run a profit loss statement with a monthly view going back more than 12 months we're not going to be able to do a full valuation because the full valuation does a year over year comparison. I'm going to look at January of 2020 versus January of 2019 and hopefully '18 and so on. And that's part of the financial key metrics in terms of where the top-line growth trends are, where the advertising cost as a percentage of revenue is, and where it's trending. Is it seasonal? We're going to talk about the timing of listing a business sale. Even if you're looking three or four years out we're going to talk about some of those things and we're going to see all of that with the detailed financials. Now today Walker wrapped up a long email chain between all of us where he had a client trying to do a valuation and get his business listed for sale and all he had were quarterly P&Ls. What's the problem in your view Mark with quarterly P&Ls versus monthly P&Ls? Mark: It's just the level of detail, right? I mean I can go backwards. I can take monthly P&Ls and go over to quarterly and I didn't comment; we had a discussion about this within the company and I didn't comment on it before everything resolved themselves. There are some businesses frankly that I think quarterlies worked really well for and probably better for; businesses with lumpy income benefit from having a little bit larger of a lens that we're looking through to even that out so we can see what the real trends are. But it's good to have that option to be able to go to monthly because you have more detail. What you pointed out Joe and I think it's a very good point is that when you get into the transaction and let's say a buyer places an offer we get past a quarter and let's say that we're month one into the quarter, most buyers before they close on a transaction want to know what the business has done over the past month and that time that they're doing their due diligence. Did it completely blow up while they were doing that final piece of due diligence? So they're going to ask for these updated numbers along the way as they're going through the process. Well if you have to wait two more months in order to close to be able to get reliable updated numbers that's just going to extend your timeline, introduce further risk that something happens and the buyer has to pull out and will disadvantage you in that way. And again the lack of detail when I'm doing analysis on a business for a valuation I love looking at the trends I like looking at year over year trends and really I start to look at the different months. And it's surprising the number of businesses that obviously November December get a spike are pretty high but let's say like home and garden stores often get a bump right around April or May so that'll be a second quarter. Maybe it spans two different quarters and you really get a sense for how does this business breathe over the course of a year. Right? Joe: So we're going to look in great detail at the financials. So we want you to run a profit and loss statement for me to Quick Books or Xero with a monthly view going back as far as you can up through the most recently reconciled month. If it's an e-commerce business we definitely want to get those P&Ls on an accrual basis. If we can't get them on accrual basis because you do cash accounting at some point we're going to have to find a way to flip the land cost of goods sold to accrual. Why? Because if a business is growing like crazy you're taking a lot of cash flow from the business and putting it right back into more and more inventory and that's going to depress your seller's discretionary earnings. And your business is a multiple of seller's discretionary earnings which is net income plus add-backs equals SDE. Mark: Yeah I want to talk about this accrual basis because I'm seeing this more and more. People are hearing us, they're hearing this message, and I'm seeing more and more books delivered to us on a false accrual basis is what I would call it. So here's the problem, bookkeepers don't like to do accrual basis accounting because it's hard. It takes more work. It takes more reporting on a monthly basis. They need to dig in, see what you sold, tie that back to the cost of goods sold, and record that. What I'm seeing pretty commonly here is accountants who make a year-end adjustments for the cost of goods sold. And so what you end up seeing is cost of goods sold seems kind of flat or kind of lumpy all throughout the year and then in December all of a sudden everythings out of whack. It doesn't match up. Speaking about the monthly one of the elements that a buyer is going to evaluate when looking at your business if you're selling physical products business or even if you're selling; you can do this if you're SaaS business as well it's just a cost of sales numbers out of the cost of goods sold. One of the key metrics we want to look at is your business getting more expensive to run; in other words, if you're consistently bringing in 5 million dollars of revenue what does it cost to generate that 5 million dollars of revenue? Are your products getting more expensive? Have you had a discount on those products over time? Are there periods during the year where you have to do one or the other? If you are in SaaS business are the cost of sales going up; your commissions that you're paying out the salespeople if you're on a commission sales basis. You can't get these numbers unless you're on accrual basis accounting. And a buyer, a smart buyer, if you want to sell to a smart buyer will want to see this information to see is this trending in the right direction and if not then we need to work this into the valuation; so monthly accrual. Joe: When this false accrual practice is done it's generally done by a CPA not a bookkeeper because they're doing some adjustments for the end of the year. Although just to be clear everyone if you've got an e-commerce business with physical products you are going to file your taxes on a cash basis. But when you're looking at the value of your business we need it on an accrual basis. You should have a CPA for your taxes. You should have an e-commerce bookkeeper for your daily, monthly, quarterly profit and loss statements. You should not in my opinion or view do that work yourself anymore if it takes you three or four hours a month you're worth more than the $400, $500, or $600 a month that a really highly qualified e-commerce bookkeeper is going to charge you. Mark: Yeah and we've made this point before but I'll make it again. It all depends on how you enter the information or your bookkeeper how they enter the information into whatever accounting software you're using. If you enter the information as an accrual basis you can flip to cash with a click of a button. It's very easy to do. Joe: Very easy, yeah. Mark: If you enter your information into your books on a cash basis you can't flip it to accrual. I mean you can, you're just going to get the wrong numbers, right? The software is stupid in that way. It's going to try and it's going to calculate it but you've entered the data wrong. So if you entered it in as accrual you can file in cash, that's totally fine. But for the sake of accuracy, you should be entering it or having your bookkeeper enter it in as accrual. And ask your bookkeeper this too, when I hired our bookkeeper I asked them; I sent them an interview, a written interview and I asked them to explain what accrual accounting was. I know what it is but I wanted to see could they explain it. And I was shocked at the number of foot keepers that couldn't explain it in a clear, concise way. Joe: It's not hard guys. Just we'll move beyond this make your eye bleed accounting part of the conversation. Look up cost of goods sold accrual formula. That's all it is. It's beginning inventory plus purchases minus ending inventory on a monthly basis. That's ideal. But the point; one last point is that if you spend a million bucks a year on inventory and you're just doing adjustment or a guess we have to flip things sometimes to accrual. If you're off by 1½%, that's $15,000. If you're spending a million bucks on inventory, you're spending a lot of money; you may be doing 4 million 5 million dollars a year in revenue which probably means you're doing $750,000 in discretionary earnings. You might be at a four-time multiple at that point; four times the $15,000 that you got wrong on the inventory is $60,000 that you're not putting in your pocket in the sale of your business because you wouldn't spend $500 a month on an e-commerce bookkeeper. Or you're overcharging your buyer by that 15,000 times four because you guessed on the wrong side and things are going to fall apart or go off the rails in due diligence. So get it right, build trust, and move on. Okay, so first thing we need is a clean professionally done profit and loss statement with a monthly view. We're going to import that into the Quiet Light Brokerage import system. We're going to normalize the P&L. If you've ever looked at our listings folks you can see they look pretty much the same; our profit and loss statements. We do that because we see them in every shape, size, quantity, format, PDF, Excel. I mean it's crazy I'm surprised somebody hasn't mailed in a napkin at one point or another to Quiet Light. Mark: I had a notepad document once on a 20 million-plus business. Joe: We don't want our buyers to see that so we import it. We have an importing process where we're going to pull it in and we're going to analyze the key metrics; the financial key metrics that buyers over the last 14 years have told us this is what we look at. They're looking at top-line revenue trends. They're looking at gross profit, trends, shrinking or growing, and then they're looking at advertising cost as a percentage of total revenue and how it's trending. As Mark said earlier you could be spending a lot of money on advertising in the last six months to drive top-line revenue or the reverse and it all weaves together in a web, right? I've had a listing for sale last year and the seller said I handed my advertising off to a VA in late spring last year and I let him run it and five months in I realize things got out of hand and I pulled it back and took it over myself. We do a recorded interview just like we're doing right now on Zoom. We do it on video, we do it on audio, that's part of the package when a business is for sale. And that question may come up then it also may come up in the written client interview and then guess what it all weaves into the profit and loss statements and the financial key metrics when then you can go and look at the advertising trends going yeah look at that Joe was right in July, and August and September the numbers were up and advertising was 17% instead of the normalized 12% that it's been for the last three years. So you can see those different types of things. I had a situation just last week where I was looking at a profit loss statement where the ad spend went through the roof in December but revenue went down. That tells a story that he's struggling against competition and it's not really working out. He's spending a lot more money but sales are going down and lo and behold January and February are down as well. The numbers tell a story so the first thing we've got to get are the numbers, right Mark? Mark: Yeah. And I'm going to share something here Joe that I think was last week or maybe the week before, you actually did a valuation on Quiet Light brokerage. Joe: I did. Mark: Which was done not because we're looking for a buyer although if somebody wants to offer us 30 million dollars let's have a conversation. More importantly you wanted to look for areas of wasteful spending on our part and also key trends for the business as well. So let's think about this in terms of not selling our business, let's think about this in terms of business owners who want to run their business efficiently. Let's say you take the last three years' worth of your P&Ls and they're done on a true accrual basis and you take a look and you see that your gross profit margins have gone from 60% and they're dropping down to 52%. Now you might know why that's happening, you might know what's going on there but you can also identify that as a trend that if you were to correct that trend it's going to help the business. I worked with a client; I'm actually in the middle of doing a valuation for them and they keyed in on this on their own. They were very proud of this. They said look our gross profit margins are 42% right now but what we did over the course of the past year our revenue is down because of a very explainable reason but what we did is we found a product line. We found a method here to increase our gross margins from 42% upwards to 54%, 55%. We were able to test this on a singular product and it worked well and we plan to expand this. Well look what happened by looking at their margins and understanding the margins and understanding that's an area of opportunity they've uncovered a huge avenue to growth which is replicable and from a valuation standpoint it's great but from a business ownership standpoint, it's even better for them because now they can charge a charge more, pay less. Who doesn't want that, right? So let's exercise; again you asked why should we do a valuation beyond being prepared to sell should that they arise? It's a valuable exercise to do as business owners. Joe: I got an email the other day and it was from somebody named Anthony; let's leave it at that. And he wrote Joe this is really, really insightful. I had certain financial goals in the business and now I realize I'm that much closer to them than I ever was. This is making it so much more exciting to run my business every day which is exactly what it truly is. In that situation we determined, he determined; he came to the table with they've decided to charge shipping on items over a certain dollar value and that was going to add their estimate was $180,000 in additional discretionary earnings over a 12 month period. And then they had renegotiated cost of goods sold, they were going to save about $2 a unit and that was going to add $200,000 in total discretionary earnings over the next 12 months. That's $380,000 right there and with another $400,000 now they're at $680,000 they expect to be adding 2020. It's getting that much closer to their exit goal and it just defogs their window put your high beams on you can really see that much better when you're running your business it makes it that much more exciting. A lot of the things that we do talk about beyond the financials, Mark; it's not just about the numbers folks, it really starts with them. It's funny that it starts with them but that's pillar number four, documentation. Let's talk about the other three pillars briefly, Mark. Go ahead and tell me what the other three are. Mark: Risk, growth, transferability. Joe: It took me a while to remember what all four those are and I'm going to hold this up everybody; anybody that's on YouTube. I still have this on my desk after eight years. It says what they all are right there. Mark: I didn't make it memorable enough. Joe: Risk, growth, transferability, and documentation. Mark: How are you as a student in school? I'm just curious. Joe: Oh I fell asleep in accounting class I tell that story all the time. And the bottom part of that; oh look at that I forgot to turn my phone off you're hearing my Twitter. Mark: I heard a bird. Joe: The bottom part of that note there was that our business is relational, not transactional. I need reminders every day. Anyway, risk, growth, transferability, and documentation; we've talked about number four, risk. I've got a business that should be closing in the next few days and 70% of their revenue is from one SKU. What is that called? Mark: That's product concentration or a single point of failure. Joe: Or a hero SKU or a bad idea or a unicorn; all sorts of trouble. I had a conversation with somebody; a couple three years ago… Mark: Bad idea. Joe: Actually it's a bad idea. Mark: It's not a bad idea if it's sustainable just to be clear but yeah I get where you're going. Joe: Well here's the sustainable part, so there was a gentleman that I was working on a valuation for and he had one SKU that generated 90% of his revenue. And I'm like this is a bad idea. He's like well it's a lot less work Joe, it's very defensible, look at our reviews. I mean he had me convinced that it was actually a good idea. And then guess what happened? Facebook changed an algorithm and they're their ads that were working with no longer allowed and they never recovered. Their business was worth two million dollars one month and the next month it was worth like one maybe; two million, 50% cut just like that and I haven't heard from him so I'm sure it's gotten worse and worse and worse. It's a single point of failure. It's a hero SKU. It's a risk. So, therefore, buyers are going to decrease the value when it comes to the valuation. We're going to do it for you and we're going to tell you what buyers think but it's a decimal point or two or three. So instead of at a 3.2 multiple; I'm going to do some math for everybody, simple numbers at 3.2 if you've got $100,000 in discretionary earning you're at 320,000 in terms of list price. Two-tenths of a decimal point off because of a risk point you go from 320 down to 300 or 300 down to 280. It changes that quickly because of a single point of failure or because of risk in disregard. So that's part of the risk, it's the hero SKU; things of that nature. But there's also age, there are trends, right? So generally we want to have a business that's about 24 months old at a minimum. We sold them for less. There are exceptions to every single rule we talked about here. But 24 months is when buyers start to have confidence and they don't discount the value of the business because of age. The other thing to talk about is the trends, Mark, right? I just had a valuation call last night with somebody I've been talking to for six months. And I can't seem to get updated financials on a monthly basis. That's the challenge. And finally, I get them and we have a conversation. We're recording this on March 3rd. I don't have January and February's numbers. I finally have Q4 and top-line revenues down 25%, bottom line discretionary earnings down 30%. So the value of that business just went from three-point something based upon the numbers down to easily 2.5 on the top side. So it's risk because it's trending down and somebody has to jump in and fix that downward trend, right? Mark: Mm-hmm that's right; yeah, absolutely. And one thing with these downward trends you talked about how quickly the discount, just an observation multiples go down much more easily than they go up. It's hard to prop the value and that multiple upwards but people would discount much more aggressively when they start to see problems such as the concentration or as you said the bad idea. Joe: So it is a bad idea when somebody calls and says hey I'd like to sell, I'd say hey you really can't nobody else will buy it. Bad idea. So we touch risk, we touched on growth; these are the first two, let's talk about the transferability of the business. What are the key components to this pillar? Mark: Yeah, the transferability; the easiest way in my world to think about this is just can somebody step into your shoes today and run the business without having a significant decline. Or maybe another way to think about it would be what's the learning curve of the business, or do you have documentation in place that will allow people to be replaced if needed? The transferability is just that and it can encompass a number of things first of all that affects all businesses would be procedures. The procedures that you have within your company to run it on a day to day basis; how do you handle returns if you have that sort of business, what are some common customer complaints or concerns or questions and how do you handle those; do you have a process set up for that. If you're an inventory-based business what is your inventory ordering process and your forecasting process? That's something that should be in a standard operating procedure. So there's all sorts of SOPs. Outside of those elements, transferability can come into your customer acquisition process and I brought this example up before during this call. If you're a doctor and your name is all over the website for your great athlete's foot cure now you've set up a barrier to transferability because you're selling off your own personal reputation. And unless you're willing to give your name and reputation to somebody else which most people aren't and understandably so you need to get that off there and no longer be the key method for customer acquisition. And the last thing would be licensing issues or other requirements to run your business. We've seen this before. Joe you had a valuation I remember this clear as day at Rhodium Weekend when they were doing live valuations up onstage and somebody came with a business we were supposed to be working quiet with other advisors, everyone was going to do valuations so we could see what it looked like live on stage and what was the result; it was an e-commerce business, what was the result of that valuation? Joe: It wasn't transferrable because they were sourcing product from the old; it was the old school, they were required to have a retail space so the business was going to be very, very hard to transfer. And I want to comment on that. Mark: It used to very common where wholesalers would require that you have a brick and mortar store because a lot of the legacy brick and mortar stores were telling their suppliers don't let these internet people come in and just start selling this and so they would require that storefront but it still exists out there. The other issues that I've seen with these licensing issues would be not only the storefront issue but maybe if you actually have to have a license to run the business. And you see this like; we had this with somebody that was selling high-end hair products. And you think well, what's the problem there? Well in order to sell these hair products you need to have a cosmetology license. And so that's a transferability issue. It cuts both ways though. Transferability when it comes to licensing and then these hurdles does set you up with some defense ability that can actually help your risk profile be lowered; anytime that there's a hurdle to jump over a business if you jump over it you're leaving some of your competitors on the other side of that hurdle, so that's a good thing. But the element that we started off with the SOPs and the documentation of your procedures, it's something that everybody should be able to do and should have in place. What are your common procedures, how do you do it, let's make it easy? I know you have something to say here on this, the last thing that I would recommend people do and I actually just did this with Quiet Light Brokerage for your sake and for other people within the company, diagram your business. Write out everybody who works for your business. Write it out; you can draw it if you like to draw, you can use a graphing software. I used Lucid Chart; very easy to use Lucid Chart for this or just write it out and see who has what roles within your business and how does that look. I'll tell you what it's an eye-opening experience because what you find especially in small businesses is you have people who wear multiple hats. You might find some crossover there as well. So that's where I would put transferability. Joe: Too many people are focused on the top line and very proud of the total revenues that they're doing. But ultimately we're running these businesses to make money and to be profitable and we can help you hone in on that profitability and what your business is truly worth. So we've touched on what we do when we import and normalize a P&L and look at financial key metrics. We've touched on the four pillars which are risk, growth, transferability, and documentation. Within each pillar, there's five to six different points that we touched on in a valuation process and we really get to know this invisible; I call it a fifth pillar. Mark corrects me every time. You don't need to Mark, people know this. The person behind the business; the trust and credibility that they have is that invisible fifth pillar. It's the mortar holding it all together. Are you a good human? Do people trust you? Do people like you? Believe it or not, if you are people are going to pay more for your business. You do make a difference in the overall value of your business. So we do all of these things and then we create a profit and loss statement with a detailed add-backs schedule. We go through that with you and we firm up your seller's discretionary earnings and apply a multiple range to it. This is where it gets into the weeds and we won't do it today on this podcast. I'm actually going to go ahead and record a podcast following this one on the three levels of add-backs. There are six different points to each level and it's very eye-opening. A lot of people don't understand the importance of detailing the add-backs. A few folks are like why do I need a broker for I'm just going to sell to this consumer group that's buying up FBA businesses. You need to understand the add-back schedules so that if you choose to sell directly to them you're getting maximum value for your business or even better the real value for your business; not maximum, the real value. It's okay, you can choose to sell to whomever you want however you want but make sure you're getting your own numbers right and that's what I'm going to share on the next podcast. Mark: Fantastic. Joe: Okay, one more final thing. Mark: I was going to say we're getting close to time here. People are like my drive is done. I'm at the office. Joe: We are. You're so eloquent Mark with your words and your e-mails and all this. I say this all the time and people hear you speak. You speak very, very well so why don't you do one final wrap up on why you think someone should have a business evaluation done through Quiet Light Brokerage and how it's going to help them in the future and then I'll give my two cents as well. Mark: Flattery is not going to get you anywhere Joe. Joe: Tell them what I want you to tell them. Mark: Well that I don't exactly know, I'll tell them what I think. So the question is why should people get a valuation done to kind of wrap this up. Your business is most likely your most valuable asset and if it isn't yet hopefully it will be someday and you should know what the value of it is. More importantly, you should understand what drives the value of your business and also what's holding it back. My favorite part of evaluation when I'm doing one; and actually I've got a call here in seven minutes to do a valuation, it's going to be coming up soon, somebody is taking us up on this. My favorite part of a valuation isn't telling somebody what their business is worth right now because that's usually somewhat predictable. It's being able to tell them what I love about this business and what buyers are going to salivate over is fill in the blank, and this part you've done a great job here, the areas where you're going to have some friction in your sale and it's going to cause a discount on the business are these elements. Now what I'm doing there is I'm really giving some insight into where the business is today but I'm also laying out a roadmap for everybody that I'm doing that for to say if you want to grow the value of this asset work on these elements and you know what if there's an element of your business that's really good double down on it. One of the areas that we've talked about in the past is this pillar of growth, we want them to have lots of growth potential for the business; lots of growth prospects for that business and they need to be real. However, if you have easy obvious growth within your business take advantage of it because I would rather multiply a larger earnings number and get that going up because it's a lot easier to grow your value that way. Doing a valuation will help identify those aspects of your business; where is it valuable right now, what's holding it back, and what's the plan to be able to make it more valuable. You don't have to sell the business. If you do these things you will have a business that is more valuable and you're going to gain insights that you never really thought about. I will challenge everybody if you don't do anything else on this call we've talked a lot about finances so I'm going to change it up. Diagram your business and then feel free to email me if you thought it was a complete waste of time. Joe: Or you can go at Mark@QuietLightBrokerage.com. Mark: Tell me it's a complete waste of time. Joe: Mark with a K. Mark: Mark with a K. The only way it would be a complete waste of time is if you have like two people in your company. But then you know what? Joe: Send him an email. Mark: Yeah, right. But then if you're going to do that diagram out the other people that are supporting you. Your contractors, the vendors, the people that are key for your business to run and take a look at that and you might not gain a whole lot of new insights but you're going to see your business in a way that you've never seen it before. Joe: What you're hearing here from Mark is that we're here to help. We're sharing information with you and giving you tools to make a better decision for your business and for the future when you are ready. If you are ever ready to sell. In no way shape or form are we ever here to talk you into anything. We're going to share the information with you. And that was the reason I chose Quiet Light Brokerage back in 2010 to sell my own business. I talked to three different firms. Two were trying to get me to sign a contract. The third was giving me helpful information to build a more valuable business to sell when I was ready to sell. And that conversation was with Mark. Lastly, don't be embarrassed by the size of your business. Sometimes we'll go to Mastermind groups and someone will; I can tell they're uncomfortable talking to us because they're only doing $100,000 in profit. Are you kidding me? You're an entrepreneur, you've built your own business, you're doing $100,000 in profit which is 40% higher than the national average; I don't know the numbers, I'm going to get a correction on that Joe@QuietLightBrokerage.com. It's huge compared to the national average. Don't ever be embarrassed by the size of your business. The smallest one we sold in 2019 was $28,000. Yes, it was a pocket deal because Brad had a larger listing and the gentleman had two smaller sites he wanted to sell off. They're all shapes and sizes. Our average transaction size in 2019 was 1.1 million. It grows every single year but we go through all different sizes. We want to help you get from that hundred thousand dollar valuation to a million-dollar valuation. We've had clients where they first sold their business at 7,000 then 20,000 then 220,000 and now nine million and the next exit that that particular individual has set is 100 million. We want you guys to achieve your goals and we're going to help you along the way. But we're not going to talk you into a single thing. So reach out go to the website. It's the valuation form or sell form I think it is or it shoot us an email at inquiries@QuietLightBrokerage.com and we'll hook you up with one of the qualified advisors here who are all entrepreneurs themselves. Links and Resources: Quiet Light Brokerage

ShakeDown Radio - Episode #273 OL SKOOL Hip-Hop and RnB

Play Episode Listen Later Dec 28, 2019 122:05

www.ShakeDownRadio.com 1. Ta Gana - Dance Floor 2. Truth Hurts - I'm Not Really Looking 3. Deborah Cox - Up and Down 4. Florelie Escano - Ultimate Pleasure 5. Donell Jones - Gotta Get Her 6. Faith Evans - Faithfully 7. Black Coffey - Hard To Get 8. Beyoncé - Me, Myself and I 9. Ashanti - Happy 10. J Wess Project - What Chu Want 11. Aaliyah - Rock The Boat 12. KeKe Wyatt - Used To Love 13. Keith Sweat - 100% All Man 14. Kelly Rowland - Past 12 15. Mariah Carey feat Eric Benet - Want You 16. Lil Kim - Kimnotyze 17. Misteeq - Roll On 18. Monica - All Eyez On Me 19. Prophet Jones - Doin' Me 20. Next feat Tha Rayne - Juicy 21. Nivea feat Jagged Edge feat Mystikal - Don't Mess With My Man 22. Senani - I Am Gone 23. Syleena Johnson feat Busta Rhymes - Tonight I'm Gonna Let Go 24. Blu Cantrell and Sean Paul - Breathe 25. Jennifer Lopez - I'm Glad 26. Joe - Let's Stay Home Tonight 27. Ideal - Just Like That 28. Dani feat Phaedra - I'm That Girl 29. Ja Rule feat Ashanti - Memerize 30. Brandy - I Though

hip hop mariah carey ja rule shakedown nivea jagged edge keith sweat syleena johnson blu cantrell ol skool joe let shakedownradio

ShakeDown Radio - Episode #271 - Boxing Day 2019 - Blazin Hip-Hop and RnB

Play Episode Listen Later Dec 28, 2019 120:26

hip hop mariah carey boxing day ja rule shakedown nivea jagged edge keith sweat blazin syleena johnson blu cantrell joe let shakedownradio

ShakeDown Radio - Episode #271 - Boxing Day 2019 - Blazin Hip-Hop and RnB

Play Episode Listen Later Dec 28, 2019 120:25

hip hop mariah carey boxing day ja rule shakedown nivea jagged edge keith sweat blazin syleena johnson blu cantrell joe let shakedownradio

ShakeDown Radio - Episode #271 - Boxing Day 2019 - Blazin Hip-Hop and RnB

Play Episode Listen Later Dec 28, 2019 120:25

hip hop mariah carey boxing day ja rule shakedown nivea jagged edge keith sweat blazin syleena johnson blu cantrell joe let shakedownradio

ShakeDown Radio - Episode #273 OL SKOOL Hip-Hop and RnB

Play Episode Listen Later Dec 28, 2019 122:05

hip hop mariah carey ja rule shakedown nivea jagged edge keith sweat syleena johnson blu cantrell ol skool joe let shakedownradio

ShakeDown Radio - Episode #271 - Boxing Day 2019 - Blazin Hip-Hop and RnB

Play Episode Listen Later Dec 28, 2019 120:26

hip hop mariah carey boxing day ja rule shakedown nivea jagged edge keith sweat blazin syleena johnson blu cantrell joe let shakedownradio

ShakeDown Radio - Episode #273 OL SKOOL Hip-Hop and RnB

Play Episode Listen Later Dec 28, 2019 122:04

hip hop mariah carey ja rule shakedown nivea jagged edge keith sweat syleena johnson blu cantrell ol skool joe let shakedownradio

ShakeDown Radio - Episode #271 - Boxing Day 2019 - Blazin Hip-Hop and RnB

Play Episode Listen Later Dec 28, 2019 120:25

hip hop mariah carey boxing day ja rule shakedown nivea jagged edge keith sweat blazin syleena johnson blu cantrell joe let shakedownradio

Episode #271 feat. Blazin Hip-Hop and RnB

Play Episode Listen Later Dec 27, 2019 120:26

hip hop mariah carey ja rule nivea jagged edge keith sweat blazin syleena johnson blu cantrell joe let shakedownradio

Episode #271 feat. Blazin Hip-Hop and RnB

Play Episode Listen Later Dec 27, 2019 120:26

hip hop mariah carey ja rule nivea jagged edge keith sweat blazin syleena johnson blu cantrell joe let shakedownradio

Episode #271 feat. Blazin Hip-Hop and RnB

Play Episode Listen Later Dec 27, 2019 120:25

hip hop mariah carey ja rule nivea jagged edge keith sweat blazin syleena johnson blu cantrell joe let shakedownradio

ShakeDown Radio - Episode #271 - Boxing Day 2019 - Blazin Hip-Hop and RnB

Play Episode Listen Later Dec 27, 2019 120:25

hip hop mariah carey boxing day ja rule shakedown nivea jagged edge keith sweat blazin syleena johnson blu cantrell joe let shakedownradio

ShakeDown Radio - Episode #273 OL SKOOL Hip-Hop and RnB

Play Episode Listen Later Dec 27, 2019 122:04

hip hop mariah carey ja rule shakedown nivea jagged edge keith sweat syleena johnson blu cantrell ol skool joe let shakedownradio

Episode #271 feat. Blazin Hip-Hop and RnB

Play Episode Listen Later Dec 26, 2019 120:25

hip hop mariah carey ja rule nivea jagged edge keith sweat blazin syleena johnson blu cantrell joe let shakedownradio

How SMS Marketing Can Increase Your Engagement 4X With Arri Bagah

Play Episode Listen Later Dec 3, 2019 37:49

We have sold over 120 businesses here at Quiet Light but this is the first time we've employed the term text list. Does texting make your business blow up? The young entrepreneur we are talking with today is at the forefront of mobile marketing with his company, Conversmart. When done right, mobile marketing gives customers using smartphones personalized information so that they can get what they need exactly when they need it. SMS subscriptions have begun to bypass email subscriptions with their elevated engagement and conversion rates. Arri Bagah was a computer science major who learned coding to make money as a side hustle in college. After college, he got into messenger marketing with Facebook messenger at an ad agency. He started Conversmart and began to explore looking outside traditional marketing channels for his clients. Arris has quickly become an expert in the mobile messaging space, helping his customers generate millions in additional revenue. Episode Highlights: The difference between message marketing and email marketing by numbers. The advantages of message marketing. How the tool allows for easy customer opt-in. Specific examples of the client conversion rates. Growth opportunities for potential buyers. Categories or spaces where message marketing works best. Ways to collect subscribers. Average return on ad spend. Messaging frequency of a successful text messaging campaign. Costs to get started in message marketing. The ins and outs of opt-in compliance. Advice for all types of eCommerce businesses looking to use message marketing. Transcription: Mark: Joe recently you asked me to make a change to our site; a pretty simple change. And that was to give some of our buyers, the people that want to know when we release a new listing and put it back up a little bit, anyone that's out there wanting to buy they want to know when we release a new listing and they want to know first, right? Everyone wants to be first in line for that. So you made a suggestion which we're going to implement here in the coming months which is to add text messaging; SMS alerts when we release a new listing. And I know this didn't just come from you sitting around and saying hey… Joe: Yes it did. I come up with all these great ideas in my head. I don't get any help from anybody else; just a clarification. Mark: You know I'm not sure I want to; okay fine, this was 100% your idea based on somebody that you talked to on the podcast. Joe: Alright, that's true. Mark: Alright who did you talk to and why are we talking about SMS texting? It sounds invasive to me. It sounds like something I wouldn't necessarily want but the data doesn't really agree with me at all as it often doesn't. Joe: Yeah, it doesn't agree with you at all or me. Talk to teenagers this is what they do. And actually, they don't even text now it's just a snap. But in Seattle… Mark: You have to get on the TikTok train, that's where it is now; Tiktok. Joe: Actually that's true. Mark: Yeah so there you go. Joe: I'm hearing about that as well. You have a teenage girl so you know. Should we be talking about our kids? No, they don't want to hear about our kids. Mark: So we talk about my kids will be on here forever. And like it's two minutes each that's like 15 minutes. Alright, SMS text messaging let's get back on that. Joe: I was at a Blue Ribbon Mastermind in Seattle with Brad and Chris and this young kid gets up on stage and he presents on SMS text messaging and how it impacts engagement with customers and he starts talking about 98% open rates and much, much higher conversion rates. And the average order value in all of this stuff and somebody we know, somebody we've sold a business to engaged with him afterwards and hired him afterwards and his business has blown up. I don't want to give his name because people want to talk to him and we keep referring people to him and he's just trying to make a living and people want to talk to him about how he's doing it. So I'm not going to give his name but his business has absolutely blown up. So I ended up connecting with Arri; Arri Bagah, he's a kid guys. Yeah, he's a kid to me. I got gray on my chin. He's like 24 or 25 years old but he's at the forefront of the next evolution of e-mail marketing which is SMS marketing. It's capturing mobile phone numbers, doing specific marketing directly to that mobile number, and it's amazing. When you're online shopping now; this is how he describes it now, if you're online shopping on your mobile phone and someone says subscribe and you click on it and it's the old school way to subscribe it's your email address and then you've got to go confirm in your inbox and then all these multiple steps. Now with SMS and if it's done right and you subscribe you can confirm it right there on your phone and then you get that coupon code right there on your phone and then you could place the order right there on your phone. It's like so quick; 15 seconds versus multiple steps in multiple places. So there is a little bit of that and a whole lot of you want to help your customers, you want to get good information in front of them. They want information to get to them in a way in which they live now which is on their mobile devices SMS is the way to go. You don't have to check your e-mail. It just pops up. There's a blue dot. I'm looking at my phone right now. There's a blue dot on my phone right now. I think it's probably from you Mark. Somebody texted me and if I want to make it go away I have to click it. I have to do that. Same with Messenger and Facebook; it shows up on my phone. I could get rid of it. So the engagement is much higher, conversion rate is much higher; gosh if I could just give a statistic here. He gave me something like a 25 time ROAS, return on ad spend. So if you spend a dollar you're getting $25 back. That's amazing. I think they guarantee a 15-time ROAS. It's incredible. That's all I have to say about it. Mark: That's amazing. I think the emphasis here because we; let's bring this back to what we talk about on this podcast all the time, we're talking about buying and selling internet-based businesses and for somebody buying we're looking at how can we grow what we're acquiring here. And look we know Facebook we know Google but let's face it Mark Zuckerberg has gotten greedy. It's really, really difficult to make Facebook pay well. And if you had a 25 ROAS on Facebook you'd be selling a course next because that's what people do. You're usually happy if you have that 3 ROAS on Facebook. Google is the same sort of thing. And I think it's important for us to look outside of what we think are the most profitable marketing channels. Look all the data does actually point the same direction. The most profitable marketing channels are the ones that you own; email and email we know is cluttered so SMS text makes a lot of sense if you have permission to be able to send SMS texting because no one else is doing it. So it's going to be a really great channel. I'm excited to listen to this because you asked me to add this as an option. I'd like to hear from buyers as well would you want to have text alerts when we release a new list and I think it's a great idea to do. Obviously, it would be opt-in only but it would be a great way to be right at the forefront of that. I'm excited to listen to this and also learn how to implement this as a system within Quiet Light Brokerage. It's fantastic. Joe: Yeah. You just said opt-in only; you can opt-in, you can opt-out. All of that is right there. So you just invited all of the buyers in the audience to reach out to you and let you know so why don't you give out your cell number so you can have them all text you and say yeah man implement this. Mark: Yeah. Joe: No, don't do that. Mark: Or just e-mail me, Mark@QuietLightBrokerage.com and then when I reply they'll have my cell phone number because it's right there at the signature. Joe: I want you all to harass Mark and stay on top of him on this one because I think it's going to be a game-changer for you the buyers to be notified on your phone that there's a new listing that's launching. Right now we're launching one in four hours. Wouldn't you love to be notified two hours in advance of the e-mail launch? It would be great. I think it's a great service that we can do for you and I think it's a great service that all the e-commerce SAS content owners can do out there for their audience as well. So let's stop talking and go to it. Here we go. Joe: Hey folks Joe Valley here from Quiet Light Brokerage and today we're going to talk about something I'm pretty clueless on which is text marketing, SMS marketing, we've got an expert in the area. I met him at Blue Ribbon Mastermind one Ezra Firestone's Mastermind groups. His name is Arri Bagah. Ari welcome to the Quiet Light Podcast. Arri: Thanks so much for having me, Joe. Joe: I'm so glad you're here and I'm going to call out where you are actually because Ramone Van Miller has been on the podcast as well. He's a good friend of Quiet Light. We're actually out filming in California now telling his story and you're sitting in his kitchen because you're working with him on one of his businesses, correct? Arri: Yeah. That's exactly why I'm here. Joe: So folks those that actually go to the YouTube page and get to see this, you'll get to see a Ramone's kitchen in the background; at least his guest house at the very least. Alright, Arri tell us about what the heck is text message marketing and tell us a little bit about yourself and how you got into it. Arri: So I went to Roosevelt University in downtown Chicago for computer science and before I started I met a friend who had like a really nice apartment in downtown Chicago and I just asked hey how did you get that apartment? And then he was like hey I code and build websites. I was like cool I want that apartment. That's how he got this and that's probably what I should do too; to code web sites for people and make money. So fast forward I learned how to code throughout like the first semester. And then it will be like do a lot of the homework just like to learn how to do it myself. And then I decided if I can learn how to code myself then I can just like keep doing it. And that's where like my entrepreneurship journey started. I built a couple of web sites and then got into Facebook marketing. So I decided to move to LA. I got a job at an agency and before that's when I got into Messenger marketing which is a way for brands to leverage Facebook Messenger to market. So at Facebook Messenger marketing, we're seeing really good results. And at this agency, I was running Messenger marketing for like 15 different e-commerce brands at once and it was pretty, pretty crazy. I learned a lot. I got a lot of experience doing it. And I decided to do it for myself. And that's when I left that agency and started Conversmart. And we've grown pretty much since and then got into text messaging this year. And I'm super excited about text messaging because it's a whole different way for brands to be able to reach their customers. It's more direct. And a lot of the brands that we work with have seen really great results. So that's kind of like how everything started. Joe: So we've had you know guys like Mike Jackness who we're friends with, I sold one of Mike's businesses for him. He's an expert in e-commerce space. He runs EcomCrew. He talks all around the world on e-mail marketing with Klaviyo. Talk to; for those that are new to the space and text message marketing, talk to us about the difference in terms of the open rates and conversion rates and how you're able to reach people and things of that nature. Arri: Yeah that's a great question. I think email marketing is great. It still works. Billions of dollars generated each year through email. But the problem with email is that everybody is doing it. Especially with this season; the Black Friday holiday season, people are sending like 3 to 5 emails per day so as you can see the open rates and performance just completely drops when everybody is sending that much volume in emails. So the difference is that with text there are not a lot of people doing it. And if people are; people are super-specific to like which text or which brands they subscribe to so there's not a lot of competition when you're able to reach that customer directly. And one of the things that we've seen is that if you look at the traffic split for your e-commerce store the majority of the traffic is probably mobile already. So if somebody is like on their cell phone browsing your web site and you want to get them on your list right now brands have pop-ups and really if you give somebody a coupon and they have to leave your web site and go to their email check that email, get that coupon and hopefully come back to site and you can see how many distractions there are in the e-mail inbox. Joe: True. Arri: So there is friction right there already. Whereas with text you get that customer, they're already browsing on your mobile, you get them to opt-in through text, you send them a text, they get the coupon, they click and they're right back to your site. So it's a more direct way to reach customers exactly where they are. And really what we found is that we're not asking people to stop doing email marketing, we just want people to supplement the email marketing with text. Because with text you get 99% open rates, 10 to 20% click-through rates and usually double or triple the conversion rate over convert to like email. I'm working with Ramone like you mentioned on his brands. Really like he was telling me hey like our texts always like performs four times better than our emails let's do more text. So he's sending more text messages now which is something that we help with. We can talk more about what type of content people like. So we come up with really good content that people like and we're able to send it directly to them. They come back to site. They make [inaudible 00:13:29.5] just so that's like I think the big difference between email whereas email has gotten really overused and then text is just like this new channel that allows people to reach their customers directly. Joe: Let's talk about some of the steps that someone would take if they were going to move into text message marketing. With emails there's opt-in and unsubscribe and things of that nature, what's the equivalent of that with text message marketing? Arri: Yeah, so you can't talk text marketing without compliance. So with text messaging, we have to get people to double opt-in. I think the reason why people have these misconceptions about text messaging is because they've probably subscribed to a list before and people are just like spamming them. Or they didn't even subscribe and then they got messages. So one of the things that we do today is that we make sure that people are double opting in and that's one of the reasons why we see these high open rates and click-through rates because people are actually expecting you to text them rather than somebody is going through like a form and then you get their phone number and by surprise they receive a text and they're like why is this brand or business texting me. So we make sure that people are consenting to receiving those texts and that's the reason why we see really good results with it because people are now expecting you to go. Joe: So it starts with the double opt-in just like e-mail and you're capturing then those customers where currently either on someone's website on a laptop, PC, Mac, or whatever it might be or on the mobile device where you've got that pop up asking them to enter their phone number I assume obviously to get a discount or a coupon or to get information in the future. I see pop-ups all day long when I'm on websites. That's what it would be on the mobile phone or mobile device when you're asking for a phone number is that right? Arri: Yes. So basically we mostly only do it on mobile and the experience is really great because we don't even have people typing in their phone number. All they do is they tap the pop up twice and it opens up they tap to pop up the first time it opens up their messaging app they send the message and they get opt-in and we get the phone number through that. That is all powered by our platform partner called Pop Script. So yeah you know… Joe: It sounds like a breeze. Arri: Yeah like when you ask someone to put in their e-mail for a discount a lot of people put in their fake emails and especially with phone number you can expect people to put in like 222 and then whatever to get that discount, right? Now we've bypassed that by getting them to like actually send a text. So that's another compliance step that makes sure that your brand is fully compliant. So they send a text, they get opted in, and that's when they get that welcome message and get opted into the automated flow, abandon cart, and all those different things. So that's kind of like how it's set up. Joe: Okay. So can you talk to us about specific examples where you've had a client that's just been doing e-mail marketing and they brought you on board and what the change was in terms of their open rate, their conversion rate, their total revenues, and things of that nature so people listening either as current owners of online businesses or potentially buyers of online businesses and looking at growth opportunities as a buyer as well. Can you help out with an example or two? Arri: Sure. Yeah, we have a lot of examples. So one of the things that I wanted to mention is that your e-mail list is an asset and your text list is also an asset. And those are people that you can reach out to get them to make a purchase even after the rising cost of Facebook ads and all these different things. These are people that you can reach out to because you own that customer list. So if you're buying a business and they have a text list it's a really great asset to own. Joe: I got to tell you I've sold 120 businesses in the last 7 years and I don't think I've ever asked the question do you have a text list nor has anyone ever said well Joe you're asking about the e-mail list what about my text list? So it's rare. I assume it's coming in the future and that's why I've got you on today. But is the text list usually the equivalent of any e-mail list; smaller, larger, how big are they? Arri: You can have like large text lists and they usually work way more than your email list just because of the difference in the performance like being able to reach someone directly. So a few examples I think I've been like working with Ramone like you mentioned like when we started working together they were doing a lot of emails. So everybody that we work with it's always hesitant. It's like you know what I've never signed up to receive texts from a business. I don't see why anybody else in the world would want to receive texts from a business. So this is one of the things that we get all the time. And one of the things that we say is that you're not your customer. Like your customer doesn't live the same way. There are people out there who are looking to get like deals sent directly to them so they can save money. And there are all kinds of people out there who are willing to receive texts and most customers are and we have data to prove it. So that's the first thing. And then when we started doing the text messaging, when we launched our promotions and stuff like that we saw that text was performing four times better than e-mail. So we started to like send more text messages. Joe: In revenue what we got four times more revenue than email? Arri: Yeah. Joe: Do the math on that. People if you're listening and you have an e-mail campaign gosh Mike Jackness that's; ColorIt was huge on the e-mail campaigns, text messaging four times the revenue. That's crazy. Crazy good and it's time that we sort of adopted text messaging. I know that it's hard to ignore when it comes through because if you want that blue or green or whatever color of dot you have on your phone when a text comes through if you want it to go away you have to open the text. Arri: Yeah. And the crazy part is that looking at the millennial group like over I think it was 80% or so opened that text within 90 seconds. I think it was something like that. And yeah people don't always open every text they receive. So that's one of the great things about this. So we send our texts even for this Halloween campaign and things that we just launched every single text that we sent we saw well above 10 or 15% or so click through rates and the conversion rate was at least like 6% or so. And with text like you mentioned people open it and then they want to take to action, right? It's very short. And one of the things that we do is that we add images and GIFs. We design all these custom-built before; our design team does all that stuff. And I think that's one of the biggest value propositions is that we do the creative for the text so that it's not like somebody is just receiving a text from you they're also receiving like engaging content. So we design these GIFs and we improve the conversion rate. So every time we send like a GIF and text compared to just sending text we see twice the conversion rate when we add the engaging GIF. So those are some of the designs that we do. Joe: So for all non-millennials out there the proper pronunciation is GIF, it's not JIF clearly. That's an ongoing joke in my house. Sorry, I'm sharing a joke, people. So it's a visual aspect to it, it's just not content, they can see the images which is proven to bring more emotions to the surface and obviously convert higher. Are there any sort of categories or spaces in terms of products; e-commerce where it works better than others or certain things that you've tried and it just wouldn't work. You know Quiet Light Brokerage we've got a list of; you and I talked about this, we've got people that want to be notified and get notified when we launch new listings. I would think that text message marketing would work brilliantly for them because they'd get instantly notified instead of having to check their email. In Ramone's space, in his category, it works obviously brilliantly. Are there any spaces where you find that; I'm sure there are people that are listening and going oh yeah but I run a such and such type of business, it wouldn't work for mine? Is there anything that; is there truth to that, any that you can think of, or some categories that work better than others? Arri: That's a great question. I think the reason why people ask that is that they probably think that their customer is different than like everybody else. And the answer to that is as a business all you're doing is providing a solution to a problem to a specific group of people. And if your product works and if you have happy customers those people would want to hear from you and that's the reason why I say text works for like any space. I don't think there's any sort of brand that we work with that we saw okay their customer is not responding to text. And the reason is like I said you're solving a problem for these people and these people want to hear from you. So every single time it doesn't matter what space you're in or what product you promoted. It has always worked for their target audience. Joe: Okay, so we've talked about how to capture more phone numbers on the mobile devices, how to reach them, what the conversion rate is, usually four times the amount of revenue in e-mail marketing, and the fact that it works for every category in your opinion. What about A-cost or return on ad spend or average cost per order, how does that compare to e-mail marketing or if you're familiar with the FDA space things of that nature, do you have a sense in terms of whether it cost less or more in terms of cost per order service text marketing? Arri: Yeah, that's a good question but I wanted to add on to the ways that we collect subscribers real quick. One of the things that we've been doing recently is actually like leveraging Facebook and Instagram ads; lead ads to get more phone numbers. So when we run these text campaigns we realize text is performing way better so why don't we supercharge our text list. So we started running Facebook ads to get people to opt into just text directly through Facebook and then they're able to get on your text list so you can put them through nurturing flows. This was one of the performance methods that we've been using. Going back to your question which I completely forgot. Joe: No, I love where you just went. I wrote my question down so I can look down and ask it again. But you're talking about what would be in e-mail flow that Mike Jackness has always talked about with Klaviyo. You're doing the same thing with text message marketing. Arri: Yeah. Joe: What did you call it; what was that flow you called it just now? In terms of like okay everybody, listening can remember but you and I can't; skip it. It's the flow of nurturing, right? Arri: Yeah. Joe: How you're going to nurture that customer along and help them, help them, help them, and then give them something that they could take action on. I was asking about average cost per order or return on ad spend; what are you seeing there? Arri: Yeah the average return that we see for the plan that we work with is a 25, or the minimum return is 25X and usually for brands that we work with… Joe: Cut it down, 25X? Arri: Yeah. Joe: So I spend $10 and I produce $250; is that right? Arri: Yeah. Joe: So I did that really good math. I spend a dollar and I get 25 back. That's easier math for you and me. Really 25 times? Arri: Yeah. Joe: I'm seeing on e-commerce businesses between when they're doing e-mail all sorts of PPC, Facebook, Google AdWords, whatever it might be but all of it combined with Google as well where the average cost as a percentage of total revenue is somewhere between 9 and 15%. You're talking an incredibly low number here. Arri: Yeah. Joe: It sounds too good to be true. I don't mean to talk over you but people I just want to like hammer home on it really 25 times? Arri: Actually I'm being super conservative here. Joe: Really? Arri: Yeah. So the reason why is that the way we do text messaging we're already like we're capturing for the most part people who are already interested in your brand. So people who are on your web site. So you have good website traffic. That's the reason why text works a lot because we're getting people who are interested and then we're able to reach them directly on their smartphones and then you create really custom automated flows and really great broadcast. So that's how we're able to get really high returns. Like I don't think we have like any brand that's getting lower than like a 50X, to be honest. But we like to say we guarantee a minimum of 15X return. But yeah we get really high returns. And I don't even want to go with the ones that are getting like 200X or whatever because that will scare people. Joe: There's going to be a limit to what they can spend if they're getting even a 50X or 15X I guess the limit would be the total number of phone numbers that you have and how often you send these messages, right? I mean with e-mail I know that with Klaviyo; Mike's campaign on ColorIt, he would send e-mails all the time. They were helpful educational e-mails and really in that regard and then there would be a promotion where they could get a discount or a sample pack or something like that. How often are you sending text messages on one of these nurturing campaigns or flows as you call them? Arri: Yeah so we break down the messaging by automated flows and one time messages which is basically broadcasting. So with the automated flows, we like to send; when somebody subscribes we can send them a message immediately with like whatever the offer was and then we can send reminders. We send like two reminders within 24 hours for them to take action. And then on top of that, we have the [inaudible[00:28:04.1] and if they do not take any action or purchase then we'd get them into the Welcome Series which we can send that every three or four days and we'd like to stop after like five messages. We always give people like the reply stop to unsubscribe because if somebody signs and just said then we rather have them unsubscribe and save us some text money. And there was always that option. And then if they get into abandoned carts we have two series abandoned cart recovery messages that we send out until they make the purchase and then we go in to post-purchase. So with post-purchase, you can do a lot of things with like product-specific flows. If somebody bought this product you can say hey; you can upsell them other sort of products are related. So we can get really nitty-gritty with that. And then we have the one-time messages. With broadcasting, we recommend sending at least twice a week. I've seen people who have like text lists and then never want to message them because I think they're scared that hey they're going to receive too many messages. I really talked to a brand yesterday and they're like yeah we sent only one text a month and I'm like yeah you guys need to be sending at least like 6 to 10 maybe 2 every week because you're just going to like double how much revenue you'll generate. Joe: Right. And if the customer doesn't want to hear from you they're going to opt out; as simple as that. Arri: Yeah. Joe: That was the approach Mike took with Klaviyo and ColorIt as well; send as many as you can, be as helpful as you can, and let them know if they don't want to get any messages they can opt-out. It sounds like your approach is the same with your clients. Arri: Yeah. And I think that content really matters too. It's not about just like blasting sales. I think people think that because we are having all these crazy resources that we're always doing sales but we rarely do sales. It's always like short and sweet content with like a GIF that kind of illustrate what we're trying to say that engages the customer more into taking action and in between, we add like sort of small discounts. So it's not always about sending like hey we're doing like a storewide 20% off or whatever. You can actually send like a content. Joe: Okay. Talk to me about the cost to get started with something like this. I mean with Conversmart your business; that's Conversmart, there's no T in there folks but we'll put it in the show notes as well. How does someone get started dollar-wise? What's a test look like in terms of giving it a shot and seeing if it works and how many times do they have to really test it? What do you recommend to new clients that are coming in? Arri: Yeah. So SMS at the very bottom of the funnel so I recommend having a good amount of traffic; at least 20 to 30,000 web site visitors in order for it to work if you just want to do bottom of the funnel but if you want to use the Facebook ads to start growing your list which is a really good strategy because with the Facebook ads you get people to opt in to your text list and those people who were opting in are also buying which is paying for the cost for you to acquire those leads. So you're basically getting free leads. Joe: That's something beautiful. Arri: And then we'll tell you about because that's probably we've been doing hey let's get more free leads. So that strategy works really well. So we get people to opt-in through the web site and then we also get people to send some automated messages. Those are some of the great ways to start. So first you got to get people to opt-in. You have to have the traffic. You get people to opt-in by having a pop-up or on your mobile device or you do the Facebook ads and once they opt-in then you have to send messages. I think Thank You messages is the most important part lke it goes back to e-mail, right? I've met some people and it's always the same situation; it's like hey I have this e-mail list but I'm not even e-mailing them. It's the same with texts. You have to text the people who have subscribed. And it's always great to text at least once a week so when are you doing your promotion so these people are not completely forgetting about your brand or who you are. So it's a great way to stay top of mind while generating revenue. Joe: But budget-wise though for people going should I try this, is something I can give it a go, do they have to have a thousand to 5,000 or 10,000 dollars set aside to test this with? What do you recommend? Arri: You can get started fairly easy. In fact with our partner Postscript which is the platform that we use; if you own a Shopify, it's the one that we work for Shopify but if you're on another platform we can definitely chat about that. But it's super simple to get started in fact I can give you guys like free 1,000 credit if you want to try out text messaging. You can give them the link or something like that. Joe: Yeah, great. We'll put that in the show notes. Arri: Yeah you get charged by how many messages you send if you want to do it yourself. There is no platform fee or anything like that. So once you get those credits you can start sending and see kind of like what the results look like. And like I said it's only going to cost you if you send the text messages and be able to tell if it's working or not. So it's very simple to start. Joe: Okay. So it's all about the number of texts that you send. First, you've got to capture as many phone numbers as possible and get them to opt-in. Like we've got a fairly large list after a decade of email addresses and phone numbers, we can't just use those phone numbers we've got to get them to opt-in first, correct? We're going to follow the law. Actually, they opt-in to receive information from us anyway via email would that apply for their phone numbers as well? Arri: No they have to have opted in for the text. Joe: I got it. Arri: So if it said like only for them we're going to finish up 5 today check here to opt-in for the e-mails it has to also say text otherwise they're not opting in for the texts. Joe: That's good to know. Okay, any last thoughts for people with e-commerce businesses in terms of text or actually I'm saying e-commerce but I would imagine this would work for SaaS and content businesses as well, right? Arri: Yes. In fact like even with like a B2B company. I got a text. I signed him up for like a demo and he's texting me and we actually had a conversation. So this is a great way to like follow up with people if you're like not even in the e-commerce space. You can text them… Joe: It worked for you and worked for Quiet Light too so I don't know why I'm thinking only e-com. Arri: Last words; if you're an e-commerce business I definitely recommend looking at text because it's going to be the number one way people are going to be communicating. As emails are being sent even more I think there's going to be like over 319 billion e-mails sent in the next year or whatever so text is a great channel for you to reach those customers and you don't have to go all in. You can do like small tests and kind of see what the results look like. So yeah I highly recommend checking it out and doing some small tests to kind of see what the results look like for you. Joe: Okay and it looks like they can reach out to you and get a free consultation as well. How do they find you? What's the URL that they'd reach you at or things of that nature? Arri: Yeah. So Conversmart.com, that's where you'll be able to find us, you'll kind of see like kind of an overview of what we do with text messaging. We take a really different approach to text messaging that people haven't seen before especially with the content that we send and the creative that goes along with that content. That's really what helps brands double that conversion rate when they send all these text messages. And also as an agency, we take over the entire channel for you. So basically you can sign up and basically, you just see like money come in from text messaging after a couple of weeks and then we just give you all the reporting. You don't have to do anything besides approving the content and everything. So we'll basically like take over the entire channel for you. And that's pretty much like what we do for every brand that we work with. We don't want them to like worry about getting 11% open rates and 1% click-through rate over email. We can supplement that by sending people text messages that they actually like. And people are going to convert from those text messages. Joe: Excellent. Well, I know that what you're doing is working because you're hanging out with the likes of Ramone and that is rad. So you're doing something right. There's no question about it. Anybody out there that's interested in reaching out to Arri just go to Conversmart.com. Arri I will see you at the next Blue Ribbon Mastermind event and when Ramone gets back from filming today which he's doing for Quiet Light thank you, Ramone, give him a high five. Tell him I said hello. Arri: Yeah. Joe: Thanks for your time. I appreciate it. Arri: Alright. Thanks for having me. Links and Resources: Conversmart Free 1000 Postscript credits

Scott Voelker Shares How to Build a Successful Business From the Ground Up With "The Take Action Effect"

Play Episode Listen Later Oct 25, 2019 38:22

Scott Voelker, the amazing seller himself, is back on the podcast today with a new book that will guide entrepreneurs on a path to financial freedom. Scott has transformed from someone who dabbled in e-commerce into a seven figure business owner, author, and host of one of the most popular e-commerce podcasts out there. Now he is sharing his tips with other entrepreneurs, offering sets of specific steps to follow to create a business that will allow freedom and flexibility. From the construction career he left at an early age to starting and building a successful photography business, Scott has built on his entrepreneurial nature for over two decades. In 2008 he started selling photography products online and soon realized it could become a full time income. Fast forward a few more years and he started to hear more about Amazon FBA model and how some people were making good money using the platform. He started researching and listening to any valuable information he could garner then used all the know-how he'd gathered and applied it to his product listings. Episode Highlights: How Scott and his wife got their start building a business from the ground up. Scott discusses the path he took and how the book delves into his future plans. Whether he finds the pathway to the end goal more difficult than five to ten years ago. How Scott is evolving from being "The Amazon Guy." Helping others with the book and the action steps he outlines. Scott addresses the question of finding time to start a side hustle. Learning how to schedule downtime once success allows for less work time. Tips for finding that future-proof opportunity. Taking the affiliate marketing path as an opportunity to learn your market. Using channel diversification as a building block. Transcription: Mark: Joe recently I sent you a book through Amazon that I was hoping you would read and I'm assuming that's the next book on your reading list, right? Joe: No. Sorry. Mark: I'm not going to buy you any more gifts. Joe: No. Now you sent it to me via Amazon and I think I have to download it onto my Kindle app. Mark: You haven't even downloaded it? Joe: I haven't even downloaded it. Mark: Oh my goodness. Joe: You're just trying me. See the reason I haven't is because it's a productivity book and you're trying to get me to be more productive but I haven't read it yet so I'm not as productive as I could be. Do you see an excuse thing going on here? Mark: Productivity is one of those things that I'm sure everybody's like Joe is terrible at getting stuff done. Joe: This book I'm holding out for those that are on the YouTube channel. Thank you for being on the YouTube channel, by the way, you're awesome. This is the book I'm currently reading it's called the Take Action effect By Scott Voelker; a friend of ours and we just had him on the podcast. And that's what the book is all about. It's a combination of, and this is why I'm not reading the book you sent me. And I have one more in front of that by the way but this one is amazing it's really telling Scott's story. Scott as lot of people know has a podcast called The Amazing Seller podcast. With the audience he has every month he could fill up the Bank of America Stadium here in Charlotte and I think that's like 25, 30,000 people. He started out just telling his story building an Amazon business and everything he was going through. He just laid it all out on the line. He's really transferred himself or transformed himself into someone that is first and foremost helping people take action in their lives and he talks about this in the book and how he did certain things in his life and what an impact it had and what it led to next and next and next and now where he's at running a 7 figure business with the lifestyle that he wants. It's still one of the most important things about Scott and the book and the action steps that he shows people how to take is to run a business, set your own goals, how to set goals properly with vision boards and different things but with a lifestyle that you want. This is not a get rich quick scheme it's a book to build the life that you want; how to take certain steps and actions and if you want to run a 10, 20, 30, 40, 50 million dollar business great. These will help and there are some examples of that; of people that are doing that. But if you want to just earn an extra couple of thousand dollars on the side and build the business slowly there are absolutely some steps in there for those folks as well; people that are listening now that still have full time jobs that don't dare buy a business this allows them to take certain steps and actions to do that and build a safe business that's going to be relatively passive that they could do part-time as they build that up and eventually quit your day job work and sell it through Quiet Light. Mark: One of the things I like about this is the idea of having a purpose to what you're doing. And I think there is this tendency to chase success, chase success, chase success, and we put in our minds that success is a certain business goal while we ignore the other aspects of our life. And I know over the past 13 years running Quiet Light Brokerage I've run across so many successful entrepreneurs who have built amazing businesses but frankly are somewhat miserable because they've built prisons for themselves. And we talk about why are people selling. Sometimes it's just because they've built that prison of a business and they need to get out. And they realize that they need to readjust their life priorities. I love when we meet people like Scott, like Ezra Firestone, and some of these other guys that have reached certain levels of success and now what they're doing is they're really trying to just be helpful and really contribute to that entrepreneurial community with some of the lessons they've learned. And I love the focus of this book. I love that it's a system out there to help you identify what's really important and have everything else flow into that, set the real goals out there and build that system including the business that fits those goals. Joe: And it's just that Scott is a real guy giving real-life examples of things that he's done and the path that he's taken and he's giving real advice here that is action-oriented. And it's a mindset. It's inspiration. And they're steps to take as well. It's one of the best books I've read in 2019. I highly recommend everybody take a listen to the podcast and at the end and in the show notes here you can go to take action effect and download or buy the book. It's available. He went further than our very own Walker Deibel, he made it available in the audio version as well. Mark: Walker needs to step his game up and start a recording. No. Fantastic. Let's get to this episode here. I love introducing our audience to people that we find to be good friends of Quiet Light because they share some of our mission and purpose. So I'm excited to share this episode with everybody. Joe: Let's get to it. Joe: Hey folks Joe Valley here from the Quiet Light Podcast and today I have a guest that is back on. But this time he is a published author on his way I'm sure to being a best-selling author. Scott Volker, welcome to the Quiet Light Podcast. Scott: What's going on Joe? Thanks so much for having me. Joe: Welcome back I should say. I just saw you a couple of weeks ago at Brand Accelerator Live; a fantastic event where you launched the book, a big hit and my goodness I'm looking at some of the reviews and they're fantastic. And I'm reading it myself of course. And let's get into that but first for those folks that don't actually know who you are why don't you tell us all about Scott Voelker? Scott: Yeah. Well to kind of sum it up I've been at this basically creating businesses that allow me to have the flexibility, the freedom, that's always my first and foremost. Back when I was like 21 years old I was working for my father's construction company and from there I thought I was going to own that company one day and then that partnership and son in law that was stealing and some craziness I soon saw that that wasn't the path that I was going to take. But I wanted to still be able to work for myself and my wife and I started a photography business, learned the ropes through good old trial and error, and built that into a business that allowed us to take our kids to school and home from school and all of that stuff. And it's really important me to watch my kids grow up and I've got 3 kids ages now 11, 21, and 24. But I've been at this for over 18 years and really building businesses hasn't really changed just the platforms have changed. And so when I wrote this book I wanted to go through and tell the story of myself. Someone that didn't have a college degree and felt a long time ago that I kind of felt to myself like I wasn't smart because I didn't go to college. But then after kind of building some businesses and watching other people go to their 60 plus hour a week job and then seeing myself not have to do that I was like well wait a minute I'm going to give myself a little bit more credit. I've done okay. And so it in a nutshell that's what I do. I just love building businesses. But I like more about just building a business it's more about the freedom and the flexibility, stability and all that stuff. Joe: And that is what you talk about in the book. Let me just; I don't think I said what the name of the book is. It's called The Take Action Effect. Scott: Yeah. Joe: Proven Steps To Build a Future Proof Business And Create Your Ultimate Freedom. I'll hold it up here for those folks that are on the podcast; I'm sorry on the YouTube channel. Scott: Yeah. Joe: One of the things that you talk about in the book really hit home with me and that is that your wife had that first idea for you to go off and on your own. Scott: Yeah. Joe: And it's and it's continued in your relationship. You guys work through all of your business opportunities and ideas together, right? Scott: Yeah, 100%. I mean she was my take action moment as I talk about in the book a lot. I think we all have these moments in our life that something happens; like a decision happens that we make either because we're forced to and then we see the result from it or we choose to, we take that leap. And I was frustrated with my job and I thought I was going to own this company and then found out that it wasn't going to probably happen and we needed to figure out another way. And then that's when my wife had said maybe we should start a photography business which at the time we didn't have digital it was all film based not YouTube videos to go out there and educate yourself. So Scott that wasn't a good student in school had to figure out how to go through and teach myself Photoshop and just how to run a studio and we did that. But yes she was the one with the idea and still to this day she's always the one kind of nudging me a little bit and saying like you should probably listen to this. Even the podcast The Amazing Seller Podcast that was because she said that you should; I had the idea but she was likey should probably lean into that a little bit and here we are. Joe: That's funny you know my wife usually has the idea and then I have to go out and do it. It's a running joke in 20 plus years of marriage. I was going to I think our wives are very similar. Our marriages are very similar but it sounds like there's one distinct difference is that my wife comes up with the idea and I have to execute. So you're taking a lot of past so it's interesting from a construction worker to entrepreneur in the photography space before really the online world existed and then discovering it through eBay and then Amazon and then The Amazing Seller podcast. Scott: Yeah. Joe: Can you just talk about that path a little bit and talk about what the Part 2 of this business about this book talks about? Scott: Yeah. So like I said the photography business being brick and mortar I learned a lot about how to get clients in the door. And a lot of people say like Scott when you start a business should it be your passion. And if it could be then yes that would be amazing because then you would love to work on it every day. But I wasn't passionate about photography. I was passionate about getting out of my job. So my wife was passionate about photography but then I started to develop these passions and that was marketing and that was Photoshop and video editing. And the way that it kind of led me to really the online space and e-commerce really was my wife was looking for props on eBay. So in our business, we always were unique in the way that we had props. We had certain sets and we had like a lot of backgrounds that cost us 2 or $3,000 and people would pay just to come in because we had this hand-painted backdrop. So my wife was looking for this cedar bridge that she had seen somewhere else and she found one on eBay. It was like 130 bucks it was a little 4-foot little wooden cedar bridge. And so then as she was looking at one of the other stores that she shops at she's seen the same bridge for 30 bucks and she's like it's selling for 130. I bought one for 130 maybe we should try to sell this thing. I said okay. So then that's where we got the idea and we started selling those. Actually, we took the minivan over to the store and we loaded it up and we packed that thing and that money actually paid for our kids tuition for a private school. And so that opened my eyes to eBay and like what else could I sell, right? And even though I had a business I'm still thinking to myself as an entrepreneur like well that wasn't that hard. Maybe I should try to find more things to sell. So then we actually started a video business on the side of our photography business; they kind of work too, you know one of the same. And then I started building these projectors to transfer old 8-millimeter film. So the old 8-millimeter film that we use to have grown up as kids it was a lot of times silent film but there was some sound when it got; I think it was Super 8 and then I found a machine that was modified to transfer the film. And so when I got that I kind of looked at it and being in the construction world I'm like this is just a modified projector. Let me go ahead and reverse engineer what they did here and I did that and I started selling them on eBay for about 800 bucks. I was selling one or two of them a week. Joe: Wow. Scott: Yeah, so I made about 100,000 on just old projectors that I modified for film transfer and that's kind of what got my wheels spinning about this online stuff. Joe: And it never would have happened if you didn't; I'm going say this so many times, taken some action, right? Entrepreneurs are special people. They come up with an idea and they don't think about it and think about it and think about it and think about it. They've got to do some planning, of course, the more complex world we live in you've got to do some planning especially when you're going to spend some dollars. But I think maybe Scott back then when you and I didn't have any gray hair we were able to take action a little simpler and a little quicker, right? I would just with that whole ready aim fire or ready fire aim what is it? Scott: Yeah. Joe: Those things, right? And I just take my path and hustle and work hard and get it done and figure out the road to that end goal which I knew what the end goal was. I just didn't know the road or the path. Scott: Yeah. Joe: Are you finding now given that you've; I mean you've done all this for 20 years an entrepreneur in many, many different past and you've coached thousands of people through The Amazing Seller podcast and many of them 6, 7, 8, 10 figure exit eventually. Scott: Yeah. Joe: Are you finding that the pathway to that end goal whether it's an eventual exit of a business or just a one of a lifestyle where you can drive your kids to work every day and spend more time with your spouse and you take family vacations, is it more difficult than it used to be in your opinion? Scott: I think it depends on what your final outcome is. I think for a lot of people it's not about building an 8 figure business just to say you built an 8 figure business; to some people it is. It's like bragging rights but for a lot of people; and I know you told me a story about a guy he was a stay at home dad I think and he built his company in 2 years without pulling a dime out of it so they could cash it out and then live off of that and live the life that they wanted. So I think for a lot of people it is that. So for me personally I think it is I don't want to say easy; it's simple. Nothing is easy. Like everything that I've ever done, there's always been struggles and issues that you have to overcome; whatever like that's business. You just have to learn how to adapt, how to move, and adjust. But I think it is actually easier nowadays to build a business that you can potentially exit. And actually getting to know you more, getting to know the team over at Quiet Light has actually got my wheels spinning once again at looking at this as an opportunity for me to build something maybe from scratch, get it to a certain level, and then sell it, and then you just repeat that process. Like I could build a team to just help me do that. So again my wheels are always spinning. And the more I talk to you and I start hearing these stories I'm like that seems like a pretty straightway to go. But the principles and the concepts are pretty much the same. They haven't really changed. And that's what is in the book is really these pillars; these core things that make up a market, make up products, make up traffic; like all of that stuff hasn't really changed. The platforms change but the principles never change. Joe: You addressed some of the approaches in Part 2 of the book about building your future proof business. Scott: Yeah. Joe: You started out as an Amazon guy, right? You were selling on Amazon telling your story in the podcast but you've evolved quite a bit. Can you address that and then we'll talk about how the book addresses it as well? Scott: Well yeah but the book itself actually is my pivot. So we talk about pivoting all the time. So when I started the podcast you're right I was getting into the Amazon game just like everyone else was. It's just I was kind of doing it and other people were just kind of consuming information and saying like I'll wait until we have all the pieces that are working or all of the answers, right? Joe: You were telling your story whether it was a success or a failure and everybody was listening. Scott: Exactly. And so as I started to do that I also started to see how the market was shifting. So when the podcast was started it was Scott the Amazon guy. And then after I started to kind of see that the market was changing, more competition was coming, and it was getting a little bit riskier I'm like I don't want to go down that road. Now that doesn't mean it can't work. I just don't want the headaches of constantly just worrying that my accounts are going to get shut down or whatever. So I'm like I'm going to go back to basics build a business from skill sets that I've built and I talk a lot about that in the book like everything we've done we've built skill sets that we can then leverage in the future. So for me to really go down that road of like okay where was I van and where am I now, it's all about evolving; all about growing. I mean I think we're all doing that as we learn more things like even like when I first started I didn't think about having a brand that I could exit. And now I'm thinking; a lot of times I'm thinking to myself could this brand be sold, what would it take to sell this business? So a lot of times I'm thinking more along those lines now. But like I said people are always kind of like thinking of me as the Amazon guy and I don't want to be known; I don't want to 20 years from now be Scott the Amazon guy. I want to be the guy that helped people build a business that allowed them the life that they want and that they deserve. Joe: That's what I'm seeing with the people that I've met that have listened to your podcast and then to your events and are connected with you in any way. Whether it's Brand Accelerator Live, your inner circle Mastermind group, or The Amazing Seller podcast; they're not just building Amazon businesses, they're building businesses that will allow them to live the life that they choose to first and foremost. Scott: Right. Joe: Some of them that's all about building value and exiting and others it's all about taking care of others. Rachel; I had a conversation with one of your followers, listeners, attendees, whatever you want to call them, Rachel we don't use the last name but an amazing story. She's building a business so that she can help others. Scott: Yes. Joe: She's going to make money off the business but that's not the focus. The goal is to be able to use that money to help others foster children charities and things of that nature; really good people. You're building good humans which I think is terrific. You're surrounding yourself with them as well. Scott: It's pretty awesome. It's funny Joe I was just listening to the Ask Scott session that we recorded there live at Brand Accelerator and it just happened that the one lady came up and was telling us about her problem and her problem was is that she was wondering how she was going to keep up with the amount of scale. And I said that's a real bad problem to have. And I knew you were in there; I thought you were in there and I called you out and I go I think this is a question for Joe later kind of let him help you on that. But it's really; it's pretty rewarding to sit there and think to yourself I had something to do just because I showed up, pressed record, and started helping people. That right there that will; to me that surpasses any amount of money that I can make from a podcast is hearing other people's stories and how they're set up now to really live the life or maybe donate to their charity. That's like again the effect of the take action is the effects of that we're able to do the ripple effect on other people but also on your life and your business. So it's really about the ripple effect all the way through. Joe: Yeah, not necessarily about just building that business and exiting it. It's everybody involved along the way. Scott: 100%. Joe: That lady was Karen by the way and she did have some good problems, right? People wish to have her problems. Scott: Growth every year, year after year, and I don't know… Joe: Yeah. How do I keep up with buying more inventory? One of the things that you talked about which I think is really, really important both in the book and on stage and I'm going to just summarize for anybody listening. This book really encapsulates everything Scott's done in his life and what you've done in your life, Scott. But then it also gives a pathway to taking action and seeing what the impact and effect of that action is. But someone said look I'm busy I've got a full-time job. I'm trying to do this. How did you find the time for that? How do you find the time for this if you; you're an advocate of don't quit your day job if you have one do a little side hustle and build this over time until it's safe to exit. How would you address that question but Scott I just don't have time? Scott: Yeah and I actually I address this on stage when I came to that point because I shared my story that I was working 60 plus hours a week for my father's company running I think was like 13, 14 guys at one time that were underneath me making sure that those jobs got done. So I was always the first one there and the last one to leave like always. On the side, I was building a house from scratch. I was like 25 years old. Joe: That took a little time. Scott: It took me 11 months. And I remember Joe my mother in law lived up on the Hill. She lived probably I don't know maybe 500 or 1,000 feet. She was up on a hill though and she could look down and see the property. We had two acres. And I remember one night I wanted to get this one spot on the house done outside. It was up in the peak. I had a 30-foot ladder up against the house and I had floodlights out there at 2 o'clock in the morning because I wanted to finish. She couldn't sleep because she was worried about me going to fall and I'm up there nailing up my siding because I wanted to get that peak done because I didn't want to come back to it the next day and do it. And then I got up at 6x o'clock and I went to work. So when people say I don't have time I don't have sympathy for that because you probably have time you just are not really wanting it bad enough in my eyes. You know what you're watching your TV show or maybe you're taking an extended lunch break or maybe you're just oh I need my 8 hours of sleep you know like get 6 for a month, right? I mean it's not going to kill you but if you really want it bad enough you will find the time. And I've done it. My photography business when I was learning that when I was getting ready to leave my job I was up till 2 o'clock in the morning figuring out Photoshop. I was figuring out how we were going to do billing for our customers. Like I was figuring out all that stuff late at night and then I'd get up and I'd go to my job because I wanted it so bad. And I was so interested in it because I wanted it so bad. Joe: Yeah you are preaching to the choir if I'm the choir right now because yeah look the thing that I see consistently I mean I've done this in my life you and I have been self-employed for about the same amount of time and it's always started with a side hustle and then work like crazy. As you are building that business you're not really making a whole lot of money. You're not taking anything out and oddly enough when you're making the most money is actually when you're not working as hard in my experience. Scott: Right. Joe: You get it up to that level and it starts to just; it's a scalable business. And with that scale, it's starting to generate enough revenue to kick off and then you can quit your day job and then you can live that lifestyle that you want. It's hard though when you're a hard worker and a hustler like yourself and like so many people that are listening. How do you shift from that I'm used to working, I love working, I'm going to work, I'm going to work, I'm going to work to I'm going to sit down and I'm going to have coffee and breakfast with my wife every day by the pool at 8 o'clock? Do you have the discipline to really reschedule your downtime? Scott: You definitely have to schedule it for sure. You have to schedule it and I'm getting better with that like I'm still not perfect Joe. I have to make sure that at 6 o'clock at night that's my cutoff. I'm not going to do anymore posting and I'm not going to do any more answering. It's hard because we can work as long as we want. And when you start to see momentum you want to work more because you want [inaudible 00:24:18.18]. But I've made it very, very clear in my life that I want to have that time. I literally wrote out a vision board and really I created a video years ago that I wanted to see come true. It wasn't like you know the woo-woo stuff but it was like what am I working towards. And one of them was having a coffee and breakfast with my wife. And so here we are many years later and literally, I just got in now. I mean I started my day today at 10 o'clock in the morning. I had a first interview at 10:00. I dropped my daughter off the school at about 7:45. My wife and I got back here. We went out to the pool. I had coffee. I was out there with the dogs. I had my laptop. I was answering a few emails; doing stuff. I'm out there chillin' with my wife hanging out. And that's what I want my life to be. Now could I be doing other things to try to make the Amazing Seller bigger or my e-commerce businesses bigger? Yes, I could but I choose to; like that's kind of like my time. You know what I mean? Joe: Right? Scott: And I do think it's hard. You have to be disciplined. A lot of people say Scott I could never do it. I would never get any work done. Then maybe you do need a job. Joe: I've heard that often. I couldn't work from home I could never get any work and that's just discipline. It's focus and discipline. Scott: 100%. Joe: We've gone from how do you find the time to do this extra side business and side hustle and grow it to how do you schedule your downtime so that you could work. You don't need to as much but scheduling your personal life to make sure that you're there for your family and things of that nature. My kids are older than you. Well, not actually mine are 16 and 18 right. You've got 21? Scott: 21, 14, and 11, yeah, Joe: So I've driven my kids to school from kindergarten right up until last year when my oldest got his license and it's an honor, right? It's a privilege and an honor to be able to do that. And when they look back someday that's what they're going to remember. They're not going to remember that Dad was making more money or something like that. So from finding time to scheduling time; your book specifically talks about all of that in your life and creating the mindset of action and everything you've done in your life. But can you address like a little bit of the how to's in terms of building that future proof business and the steps that you go through with the folks that are listening. Scott: Yeah. To me, it's very, very simple and even if you're looking at this because I know people listening here are probably looking to possibly buy a business or sell a business. Here's the deal. Like whenever you're looking at an opportunity you want to first see if there's a market already there. Like a lot of people say I want to invent a market. That's risky because we don't know; I mean if you ever listen to Shark Tank they always say has the market validated the product? No I don't have any sales it's in pre, or we're kind of building this thing out, it's in pre-production, or we're in like the pre-stage and they're like come back to us when you have sales that the market actually voted and said we actually want and need this. So the market is critical. You have to have a market. Now I'd like it to also be a submarket. So we could talk about like and I always talk about the bass fishing. So if we went like fishing we would niche it down into bass fishing. If we wanted to go one level deeper we could go kayak bass fishing. And then we can really own that category and then we can also build out of that category to serve a wider part of the market. But I always like to look at the market first. Then from there, I want to see what's the potential in the market? And that could be going to Amazon and seeing how the products are selling using a tool like Jungle Scout or whatever tool you want. We have these tools that let us know the market's buying these products. Now we can either sell those products ourselves as our own brand or we can affiliate market those products. We can do all kinds of things. So I want to validate that there are actually sales being made there. Joe: Let me just stop you for a second because some of the language you're using I don't know if everybody knows it. Talk about the affiliate marketing aspect of it because it's a brilliant path that you educate people on taking. Scott: And I'm going to be doing more of it Joe; I got to be honest with you. I was just thinking about this this morning I'm like man there's so many things that I could cover just for getting back from Brand Accelerator Live. People get stuck at the I've got to launch products or I've got to grow mine. If you bought a business; right now if you bought a business and you're thinking I don't want to launch a whole bunch of products because it's something a whole bunch of capital. Why not take the content side of things. Build out traffic and start putting out products that are related to your product as an affiliate bringing some revenue but also get them to vote that the products that you're putting out there from them they want to buy then you can private label them. So I think it's an easier way to get started. If you're just listening to this and you're getting started, the easiest ways to start looking at the market and how much traffic the market has. And then from there can you get in front of the market by getting attention by posting content, building an email list, like getting attention with influencer, whatever. Then you can start to say okay all these products I'm not going to private label all these it's going to cost me a small fortune. I'm going to start putting products out there like a kayak bass fishing boat. Like I might do that but I'm not going to sell it as my own but I might do an affiliate offer for it. So basically on Amazon, we can use their whole catalog. We can become an associate for them. And it's not going to be a ton of money it's 4%, 8%, depending on where your bracket is; the category but it's a nice easy way anyone can get started. It's not going to cost you hardly anything to set up a website and to start posting content. You can write it yourself or have someone else write it and then just start building that over time. Joe: It's a great way to go back to discovering your market as well because as you niche it down people are going to buy certain things and you can say okay well that one's much more popular than the other. Scott: 100%. Joe: The tools like Jungle Scout do that very, very well. But this is an action you've got proof in your own bank account which ones they like more. What about the multiple channels. You and I have talked about this before. We talked about channel diversification. That's something you talk about quite a bit here as well. Scott: Yeah. Well, I think again there's a lot of businesses that are very successful and you sell these businesses just Amazon FBA. We got someone in my inner circle that bought I think 3 businesses from you guys already. Joe: 3. Scott: Big businesses too; crazy amounts. I mean one of them is doing like 6,000 units a day like insane. Joe: Yeah. Scott: And you know what I mean? So it's massive. So the potential there is huge but also I look at like there's a little bit of risk there because if that channel decides to go away or they shut your account down there is a potential. So I want to build a back end support there in some kind. So I want to start building content. I want to start getting my own traffic so that way there I could lead people over to my Shopify store or I could leave people over to my channel if something shall happen. Now if it doesn't; great, keep using that. And I don't; I never tell anyone not to use the channel. Use the channel. Leverage the heck out of it. Drive traffic to Amazon. Build up your rankings. Do all of that stuff. But I do think that having your own email list is a must. I think having your own content, your own home base I call it; your own blog, your web site so this way you control that asset. And to be honest with you Joe like I'm really interested lately and I think I talked to you about it, content sites to me are never going anywhere. We're always going to have content sites. We're always going to have information that people are going to be searching for. So for me what I'm looking at doing is starting something and building it over the course of 12 to 18 months. Now listen to what I just said there over 12 to 18 months not 3 days or 30 days. It's going to take time for the search engines to kind of pick it up and get it indexed and all that stuff. And if I can build that piece of property like I used to do in the construction days; I find a piece of property, I build a house on it, I get some revenue coming in by renting it out, and then I might want to sell it. That's kind of what I'm thinking about. And there's ways you can do that without even having to launch a physical product until you get to the 12, 18th month. Then you can decide what you want to do. But you can start getting revenue coming in from affiliate offers, from AdThrive, Mediavine, any of these other networks just from the content coming in. So for people that say I can't get started because I don't have the capital, I don't have the know-how, I don't have the time, do something like even if it's just building out a content site over the next 12 months do that. Just do that. Joe: Yeah I think again taking action, right? Scott: Yeah. Joe: We just got to say that whole lot here; the take action effect. This book as I've read it and as I've talked to you, you are an interesting mix of inspiration and how-to; and you are the book. That's what emanates. You call it a pivot I call it it is what you are, you're inspiring people to go beyond their current capabilities or to get started and take some action but you're also teaching them how to do it. So it's a nice blend of both and was that the main objective of the book itself? Scott: It was actually a little bit difficult and to be honest with you Joe because I didn't want to just be let me show you how to start a business. I wanted it to be for someone also that has a 7 figure business right now that are 100% dependent on Amazon they read the book and they go oh I can do all of these other things and then probably bring in more revenue, bring in more traffic, get a better multiple when I go to Joe Valley and Quiet Light. So I was looking at two different paths. So as you're reading the book you're going to hear me talk about if you're feeling stuck at your corporate job right now and you feel like you can't get out of it here's what you could do but if you already have a business you should do this too. So it's kind of like you're serving two camps. And it was kind of hard when I was going down that path because I wanted to really talk to both people not just the person starting. Joe: Yeah and I think it's an important message for both. For those that have bought a business that want to diversify beyond Amazon and those that are listening to their spouse and that spouse is saying honey we've got a great gig here you've got health insurance and a retirement plan are you crazy you're going to buy an Amazon business and [inaudible 00:34:05.8]. No, you teach them how to do something on the side as a side hustle and let it grow and take less risk but still have that that additional income down the road or a decent exit as well which boosts the retirement plan. Right, Scott? The book itself again folks it's called The Take Action Effect; Mr. Scott Voelker from The Amazing Seller and beyond. The beyond card is you just do so many other things. How do people find the book; where can they go, what do they need to do to get this in their hands and learn everything you've talked about? Scott: Yeah, just go to TakeActionEffect.com and there's just a simple page there. It'll tell you a little bit more about the book and it'll lead you over to most likely Amazon you get paperback hardcover or the Kindle; pretty affordable to be able to take this information. I don't think people are taking the value in a book is much as they should. It is a way for you to really understand me and my story but also who I've helped and who I want to help. And it allows us to start that relationship because I'm all about relationships. And I want to be able to build a relationship with you way before you would ever hire me or come to one of my workshops or inner circle or whatever. And this book is a way to do it. It's a really, really small investment to be able to really get you thinking differently because the way I look at it Joe is we're installing the Take Action mindset. We're taking this to where you think you know what I don't think I can do this and by the time you get done with even the first; probably quarter of the book you're going to feel like you're going to conquer the world. And that's what it's really all about. Now, Joe, before I do end this I'm going to ask you a question. Joe: Yes? Scott: I want to know one of your take action moments. Joe: Okay. Scott: What's something that you can recall that you're like if that never happened my life would be totally different. Joe: Let's see. Well going back to your vision board I did something very similar once upon a time and it was a Tony Robbins program writing down my goals and envisioning what they are. And I literally; and this is I described my life; I put it all down from the lifestyle that I wanted to live and the type of woman I wanted to marry. Lo, and behold within 6 months I met her. Scott: Wow. Joe: I showed her the list maybe 18 months later and it described her to a T. So that is a Take Action moment for me in terms of writing that list down. Now it changed over the years in terms of my goals. At one point I wanted to have the boat in the harbor in Portland Maine. Well, I live in North Carolina right now that's not really going to happen. And I didn't want it once I had kids. I couldn't really spend much time with them on a boat in that situation. The other one Scott when I'm at Brand Accelerator Live is; I mentioned it before we started recording, is that I have taken action on moving forward with my book as well. We're not going to talk too much about it. I'm going to drop a little hint in here and then I'll be quiet for 12 months. But it's something that I've talked about for many years and I've tried and I've tried and I just haven't gotten it done. And you've inspired me to get it done. And some of your tips in the book itself have allowed me to sort of bullet point what I need to do to take more action and get it done; so two impacts right there and I think is going to make a huge difference for me. But again it's not always; like Rachel says it's not always about me or her. It's about how you can help others as well. And I think you're doing that. You're helping others first and it's benefiting you. And I think it's the best way to go about it. So thank you, Scott, for being my friend, for being my colleague, for being on the Quiet Light podcast. I hope to see you on it again. Scott: Thank you so much, Joe. I appreciate it, man. Links and Resources: The Take Action Effect Scott's Website Scott's Podcast Scott's YouTube Channel

tv amazon learning entrepreneur talk tips north carolina drive dad bank ebay leverage fantastic tony robbins mastermind kindle shark tank shopify take action mother in law photoshop successful business ground up amazon fba portland maine mark walker jungle scout america stadium ezra firestone mark one joe valley quiet light mediavine mark you walker deibel scott voelker joe it joe you amazing seller mark oh joe let joe yeah scott yeah scott you adthrive scott well website scott quiet light podcast brand accelerator live

Incredible Acquisitions: The Beard King (Part Two) With Raj Patel

Play Episode Listen Later Oct 10, 2019 28:33

In the world of e-commerce acquisitions, it is always beneficial to explore a transaction from both the seller and the buyer side. In today's Beard King follow-up episode we bring you part two, the buyer. Raj Patel is a law school dropout who has been an entrepreneur for several years. He started to build Amazon businesses while studying full time. Being and entrepreneur and making more money as a student than he would have if he had followed his original career path led Raj to abandon law for e-commerce. Raj looked at over 35 businesses before pulling the trigger on Beard King, his first sizable acquisition. He is here to give insight into his search criteria, the buying process, and some of the ideas he has to grow his newly acquired business. If you missed Part 1, you can listen to it here. Episode Highlights: Raj's background and how he found success in e-commerce. Why he began moving towards acquiring rather than bootstrapping. The new Amazon third party platform and any impact Raj fears for his businesses. The number of businesses he looked and how the search process played out. Whether any of the other deals explored in-depth came to offers. Why direct calls and face to face time between buyers and sellers is important. Aspects of the Beard King business that attracted Raj despite trends and competition. Raj's retrospective view on what was done right and what lessons he can share from the acquisition. How he boosted his bottom line quickly. What he's now doing to boost the topline. The foreign markets Beard King is focusing on and how Raj chose them. The sources of Raj's experience, how he learns, and how he weeds out useless information. How he interacts with other entrepreneurs on a regular basis to avoid loneliness. How many hours Rajputs into the new business each week. Transcription: Mark: Hey, recently Joe I know that you had Nick from the Beard King on the podcast to talk about selling the Beard King. And today we have part two. You have Raj on who bought the Beard King. Joe: Yeah it's a great follow up. The first one we get to see it from the seller's perspective and then we get to see it from the buyer's perspective. And Raj is pretty impressive. He is a young guy. He's in his mid-20s, a law school dropout that became an entrepreneur. He was going to law school and building Amazon businesses along the way and realized that there was just no way he was going to make as much money in law school with the demands of law school and life in general afterwards as he is as an entrepreneur. And this is the first sizable one that he's purchased and he goes through the process of the hunt for finding the right business, some of the criteria he was looking for, and some of the changes he's going to make to the Beard King to help grow it over the next 12 to 24 months. Mark: Yeah you told me before that he had been looking for quite a while for a business and he looked at was it like 30 or 40 different businesses before he pulled the trigger on this one? Joe: Yeah, exactly. He'd made a couple of offers on other ones that we had listed, it just wasn't in the right place at the right time in order to make it happen. So this one I think is going to work out great. AAs the audience knows that listened to the first one there's a lot of IP around this one with utility patents, design patents, and it's a big reason why Raj jumped on this very quickly. Mark: Very good. Let's get right to it. Joe: Let's go. Joe: Hey folks Joe Valley here from Quiet Light Brokerage and the Quiet Light Podcast. Today I have Raj Patel on the line with me. He bought the Beard King. We had Nick on the podcast last week talking about his exit as a seller and today we've got the buyer. Raj, welcome to the Quiet Light Podcast. Raj: Thanks for having me, Joe. How are you? Joe: I'm good man. But where's the beard? I mean we chatted last week there was a little bit of stubble I was expecting a big bushy beard today; what's going on? Raj: Unfortunately I am not the Beard King. I can't grow a great beard but I do know business though. That's my thing. Joe: You do know business that's for sure and at a young age; we're going to get into that a little bit as well. Why don't you tell everybody listening who you are, what you're all about, what your background is? Raj: Yeah pretty much my name is Raj Patel and I've been doing about e-commerce; it's my 5th year in I would say. And I primarily do Amazon FBA but we do some; I do own a couple of sites as well that we do direct to website sales as well like Shopify and those platforms. But yeah primarily we're doing; about 80% percent of my revenue is coming through Amazon FBA right now and riding this wave of how well e-commerce is really doing and this market is just exploding right now. Joe: And if I recall from our conversations you're 25 years old and were on the path to becoming attorney and said I can't do that, I'm not going to make enough money. I want to be independent, I want to be an entrepreneur and live this life. Is that right? Raj: Right. That's pretty much true. Yeah. Well, I just turned 26. But it was one of those things where I was making more money while I was in school than I would probably make with a job after I graduate. So I was kind of one of those things that didn't quite make any sense for me to continue that path and I was enjoying what I was doing I got to travel. I'm still traveling all the time and I'm kind of reaping the perks and just growing businesses. Joe: How many have you purchased; was Beard King the first actual purchase or were the other 2 or 3 that you might own are purchases as well or did you develop those from scratch? Raj: So I developed 2 from scratch and those are the ones I started with about 4 or 5 years ago when I was experimenting and I still have those 2 today. And I purchased another and then Beard King would be my second purchase. Joe: I got you. Raj: I moved away really now from starting my own businesses because I've accumulated the capital so I'm moving more towards acquisitions and finding the right fit and brand and adding my spin to it and sort of the knowledge that gained in the last 5 years in defying that 3 businesses. Joe: That's interesting you know we've had Walker on a podcast, he wrote Buy Than Build and then Amanda Rob another advisor here at Quiet Light took another approach which is bootstrap, build, and then sell. You've bootstrapped and built too but you're now because you have the capital buying. Do you find it's easier to get ahead when you're buying something because there's revenue that's already being produced or is there; what's the sort of logic between buying now versus taking the time to build? Raj: Right and to me, it's kind of a timeline thing. I've always been sort of aggressive in terms of expanding and it's to a point where if I start my own Amazon business, I'm looking at a year or 2 out before I can really see the return on my money in terms of the marketing, getting trademarks, getting brand registry, doing a whole bunch of things; graphics, creative, getting all that stuff together as well as building the supply chain in China or wherever you're supplying from and it's really a time thing. I know the work that I put into my first 2 businesses and the timeline it took me to get to where it's at now which was it took quite a bit of time and a lot of work while I was obviously doing other things. And now that I have the capital I'm able to skip those 1 to 2 years of just hard work; not hard work but that sort of figuring things out period and get right into the top where I'm already getting a cash flow positive business that I can just keep adding to it really. Joe: Yeah. And if you hadn't started those other businesses you wouldn't have been able to buy the Beard Kind. You wouldn't have gotten capital. So there's no perfect process or method for everyone. You've got to take your own path. It sounds like you took one that definitely worked for you and now you're evolving into a buyer instead of a builder. Raj: And I would say for anybody who's looking to get into it you know it always helps to know kind of what you're doing too. If you have a little experience that's going to help but that learning curve won't be as drastic. So kind of what I know and now that I'm able to pick these businesses I kind of have these 5 years under my belt I can figure out what I generally want and how I can improve the businesses that are out there. So I feel confident purchasing. Joe: So let me grill you with a bunch of questions as a buyer given that you've just gone through the process and on this one in particular. It's mostly an Amazon business at this point it started off non-Amazon, right? Shark Tank, Shopify, things of that nature and now it's mostly an Amazon. As a buyer, as an entrepreneur, how much do you fear the Amazon third party platform and things changing there and having an impact to your business? Raj: Yeah I think that's a pretty big concern for everybody because they're thinking oh well I only have one source of revenue but the truth is if you expand to a whole bunch of different markets on Amazon you're having kind of multiple streams of income. It's not just you had to stick to the US and that's it. People always forget that there is a lot of people in the world and expanding; it's not like you're putting all your eggs in one basket. And the way e-commerce is kind of going is Amazon is kind of just out there killing everybody right now. So it seems like though you have to follow this path and if you continue trending upwards Amazon looks like it's the way to go right now. Joe: So you're comfortable with the risk on Amazon and you don't think it's going away. Raj: I don't think so, no. I still think it's relatively new and the idea that a couple of years ago you can never build a business like this out of nowhere. First, it was always you take it to retail, you build the supply chain and you're talking 2 to 3 years of just negotiation and relationships and now you can build an entire platform, a business in like a matter of 2 to 3 months which is crazy to think. Joe: Yeah. Raj: Things change over time and you kind of have to go with the flow and that's what; this is where it's at. Most of these businesses; Amazon's made it so it's automated for you and you can run these businesses and pretty much just continue to grow it. And whether it be on Amazon's platform or somebody else's or it changes over time you just have to be willing to change with that too. Joe: And when you were on the hunt for a business to buy were you specifically looking for something that was Amazon based or were you looking for anything that was e-commerce physical products and you didn't care what they were selling. Raj: No I did like the Amazon platform just because they allowed me to; I do a lot of other things during the day as well and the one thing about the FBA platform is you can really optimize everything that I don't have to put in 30, 40 hours a week. I can kind of put it on autopilot and set it. But the other main thing was ad spend is getting kind of crazy in terms of running Facebook ads and Google ads and all that stuff. It's kind of getting really expensive and I've been noticing the last 1 or 2 years with the drop-shipping model that really pushed up the cost for acquisitions for these and getting clicks. So I was kind of trying to stay away from that because that was something I couldn't really control. I couldn't really control how much I'm going to spend on ads with Facebook and all that but I could kind of control my supply chain and have a relatively good idea of what my margins would be on Amazon. Joe: I got you. Okay, just out of curiosity how many businesses in total did you look at in the process of finding this one? Talk to us about that process because some people say they've been looking for a long time but they never actually looked at a full package or they've made 9 offers they must be doing something wrong. What was your process? How long you have you been looking and what was your process? Raj: I would say I was looking for a solid 4 to 5 months I would say and I was looking pretty aggressively. Every day I would look at at least any; I was subscribed to every single email list out there whether it be Quiet Light or whatever other brokerage; everything and I contact; I don't just subscribe to a contact list. I've talked to all the brokers and I would look through all the memorandums and all the offering material. I look through from top to bottom because to me I was always learning something in those. It didn't seem like it was a waste of time for me to read an offering material. You kind of learn how people worked their businesses and you can really gain a lot of knowledge just from reading those as well. So it was never like I didn't; I just skimmed them, I read all them and you could see on my; I don't know within half an hour I'd probably have signed up or whatever new businesses out there and getting their offering memorandum. So I would say 4 to 5 months of just aggressively looking for the right fit. Joe: And in that 4 to 5 month period how many; rough estimate how many listings did you look at in detail where you've looked at the full package? Raj: I would say probably more than 40. Joe: Wow. Raj: I'd say 35 to 40. And some of those weren't exactly Amazon FBA because not that many FBA businesses are available as you would think in the market that fast. I mean when I was looking I wouldn't see more than I don't know and in a month maybe 3 or 4 new businesses would pop up that was something different or something that fit my criteria really. Joe: Okay, and of the 35 to 40 that you've looked at how many offers did you make? Raj: 3 to 4 offers I would say I have made on businesses. Joe: Did you two go under LOI on any other businesses and have it fall apart in due diligence or did your offers not get accepted until the Beard King? Raj: Yeah I did actually do one LOI; no actually what happened was I missed it by a day. Another buyer came in and signed the LOI before I signed it and I literally missed it by one day. I flew in in the morning but my offer was late willingly. Joe: Well how do you; in that regard you said that when you look at these packages you have conversations, with all the brokers that you'd have conversations, it sounds like you're building a relationship with them, do you find that building that relationship with a broker advisor that is representing that client helps if you're making a lower offer or justify some sort of offer or did you that no matter what if you made a lowball offer whatever that lowball is that it was received with displeasure and animosity from the broker and the seller? Raj: Right. I would always try to talk to the broker because when you send a lowball offer by email it doesn't seem genuine. I mean lowball offers aren't too genuine anyway. But when I talked to a broker I can sort of tell them this is what I'm thinking this is what the business needs this is what's missing kind of justify why I'm shooting them that offer and it's the starting point for me. It's to get the conversation going. If I see that there's some room to work here it kind of gets me more excited to say okay maybe we can get to the number I have in mind. That's not the number I want but I can meet you somewhere in between just to know that you're able to work. Some sellers will be stuck on a price or as we've seen many times too I know we talked about business before that just shot through the roof and they're asking this they went over asking so I kind of can gauge where the audience is slash what the seller is really thinking. Joe: Yeah, so I think you've gone through the process with me twice because I think you made an offer from one of my listings that had 10 offers if I recall. And I don't recall specifically on that one or not did we do; with the interview with the seller did we do the video call? Raj: We did a video. Joe: We did a video call. Did we do that with Nick or was it just audio? Raj: Just audio with Nick as well. Joe: Okay. So we're doing video now. One of the things that we've done and moved to as often as possible when it's feasible is on that first buyer call; buyer-seller call we will pop on the video as long as everybody's comfortable with it. I felt that it makes a tremendous difference in terms of connecting. You're in one part of the world, the seller's in the other part of the world and you can bridge that gap. And I've been in situations that I'm sure you've heard this or seen it before where being likable kind of makes a bit of a difference in business especially when you're in other parts of the world. Raj: I think one thing I've really noticed is a lot of people with their business that they're selling this is kind of their baby, right? This is something that they've been working on for years and to see somebody that maybe is just looking straight at the bottom line and just wants to buy it and just do whatever they want, seller's don't like that. And they might take a lower offer from somebody who seems genuine in their intentions to grow the business and they have a passion for that business. And definitely, that face to face helps with that. That's for sure. Joe: Yeah. So this particular business it had plenty of interested parties. You kind of stepped up and got the ball rolling with Nick and went under a letter of intent. It's got what? Two utility patents, two design patents, multiple copyrights. I haven't seen a whole lot of businesses like that in my 7 years of advising with Quiet Light. The drawback or the downfall of this particular business I think was the trends. I think you've got a heck of a value given all of the IP protection that it has, the way that the revenue took off right before closing you almost ran out of inventory because things took off because of the Amazon patent protection program. In your searches were you specifically looking for something with this kind of IP or were you just looking for something with great trends that you thought you could handle and take over? Raj: Yeah. So I was looking for something that had some kind of; something that was proprietary about it and IP is always great because another way to collect and another source of revenue is to enforce the IP and it kind of takes away these competitors. And the one thing I was seeing with business was there were a lot of competitors at the time if you recall and the IP had just gone through. So it's one of these things where I kind of was excited to get in there and start taking off these competitors. And as you saw right before a whole bunch of the competitors got knocked off the platform and the sales they shot through the roof. So that got me even more excited to say well this is just the beginning, right? Joe: Yeah. If I recall we had a conversation and it was there's a possibility he might run out of revenue; out of inventory. Raj: Actually he did run out of inventory. Joe: Prior to closing? Raj: Prior to closing we went about 2 to 3 days; nothing is in it there but 2 to 3 days. Joe: But we waited to close. The goal was to no matter what we were going to close after inventory is in stock. Raj: Exactly, yeah. Joe: Talk to me about your review now that you've had the business for 3 or 4 months. Looking back you've looked at 40 different businesses, a lot of different brands, what was done right with this business and what lesson can you share that maybe was done wrong in terms of this particular business? And I don't want you to throw Nick under the bus. I think he did an amazing job with the brand. Raj: Yeah, 100%. I think that Nick has done an amazing job to start off with the marketing side. Joe: Yeah. Raj: What Nick has built-in terms of marketing and he has a real keen eye for how to put that vision out there and represent the product in a way that it's appealing to everyone. Also, he invented the idea too which is something that we don't really think of too much, right? Joe: We all come up with great ideas. He actually followed through and got it done. Raj: Right. Yeah, he came up with the idea and then he made such a great marketing plan and if you look at how well the website is made, how well the quality of the product is, everything is impeccable that he's done. I think that was really his strength just how well he executed on the marketing side of things. Joe: And what do you think the weaknesses of the business were in the months ahead of you taking it over or the 12 months ahead of you taking over? Raj: Yeah so what I kind of look the weakness is we're really just cleaning up the logistics of the business. I saw that there was a lot of money kind of left on the table in terms of the cost of goods was way too much when I was looking at the business and that's when I was already in talks with my own suppliers and everything figuring out like hey we can drastically reduce the price and t explode the bottom line really and get this business; make it extremely profitable from what it is. That was kind of the icing on the cake because I was able to; as you know with this business when we look at the numbers it was kind of like you had to kind of dig deep to figure out where everything exactly was. And by doing that and like you said reading the offering material I was able to figure out like if I clean up the logistics I will easily make this business extremely more profitable than it was. Joe: So you worked with a manufacturer to modify; did you modify the product or just found a manufacturer cheaper, less expensive, same quality? Raj: Manufacturer cheaper, same quality, I haven't even; I'm considering modifying it a little bit but the price point I have without changing anything I just knocked up 80% of the value which is crazy. I mean everything that happened off the product… Joe: Percent of the cost of goods sold? Raj: Cost of goods sold off of the product. Joe: Can you put that into dollars? Raj: Sure. Right now I'm paying; how much the cost of goods is right now? Joe: Don't talk about how much you're paying, how much did; well I guess people will figure out the math here and we have to…if you tell me edit after this I'll edit and if you're all hearing me say the word edit then we chose not to. What I'm trying to figure out is a lot of people think about how to drive more revenue and you've got a unique approach which is how do we actually maximize the bottom line? I know now that I'm an entrepreneur buyer that the value of this business is a multiple of the trailing 12 months; the discretionary earnings. So did you save $2 a unit times 100 units a month that you're selling or what kind of immediate boost do you see to the bottom line inaudible[00:20:25.5] negotiations? Raj: I've saved say $6 a unit. Joe: Holy cow. Raj: Yeah. Joe: Holy cow. That's tremendous. Raj: And it wasn't just the cost of goods it was also the method of shipping; that was a big deal. Joe: That's right. You've got the capital to do freight versus doing just in time airship inaudible[00:20:44.2] right? Raj: I had the cash flow to lock up for a month or 2; that's okay with me but when I can take that much off the bottom line that's definitely winning. Joe: That's amazing. What are you doing to boost the top line? You just said most people focus on the top line instead of the bottom you're doing the smart thing but now tell me what you're doing for the top line? Raj: Sales fix everything at the end of the day; sales fix everything. You know the logistics thing the reason I started with that first was that was a quick fix. That's something that you could do instantly. Improving the top line, now that might require a little bit of money, a little bit of tweaking, some marketing, and what we've done with that is really expanding and being aggressive with opening up in all different marketplaces; Canada, Australia, UK, Germany. I just kind of hit the ground running with those in the works of launching in all those different countries. Joe: Really? Raj: That's what we're working on now and sending inventory over there figuring out the VAT stuff and all that stuff I've done before is just kind of even as we talk some country is only going to see maybe 5 to 10% increase in sales but it's still 5 to 10%. It still adds to the bottom line and still, you're leaving money still on the table and you don't want to do that and so that's what we've been focusing on right now. Joe: And how did you choose those countries just out of curiosity? What kind of research did you do or is it just countries that you're comfortable with and you've done it before? Raj: I've done it before and as well as I did a little research on the European ones because as you know it's a little expensive to open up the VAT and all that stuff if you're not choosing but working with other sellers and the experience I know kind of what countries do really well. If you have a North America Amazon plan you can easily open up in Mexico and Canada within like an hour. It's not anything. The listings get sent over and it's not a lengthy process. I just had to send the inventory. Joe: Did you have to translate the Mexico ads and everything? Raj: Oh yeah, you have to translate it. They have the translator on there and then you had to run through each of the listings as well because even when they get sent over the listings get converted they don't end up being right anyway so you kind of have to inaudible[00:22:52.8] anyway. Joe: I got you. Okay, maybe we can do an update in a year to talk about how those international markets went and what kind of additional revenue it was driving. Let's talk about how you've learned to do what you've accomplished here. Are you tuning into podcasts, did you go through any training programs, what is the source of your experience; who do you listen to, what do you read that kind of thing? Raj: I'm kind of a simple guy in the sense that I really listen to what Amazon puts out there too. They haven't tons of seller university information which is great but when I started watching YouTube videos here and there kind of helps. I never paid for a course or anything like that because I kind of learn by trial and error. I don't think you need a course per se but you're going to make a lot more mistakes if you don't have a clear path to follow. There's a lot of information. I would say it's not really too useful for people or kind of misleading out there too. So it's kind of hard to find. But using Amazon's material and just going to trial and error. I'd say your first product is not going to always work. And I think people are under the impression that if they buy a course and they do this that this is a home run; it's not like that. It's trial and error really. Joe: Okay, so you're doing your own research; watching, reading Amazon stuff and what they put out versus paying for courses and programs and going to events and things of that nature. I just had a call this morning with somebody that is like Nick he's 12 months after selling his own business and one of the big reasons he sold was he felt isolated. It was growing and there was risk but he felt isolated and alone. And he did the same thing. He didn't have a Mastermind group or anything like that. How do you overcome that? Do you have friends and colleagues that are also Amazon sellers that you talk with? How does that work in your life? Raj: I'm in contact with a ton of people that we talk almost every day about what we're doing and say oh you know international sellers and see how they're getting what they're doing on Amazon. So they are mass; I'm not part of a thousand, 2,000 group mastermind group but I am part of groups where big power sellers kind of talk to each other and figure out what's going, what's working, these new changes Amazon's made. So we do talk about that every other day. Joe: Okay, and how many hours a week are you putting in on Amazon altogether or Beard King all together? Raj: Beard King? Joe: Sure. Raj: Beard King by itself I would say I'm putting in about 15 hours right now. Joe: A week? Raj: Yeah. Joe: And you're making more money than most people make when they do graduate from law school. I think you've chosen the right path here. Raj: Yeah I think I'm onto something for a while now so I'm happy with the outcome and grateful for everything. Joe: Well look, you did the work, you took the risk, you were in school and focused on building your own businesses as well. You studied up. You took the risk. You worked hard. The harder you worked the luckier you got. And here you are today buying a business with something very rare; a great IP and whole lot of protection with a lot of growth potential ahead of it. It's growing in the bottom line which is fantastic the way that you're renegotiated cost of goods sold and shipping. I'm excited to hear what it does over the next 6 to 12 months for the expansion to the other countries and some other focus. Raj: Q4 is coming up and we're super excited it's about; we're already up all across the board in revenues and it's just about to take off now so it's in the interesting lap in the next couple of months. Joe: That's great. Let's get every man in America growing a beard and using the Beard King products. Raj: That's the dream. Joe: You've got to do it too though you've got to grow that beard. Raj: Yeah I'm going to try. It's a patchy beard but I'll work on it. Joe: For anybody that does get over to the Quiet Light YouTube channel. I think it's Quiet Light Academy now. You've got to take a look at Nick's beard versus Raj's beard and my beard. You and I Raj are pretty pathetic. We don't have much to go on at all. Raj: Nick got a crazy beard though. Joe: Absolutely. Well, listen it's been great. I appreciate you sharing your story. What you've accomplished is pretty damn impressive and I'm excited to hear what happens over the next 12 months. How can people learn about what you're doing or reach out to you? Raj: Well you can find me on YouTube at Raj Patel and I'm going to be pretty much talking about everything from selling on Amazon to how to launch your product as well as just telling stories of what I've done over the last year that's worked for me and putting some information out there that people can use in whatever they're trying to accomplish by selling online and to learn sort of what I've done and help them out pretty much. So you can check me out at Raj Patel on YouTube. Joe: Alright and everybody watching we'll be expecting you to grow a beard as well or at least have a fake one on now and then Raj Patel at YouTube.com. Raj: Yeah, inaudible[00:27:43.3] progress made. Joe: Alright, perfect. All right man thanks for your time today. I appreciate it. Raj: No problem, thank you, Joe. Links and Resources: TheBeardking Youtube

america amazon canada australia google uk china talk mexico germany european improving incredible ip mastermind shark tank beard shopify aspects acquisitions raj vat loi king part amazon fba fba aas raj patel joe talk quiet light brokerage joe valley quiet light mark yeah joe you joe let joe yeah joe well joe don joe how joe so joe absolutely joe did joe for quiet light podcast

Incredible Exits: The Beard King (Part One) With Nicholas Galakovic

Play Episode Listen Later Oct 3, 2019 39:27

Today's guest set out to create a product to solve a problem in his bathroom sink, wound up with two utility patents, numerous copyrights and trademarks and went through lots of ups and downs along the way. This week we are having him on the podcast to recount the seller side of a two-part seller/buyer series on the build and sell process. It's always inspiring to hear stories of entrepreneurs who built something based on a need they uncovered. Nicholas Galekovic, the co-founder of Beard King had always been creative, going way back to the dawn of design in technology. He was active in the early days of the digital space, doing one-offs for brands and starting a small digital marketing agency. He had gotten used to seeing brands succeed and fail when he realized that it might be time to start building his own brand equity. Episode Highlights: Nicholas walks us through the process of jumping off the couch and creating the product. How the timing was a factor in the success of Beard King. The patent processes and how they played into the growth and eventual sale of Beard King. What Nicholas did that was outside of the box to make his product and brand different. How long it took him to pivot from US-based to overseas production. Why learning every day is part of the success equation. Nicholas's Shark Tank experience. Amazon's patent neutralization program and how it helps protect product builders. Nicholas shares his two must-dos for preparing the business for the exit. What his next adventure is and what he can now do with all that invaluable learning. Transcription: Mark: For those of you that are listening in your cars and not taking a look at the video that we have up on YouTube of this podcast. You can't see that Joe is actually supporting just the faintest hint of a beard. So Joe is this intentional or is it just the stress of Quiet Light getting to you. Joe: Oh my dear this is embarrassing compared to the guest on the podcast this week. His name is Nicholas Galekovic, there you go. I wasn't going to try saying that name. I know you aren't. But let's just call him the Beard King because that's his company's name or former company name. He developed a product to solve a problem, wound up with two utility patents, a couple of design patents, lots of copyrights, trademarks, and went through lots and lots of ups and downs as we talked about the podcast. He's essentially run up with his doctorate in product development, branding, marketing, things of that nature before he exited a couple of months ago. So this week we're going to have Nicholas on the podcast. He is the person who sold his business. So people get to hear about the process and what it takes. And then the following week we're going to have Raj the person who bought his business. So we're going to do a two-part series on who sold their business and who bought that business so people are going to see it on back to back. Mark: That's fantastic I love this series when we can do the buyer and the seller. Even if we can get just one of the parties on it's always super useful. I know I talked to somebody recently about the podcast and they told me that these are some of their favorite episodes. So we are going to try and get some more sellers on. I know I have a seller coming on here soon in the coming weeks of somebody who is going to tell their story as well. I'm excited about this because I love these products that come out of this practicality of I've experienced this, I had a problem, I solved it, I turned it into a business and not only just a little business but something pretty significant. Joe: Yeah, he's been on the Shark Tank, got an offer, got a deal, ended up turning it down rightfully so; intelligently so. He talks about utility patents, the Amazon program, and grants to patents, and talks about some of the great things he did right in terms of social media and video. He actually had Snoop Dogg who was tweeting about his product and brand which is pretty cool. And then he talks about some of the mistakes he made. You know things that if he looks back he does want to live, gone, I wish, I should have, I could have, I would have. But he points out directly what he thinks he did wrong and what he could do differently and just dropping some advice for folks that are following in his footsteps. Mark: That's fantastic. Let's go and listen to him. Joe: Hey, folks Joe Valley here from Quiet Light Brokerage and today I've got somebody that just sold their business. Well, I shouldn't say just because it was in late spring of this year which is 2019. It's August 29th, 2019, my wife and I's 21st wedding anniversary. Thank you very much. Nicholas: Congrats. Joe: Thank you, Nick or Nicholas. Folks we have Nicholas Galekovic on the line and I had to ask him how to pronounce his name. I've known him for almost a year now and I've always screwed it up so I wanted to get it right. Nicholas, how are you? Nicholas: Good, Joe. How are you doing man? Thank you so much and don't worry my whole life I've heard the mispronunciation of my last name. So I'm quite used to that. I bring that into the branding side but I'm definitely excited to be here. Thanks for having me today so I can share my experience with you guys. Joe: We were going tell it you folks he's down in Florida and there's a hurricane coming in and pardon the lightning and whatnot but instead, he had a light just fall but we're not going to cut that out because you still are great. You sound great and it's life in the podcast where we're not professional; well I guess we, I don't know. Nicholas: Yeah we are. Joe: I don't know if we're professional podcasters. Anyway, I was going to say that is one fine looking beard. You should be in the beard business. Nicholas: Absolutely and I think by accident, by default I became in that business. Joe: You did, didn't you? So why don't we tell the folks because you and I have that little inside joke there; why don't we tell them who you are and your background? I'm going to let you do it. Tell them a little bit of background about yourself. Nicholas: Sure, absolutely. So you know I've always been in kind of the creative field and I really started to hone in on my expertise about eight years ago and I was doing more graphic design for other clients and really started to hone in what technology I like to use. So obviously Photoshop being the main one, Adobe Illustrator, I really got used to the Adobe Creative Suite. So I would just charge clients to do a flyer or one-off. I mean back then the digital space wasn't as big. I mean it has always been big but this is back in like the MySpace thing. So I even started off designing MySpace pages before I created havoc. Joe: You're aging yourself right now. Nicholas: I mean you know but I'm going way back. So then I'll just fast forward a little bit here and I started to hone in on my skill set of design. So then from there at a company called Kovick and Kovick was what I call a brand tailor. We really focus on helping companies with their brand identity, their strategy, website design, logo design, you name it. So I had a small marketing agency where I really started to I would say have success in business in that regard. But I always had a designer mentality we'll call it which later on down the story you'll see how that soon fulfilled me. And then I started to see a lot of these companies fail as far as whether they're small big or whatever and I would put my heart and soul into these companies I was designing. But then I realized I'm building all this brand equity but for other people in a sense. I'm still an entrepreneur but I'm doing it for the sake of their brands; which is fine. So then Beard King came about when I was just simply solving a problem that I had on the day to day basis which was trimming my facial hair. You mentioned the glorious beard hair. So it wasn't always this long and glorious but usually when it's a beard like let's say you're a size or small-sized beard you make some mess all over this thing. Basically, I just came out with this product called a beard bib and we'll dive may be more into the story in detail here but that's kind of how Beard King came about for four and a half years ago. And then I met you Joe last here. And then here we are right now. Joe: You and I and I think Brad. Right? Nicholas: Yes. Joe: We had lunch or breakfast may be down in Miami before the Blue Ribbon Mastermind; shout out to the Blue Ribbon Mastermind members. Nicholas: Shout out to Ezra; yes. Joe: A heck of a group of entrepreneurs there for sure. Nicholas: Absolutely. Joe: So we've been through the process of doing the valuation of getting your business ready for sale of getting it under contract and going through and selling it. We're actually later in the month going to have Raj on the podcast as well. Raj is the gentleman that bought the Beard King. So we're going to go full circle with the buyer and seller and hear Raj's story about how it's been going since he purchased it. And you and Raj have got along great. You're good friends now. You might be doing some business together in the future outside of the Beard King which is always great to hear. Well let's talk about the process because you have something or had something; Raj has it now that was relatively unique. Nicholas: Yeah. Joe: 100 plus businesses in the last seven years and less than a handful have had a utility patent on them. Let's hear a bit of that story you were making a mess in the bathroom sink and created something called the beard bib. How did you develop the product? Did you create one? A prototype from an apron at home or what did you do? What was the first epiphany [inaudible 00:08:25.0] and where do you go from there? Nicholas: Of course, so I mean I used to use a T-shirt. So you could picture you're at home, you're about to trim, it's either A. use the sink. Let that be the catcher. Get the hair all over. Try to clean it up. We all know that's super tedious. And being in 20 19 and then when I invented it that's four or five years ago so still though we're in this age where there's always a solution, right? There's always a product that's been invented. Everything's been invented and now you're just creating a better mousetrap. But in this case, I usually just use my T-shirt but then I wouldn't get like the little hairs all inside the T-shirt. And I'm like there has to be something like; I don't even know if Amazon was huge back then as far as how big it is now. But I think I just did some basic Google searching, Amazon searching, and I didn't really find anything. So I'm like you know what I'm just going to draw something together for myself. And I remember being home one night, I had a few glasses of wine, just chilling and I'm like you know what let me get up and start grabbing whatever household materials I could find. So I grabbed; it wasn't necessarily like an apron but it was almost like one of those hair cutting capes. I didn't know how to sew so I just; what's a man going to do? We're going to use staples. So I was literally finding whatever I can. And it was hideous but it actually kind of worked. So if you can imagine a product like a bib attaches around your neck and suction cups to the mirror as simple as that. Some of the simplest solutions are ingenious. And in fact, as the story goes along a lot of our customers are like I wish I would have thought of that like one of those things. And actually part of the story is funny because I remember thinking to myself well there's nothing out there I'm just going to use this for myself. I know how to brand a business but I don't know how to operate and scale a business. So I kind of let it sit for almost six months. And I remember coming across the Norelco or Panasonic clippers that tried to solve the same issue but with like a vacuum seal. What I found was; what my goal was the death of this idea. Let me just go and buy this product. And I actually tested it out but it didn't really work. It may be caught 20% of the hairs. But not only that sometimes people try to solve simple problems with these extravagant solutions which is unnecessary. So after that, I'm like you know what let me try this again. So I actually ended up manufacturing. I live in Miami so there are tons of manufacturers around here but of course with that comes greater costs. So I just tried a few. And long and behold I'm realizing in my mind, okay I have a company or I have a product called a beard bib but that's very limiting and so the branding mind starts to kick in. So I started thinking bigger scale. And I tripped up on during my naming process. Since I have all these processes and I saw ease of how to create brands it was easy for me to kind of just bootstrap that portion of it which sometimes a lot of people pay a lot of money for that. And I came up with Beard King thinking bigger picture; beard oils, brushes, washes, all these things. So I kind of accidentally got into the beard market. I did just wake up one day and said I'm going to get into the beard niche. And it just so happens that it also started to trend big time many years ago. But the trend was going up and I think that was from some other companies kind of breaking through. And yeah that's kind of the initial process of how I came up with the invention, prototyped it, tested it before even scaling it. Joe: You got off the couch and you actually did it. People have great ideas all the time but don't act on it don't know what to do with it. I'm going to just put this out there and then maybe we'll edit it out but seriously this is like an alcohol-infused invention. You sit and grab whatever you could in the house and started stapling things together and as you said it was hideous but it worked. And after several prototypes and a lot of money you wound up with was it; remind me, was it two utility patents and two design patents? Nicholas: Yes. So we can talk about the intellectual property side of things and again mind you as an entrepreneur you have to be willing to learn. So I didn't know anything about intellectual property maybe besides a little bit of trademarking but the pat world is completely different. So, of course, I did the initial patent process. The name of not a utility, not design but what's the one right before that? Joe: I don't know if there is one before that I thought it was designing utility. Somebody is going to have to call us and help us out. Nicholas: Right. Well, basically it just gets your spot in line for a year. So it allows you… Joe: Provisional patent. Nicholas: There you go. Thank you, Joe. You see your lawyer; I know, but essentially the provisional patent is your spot in line so you can kind of tweak and work on it but you can't go so far outside the scope. I mean it was five years ago that I did it so I forgot the name of it. And they're also not strong; they're really just your place in line. But if you have something that you really know you'd go straight for the utility patent. And what I found was I mean it took almost three years to finally get the patents that were issued. So you have to remember during this process; yes it's great for exit, it was amazing and we'll talk about that of how it all kind of played into the whole Amazon patent neutralization program. But going back in time the product went viral. And of course there's going to be knock offs and whether you have a provisional patent, a patent pending in this cut-throat industry, in this fast-paced e-commerce business, people don't care. They're going to still sell it. So this is kind of gets into the pat IP side of where when you do have a viral product that never existed before we basically created a new market; this beard bib market that never existed before. So it was flattering on one hand but obviously very aggravating on the other. We're losing money left and right with the knockoffs. Joe: Yeah. And that was for a period of time that was just too darn long. Looking back do you think that you could have done anything differently with the provisional patent and patent pending? There's just simply no real protection there. Nicholas: Yeah I mean the only thing I could say that you could do different which I never really like to say I'd like to do all that over again it's more like what did I learn from this. Joe: Yeah exactly. Nicholas: Would be perhaps accelerating the patent process. I think we chose the route because of cost. Usually, that's always when you have a company you don't have the cash to infuse into intellectual property. So I think we did the slower one, not the accelerated patent. Also as you're waiting for the provisional patent it gives you kind of time to pick and choose what elements that you want to claim or drop. Also, it's extremely hard to get a patent because some of these patent examiners they're tough. I mean it's not like they know you personally but it's like every little thing and then prior arts. So that's where you get into the field of you might think you invented something new but when they start stacking you against prior art; for example bibs in general, that was one of the prior art cited against our patent. It's just so difficult. So we have to kind of adjust to what parts of the application we want to claim. Joe: I was curious about that because anybody that I know that's filed a patent has said that they're going to say no and then you've got to pivot and go back at them with this other unique feature to your patent. How many times did you have to go back to that examiner until they eventually said granted; you're right, here's your patent? Nicholas: I mean looking through the docket history; by the way I mean first of all get a great lawyer. I'm not a lawyer so if you try to do things yourself you don't really know the ins and outs but I believe we went through at least three rounds per se and we still by the time we were getting ready to sell the business we'll have to talk about that with Raj when you interview him but there was a design patent still pending. So it took about like I said three or four iterations for the first utility and then just the next utility fell right after that a month later. So I think we got the first one in September and the next one in November and then you know. Joe: It was falling quickly. You were getting them quickly as you were preparing the business to sell. Nicholas: Correct. Joe: But from beginning to end from the time you decided to file for the patent until you got that last one in November of 2018 how many months or years was that process for you? Nicholas: It was almost about like I said three and a half years because again provisional patent was in the first year but that kind of only hold your spot in place. And then when you file for utility that time clock starts all over again. So that was one of the takeaways I was saying that I might have changed is just either going straight to utility and or accelerating. That's how you can probably get it faster. But in hindsight also being able to enforce your patent you're going to need cash to also enforce. It's one thing to have a patent. That's great. That's amazing. You know I actually literally; you could see on the back my wall right here that's a little patent but it doesn't mean anything if it was sitting on a wall. You've got to have cash to enforce. So that was the second part of this strategy was being able to have cash to take down these people. And we can probably segway into the topic of Amazon's pattern neutralization program. Joe: Yeah, I do want to talk about that. You know what I'd like to hear first because though? [inaudible 00:17:44.5] your story and the success that you found at the very end and actually helped Raj your buyer and propelled the business. I mean it was taking off by the time he bought it which is just great timing for him. But you had some great successes along the way with the Beard King and the bib. Can you just highlight a couple of those points? What did you do that was a bit outside the box that your standard e-commerce entrepreneur or Amazon FBA entrepreneur may not have done? Nicholas: Yeah. I think the first thing would be the branding and the marketing. You know with the named Beard King I started to brainstorm on okay how can we treat our customers different? I think even when we first met I would say King Joe or Lord Joe or Queen Sarah or whatever. Joe: [inaudible 00:18:31.7] is what your email add. Nicholas: At a royal day was the signature. So I really thought to every touchpoint, every detail; whether it's a phone call, email, flyer, or whatever it might be; packaging, everything was based around royal theme. And that's important to stand out nowadays especially with Amazon businesses just kind of being one out products and you kind of forget about the brand you just want function but to have that little extra piece; the second piece of that would be the video content. So I did a lot of the storyboarding, scripting, and writing of these pieces. I think the first one we hired one of my buddies to shoot it. And that first video ended up being picked up by a huge Facebook account like 9Gag or Unilab. And then once those big Facebook accounts picked it up it just goes viral. So I think within the first six to eight months of business that first video we did went viral. If anything I was a little self-conscious about it because people were making fun of it. But good or bad PR doesn't matter; it's great. Joe: I think if I recall in the package we put together we shared some of those links and am I remembering it right that Snoop Dogg tweeted out; as it Snoop Dogg or somebody else? Nicholas: Oh yeah. I think the meme was; so that was the meme portion of it but I think it went along the lines like you know a pissed off woman invented this. Joe: Yes, that's what it is. Nicholas: And so basically Snoop Dogg, Usher, even besides those accounts the big accounts; Facebook was huge on video and you can go viral a lot easier than you can today. I mean I think we're in the 40, 50 million views collectively across social media platforms which of course infused fire into the sales and this was right before picture going Shark Tank. So I imagine we had okay sales and then one month I think we had $80,000 in sales. I'm like how am I going to fulfill these orders? Joe: Yeah. Nicholas: That's a good problem to have but… Joe: So moving along with a story there and you just mentioned Shark Tank but we'll get to that in a minute as well. You were manufacturing in the United States which was more expensive. How long did it take you to pivot and move your manufacturing overseas? Nicholas: I think… Joe: I think you did right? Nicholas: Yeah, we did. I mean I think another pain point of any business or entrepreneur is when you're kind of forced to grow. Some people just want to grow but then you grow too fast and you can't handle it. But for me these types of pivots; when you're almost forced to do something it's kind of like working out and you've got to go to that next level of weight to kind of grow. So for me, yes we were manufacturing in Miami for an insane amount of cost per unit. And I did that also on purpose which I suggest people do because you don't want to invest too much with too many units and then they don't sell. So I was willing to see proof of concept. That was my first thing. Joe: Especially for you, because you invented the niche, a lot of folks are finding a niche that's already selling well and they're just doing that branding of their own product. They know there's; they need to get eyeballs. They know the units are going to sell if I can get eyeballs. You know it only had to get eyeballs but you had to educate the people what the product was. Nicholas: Right. Joe: So the video was fantastic. That's a very visual product. Nicholas: Absolutely. Joe: So at one point you did pivot and you moved manufacturing overseas. Did you figure that out yourself? Did you hire a company? Nicholas: Yeah. You know actually that guy originally; so I'm kind of like Bob the Builder, right? I'll piece everything together and when we were manufacturing Miami I was sourcing the materials from China. You just buy; my natural gut feeling like let me source material there, ship it here, and then make it here. So the problem with that obviously is the fact that it's super expensive to be shipping a bunch of material. So the same guy that I ended up ordering a lot of the material from we established a nice rapport and relationship he ended up kind of telling me on the side hey look I'm going to go up my own manufacture let me know if you need anything. So essentially not only did I create a niche but for this individual, he ended up starting his own manufacturing facility almost really based off of our product. And we were like his number one customer. So we had a long relationship. He was basically the only guy I used for the entire time and I think to this day the new owner is actually still using him. Joe: [inaudible 00:22:53.9] loyal; that's the story. Good relationships like that are great. I'm going to throw out there to some of the folks listening there are companies out there that can help with the manufacturing overseas. I just did a podcast with Zach Leonard from Gembah and he's explaining what they do and it's the exact type of company that you probably needed at the time. It would've made your life a lot easier. They do all the importing and shipping, the [inaudible 00:23:22.1] industrial designers on the team. I know their company; I think in Gembah is Austin, Enventys is down in Charlotte. They've been around since 2002. They actually did some of the industrial design work for the Miracle Mop and other products like that; a really, really impressive company there as well. They actually; really interesting for proof of concept like your new invention, new category that you created, they will actually do all the industrial design work, do 3D printing, do a video of the product, and then put it up on Kickstarter there's interest. And then if it's a success they'll take the orders but then they'll go manufacturing. So brilliant idea. It's; I don't know, I wish everybody listening that's an entrepreneur now knew about these different companies. Nicholas: Of course, it would make it; I mean that's why I said in the beginning of the podcast you got to be willing to learn something new every day because I didn't have experience in sourcing or manufacturing but I learned. Joe: Yeah. Nicholas: So it's great to have those companies but with that also will come costs. So you do have to have a little money. I'm sure it's not free. Joe: Yeah, they probably don't work for free that's for sure. Nicholas: No, they probably don't. Joe: Let's talk about Shark Tank. You brought it up; you were on Shark Tank. How did you go through the process? What was it like? Was it the biggest joy in your life or very very difficult? Nicholas: I mean it's obviously very stressful in the sense that they leave it open-ended. Like literally; and I think when I heard one of the other guests on the show talk about how they never really guaranteed anything and that's super true. Actually, the whole process took a year. So from the year that you audition until; and it could be different in any case, but the year you audition or the beginning of it then you go through several funnels of interviews, face to face Skype calls or Xoom calls like this and then eventually you fly out to LA and you pitch in front of the producers and it's still not guaranteed. And then they'll call next. And if not you fly back. And then if they choose you, you stay another day or two and then you just wait for your spot to be filmed and then you're still not guaranteed to be airing. Now the airing of the show is kind of like the pivot for the company. And not only that if you do film and you get a deal that's huge because it adds a lot of value to that shark to then want to close the deal with you. So by the time that we auditioned, filmed, and then I think there was like a six-month gap in between due diligence and finally getting that air date which they only give it to you like a week or two in advance. So imagine that, it's like you're always on your toes like are we going to get it, are we're going to air, are we not; but they just say do your business as if Shark Tank doesn't exist. Joe: That's hard to manage your inventory level if you're going to get that extra 10,000 orders next week. Nicholas: Of course and you can imagine I like to call the Shark Tank effect this kind of trickle effect because let's say you do air. The amazing thing about it is as we all know nobody really watches TV live anymore, or at least I don't. So you get that initial spike from viewers that are viewing it live. Of course, you can advertise that; promote it, but then you're on Hulu, Netflix, Amazon Prime, you're on all these things that you're kind of in the Shark Tank alumni books forever. So you still get spikes. I mean in fact we still re-air all the time; airports, I think it goes from ABC to CNBC. So that content is syndicated across all the platforms and it's great. So just to be on air alone the exposure is worth millions of dollars advertising. So it was a great experience. I definitely will go for it again if I can. And it was great. It was an amazing experience. Joe: I bet they would love to have you back with a second invention someday. That would be really; a good story for them too I could just see it really, really working. So we're going to fast forward a little bit. I just want to say one thing about Shark Tank I had another guest on that said that after you pitch a lot of entrepreneurs come pitch the same day they take them and they put them all in separate hotel. You have to go for an hour of council and then you go to separate hotels. Do you have to do the same thing? Nicholas: Yeah, that was absolutely true and I think I know the conversation that you were having with [inaudible 00:27:51.9]. Joe: So you had to go through an hour of counseling as well just to make… Nicholas: I was like alright can we go now? I'm good. But yeah it just depends. I mean it's very stressful you need to almost debrief because I mean I remember the call time was like let's say 6:00 a.m. but we didn't film until almost 12:00. And I was starving I'm like I literally pulled the producer and I'm like I got to eat I'm about to pass out. I imagine it's like the biggest pitch in your life. And that's another crazy thing to think about to kind of show anybody that's scared to pitch, public speak, to do anything like that. That was the first time I've ever even pitched a business. So it's like I never pitched a business in front of Joe or Bob or anybody. And then here I am in front of Mark Cuban, Lori Grenier, Chris Sacca, like all these major names that I'm like just doing my thing. And that's another cool tidbit of the show that I could probably add that you feel like you might be nervous and all that but not really because it's like having a conversation. They're intimidating, you're in there for like an hour, and then they condense it down to eight minutes. So it seems intense but it's TV guys. So just keep that in mind. Joe: Lots of editing. So the success on Shark Tank led to lots of knock offs. But you were working on the patent the entire time. And eventually, you were offered two utility patents, design patents, things of that nature. What did you do? We talked about this just as they started coming out and you mentioned the patent, the Amazon patent neutralization program, for those that are not familiar with it could you talk about that a little bit? Nicholas: Yes sure. You know this is Amazon's way of showing you know what guys we got to do something about this we know it's an issue and Amazon is such a huge platform. And I think that's why everyday people are kind of like well I want to do this too. And so sometimes dealing with some of these knock offs directly and strategically you realize they're just everyday people that didn't even know they were knocking you off. And then, of course, you have people that know that they're knocking you off and then they try to be slick and go around you whatever it might be. But the Amazon patent neutralization program is great for patent holders, inventors and it says look if you're selling this product you have a utility patent we're not going to be a lawyer but they hire a third-party law firm that instead of going through litigation which we could even touch on that quickly as I went through a litigation with a knock off that tried to sue me and here I am blowing cash which of course affects the bottom line; cash that I'll never see again. But circling back the program actually is instead of going through a long drawn out expensive process of patent litigation it brings in a third party and it says seller if you have a patent give us a list; I think it's 50 Asense at a time, we're going to reach out to all them. They have two weeks to respond. If they don't respond well then guess what? Automatically you get removed; the sellers that are knocking off. So it's kind of like they just said alright we bow out without saying anything. And then what we found was a small percentage of people opt-in. The opt-in process costs I think $4,000. I don't know if it's changed as of today. I mean it's only been a couple of months. So you opt-in with 4k, the other seller has now another two weeks to put in 4k and then you go through the process. I don't know what happens after that because I at this point in the business ended up selling it. And of course, this gave great hope for the new buyer because he's like wow we just got rid of 50 plus Asense, only two people opted in. I think this is great. So it just allows the inventor; because there's really nothing you could do for patents right now before that. You could do trademark claims and copyright claims but that portion of it what we found building our SOP's is that it's really outsourced. So it's crazy you could do the same trademark claim eight times and it doesn't get caught by the first seven agents so the eighth agent might pick it up and remove it but it's a game of Whack a Mole and man is it frustrating. Joe: Yeah. We'll talk to Raj about it. Nicholas: Absolutely. Joe: About the neutralization program and what it looks like competition-wise on Amazon now that they've got that program in there. Let's talk a little bit about preparing your business for sale and you've gone through this, you've got the benefit of hindsight. You did a lot of things right. Clearly, these folks have heard about Snoop Dogg tweeting about your product line, being on Shark Tank, and you got an offer but you ended up turning it down eventually. Just for clarification purposes that is the deal, right? You got the offer but you ended up not going with it. Nicholas: Yeah on Shark Tank we ended up doing a deal with Laurie. That's a funny piece; definitely watch as far as the way I close that deal. She was about to be [inaudible 00:32:38.0] I'm like why don't you make me an offer and she's like wait, what? Okay. So we got the offer but it was a rich 40% for 100k. Thank God I didn't take that deal. Looking back now I'm going to exit, imagine if I only owned 60% percent of the company. Joe: Yeah. So you did get an offer but you eventually turned it down because your business was exploding and growing. Nicholas: Financially it made zero sense but I wouldn't change it for anything. Joe: So then you're preparing the business for sale. We had a chance to meet again down in Miami at the Blue Ribbon Mastermind. So you've got that benefit of hindsight. To the audience that's listening now, that is running a business and may eventually exit or they never thought they could exit. What advice do you have for them in terms of the one or two things that they must do to prepare the business for sale and get them out? Nicholas: Well, first things first. I think having the benefit of hindsight is start a business to exit, right? Have an intent to exit because I don't think most people think about that. Even when I started Beard King I didn't think oh I wonder how this is going to end. I just thought it's going to always go up. And that's fine if you want to leave on a legacy or pass it to your kids or whatever it might be. But regardless I think you should always have an exit plan in the back of your mind and start there and then reverse engineer the business to always have a target to move towards. The second part of what I would suggest and probably would have changed for myself the beginning setting yourself up is the books. When you and I met back in January of 2019 you're like Nick look you got to get your books together. I mean obviously, if you're trying to sell an asset people need to see the numbers and the SDE based off of your last twelve trailing months isn't so strong. But you know what Joe I like how you said wait a little bit. Wait six months or and go get the valuation in the multiple that you want. So I think having your books in place, having the SOPs ready to be literally turn key is really the benefit to getting ready to exit your business. But if you do that from the get-go and you reconcile that every month it's much easier to do so literally in our case sell a business in two weeks. Joe: Yeah. The most difficult thing as a business adviser like myself, broker advisor is when someone comes to us and wants a certain value for their business and they ask is it worth this. And I can't tell because they don't have good clean financials. And by good clean financials, I don't mean that you don't run your personal stuff through the business. Most entrepreneurs do that. In fact a couple of things; I want to give a shout out first to Tyler Jefcoat at Seller Accuntant. So Tyler was great in this relationship; introduced us, good guy, you never hired him but he just gave you some advice and or did you hire him? I don't think you actually hired him to do the books, right? Nicholas: We ended up hiring him to do an audit sweep. Joe: There you go. Okay, so Tyler shout out to Tyler Jefcoat at Seller Accountant. The other thing is that there are generally four pillars; it's that risk, growth, transferability, and documentation. So if you do number one what Nick said was go into this with a plan to exit. Figure out what that exit process is like; figure out what the valuation process is like. Do you know audience what the definition of seller's discretionary earnings is? If you don't go to one of last three or four podcasts; Mark and I did an entire episode on what's a legitimate add back and it goes through that entire process. One of the benefits that you have now is that you've been there and you've done that. You've got that patent back there on your wall. You've sold a business. You've got the branding experience. You've got the manufacturing experience, the importing experience, the marketing experience; you've got it all. Now you just have to find that next great product and do it all again. And I see this every time; the first one you take some money off the table and the next one it's five to ten times bigger. And I'm hoping that's going to be the case for you. What is your next adventure? Do you have it sort of turning around back in your head or you're doing it or are you just taking some well-deserved time off from it? Nicholas: I'm sure like most entrepreneurs you could retire on a beach and then figure out what am I going to do with all this sand, right? You get bored. Joe: Yeah. Nicholas: You know taking a couple of weeks off to just reflect; your personal development I think is key to just kind of figure out your next move. And I think for me it's reflecting and learning from the mistakes and then creating an even stronger foundation even if it's from a corporate level, operational level, legal level; all these things that I learned on the fly. If you can set them up in the beginning with the intent to exit you're going to have a better shot at what you said; a higher multiple. I mean look selling Beard King was amazing but I think for me besides the liquid side of the asset I basically just purchased an MBA. I got a legal degree. Joe: At best you got your doctorate man; you learned so, so much. Nicholas: So much and I think it's that key takeaway of learning all those things hands-on versus just your standard education or self-taught on YouTube; it's invaluable. It's absolutely invaluable. Joe: I'm calling you Doc Galekovic from now on. Nicholas: I like it. Joe: [inaudible 00:37:54.2] because that's what you did for your own business. That's great. Nicholas: Absolutely. Joe: So listen we're running out of time, how do people find you if they want to reach out and talk to you about your story; maybe you can help them with their business or whatever the case is. It's always good to connect. How does somebody find you and reach out? Nicholas: Yeah, for sure. Definitely. You can reach out on Instagram. My handle is just my name so it's Nicholas Galekovic. I know that spelling is going to be tough but G-A-L-E-K-O-V-I-C, or you could shoot me an email directly. It's actually galekovic.nicholas@gmail.com. Joe: And we will put that in the show notes as well. Perfect. This has been fantastic. You're a good man. I appreciate you choosing Quiet Light Brokerage. It's been a pleasure working with you. I look forward to hearing about and helping you with your next adventure. Be sure to stay in touch [inaudible 00:38:43.1]. Links and Resources: Nicholas' Company Nicholas' Instagram Email Nicholas

united states tv amazon netflix google china pr miami abc 3d mba figure amazon prime hulu incredible kickstarter skype ip snoop dogg folks cnbc usher shark tank beard builder myspace mark cuban photoshop mole exits raj sops panasonic sop whack king part automatically amazon fba sde adobe illustrator chris sacca adobe creative suite quiet light brokerage xoom joe valley quiet light 9gag joe it joe you joe let joe yeah unilab gembah joe so joe there seller accountant tyler jefcoat lori grenier enventys

Streamline Your Product from Concept to Market with Gembah

Play Episode Listen Later Sep 20, 2019 32:57

Product innovation, product creation, and product variance are the key lifelines to any Amazon e-commerce business. Unless you are very lucky, simply putting one product out there and hoping that pays off is not going to be sustainable to your business. Today's guest helps people working with overseas importers to navigate the realm of product development, sourcing, and all that any e-commerce business owner needs to achieve success and save some money in the process. Zack Leonard became interested in product design and importation after starting out as a consultant and working in operations and strategy. His interest was piqued when he started delving into what goes on in product manufacturing. Zack started to research and test what was missing in the market. What started as quality control team on the ground overseas has grown into a full-service product innovation platform that brings in experts all along the product creation, development, and delivery chain. Episode Highlights: How Zack got started in manufacturing and the story of Gembah. Zack walks us through a case study of a client Gembah has helped streamline product design and delivery. How Gembah is able to shave off thousands and create value for your business with his services. The design process their teams go through with clients. How relationship building is essential to the services Zack offers. How Gembah's consolidated shipping tactics help clients. The process is for new product manufacturing launch – goals for an awesome product. Mutual nondisclosure steps taken by Gembah and their clients. The importance of visiting the factories and making that culture stop overseas. Transcription: Mark: Joe as you and I both know product innovation product creation and variance on your product is one of the key lifelines to any Amazon business. You can't just launch a product or if you can you're very, very lucky. Most businesses don't just launch a product and live with that forever. You need to be able to come up with new products to feed your audience, to feed your; complete your customers in some way. Then I understand you have Zack Leonard on who his company helps with just that; product creation, sourcing, reducing COGS. Tell me a little bit about the conversation. Joe: Yeah. Zack is from a company called Gembah and he came to us through some people that have bought some sizable businesses with us. People that I would say are smarter than us and are in the e-commerce world working with Chinese manufacturers developing new products, sourcing new products, and just focused on all aspects of importing from I should say overseas. It's not always China. But it was a fascinating conversation because a lot of people that we talked to whether they're buyers or sellers want to expand their product line. A lot of conversation that you and I have with entrepreneurs we repeat over and over it's not just about the top line it's the bottom line and you shouldn't just drive revenue and not focus on reducing your cost of goods sold or repackaging or stop shipping things by air and do it by freight things of that nature. Zack's company focuses on all of that and it's right there in Austin, Texas and he just goes through all of it here in the podcast and it's fascinating. I think a lot of people are going to say where the hell was this guy when I started my business because you're going to want to use him and similar services like his. Mark: You know I was just talking to somebody right before you and I jumped on this call here where he had an idea. He's a consultant on a lot of different things and he was asking me about product packaging and Amazon businesses whether or not there would be a market out there from amazon sellers who want to save some money on their packaging and maybe getting better rates from Amazon in that regard. And I tried to explain to them that yes people are interested but in the Amazon eco-space, there is this element of there's so many opportunities to either cut costs or grow revenue. Most people are focusing on this; the 20% that's going to have the 80% effect, right? And so if you can hire somebody like Zack; if you can find a company like Zack's that can come in and take care of maybe the other 80% that you're ignoring because you're simply too dang busy with all the other stuff that's on your plate that can be a really key win for your company. Joe: Yeah I think it's an opportunity to at least listen to it have a conversation I think that; you know I asked him throughout this is not, by the way, a pitch for his services. I asked for golden nuggets all the way through. What are people doing right? What are they doing wrong? What would you advise them to do? How can they cut their own costs and things of that nature? So I think it's going to help people if they're in the e-commerce world now and it's an opportunity. You could talk to him at the end. We gave out his information. It's Gembah.com G-E-M-B-A-H but listen to it, it's fascinating. Some of the tidbits he gives throughout the entire podcast are really valuable. Joe: Hey folks it's Joe Valley from Quiet Light Brokerage and today I've got Zack Leonard on the line with me from Gembah. Zack welcome to the Quiet Light Podcast. Zack: Thanks, Joe. I'm really excited to be here; excited for the next 30, 30-ish minutes to talk more about what we do and a bit more of our background. Joe: Let's jump right into that. Tell us about what you do, what Gembah is, and who you serve. Zack: Yeah. So I am the founder and president of Gembah. We are a product innovation platform. So we help businesses both e-commerce Amazon and promotional products companies and retail brands create and manufacture products. So we have a team of engineers, designers that help more with the product innovation side of things. So helping bring ideas to life through sketches, design, whole renderings, CAD drawings. And then we have a team in China that focuses on the manufacturing once those collaterals for your projects are done; for those cool products that are you trying to make. We turn it over to our team to help put it out to our factory network which is over 500 now. And then once you're into production we do a bunch of quality control measures and really look at it as if you are physically there in the factory yourself to take photos and videos along the way to make sure that we're scrutinizing the way that you would not a third party necessarily. Really we see ourselves as a partner in crime in that sense and then once everything's ready to go we help with the logistics as well. So really a turnkey operation to make sure that you can get these cool products to the market in a very fast manner. So typically we can get them out in like three or six months. Joe: Where the hell were you when I was in the e-commerce world dang because I needed you? Zack: Actually during that, I keep hearing that but we're here now. Joe: Yeah, I actually; two different e-commerce worlds, first for me it was supplements; digestive health supplements that was US-based. But we had another; my wife had a different product that we manufactured in China or she manufactured in China but we had no idea what we're doing. So I love this subject and I think there's probably a lot of people that are listening going oh my God where has this guy been? So tell us that, where have you been? How did you get started doing what you do? What's your background prior to Gembah? Zack: Yeah, so it's actually unrelated completely. I started as a consultant many moons ago; my prior life. And really that helped me organized chaos and kept me that operational and financial way of thinking. And I moved into a role where I was running the Texas markets for a company called Instacart which is same-day delivery. And you get to see explosive growth and I was employee I think number 40 or something like that so moving a market from zero to doing seven-plus figures in a week in GMV which is hiring nonstop. Basically we have to hire 75 to 100 people a day. It is nuts. Joe: Wow. Zack: Yeah and then from there I moved into a strategy role at a company called Dropoff which was focused on more than just grocery delivery but more to same-day courier delivery. And while I was there I started to pick an interest into manufacturing side of things; it always, Show How It's Made always resonates with me. I like to watch that show. And then I met a couple of people that were into the manufacturing. One of them owns a pet products company. And he really opened my eyes to what really goes on into that. And the whole time I was thinking man there's really a problem that was on for a product company to try and find a good resource to really make products overseas especially. So I started doing a ton of research and then I started to really just test this theory out of what is missing in the market out there. And it started off as really just trying to be like a quality control company seeing like how we can help and we've just been like a team on the ground overseas. And as we continue to grow over the last couple of years we've started to say okay so just being a; there's tons of companies out there that do this already. What is the it-factor for Gembah? It is really offering that full-scale design plus manufacturing offering where we can take something from idea all the way through the entire process. And the reason for that is I've seen a couple of my friends go through that process and they work with a designer maybe and then it's kind of disjointed. You have that experience where you go in the designer and they don't know if they can actually get that product manufactured. They go to the manufacturer and they say okay well what do I have to change? You can make a mass scale production here. Then you have to go back to designer and designers are charging them and then the manufacturer says well that's wrong. This whole process is just kind of just not straightforward. And so what we're trying to do is bringing experts along the way at each different part of the cycle so start off with the product design part of it and have experts that have made products and manufacturing at full scale manufacturing before and then sync them up with the factory so that you don't have that lack of communication; that gap in communication. That's resonating really well especially in the Amazon space. We've started to even expand our offering beyond just the product design into more of a research-based company to help with; you know there's tools out there like Helium 10 and so but we have a team over there that can help really expedite that process and enhance the Helium 10 experience. Joe: So expand, you mean expand beyond their current set of SKUs to a wider product line; is that what you mean by expand? Zack: Yeah, so let's say that you have a search term that you find that is really hot right now. There's a lot of investment that could go on into making a product completely new from scratch or incrementally innovating and paying some high design fees if you don't know what you're doing. What we can do is actually say okay you find this hot search term let's go talk to our factory networks and find out what the latest and greatest technology is for that search term and find out a product that isn't on the market yet and then you just go sell it, right? And we've done that successfully now for a couple of our customers and they actually have a seven-figure product now because of our research. Joe: That's amazing. Let's talk real-life examples if we can without naming names or products or anything like that but can you walk us through a relationship that you have where they've come to you, met with you, sat down with you and your team and what you did for them in terms of helping them design and develop the product and expand and find those manufacturers and so on and so forth. Zack: Absolutely so there's a customer that we have that's an eight-figure seller now and they came to us with a couple of issues. One is they're one of those companies that acquires a bunch of other smaller sellers and tries to roll them up. And so a lot of those sellers when they sell they made it from their factories on Alibaba or they may have gone over and met the guy in a subway or something like that and they're taking those guys at face value. Well first thing that we do with them is help optimize their supply chain. So if they have a bunch of different companies we're helping them really understand are they getting the best pricing, are they scaling the correct way, or maybe if they have similar products are we able to condense them into one single factory or maybe two factories instead of three different factories that they have. And so when you talk about that you're talking about giving them buying power. You're talking about giving them scale at the factory. I mean able to shave off like 20 to 30% of their product cost so at their bottom line we're talking; you're adding a ton of revenue or saving a ton of cost to their bottom line so that's kind of the first thing we did for this company. The next thing we did is… Joe: Pause right there just so that people understand and I maybe I don't need to do this because the audience is incredibly smart and adept but if you're selling; simple math 1,000 units a month and you're saving a $10 product cost. And correct me if I'm not getting this right Zack but $10 product cost and you're shaving off 20% that's from manufacturer to FBA in this case $2 per unit or $2,000 per month what that does everyone is that adds 24,000 to the bottom line and if your business is worth 3, 4 times that's going to add $7,500,000 to the overall value of your business when you eventually do exit it as well. So we're always talking about it's not the top line that only matters but working with some of it Zack and improving that bottom line and the efficiencies and the profitability; that's what really drives value. It's not just the top line. I'm sorry to interrupt but keep going. Okay, so you're working with this particular client to reduce their cost of goods sold and streamline and go on. Zack: That's right. So that's kind of the first set of operations that we helped them do. The next set is they identified a bunch of SKUs that they want to add to their brand or add to their existing brands. The first step is if they want to just white label a product because they see how we've been able to give them better pricing they'll come to us and say hey I just want to go white label this, I found a hot product, let's go find it. They set a price target and the quantity and 9 times out of 10 hit that price starting in quantity and get them adding SKUs; adding value to their overall brand, diversifying their brand, giving that perpetual continuous flywheel of bringing out new products that are really reasonable clip in terms of time. Like I said it's like three to six months. Joe: And they're using a software like Helium 10 to see what kind of sales are already occurring. They know that that particular product is a hot seller. They're just going to jump on the bandwagon so to speak? Zack: Sometimes yes I think they also have their own proprietary software that they use. Joe: There's the Jungle Scout, there's the Helium 10, there's a lot of things out there that can help with it but that's what they're doing is to research goods; okay this is something that sells well? I'm going to go ahead. Okay, I got it. Zack: And if they want to differentiate from that then they'll come to us and say okay I want to make a new or incremental innovation on this product. I looked at maybe some of the reviews or I have some sort of test market that I go out and look at and say hey what do you think about this product and they give some feedback and then they say I need to make X Y Z enhancements on a certain product. Our team will design it really fast. Usually we get those designs back in about a week we. And then we go put it out to our factory network and then they're able to again get on that flywheel of creating new products in three to six months. So obviously it's just a straight sourcing white label gig that can take a lot less time. That can take like a month maybe to get a product out to market. And then if it's more of a design-focused project then it can take like three to six months. Joe: Okay, and the designers are industrial designers doing real 3D renderings, things of that nature? Zack: Exactly right. So our process really starts off with sketching. So we'll do two to three sketches of each concept based on a conversation or a full project kickoff we have for each one of the SKUs and from there we then focus in on getting to that final rendering and then we'll then prepare you and enable you to have the real blueprints of the product; so the CAD drawings, all the build materials, all that stuff you need to really look like a professional when you go and start sourcing overseas. One of the biggest problems I see with a lot of sellers is that they try and go talk to these factories on Alibaba and they go and say oh I want to make X Y Z changes to your product not really giving them that collateral and saying these are the exact changes I want to make. And so the factories know that you're a fish in that circumstance. They know that they can take advantage of you. You go to them with a design sheet; full build materials, a full CAD drawing to show them exactly what you want, they're going to take you a lot more serious. And so what we're really trying to do is prepare you for that conversation whether it's through us or whether it's on your own factory network but we want to make sure you look like a professional. You can start getting better pricing because of that. Joe: Okay. So if I was the person that had the e-commerce store or Amazon business or both I can choose. I can take your renderings and go direct to my own manufacturer or I could have you bid it out to your manufacturers as well. Zack: Yeah, if you want to. We prefer that you build it out with our factories obviously. We tend to have better pricing than the average Joe. But if you want to go off on your own we're more than happy to do that. Joe: Yeah, so let's say that I hired you, do the relationships with your manufacturers transfer to me? Do I get to work with them directly or are you always in the middle? Zack: Typically if you're going through us to manage it you're using us as your face in China or Vietnam or India or wherever we're doing business with you. And the reason for that is because the relationship building is so important as well as we provide the quality control. So it's something you just take off your plate. You don't have to worry about it. You don't have to fly over to China. We just handle that relation for you. We're going to show up at the factory, we're going to build the relationship, we're going to constantly go to bat for you, try to get better pricing, make sure that if your factory is getting behind or they're starting to lose scale you can start having a conversation about either bringing you to the next level factory; the higher level or starting to scrutinize the build materials that they give back if it's an assembly factory and say hey maybe this component that you're sourcing you're marking up too much let me go find a different factory for that individual component and get it cheaper for you. So we do that a lot of times with packaging for example; if you go to an assembly factory they're going to upcharge the packaging. But we have the packaging factory work it that. We can compare pricing to make sure that your assembly factory isn't up charging you. Joe: Yeah, every dollar counts again to that bottom line. I had someone on the podcast a few weeks ago; folks if you haven't heard it somebody bought a business from Quiet Light and within a few weeks they did what Zack is talking about which is exchange out one part and get another part. I think he saved something like $4 per unit and per SKU and they sell thousands on a monthly basis. It was just a tremendous instant equity to his business and overall a bump in bottom-line revenue as well or profit I should say. Do you also do consolidated shipping so that if you've got three or four different clients that are manufacturing from different facilities can; do you do partial container load with different folks and reduce their overall shipping costs as well? Zack: Absolutely if they have factories that are located in essentially the central part of China that goes to the same port we absolutely can handle that. We're doing that right now with one of our customers actually. They have three different factories after three different products and they're trying to fill up a 40-foot high container and they want to make sure that we can make it happen for them and that's something we do pretty easily. So yeah we definitely do that. Joe: Educate me. Make me sound smarter than I am. Is it LTL less than container load is that what the acronym is? Zack: LCL, less than container load. Joe: LCL. Okay, thank you. Thank you very much. Alright, I'll try to remember that. I'll get it wrong the next time we do this and people are going to go, God, Joe you just can't get that right. But I don't do what you do so it's okay. I don't need to know what you know that's why people. Alright, so the design aspect going back to that again, how does somebody approach you? What's the ideal situation; is it do you have a form on your website site, do they just come to you and they have a conversation with you, how does it start, how does it work? Zack: Yep. So we have a form on our website which kind of gives you just the basic Name, Email, Phone, What you're trying to make, and then we'll have a conversation with you about what you're trying to make and we'll start the conversation with understanding if there's patent issues or some like that so that we can have an understanding if there's any legal obstacles we have to overcome. After that, it's really just talking with our industrial designer to pull out every information from you that they need to do their job which is who's your inspiration, what's your end-user goal, all the stuff you want to have in terms of making an awesome product and then we go to work. I mean we try to make this process as simple and easy for anyone who wants to come interact with us. Joe: So when we do valuations at Quiet Light which I hope we're doing well in advance of somebody exiting their business so that they get more value. Oftentimes people say well I don't really want to share my information with you until we have a nondisclosure agreement on file. Will you send that to me? Do you start with a nondisclosure agreement on file because you've got an awful lot of information about somebody and you can decide to go into the e-commerce business yourself? Zack: Yeah. We won't have a conversation with you until you sign a nondisclosure because of that. It's mutual. We make sure that all the IP is protected; all the conversations are protected because our business is really secretive, right? So that we make sure that everything is completely sound in terms of legal and protection for the IP. Joe: So theoretically if I decided to work with you, do I really never have to go to China? Zack: Never. I mean we encourage you to because it's always great to meet the factory and our team. But in terms of like reality, no you don't have to. Because we have someone who's going on your behalf showing up at the factory doing pretty much everything that you would do and they understand the culture because they're locals. Joe: You know we had Dave Ryan on the podcast and he's from EcomCrew and a big part of his contribution to that is manufacturing in China and he's an expert at it and his wife is actually from China originally and he lived there for a long time. And he talked about the benefit of that relationship. I've heard people talk about it when they go over and they meet the manufacturers and they go out to dinner drinks and drinks and drinks and drinks as understand. It changes things. They're willing to give you perhaps better pricing, better terms, things of that nature. Do you fully replace that or should a business owner also; it's still your relationship with the manufacturer but should they get over there as well? I mean what do you; I mean you said you think that or you think that they should go over but truly they don't ever have to. What's the benefit of them going if it's your relationship with your manufacturer? Zack: Yeah there is a business culture called Guanxi in China which is exactly what that is. It's basically how they operate in terms of the business language and how they operate from the business culture. And what they enjoy is the face to face interaction. There's a lot more conversations that can be had. You can learn about their family. You can talk about what kind of food they like to have, all that kind of stuff. There's a lot of value that comes out of building the relationship and like you said they'll start to give more concessions. There's a ton of people going to them every single day on Alibaba or in person that wants to do business with them but they value the people who are there for the long term and the people who really make an effort. And that's because that's just how their culture is. So while you don't have to do that because we're taking care of that we definitely enjoy, recommend, whatever you want to call it, you personally as the business owner of your business going over there. Maybe it's not every year; maybe it's every other year, maybe if you want to go there every six months, whatever it is we help facilitate that. So if you show up we're going to take you with our team over there. So you get to meet both our team which is also a part of it as well going to the factory. So yeah we'll take you straight from the plane to the hotel you choose. If you want to stay in our place you can stay at our place. And then from there, it's going to the factories. Joe: I love that. That's great. Zack: So you get to meet our team, see our office, if you want stay in our apartment we're more than happy to but really we give that white coat service in terms of making sure that you again look like a professional and look great in terms of the culture aspect over there. So we're just bridging that gap. Joe: That's awesome. It's standard business stuff and that's why we do video in addition to the audio on these because it's; look we can't meet everybody face to face but it's great to be able to see the whites and odds and talk to them when we talk to people all over the world. Talk to us about what are the biggest mistakes; let's say somebody doesn't want to use Gembah but educate them, help them, what are the biggest mistakes that e-commerce product owners, and marketers, FBA owners, what are they doing wrong at a dramatic level? Zack: That's simple. I think the number one thing I would take away is going to Alibaba unprepared. And the reason I say that is because Alibaba did a great job at bringing the factories to mass market. But they don't do a great job of explaining how the process works. And so there's a lot of things that you can go straight to Alibaba and get wrong. So I'm sure you've experienced this or maybe people; your audience has experienced this. We go to Alibaba, you ask for a price quote or something, you get a sample and then they change the price. Or you ask for an iteration of something they give you a price and then they make the sample and it's completely wrong. Or you order a product and then it's completely defective before you come back. I mean again this is just a software platform into a process that has been going on for thousands of years, right? Software is not going to necessarily overcome the hurdles that exist continuously in manufacturing which is defective products, building that culture, and building a relationship. So those are the three things that Alibaba really doesn't fix. And so what I would recommend again is to hire someone locally to fix those problems because there is a culture gap. You do need to build a relationship and you need to make sure that your products are not coming back defective. So those are the three things I think that are the most important in terms of doing business overseas that most people overlook. Joe: And what is the simplest thing somebody can do to reduce their costs? Zack: It depends on which part of the process they are in. So if they're; if you're talking about building something from scratch it's going to the factories and getting multiple bids with an actual blueprint. Like I always use the analogy of building a house; you wouldn't build a house without an architect. You shouldn't build a product without a designer and an engineer. You're just going to cut corners. They're going to take their interpretation of what you're trying to make and their interpretation is let's make this the cheapest way possible and charge the most they possibly can. Joe: It seems logical when you put it that way. Zack: Right. I mean who wouldn't do that? It's the same thing when you're building a home. If you go straight to the builder and you say I want to build a 2,500 square foot house. Okay, I'm going to build my interpretation of that and I'm going to put it up as fast as I can and as cheap as possible. Why wouldn't they do that? That's the way that we approach it. Joe: Okay. Any tricks or tips or advice in terms of shipping which is a big cost to freight when people are shipping products from China to Amazon or to their own 3PL or whatever the case might be; any tips there? Zack: Yeah. I think again always get multiple bids for that and then always make sure that your compliance is in order especially if you're building a new product. These products have never been out in the market before. There's a ton of compliance measures that need to be taken to make sure that they're labeled correctly. Like for example if you're selling a children's product. They need to be tested. They need to have a CA Prop 65, ASDM testing, a bunch of other testing that needs to happen and be labeled a certain way. If it's intended for infants it need to be choke; make sure there's no small parts that can choke them. They need to be labeled on the packaging as well a certain way. So those are all things that if you don't do those correctly they can get flagged at customs and ultimately turned back. And the factory is not going to reimburse you for the mistake that you made in not going to your compliance in order. And so that is a business killer. So that is the number one tip I can give to someone in terms of logistics and compliance is make sure you have all that in order before you bring a new product into the market. Those are all things that we help do obviously. Joe: Good advice and you do that again but what the heck is Gembah? How did you come up with that name? What does it mean? Zack: In Japanese Kaizen manufacturing theory there's the word Gembah which means the place where value is created on the manufacturing floor. So that is where it's based off of. In Chinese gembah means let's do this. So it's kind of a dual meaning both from the Japanese manufacturing and then the fun side which is gembah. Joe: Very cool. I got it. You just mentioned manufacturing; I want to go back to something you said earlier which was your manufacturers in China or Thailand or wherever they may be you named a few countries. How difficult is it now in this economy and this environment with all the trade wars to find something that's being manufactured currently in China and get a quote on their factories in Thailand and the Philippines and so on that can do the same thing? Zack: Yeah that's a great question and we get that a lot now from our customers and I think there are some products that are more easily transferred to a different country. If you're talking cut and sew apparel for places like Vietnam, glassware you can get in India pretty well, if you're talking injection molded items it's starting to pop up in Vietnam. You just have to make sure that you understand they move a lot slower. Especially in places like Vietnam, Cambodia, Philippines, and the reason for that is because they don't have the raw materials that places like India and China do. So they're importing almost everything from places like China, South Korea, India to get into their factories. So that adds time to the lead time of you making a product. So most Amazon sellers for example don't have the luxury of waiting 60 to 90 days to get a product into their hands of their consumers whereas these big e-commerce brands who spend a lot more time and money on R and D and come up with new products maybe 12 months in advance they can take that luxury and move their production over to different countries. So that's what you're seeing like the Nike the Adidas of the world moving into Vietnam or moved a lot of the production into Vietnam because they can do that. They have the operational capacity to do that. Joe: So for the six, seven, eight-figure brands that we know and we talked to is it worth it time-wise and financially; are they saving costs in terms of cost of goods sold or are they just comfortable knowing that they're not going to have to deal with any trade war issues in the future? Zack: I think that's a true business decision. While I would say the prices that we've seen between India and China specifically are not competitive. China's way more cost-friendly in terms of like apples to apples comparison on the exact same products I've seen 5x in India. Vietnam is pretty competitive because everyone is starting to knock at their door. So I've seen garment and apparel prices go up by 4 to 7% just cost of good before you get to the shipping and logistics side of things. So they're smart. They know that everyone's trying to come to them and their production lines are moving at a high clip now. So I think it's really you have to understand the entire landscape of your true landed cost and lead time before you actually make that decision of moving production over to Vietnam because it's not as easy as it sounds operationally. Joe: Right. Makes sense. Are you renegotiating with any of your Chinese manufacturers to offset the tariffs? Zack: Of course. Joe: They're okay with that; what are they like? Zack: Yeah, I mean it's a geopolitical issue that's going on and they don't like it either. Whoever side they end up taking is on them and whoever side we as Americans take is on us but there's certain things you can do to help them share the tax burden. There's certain things you can do especially with molds that you can start recouping your mold costs if you want to create some injection molded item. That's the kind of stuff that we do and we're talking about making you look like a professional. These are the things that we are bringing to the table when we start the negotiation process. And so because of the geopolitical landscape that we have this is part of the conversation now. Joe: It sounds like a really, really important conversation to have. How do people find you, how do they get started, that kind of thing? Zack: Yeah. So the best approach would be to go on our website www.gembah.com G-E-M-B-A-H.com and fill out a form and we'll be in touch with you as soon as you fill that out. Joe: Geographically where are you located? Zack: So we are headquartered in Austin, Texas; the barbecue capital of the world. Joe: And all you have to do today is put it on your dashboard because it's; I've talked to people in August here right so it'll grow right there. Yeah, I love Austin; lots of folks down there that we work with. Zack: Yup, and then our office in China is in the southern part in a place called Dongguan which is close to the Guangzhou area; it's the manufacturing capital for the south. Joe: So you get the grilling capital and barbecue capital and the manufacturing capital. I think the folks here in North Carolina may argue with you about the barbecue capital but I'm for me. Zack: Yeah we all love your sauce; I've come to learn that it's a saucy type of barbecue. I prefer the sauceless more of a dry rub which fits me well in Texas but I still like the Carolina barbecue. It's great. Joe: I won't say I disagree. Alright man, it's been great having you on the podcast. I'm looking forward to hearing some great successes from some of your clients who I know. I know a few that are working with you; people that have bought businesses from Quiet Light and sold to Quiet Light working with you now too. So it's been great having you on the podcast. I look forward to having the audience reach out to you and work with you and learn and get better pricing and better products out in the future. Thanks for your time today. Zack: Thank you, Joe. I'm really, really glad I could be here. I appreciate it. Links and Resources: Gembah Instagram Facebook

Investing in a Web-Based Business: Mistakes and Best Practices

Play Episode Listen Later Aug 28, 2019 39:13

Today we welcome Chuck (iii) Mullins, we are talking with him about his background, experience, his algorithm knowledge, ask him our rapid-fire questions, and pick his brain about the business. Chuck built his first profitable website back in 1996 when he was an impressionable 18 years old. He studied computer software engineering in college, which taught him the skills to analyze search results and implement strategies. Throughout his career of developing, managing, consulting, and investing in internet-based companies, Chuck has developed a keen ability to spot opportunities and develop strategies that lead to growth and profitability. Episode Highlights: Chuck's background, entrepreneurial experience, and success stories Web-based business ups-and-downs The difference in long-term cash flow from web-based businesses and get-rich-quick cash businesses Chuck's favorite web niches Chuck's favorite audience member (who is also a buyer) Websites that are more/less desirable The importance of knowing your Profit and Loss Biggest mistake buyers can make Best practices for buyers and sellers The importance of understanding the business and doing your research Quiet Light's vision and how we can help you Transcription: Mark: Joe, one of my favorite things about working with team Quiet Light is some of the camaraderie that we have with each other. The fact that we get to tease each other a little bit, egg each other on, but also help each other out; talk about deals, collaborate on our transactions because everybody at Quiet Light has so much entrepreneurial experience that it's like having this built in board of advisors for every single thing that we do. And one thing I think you and I need to do a better job of; I know we've had each of the advisors on Quiet Light at the Quiet Light Podcast. I think we need to bring them on a bit more so that others can enjoy some of the experience that they have. You had Chuck on recently and grilled him a little bit in this episode. Joe: I did. I want people to get to know Chuck for the fun experienced entrepreneur that he is. And so I mixed it up a little bit. I had some fun with him we did some rapid-fire questions. I intentionally; just let me get this upfront and out there for the audience. I intentionally mispronounced somebody's name. I butchered it intentionally. Again I did it seven or eight episodes ago and I got some email saying I think the person you're trying to find is so and so. I did it again. Mark: Same person? Joe: Same person; yeah, if he's listening. Mark: He needs to start listening to the podcast especially my episodes because frankly, I've got a leg up on you. Joe: You have overtaken me for the most popular episode on the Quiet Light Podcast. I will overcome that because I've got some great ones planned coming in here soon. Chuck is a fascinating individual. I've known Chuck for a long time and he's really, really smart when it comes to his entrepreneurial acumen. It's almost annoying to be honest because with a model that we have at Quiet Light Brokerage; we don't have employees, right? No one's an employee of Quiet Light Brokerage. We have a lot of entrepreneurs who work together in sort of a collective group. Well, one of the benefits to that is all the advice and feedback I'm able to get from people. And one of the most annoying things is all the feedback and advice I get from everyone. And sometimes; Chuck especially, Chuck is so thorough. What's the term he gives to himself? Whatever it is he just hyper focuses on the most minute little detail and I fear asking questions sometimes because of the level of detail that he's going to give to me in terms of what I have to fix and correct in a document that I'm creating. Mark: But at the end of the day even though sometimes it can be overwhelming like come on you think I'm doing everything wrong evidently because I keep getting his feedback, it's always on point. And I don't think I've ever received feedback from them where I look at it and say this is not worth considering or looking at; so a smart, smart guy. I'm looking forward to it. What are some of the things that you discussed in this episode? Joe: Well we talked about some of; he's got almost three years brokering now and over 20 years as an entrepreneur now. And he talked about some of his experiences; the pros and cons of A. being an entrepreneur, some of the things that he's found that certain buyers do better than anyone else, and how he wants new buyers to adopt that style, and then the biggest mistakes that someone's selling their business can make as well. And it's fascinating as I just said he's got 20 plus years as an entrepreneur. I'm in the same boat. You're in the same boat. So collectively the team at Quiet Light I'd say what 250 years of entrepreneurial experience that we share with our team with our clients and I think it's fascinating. Chuck is just the tip of the iceberg here in terms of the experience. So it's exciting to share this with him and we had a lot of fun. So that's the key to this one. Mark: Fantastic, well let's get to it. Joe: Hey folks it's Joe Valley from Quiet Light Brokerage on the Quiet Light Podcast. And today we have the most special guest. His name is Chucky. Now that's not what we call him. It's Chuck. I use his personal email address. I'm not going to tell you at what you can all haul in the mail anyway. You know his e-mail address its Chuck@QuietLightBrokerage. Chuck Mullins, welcome back to the Quiet Light Podcast. Chuck: Thank you, sir. Thank you. For any that's specific it's actually Charles Clifford Mullins III. That's my D-I-I-I. Joe: You know I am from New England I can't talk with a British accent; it's something about us. Chuck: Well I can't either. Joe: Alright. Well listen you know the routine. Normally on the podcast we ask people to give their own background; who they are, what they're all about so that we're not sounding like we're reading from a script which we don't. We wing these things. You know that. Our audience knows that. But before we get into that I want to ask you a series of rapid-fire questions; the first one so that people understand and establish your experience here at Quiet Light Brokerage, how long have you been brokering at Quiet Light Brokerage? Chuck: About two and a half; almost three years. Joe: Almost three years. Okay. So let's start with…I've got a total of six questions. Number one; and you've got to give me a quick answer. Number one, who's your favorite broker? Chuck: Joe Valley. Joe: Good, good, good. Alright, if you were stranded on an island with me, Brad Wayland, and Jason Yellowitz and a rash floated by and they would only carry three of us; there's four altogether, who would you leave behind and why? Chuck: Jason Yellowitz, because he would be able to burn his stacks of cash to stay warm. Joe: And he carries it with him, is that what you're saying? Chuck: Inaudible[00:06:25.8] Joe: Jason I know you all listen to the podcast so everybody make fun of Jason. That's your job here. Alright, this is a really important question. Who is the better podcast me or Andy Youderainan; I mean in Andrew Youderian? Chuck: I would have to go with Mark. Joe: You are… Chuck: Hello? Isn't it you that people come up to the Booze and ask for or is it Mark that they come up and ask for? Joe: That's me. It's me. Mark doesn't go to Booze. Alright, sid you know Walker Diabel wrote a book; and a best seller book? Chuck: Have you heard about the second book that he wrote? Joe: No. He wrote a second book? Chuck: Yes. If you go to WalkerDiebel.guru you can check out the second one that hasn't been released yet. Joe: Okay, Alright. So this is a tough question. This is not a trick question. I want to know if you can answer this one. What's the name of Walker's book? Chuck: Buy Then Build. Joe: You got it. Okay. Alright. Chuck: How can you not get it? I've heard it at every conversation. Every conference I go to there's these three books that are just floating around that conference and I'm like wait a second how did that get there? Joe: And it's the bottom of every one of his e-mail signatures. One of these days you're going to dig way back into the archives when he was actually an actor and find a clip and we're going to change his email signature line somehow some way. Alright, so as you know historically Quiet Light Brokerage does not recruit brokers. I have conversations three or four times a week these days with people who want to join the team. But we, for the most part, don't recruit. We have as you know or Mark has as you know recruited a few starting with Amanda back in the day. She was the first. And I think Brad was also recruited. And yourself was also recruited. Of all of the brokers that Mark recruited; last question by the way, what was his best decision? Chuck: Probably Brad. He's been killing it man. Joe: Man and give yourself some credit Chuck. Come on. Anybody but you would probably be the politically correct answer but essentially you just threw Amanda under the bus. But fortunately Amanda doesn't really listen to our own podcast either. Alright, enough of this nonsense; let's talk about you and your experience. I know all about you but for the audience members, Chuck has been on the podcast before Mark had him on when he first joined the team two and a half years ago, three years ago. And the focus of that podcast was a tiny little bit about Chuck but mostly about Chuck's due diligence experience. And I think you had a list of was it 25 due diligence tools? Chuck: Who can remember? Joe: Yeah, a lot. And it's all; if you Google Quiet Light Podcast, Chuck Mullins, due diligence you'll find it. It'd be at the top of the Google search engine and it's great stuff. And I learned a lot when I did it. But I would say I refer most people out for due diligence; buyers that is to our friend Chris Yates at Centurica. They do a great job. Well, let's talk a little bit about who you are and your life experience and a little bit of your brokering experience now that you're three years into Quiet Light. So who the heck are you? Tell us about your entrepreneurial experience. I know that you started way back when you were in college, right? Chuck: Yeah. I graduated high school in '96 and I always wanted a computer but we couldn't afford one. So finally for college I needed a computer so I got a computer and started a free website on it's like Angel Fire or Tripod or one of these things way back in '96. And I remember just putting up some content and that is an online library for college students. And I remember somebody offered me like 10 bucks at some point to put a link on my website. I'm like $10 awesome, I'm making money and then somebody offers me like a hundred bucks and I'm like what $100? So then I was; this is before I even had a domain so it was like AngelFire/blahblahblah. I started thinking about okay we'll buy a domain and back then they were like thirty-five bucks. I was talking to my mom and I'm like mom I'd buy a domain and she's like you're crazy you shouldn't buy you know like you're just wasting your money and why are you spending all this time in front of the computer and then it just started growing and then somebody offered me a thousand bucks. And before you know it I was making about sixteen grand a month off of advertising back in the '90s. Joe: In college, right? Chuck: In college; yeah, and so I was just… Joe: That's a lot of Jägermeister. Chuck: And the Internet bubble ended up bursting in like the 2000, 2001 and all that money like dried up overnight. So I was like okay now what? So I had to figure out how to pivot and myself and two other guys; we had different businesses. We all pooled together and started a membership site. The first month with our membership site we made like 60 grand. It was just like mind-blowing like oh my God we're in college. I didn't have keggers I had like full bottle; like full bar parties. Joe: Everybody wanted to be your friend, right? Chuck: It was fun and we'd stay at like the Ritz Carlton for Mardi Gras and like just do crazy things. We rented like a ski chalet; it was like a 15 bedroom house on the slopes and I forget where it was bit we then brought all of like; we had affiliates at the time, all our affiliates to come and ski with us and so we had a great time. And at some point, I was making a lot of money and I didn't really know what to do with it all. I was definitely wasting my fair share of it. Actually kind of going back, my mom, the whole thing with her telling me I shouldn't start the business and this and that in 2003 I think it was about my mom and sister cars for Christmas. Joe: I wrote that down when you said it because I knew that. You told me the story about Christmas and your mom went outside and there was a big ribbon on a brand new car. I guess she's happy you bought that domain name, after all, isn't she? Chuck: Yeah. Yeah for sure and I do not usually tell that story so maybe we'll have to edit that out. Joe: No. No editing. Tell the story. Chuck: I made two giant boxes and I had my mom like a box of some keys and she sees them and it had Lincoln in it which I had a navigator at the time and she's like oh it's a scavenger hunt he put his keys in here and she walks outside and sees this giant box and just like; my mom doesn't curse and she goes oh shit and she runs outside gets ready to tear into the box. And I said wait, mom, hold on hold on there's a card on there you've taught me better; open the card. And so she opens it and it says to my sister and my mom is like inaudible[00:12:57.1] my mom's like…well my sister is like to me? And again I wiggle the keys in front of my sister's face and she's like what?! So she runs and dives in and my mom looks at me like what this like WTF and I'm like you're over there. Then she starts walking and then sees it like buried on the other side of the house in a big box and like runs over and dives in. We're in Georgia at that time at a family house and it was cold and she didn't have shoes on. It was a great time. I've got the video. One day I'll have to share with somebody but I don't know that I want to share it. Joe: What a great experience and a great thing to do for your mother and your sister did. Did your mother get the nicer car or was it equal to both? Chuck: I was actually going to buy them the exact same car and then I was talking to my sister trying to like make sure that it was the kind of she would want and I said well what do you think Mom would like? And she said well my favorite car is a Sequoia and I ended up; my mom a Lincoln Aviator and my mom's Sequoia. They're about the same price. I think my sister was a little more but I did get some grief about that. Also the night before or a couple of nights before we went to Walmart and I bought every single piece of cheesy add on part you could get and added it to the car. So I got like a fuzzy steering wheel cover, dice, a little light-up things that go on the rims, and just totally like made the car look as ridiculous as possible and told them in order to get it they'd have to drive it with that stuff on it. Joe: That's hilarious. So for anybody that's listening instead of watching if you look at my chin and Chuck's chin you'll see some gray; there're probably a little more on mine than his of course. His is more his cheek mine's dead on center of my chin that's because of age and life experience. So you had some amazing times Chuck out of college making more money in a month than most people in this country do in a year; all web-based business experience. It's not always wonderful though. Chuck: No, absolutely not. Yeah, entrepreneurship is ups and downs. We've gotten hit by Google so many times I couldn't even tell you. And most of them were just algorithmic. But I have on one of my big businesses, we had about 12 that were all doing the same thing and one of my partners had used the same email address in our Webmaster Tools account and somebody from the spam team I guess noticed and went in and just manually penalized all of our businesses. I think except for two because those were the only two that didn't have those email addresses. And just overnight it's like poof gone and it's just like oh it's heartbreaking. At least when it's the algorithmic type of penalties it's easy to kind of; well maybe not easy but you're going to recover from that. The manual penalties, we hired somebody who used to work in the spam team. They told us what to do. We did it. We just haven't been able to recover from that on those other sites. Joe: Yeah I know it's always hard. Google algorithm updates I think are getting a little better, a little easier to handle and manage I think ultimately. I always used to say this actually if you do the right thing the way Google tells you to do it, ultimately it's not going to hurt you; the algorithm updates. And I guarantee there are people out there shaking their head no right now because a good friend of mine, he built a great business, a great, great content site, and sold it and there was a an update recently. And the buyer, another great entrepreneur bought it and did have some negative impact. What they both know is that sometimes when Google casts a wide net some of the wrong sites get caught up in it and over time that does get corrected but it does sting initially, doesn't it? Chuck: Yeah. And I will say like the reason we got caught up in a lot of the updates wasn't because we were doing the things that Google tells you to do. We were gaining the system and we deservedly got caught for doing those things and we would adjust our technique and then regain. So like one of our sites had like 100,000 pieces of unique content that we were in Google index for like 30 million pages. Joe: Wow. Chuck: So like how does one do that? Joe: How does one do that? Good Lord. Chuck: Trickery. Joe: Well the grey in your chin has matured you to the point that I think you're beyond the trickery because you look at the long term cash flow and benefits of owning an online business now it's not just a quick cash anymore. At least that's the way I look at it; you too? Chuck: Yeah, absolutely. And you're talking about like the algorithm updates and I feel like there's been so many and that most of the really garbage sites have probably gotten taken out by now. I feel like, and maybe I'm wrong but now it's more of like just tweaking the knobs a little bit. So unless you're in one of these like fringe business models I tend to believe and I could be 100% wrong but I tend to believe that most of the major algorithm updates have been already done and then now they're going after I guess like medical websites and things like that. Joe: Yeah. The updates are far further I'm sure in between and in many cases not as severe. Alright so I'm going to throw a question at you. I don't know if I told you this story or not or if you've heard it. Some of the audience members might have heard it so I'm going to just test your algorithm update knowledge. And if you answer within two seconds then I know you heard the story. So I bought a business, I sold my business in November 2010; yada, yada, yada. People have heard this a million times, or at least tens of hundreds of thousands of times if they've listened to every episode and keep downloading everything. No we haven't done 100,000 episodes that's totally inaccurate. I can't do math by the way apparently. Alright so I bought a content site. I sold a great site. The content was amazing. And then I bought a piece of junk. I had 42 amazing days. I bought it March 1st, 2012. I had maybe 3 or 4 keywords on the first page of Google and then boom they fell to the bottom of page 1 and then page 2 and they were gone and I lost over a quarter-million dollars in the course of twelve months. What happened? What algorithm update was that? It was; again I bought it March 1st, 2012; I had forty-two amazing days. Chuck: Panda. Penguin. Joe: Penguin. Alright, you're close. We're going to have to throw that quiz out there. Everybody in the audience wouldn't throw that quiz out there for a price. Chuck's wearing a beautiful Quiet Like Brokerage…is that a polo shirt? Chuck: Yeah. Joe: We need to get some of those packaged up and give away prizes for that kind of stuff. Alright let's jump on to your Quiet Light Brokerage life; your entrepreneurial life, amazing ups and downs, a lot of great ups and you did some good things for family and friends. The downs, we learn from them and we try to take those lessons and make sure that we are really bringing great listings to market so the buyers are making good safe investments and the sellers of those investments can move on with peace of mind to their next adventures whether that's another business or retirement. In your history of transactions here at Quiet Light, is there any particular niche that you gravitate towards and enjoy more than another because as you said a ton of content and affiliate experience, but I think some of your larger deals have been physical product e-commerce sites. But is there anything that stands out for you? Chuck: Yeah I mean so my heart is in like membership sites. I love recurring revenue. I think everybody does and that's why the multiples are higher because of that recurring revenue and the predictability. So I would say that that's kind of where I'd like to be but my biggest sales have been around physical products inaudible[00:20:53.3] an outdoor sporting equipment one that was great. One that I really love that I sold like six months ago was a company that did custom-tailored suits. That thing it's like awesome. Who doesn't want to say they have a business that sells custom-tailored suits? Like it's just; I think it's got the cool factor. Joe: That's the amazing thing about what you do and what we do at Quiet Light is that we come to this role with a lifetime of experience that; I was talking with Walker and Brad about this recently that we didn't know it but all of our entrepreneurial life was preparing us for this role. And now we get to experience so many cool different business models. You come to this role with a ton of membership experience but custom-tailored suits and you're like that's the coolest thing. Who doesn't want to say they own a custom-tailored suit business? I need to buy a custom-tailored suit. I know who bought it and I can reach out to him. I know who he is too. Speaking of that I do want to ask a random question although its timing is not very random and you have to answer this. There's only one answer to this. This buyer listens to the podcast and he comments and he tells us about us sometimes when he's riding his bike. So do you have a favorite audience member that also happens to be a buyer? Yes or no? You have to say yes and you have to say his name now because he's a… Chuck: Sure. Mike Nuñez. Joe: There you go; Mike Nuñez, this is just a shout out to you. Thanks for listening Mike. Chuck: Well I'll tell you it shouldn't just be a shout out to him. If anybody wants to know how to be a good buyer and how to buy businesses they should talk to Mike Nuñez because he is 100% the absolute best buyer I have. And not like just in a sense of like the actual acquisition of the company. When he gets on a phone call and talks to the sellers he makes them feel like they are the only person in the world; the most important person like he's just so smooth and he's not doing it as like a ploy or a gimmick. He's just a nice guy and he really appreciates these people and the businesses they've created. And it's just he's really good on a call. Joe: It's the unknown secret that we tell all the time to buyers. Look, when it's a great business it's a great opportunity. There are going to be multiple buyers. And it's not always the most money or the most cash that gets the letter of intent. In some cases, it's the buyer that the seller likes the most. And being likable on those conference calls is critically important. Mike does it very well. Chuck: And one of my businesses; actually I think two of them that Mike purchased, the sellers actually said like I want to sell to him. Make him buy this. It doesn't matter; I mean within reason, right? The price; but they were willing to take less than somebody else because they liked him so much. Joe: Oh boy. Now if Mike's listening and he paid full price now he's going to be like inaudible[00:23:49.1]. Chuck: That is the problem because of course I did make him pay more than the other people but they were willing to take less. And what's funny is one of my sellers told him as much oh like I would have taken less from you and I'm like don't say that to him. Joe: In his heart, he was willing to take less but his checkbook and his head was willing to take the highest bidder as long as it was Mike Nunez. That's the key. In your experience both as an entrepreneur and as an adviser here at Quiet Light you've seen a lot of businesses that have come up for first they reach out to us for a valuation, they start thinking about an exit sometimes the day before they want to exit, sometimes months or a year or so in advance. What do you see being the biggest thing; most consistent thing that those particular entrepreneurs do wrong time and time again that there's just if there's one thing you could just like shout into the microphone right now to everyone listening even though some of them are doing it right, what are the majority of folks not doing that that you want them to do to bring more value to their business? Chuck: Silence question. Joe: Yeah it was a long one. I kept rambling on in my sentences because I could see you thinking. Chuck: Yeah. Joe: Maybe I should have asked a little more. Chuck: What's weird about at Quiet Light is we actually get so many great businesses to sell. People bring us quality things. So what are some of the bad things people do? Joe: Let me just get some stats behind that though; because it's true what we bring to market, it's great stuff. But the reality is Chuck if you look at my numbers I've closed 105, 106 transactions in seven years. People say well that's not very many but in order to close those transactions; I've ballparked the math and I've talked to 2,500 entrepreneurs. That's 2,500 valuation calls. Your stats are similar. What is that consistent theme that if you could speak to somebody that someday may sell their business what should they be doing? Chuck: Sure. So when we talk about like specific like product-level things like when people are just selling random shots keys that aren't unique in any way; those are really difficult to sell. When you have an actual unique product that's got some sort of a brand to it that's not easily knock off-able that there's a moat around it like that makes it so much more desirable to people and so much more valuable. One of the things I also see probably is just P & L's; having clean P & L's. Oftentimes people's profit and loss statements are just a complete mess. They'll lump, they want to save; I was just thinking about a specific one, but you see people are just lumping things in because they know they had a cost but they don't really know when it was or where it was and they just kind of guesstimate things and put them in the wrong ones. So then you'll see like really lumpy P & L's. And we always try to work with people to flatten those out and figure out where the real costs are. So that often takes a lot of time to just figure out what the true P & L is on a business. And for doing add backs; what's a real add back? We fight with people a lot on what's a real add back versus something they think they should be adding back. Joe: Yeah I want to just step in and shout out that there's no question I think that preparing your business for sale is the number one thing that people don't do. They decide to sell as I say instead of planning to sell. That means they work their tail off. They launch this business. They work like crazy against all odds. They succeed. And it's producing solid revenue and profit for them. And they just burn the candle at both ends and then the candle starts to burn out. And they're emotionally tired, they're frustrated, they're exhausted, and they wake up one morning I'm just not into this. I'm going to sell. I didn't know I could sell but it just occurred to me. I'm done. I'm calling Chuck Mullins. And at that point because they're tired; because they're emotionally worn out they need to sell because trends will go down. They won't do the things that they need to do to keep the business growing and strong and in great shape for somebody else to take over. And so at that point you get those P & L's and you're like yeah Excel is not really accounting software. Ideally Quick Books and Xero or one of the other so that we can run a historical P & L and do year over year trend analysis and look at the metrics. All that is really hard and then there's the commingling. So I'm going to just mention a podcast; not ours, somebody else's. EcomCrewPodcast247. Chuck as you know I sold Mike Jackness' business ColorIt last spring. And Mike is a bright guy. Mike knew exactly what to do as most people in this audience do. They know what to do. And the mindset that Mike had was simply I'll get to it someday. What happens is you end up chasing too many rabbits and that someday comes when you get exhausted and in his case, he had four brands under one LLC and three of them were really not sellable at the time that we decide to list the business. So what does that do? You've got four brands all in one LLC, tax returns commingled, and you're only selling one brand. What does that eliminate? Chuck: SBA financing. Joe: SBA financing; exactly. Is it required to get an SBA loan? No it's not to sell a business; absolutely not. We sold multimillion-dollar businesses without an SBA loan. But what it does do is it casts a broader net; buyers. And even some of those buyers; I've had it. Have you had buyers that have more than enough money to stroke a check for a multi-million dollar business but they use SBA? Chuck: Absolutely why not leverage if you can? Joe: Yeah, so that's I'd say number one. I'm in total agreement on the documentation. We always talk about that the risk, growth, transferability, and documentation; gets your numbers right, get those P & L's in great shape and it's going to help you learn about your business and set goals and then that passion may get reignited and you may do more in the business and grow it and have a bigger exit someday down the road. It's not that I don't love it when somebody calls me and says I'd like a valuation and part of that is okay, what's your timeframe, when are you ready to sell, right now. Not that I don't mind that; I love that if everything's in great shape. It's just tougher to sell it when it's not. They get a lower value, right? Chuck: Yup, absolutely. Having those four pillars and the clean books it makes a big difference. Joe: It really does. I think I'm in total agreement. Buyers or sellers of businesses, get your documents in great shape. The best way to do that, just call, email inquiries@QuietLightBrokerage.com, Chuck@QuietLightBrokerage.com. Reach out. It's a service that we provide. I mean what do we do Chuck? We help, help, help, and then keep helping, right? Chuck: Build value. Joe: Build the value. It's my; I've got a mentor that I talked to long and hard about all my business opportunities and in this particular one as we chatted about the model and what we do here at Quiet Light he's like well it just sounds like you're giving away all your knowledge for free in hopes that maybe they'll work with you. And I' like that's exactly right. We help first and we're entrepreneurs so there are times that we wish we got good advice and we were too young to listen or there was nobody around to talk to about it. And now we share that when it comes to business values and planning an exit. The number one thing you can do is just reach out to somebody. It's free. Talk to Chuck, he's got a ton of experience. Chuck: I'll tell you kind of in my entrepreneurial days if I wasn't going to be an entrepreneur I always wanted to be a consultant and help other people. And I never had like the actual desire to go out and build a portfolio and charge people to help them grow their business. But like you said I've been do this since '96. I've met so many businesses; a lot of focus on optimization and SEO and just so many things. And one of the things I actually like about is giving unsolicited advice. So when I'm on all these valuation calls I'm constantly asking people like oh have you tried this, have you thought about this? So even if they're not ready to sell I'm often giving people advice on how to increase their business. And even when I do have listings like I think of one and particularly like I give him so many ideas and then he did those and the business just kept growing. That actually came to bite me because the business grew so much that we ended up pulling it off the market after getting multiple full-price offers because it just had grown so much and he wanted to just wait a little bit and we're going to actually getting ready to relist that here soon. Joe: It's a good problem, right? I mean I've been in situations that you say it bit you but ultimately this is a long term play for us; it's building relationships and that person respects and appreciates you obviously because he's coming back for some of your entrepreneurial life experience and it's benefited them financially. It's going to grow the business and ultimately they're going to get a bigger value and tell people about what you did. So that was a little bit more about the sellers and the things that they can do and then number one I think we both agree, plan that exit; call somebody, e-mail somebody, get a valuation. It's not going to hurt. What about buyers; biggest mistakes that buyers can make? Chuck: Disrespecting somebody's business. So getting on a call and like; I'm trying to think of a of a PC term that I could use that's not a profanity, just talking smack about somebody's business, trying to negotiate them down in price, and like trash-talking the business. That doesn't work. At least not at this size but maybe it works when you're dealing with a couple hundred million dollar business or something. I don't know. But at these levels, people care about their businesses at least the ones we sell. Inaudible[00:33:38.9] and when you talk smack like… Joe: It's personal even at the 15 to 20 million mark. Mark just closed one just under 15 million. It's owned by an individual. When you're talking about a hundred million, yes somebody is up there at the top like their shareholders and the CEOs and COOs and all that and big-time attorneys are in there negotiating. It's not you're talking to the guy across the table that actually built it and owns it for the most part, right? So he cares about it. Chuck: He worries about it like he's had the baby. I mean you wouldn't believe how many people I've talked to; sellers that cry on the phone about their business like it happens a lot. People are deeply invested emotionally in their business. When somebody comes in and disrespects it for no reason other than they're trying to negotiate, it doesn't go well. You need to be nice. That's what Mike does so well. And I want to keep talking about Mike. Well like… Joe: Should we talk about Walker again? Chuck: He's about people and he's nice. Joe: Let's talk about Walker again then. Actually you're absolutely right. I remember being at the Rhodium Weekend Conference before you were a member of the team here at Quiet Light. Now he's up presenting and talking and I could swear in that environment and I used the word that begins with an A and ends with an E; figure it out, folks. Everybody's got one. And what's the secret to being a great buyer? And I said don't be one; as simple as that. I can see you out there in the audience shaking your head up and down. And that's exactly right. Mike is very nice, very kind. When I sold my business I had people that were well I remember one, in particular, ripping my business to shreds on a conference call; initial call and I'm like why am I even talking to this guy. I'm not selling it to him even if he gives me an offer over asking. And then, strangely enough, the last call, the person that ended up buying my business first thing he said is thanks for creating such a great site. Your products have helped people exactly like me. By the way I took stuff like this and I ran the Boston Marathon actually the Chicago Marathon last month and it's because of products like yours and I said cool. It was actually a really short call; 20-minute call. I didn't ask any great questions I had going on. That was really nice but I don't see he's buying my business and he almost; he bought it almost full price offer. Chuck: I'll tell you what you just mentioned something that is often overlooked. When you get on these calls don't just wing it; do some research, educate yourself before the call, and ask the right questions. It's so important. So many times I get on a call and the seller or the buyer doesn't ask any decent questions and the seller just writes them off and says let's not take any more calls from that person. They weren't serious. So make sure that you understand the business and you're asking good questions that a good buyer would ask, right? Joe: Yeah. They don't have to be the most intelligent questions the seller has ever heard but that you've done your research and you care. I mean yeah Chuck you put there together a great package and all the great questions are in there. They just have to dig into them and digest it a little bit and ask the same question in their voice and see if you get the same or similar answer from the client on it. I think that's great. I think you're absolutely right. Too many times there has been a few buyers that they're not prepared for. You can hear them walking down the street getting in the car and it just feels like a complete and utter waste of everyone's time including the person who's making the call and asking the questions. Okay, is there anything else; before we wrap up is there anything else you'd like to say about Walker Diebel? Chuck: Visit WalkerDiebel.guru to check out his new book that's coming out in a couple of months. Joe: Let's do this; actually everybody do is too. Go to IMDB and look up Walker Diebel the actor and watch some of the movies he's been in. Add a review, let's see if we can boost that one-star rating up to one and a half. Chuck: Inaudible[00:37:37.6] tomatoes maybe. Joe: Alright Chuck, you're a good man. I appreciate you coming on. We'll wrap it up here with time. Any last thoughts for anybody out there thinking about selling their business or buying one; any last pearls of wisdom and I know I didn't prepare you but any last-minute pearls of wisdom? Chuck: Yeah. I would just say that reach out early. We're not here to be high pressure as far as trying to sign you to sell your business. We're here to lead with value. We're going to offer some hopefully some wisdom that's going to help you sell that business in the future. So don't think that like oh I don't want to reach out because I'm not going to sell it for six months or a year. Talk to us now. Let us help you get the business in shape to sell it later. Joe: Great advice. That's Chuck Mullins folks. We will be back in the next podcast. See you soon. Thanks, Chuck. Chuck: Bye-bye. Thanks. Links and Resources: Chuck Mullins Chuck's LinkedIn Walker Deibel's IMDB

What's a Legitimate Add Back

Play Episode Listen Later Aug 20, 2019 44:31

This week we are talking about add backs, what is a legitimate add back, and how they affect your business valuation. The value of a business is dependent on earnings but it is also dependent on the company's discretionary earnings such as the add backs of owner salary and benefits. Then there are those one-offs – those non-recurring expenses which are also known as add backs. Those are the add backs what we are dissecting on today's episode. A seller's due diligence when it comes to discretionary earnings can help buyers see their potential ROI without any grey area. Episode Highlights: Why we work off the seller's discretionary earnings and what that is. How discretionary earnings are a case by case calculation for each business. The three levels of add backs. Why it's important to take a scalpel to those third level add backs. Questionable add backs – what can fly what cannot. How math and logic are the key tools to determine legitimate add backs. Transcription: Mark: Alright, welcome back Joe. I know you just came back from Blue Ribbon Mastermind; Ezra's event. It was up in Seattle, is that right? Joe: Yeah, a beautiful city and a great event. On a personal level, I had a great time. I took my 17-year-old with me and just explored the city in off-hours. Business-wise I'm telling you Ezra Firestone is sort of the Tony Robbins of the e-commerce world in my view. He gets up there, he's real, he says it like it is, he shares his own information to the Blue Ribbon Mastermind members and it's such actionable, transferable information. And the level of entrepreneurs and intelligence at the Blue Ribbon Mastermind I think is nearly unmatched; it goes very politically correct I think, right, nearly unmatched? Mark: Yes. I think every conference that we come back from is our latest favorite conference. But Blue Ribbon and Ezra's events have been fantastic since we started going to them. And you're right he's just a fantastic guy. He gives a ton of information and has a ton of insight to share. So one of these days I'm going to get to go to the event instead of you because I want to get in on some of these. Awesome, glad to have you back, we do have a couple of conferences coming up. We will be sending these out in our email; our newsletters that go out every Thursday or Friday depending on when we get our stuff together so pay attention to those. Alright, this week Joe you and I are going to do the podcast. Joe: That's right we have two very special guests. Mark: Two very special guests; that's right. We're not bringing anybody else in on this one because we want to talk about add backs; what is a valid add back or what is a legitimate add back? And I know for a buying perspective this can be a little jarring the first time. If you're just coming into the acquisitions industry; if you're looking for your first acquisition and you look at a profit and loss statement that we provide you might be wondering well why are these guys throwing all these expenses back at me, these were on the tax returns shouldn't they be included? So Joe why don't we start with that? Why do we work off to this number of seller's discretionary earnings and what is seller's discretionary earnings? Joe: That's a good question and a great place to start. Just defining it simply is the best way to go. So when you're running a profit loss statement as a business owner; hopefully in Quick Books or Xero or something like that, you're going to get a net income line at the bottom. So let's say you do it for the trailing 12 months you get a net income. But there are certain owner benefits that you get as the owner of the business. You have an Internet-based business; you may write your car off in that business. You may pay yourself $200,000 salary in the business. All sorts of things like that they're generally owner benefits and then there are some one-time non-recurring expenses; these are things that do not carry forward to the new owner so they're classified as add backs. So net income plus add backs equals seller's discretionary earnings or SDE. It is what business is in this general category are multiplied by; they're valued at a multiple of the trailing 12 months seller's discretionary earnings. So that's the critical nature of an add back; it can make a tremendous difference in the value of the business when using a proper formula. If you don't do that the add backs properly you're either going to under inflate or in some cases, unfortunately, some inexperienced brokers might over-inflate the value of your business. So it's critical for both buyers and sellers to know how to calculate seller's discretionary earnings and what is a valid or legitimate add back. Mark: Yeah and I think on that the thing I would like to just add here and emphasize is that there are rules to seller's discretionary earnings. I know I've talked to some sellers, I've talked to some other brokers frankly outside of Quiet Light Brokerage and they feel as if well if you can make an argument for it then we can add it back and they approach this almost as if it's just a free for all as to who can make the best argument. The fact of the matter is there is an actual definition for seller's discretionary earnings and there are rules to follow. Now that doesn't mean that there aren't some situations that require interpretation. And we're going to go into some of those scenarios in this podcast today where you have to try and figure out is this a legitimate add back or not? But at the heart of seller's discretionary earnings when we are showing seller's discretionary earnings what we want to do is we want to show a baseline number for buyers to understand what is my potential return on investment? When you think about all the different buyers that are going to look at a potential opportunity, every buyer comes with their own set of assumptions, right? Some buyers might already have infrastructures set up to run a business; maybe they already have a marketing team in place or maybe they' already have a warehouse if it's an e-commerce business or if it's a SaaS business maybe they already have a development team in place. Those assumptions need to be worked into their own evaluation of the business. What we want to show is a baseline number so that you as a buyer can figure out what your potential return on investment is for you. And that's going to vary from one buyer to the next. So seller's discretionary earnings that's all it is; it's a baseline number, we want to be consistent from one business to the next that's why there are rules as to how we calculate this number. Joe: Right and even though combined we've got 20 years of experience doing this and have sold well over a hundred million in transactions just the 2 of us combined it's still a case by case basis and you got to dig into each particular business and get an understanding of the nuances of it to determine whether or not it's worth doing an add back based upon the size of the business and the total number of add backs and if it should be done. Generally speaking, there are 3 different levels of add backs; the first 2 are pretty standard, it's the third one that we want to spend the most time on today because of the nuances of them. But let's run through that first and second level. Mark, if you want to start off with that first level why don't you address the owner's salaries in add back. Mark: Yeah, absolutely. Joe, I like the format you put together here. You created these 3 levels of add backs; the obvious, the one time expenses, and then the ones that require a bit more interpretation. So the very top of the list here are these a level one obvious add backs. We have things like charitable donations; obviously, that's purely discretionary nature. We have accounting expenses such as amortization and depreciation. And then we have one owner salary. And I know there are buyers out there that look at this and say well why are you adding back somebody's salary; like you need to pay yourself some money? But this is a standard add back that we always include and it's part of the standard definition for seller's discretionary earnings. The reason for this is how you pay yourself as an owner, how much you pay yourself, and the format you pay yourself is completely discretionary. You could in theory not pay yourself any salary and just take distributions from the company from the profits. Or you can pay yourself a very large salary and run all your payroll tax through that which will show up on the profit and loss statement. What we do for the owner's discretionary earnings we do add back one owner salary. But there is an exception to this and that's if there's multiple owners that are working full time on the business. Because we know that if there's multiple owners working on a business you can't add back all of their salary. You can only add back one. Did I explain that well Joe or does that need more? Joe: Let's go a little bit more. What happens; what do you do Mark if you have 2 owners that are working a combined 25 hours a week, one is doing customer service and logistics, and the other is doing sales and marketing. Do you add them both back? Mark: I would add both those back. Joe: Okay. Let's flip it up; let's say that one is doing sales, marketing, logistics, and the other is a developer. And the level of work that that developer does still only takes 15, 20 hours a week but it takes a different skill set than the average person has. Do you add them both back? Mark: No, I would not add both those back. Although we will discuss this in Level 3 add back. I might adjust that second owner salary depending on what they're getting. But the reason I wouldn't do it is because of the specialized nature of it. So what we're assuming here is that the buyer is a single person who is coming in and needs to run this business. I wouldn't expect most buyers to have developer skills to run a business. So maybe you do; if you do, that's great you're going to do really, really well. But most people can't be that sales and marketing plus developer role. I've done this for over a dozen years now. I've run across that skill set a handful of times. It's not very, very common. Joe: That's right. So those are the; even though these are just Level 1 add backs there are some complexities to it that require some attention to detail on the nuances of one business to the next. The only other things that are pretty obvious in there are personal meals and entertainment, travel, mobile home…mobile phones; everybody's got their own mobile phone that expense doesn't charge for. You've already got that expense. Things of that nature are pretty much Level 1 add backs. Jumping on the Level 2 add backs it's really focused on those one-time expenses; things like a trademark or a copyright, patents, things of that nature. And then there are some that are a little bit deeper like legal expenses and lawsuits and enforcement letters and things of that nature even the thing that we have to do often Mark which is referring potential clients; people that we do valuations for that are not using a kind of software. We'll refer them out to a bookkeeper. So in this situation Mark, tell me if we're on the same page. We will get a call somebody has got a great business but they've got 3 years of data in an Excel spreadsheet that is not using any accounting software. Or they might be using Fetcher and piecing different pieces together. I would refer them out to a bookkeeper like CapForge, MuseMinded, Stellar Accounting, Catching Clouds; one of those and get them on Quick Books or Xero. And generally, that's a one time expense for them to build that, put that data in the software in arrears maybe $1,500, $2,000. To me, that is without a doubt a one-time expense and an add back; would you agree with that? Mark: Yeah I would and I'm glad that we agreed because if we don't it's just going to be an absolute brawl on the podcast, right? Inaudible[00:11:27.2] here is fighting with the microphones. No, absolutely that would be a one time expense. It's something that does not carry forward. But we have a great example of that with somebody who's been a friend of Quiet Light Brokerage for a while; Scott Deetz from Northbound Group. He's a strategic advisor who helps clients in a lot of ways. He does a fantastic job with his clients. Specifically a lot of Amazon stores but he also works with other companies as well. He does forecasting and a lot of preparation for an exit. And his fees are all one time expenses. Even though that you can see a monthly fee during that preparation, the goal is to prepare for an exit. So those are fees that get added back in the bottom line. So recasting books going back and trying to recast those books either in accrual format or just cleaning them up I would totally consider that to be a one time expense. As with the other things that you mentioned; the trademarks and the logo design, you shouldn't be punished for the expenses that are really necessary to be able to run the business or only occur once or will occur in the future. Joe: Yeah. And there is again always nuances; sometimes an owner is going to buy a new computer. But it's their new laptop that they use and they're going to keep that and it's not going to carry for you then that's a one time expense; things of that nature, a case by case basis from business. So again nuances, deep-diving into the business, no 2 are alike. Mark: I have been hearing you say this for a long time our own kind of sliding into this Level 3. But in Level 3 you always say math and logic Mark; it's for math and logic. What makes sense? How does the math work out? And look this actually works out for Level1 and Level 2 as well. You have to use math and logic. But Level 3 is where we start getting into the interpretation of different expenses, right? Because these are the grey area ones where maybe it's not as straightforward as saying amortization and depreciation; that's a pretty obvious add back. Charitable donations; pretty obvious add back. So let's go into this Level 3 and get some examples on a case by case basis. Here are things that we've seen in the past which; look at Quiet Light we've actually had some pretty big discussions with all of the advisors of Quiet Light that we have this large group chats and sometimes we've disagreed in trying to work out how we should actually treat these expenses. And I want to start out with one that Joe you and I have talked about a lot and that would be events, trade shows, and Mastermind fees; how do you handle those? Joe: I almost moved this to the bottom of the list so we didn't start off with one that is pretty tough and it was talked about a lot. This is a case by case basis. If somebody joins a Mastermind group in the trailing 12 months prior to selling their business and they pay $20,000 to join that group, it's a one time expense; absolutely an add back, it kind of moves up to Level 2. But let's say they also choose to go to an annual event that that Mastermind group has. And they do that at their own expense; let's say they go to Seattle, I was just at Blue Ribbon, those people that were in Blue Ribbon; I'm sorry at the Seattle event not all of them were at the Miami event just 6 months prior and so it's definitely a choice to go to the event or not. Some people never go. There are lots of people that are in eCommerceFuel that we've never met because they never go to any of the events. So the choice to go to an event, it's an expense that doesn't carry forward. It's one that I see as an add back. Our team has talked about it quite a bit; that's an add back. But there are other types of Masterminds and events; we'll call them events in this situation that are not add backs that you and I have talked about. So if you are an advertising agency or any kind of company that's going to these events to build your company brand and reputation even amongst the people that are part of the Mastermind it's integral to your business. Like us, we go and we sponsor. That's integral to our business; our business models. We are sponsoring, we're getting our own brand and our own name out there; that's not an add back. An ad agency does the same but might just be a member of the Mastermind or events and is doing training courses in free valuations or free testing things of that nature we would have to really dig down into that one and determine if it's an add back or not. And it's probably not an add back. But for the rest of the folks most likely an add back; the only adjustment you and I have talked about that is we'd have to look at and say logically does it make sense to add this back? Do we have 2 lines of add backs? Is it a business that's valued at 250,000 or 2.5 million? Sometimes you say you know what at this level it's not worth adding it back; let's just leave it alone it's only going to add you another $300 per month back to it and you can play with a multiple in that situation. Would you agree? Mark: Yeah I absolutely agree. You have to pick your battles on this and if you have to really fight to be able to justify an add back you should look at it and say is it really worth it? Like is it is a big enough expense where I'm going to gain enough potential value out of adding it back and making that argument. I want to throw a little wrinkle at you, Joe. We have not discussed this before and it's a question that I'd like to get your opinion on. The difference I see between these Mastermind fees, events, travel-related expenses would fall under this idea of is it a personal development or business development, right? I don't add back the business books I buy. The business books I buy are personal development and I consider that to be just for myself. Obviously, there's a business application for that. I want to become better at what I'm doing but I think that's more personal related. So the line I see is again this idea between is it development for business or is it personal development? So if I go to Pubcon without really putting Quiet Light name on it I'm just an attendee I would consider that to be a valid add back. Let's go into a scenario where you have an employee; let's say that you have somebody who works specifically as a content writer for you and is possibly doing SEO and you send them to MASCON because you want them to become better at SEO for the purpose of your business. How would you handle something like that? Joe: It's off the top my head not an add back. But then you've got to look at the history of the business because that's business development, right? You got to look at the history of it; is that something that they're going to do every year, are they're going to get new information every year and develop their skills, are they going to send different employees, have they done it for the last 2 or 3 years? You got to look at all those nuances again and determine whether or not it's an add back. But because it falls in that business development versus personal development I think you and I know everybody on the team would lean towards no that's not an add back. Mark: I would agree. So again this is where you have to kind of take a fine scalpel here and kind of slice this up and really understand what's going on behind this add back. And again as you went out with this Joe math and logic and I think reason as well. You have to be sort of reasonable with some of these so that it's not just you're going through; sometimes I see sellers come back with their own add back schedules and they're super aggressive and every last dime is trying to be added back. And it's a question at some point where you have to ask them what can we really say is a reasonable add back versus just being as aggressive as possible? Joe: Right. So let's take that scalpel and dig down into a P & L for instance; of course we're not doing it live here, but one of the things that that when you peel back the different layers that we always ask the question okay you're spending a lot of money on advertising here; what type of credit card are you using for that advertising? And then are you getting points back on that, what are you doing with those points? 9 times out of 10 people are doing cashback credit cards or converting them over to travel but they're pushing all that over on the personal side of that's an owner benefit. It's income, right? You're getting cash back, you spend $10,000 you get $400 back. If you spend $10,000 a month on advertising and you get that $400 back and you slide it over to your personal side and it never shows up on your profit and loss statement we need to look at it closely. It's an add back. You can multiply that times whatever number you want and then make the decision, right Mark whether it's worth it to add that back or not. Jason and I had a listing that we worked on last fall where there were about $24,000 in cashback points added up over the course of 12 months and it was very, very measurable; clear and distinct because that person spent a lot of money on advertising plus he bought used inventory that was going to be refurbished. And he bought them from different places on the web. And all of that was done with a credit card. All of that was converted to cashback points that moved over to his personal side; amounted to about $25,000 on an annual basis. It's a significant number. The business was listed at a 4 time multiple. It was cash in his pocket so we did add that back and it bumped the valuation by $100,000. If we're talking about a business that's $4M but that amounts to $3,000 then maybe you don't add it back. You just got to play around with those numbers a little bit and again use more math and logic there. Mark: Yeah and I think here that the key that I would look at would be the consistency of it. If you're advertising budget is over $100,000 a month for example and you're putting that on your Amex gold card and part of your strategy is look I'm getting some margin from the points I'm getting back; that's pretty obvious in that category of its part of your existing business model. But like you said if you have just kind of a small amount of points, it's probably not worth the effort to put that in there and try and justify that. So I think that's pretty reasonable. Joe one question that we hear a decent amount would be website redesigns and we can also throw in here product development or even in the SaaS world development on a SaaS product. Why don't we start to unpack some of these and we'll start with the website redesigns. Obviously, most people who have a web-based business unless you're purely Amazon have a website and part of that is you're going to have to redesign the website every now and then. I mean there are some sites out there that have look exactly the same since 2000 but most businesses do update that and those can be expensive. You can easily drop 10, 20, 30, $40,000 on that if not more. So how would you approach website redesigns or website redevelopments? Joe: I would look at the history in the P & L to get a clue of the way the business has been run because that's the way it's going to be operated in the future. And if there's never been a website redesign and it's on a good current up to date platform like Shopify and the business is trending in all the right directions then; obviously there's been a website redesign because that's the point of this add back so let's say that it's been done in the last 12 months but had never been done before and the business is 7 or 8 years old and it's just been put on a new platform and they spent $20,000 on it I would say that; and I have in the past done 100% add-back on that website redesign. But again it varies from business to business. If I'm looking at a business that's operated like Quiet Light Brokerage just by example you have a tendency to redesign the website often. I think there's been 3 or 4 versions of it in the last 7 years that I've been with Quiet Light. So, in that case, it's either simply not an add back or you do some math and let's say you're going to redesign a website every 3 years you might take that cost; $10,000 website redesign and add back 50% of it or a third of it and things of that nature. Because if it happened in the last 12 months it's not an expense that's going to happen in the next 12 months so there has to be some mathematical adjustment there. And again math and logic; look how often it's been redesigned, do the math on when in the future would you redesign again, and just do partial adjustment more often than not. Mark: Yeah, I would agree 100%. And the thing to look for here obviously if it's on the last 12 months it probably isn't going to get looked at too closely. But I think you have to look at why. Like the Quiet Light website gets redesigned a decent amount and that's simply because I get anxious about stuff like that. That's just kind of what I do. I'm always tweaking; always thinking that I should dust scraps and start it over again. And so I actually do think with Quiet Light it's mostly discretionary in nature but again this reasonableness needs to come in. Joe: Not always discretionary but it takes 12 months every time that you start. Mark: It's absolutely ridiculous. Joe: Why don't you touch on product development? It's interesting you bring that up. I've got a physical products e-commerce business and I'm developing new products; do I get to add that cost back? Mark: Yeah I think again we need to use math and logic here, a little bit of reasonableness, take a look at what type of business you are in. Here's the thing about e-commerce; Chad Reuben when he was on the podcast about a year ago mentioned this, product development is the lifeblood of most e-commerce businesses; you rarely, rarely run across a business that is truly evergreen with its product or you never have to iterate. Apple comes out with an iPhone every year. Android products are constantly coming out with a new phone every year. Car companies constantly come out with a new car every single year. Product development is the lifeblood of businesses. So on that note no I don't think that you can add back product development costs. I do think maybe if you're coming out with like a large truly one time sort of burst maybe I would look at it. Joe: Maybe if there's a mold, right? If you paid $5,000 for a mold of that product that mold is going to last 10, 20 years perhaps. That mold maybe partial add back but yeah I'm 100% on the same page; product development is the lifeblood of a business. The molds thing is so rare; 105 businesses I think I've sold in the last 7 years and I think maybe only Sean van der Wilt's business has actual molds that are part of it and that he owned. In other cases, it's generally the manufacturer that has the mold anyway. So yeah adding back product development expenses can't really do it. What about the SaaS development? We're not all e-commerce here; we're selling content and SaaS and things of that nature as well. You've got a developer that's been doing some certain projects within the last 12 months; are you adding that back? Is that black and white? Mark: It is not black and white but I do think that if you are looking at for example your initial build of the software that's going to be very intense, very cost-intensive. That I think could be added back. Regular maintenance, regular feature updates; absolutely not because a SaaS business needs to have updates, needs to have new features added. If you're going to redevelop the entire SaaS product from the ground up; maybe you're switching technology stacks, that's something where I would take a look at that and again reason and logic need to really…math and logic really need to reign with this. But generally speaking no; just as product development is the lifeblood of an e-commerce business, software development is the lifeblood of a SaaS business. Joe: We are 100% on the same page. There is no question about it. Mark: No fights here, thank goodness. Joe: Yeah. We've got 3 points left and really the last 2 points I think are ones that get missed most often and can add a tremendous amount of value to the business. But the first one of the 3 here is pretty obvious and maybe we could have we actually talked about moving this up into Level 1 but it's a repaid relative. I sold a business a couple of years ago where the owner of the business paid his brother to do customer service. They paid him $20 an hour for 20 hours a week worth of work. I talked to the brother. I talked about his job and what he did. He said yeah I really only put in about 5 hours a week. Most of what I do is automated; it's canned responses with customer service. And so we talked about the work and the level of detail there and just added some logic there and some math and said look you are grossly overpaid. Your brother loves you. I'm going to suggest that he fires you; and again this is just before Christmas, of course, he didn't. Mark: Oh my you told him to fire his brother. We've talked about this before. Joe: I know. It was a $10,000 add back or whatever the number was. So we just did some math, right? We said alright how much does it cost to get a really good high-quality virtual assistant; $4 or $5 an hour. Okay, let's double that. We know you're only working 5 hours a week but we're going to go with you 20 hours a week times whatever the number is and we're going to add it back. So instead of the $20 an hour times 20 hours we took $10 an hour on those 20 hours a week and we added back the adjustment there. It's in black in white in the add back section with an explanation of why. So math and logic applied to a situation like that; that overpaid relative and it absolutely works and is am add back. And it has to be a big enough number to be an add back. In this case, the total add back was a pretty sizable number. So pretty clear there in my view would you agree with that on Mark? Mark: Yeah I had a guy who had a really cool business. His mom was doing his bookkeeping and he was paying her $250,000 a year for her bookkeeping services. Joe: What? Mark: That's a pretty expensive bookkeeper. That's a pretty obvious case of look it's a relative; he's paying his mom good for him, what a great son; better son than I am to my mom, and pretty obvious add back. And look I'm going to tie in something that we had from Level 1 here and that is where you have 2 owners and you brought up the example one owner is business development and marketing, sales and marketing and the other one is a developer. And I said well we should take a look at that developer side probably and probably not add back his salary but you've got to take a look at how much is he getting paid. I'm dealing with a client who has that sort of set up and the developer side; they're both getting paid the same amount of money and it's basically the profits of the business. We're going to add back in a reasonable and a pretty generous salary for a replacement development. And that's kind of the way that we would look at that is what is a replacement cost? You don't want to be super aggressive on that. It's got to be reasonable. It might be a little bit generous to say here's what the replacement of this person would cost. So you can do that with relatives. It can get a little bit tricky. I had one company that I dealt with where literally the company was basically run by this guy's family which brought up some issues with the transferability of the business. Because there were so many people involved that were family related but they were all getting these big fat paychecks. And so if we had gone to market; we didn't go to market with that one but we would have had to go in and try to find reasonable replacement costs for most of these people which will be then a little tricky. Joe: Yeah. Look, I can assure all sellers out there; all business owners that are smart enough to do some thinking and planning in advance of a sale, your buyers are going to be intelligent people that are going to be thorough and diligent. And doing that logical adjustment that Mark just talked about for that developer who's your business partner that is a non-transferable skill you've got to hire that out. You're just going to have to do that and it's going to help build trust and help you achieve your goals in getting your business sold. If we have to push the multiple if it makes sense because there's other amazing trends in the business then we can push the multiple a little higher as long as it's still within a reasonable area. The next add back is one that I just did this year as an example with Mike Jackness when we sold Color It. And I'm going to go ahead and mention the podcast series that Mike and I did because I think it's invaluable for both buyers and sellers to listen to and Mark I'm going to just tell you right now I think that you and I did a decent job in doing the intro for the podcast and then me doing an interview with Mike on our podcast. Mike did a much better job on his podcast. So I'm going to point people… Mark: They're actually pros at this. They're very good at it. We're just kind of fly by the seat of their pants. Joe: Yeah. He did an amazing job. And he actually did a series of 4 in total; 2 of them were with me and the one at the beginning one at the end was with his staff, his staff down in the Philippines before and after the sale. So he went through the whole arc. But it's episode 247 of the EcomCrew Podcast and the first one was Preparing Your Business For Sale and the second one was What It Was Like Going Through Due Diligence And Actually Getting It Sold. Now one of the things that we focused on in Mike's add back schedule was cost of goods sold. Let me give some just general numbers here; broad examples, these aren't actually from his business but let's say that what he did do was he renegotiated the cost of goods sold on one particular ASIN. He could have done it on more if he had planned in advance of selling his business instead of deciding to sell his business because he was emotionally ready to move on. We could have waited another year and he would have had a much more valuable business. But we didn't do that because he was ready. So in this situation again it's magic and loss; math and logic; oh my goodness, see this is why Mike's podcast is better…math and logic. Mark: Well I'm sure a lot of buyers out there look at sleaze and say this doesn't look like magic; it doesn't make sense. Joe: I said magic and loss; oh man, oh man. We're not editing that out. Chris, don't touch that. Alright, so Mike renegotiated the cost of goods sold on 1 ASIN. The reduction in cost was it came down $1.60. It was already on the books. He already had product in Amazon FBA and it was shipping and it's been in FBA already for 2 months. What we did; it was a $1.60, so what we did was we looked at the sales per month of that ASIN for the other 10 months going back in the P & L took that dollar amount and multiplied it times $1.60. Let's just say for simple math it was 1,000 units a month, right? I say simple math but here I am looking to the other calculator. If you got 1,000 units a month times $1.60 we're looking at 1,600 dollars a month times 10 months it's a $16,000 mathematical and absolutely legitimate add back; math and logic there. That times the multiple applied to the business; let's just say if it's 3 times that's a sizable add back, it's $54,000, no, $48,000. How's my math? Mark: We'll 48,000. On this I want to go back to where we started this conversation; why do we do these add backs at all? Again it's the idea that we want to show a buyer they're expected return on investment and we want to show a set number standardized approach so that you can interject your own assumptions. And the reason that this is completely valid to do even though you can take a look and say well the actual expenses were not this is because this is the forward-looking numbers that we know are going; the way that the business is going to be run in the future. Joe: That 10 months of expenses there will not carry forward so we needed to make an adjustment for that. Mark: Exactly the only thing we would need to verify would be in due diligence the supplier is going to give the same or similar terms to the new buyer. That would be the only thing that we really need to confirm there. So I think this makes complete sense. Joe: 100%. Mark: Did you get any pushback from buyers on that? Joe: Not an ounce and the buyer that bought the business is; I mean he went to Harvard, he's a very smart guy, he's bought 4 other businesses from Quiet Light Brokerage, and he understands all of this. And he's got investors that review everything so no pushback at all. Mark: Yeah. Alright, next one on your list you have here reduced fees times units sold. Joe: Look, everyone listening that's considering a sale of their business this last one is why you cannot have one conversation with a business broker for 30 minutes and decide that that's the one you've got to go with because if they're incredibly good at sales they're going to talk you into something in 30 minutes. Now I shouldn't say that because; well, look you've done research on Quiet Light, you've listened to the podcast, you've listened to different examples so maybe you can but you got to dig deep. This happened to me recently in like the third conversation on having in a review of the profit and loss statement. This is why we review profit and loss statements. We learned that the owner of this particular business that I'm talking about repackaged; worked on repackaging all of his product SKUs and in doing so it changed the level of pick pack and ship at Amazon. So he was at let's say Level 5 and he came down at Level 4; now these are costs. They're not called that but his fees at Amazon went down. Let's call it a dollar. So instead of $5 pick pack and ship fee, it was $4 because it was a smaller package, lighter package, things of that nature. So he did that. Again let's go to the same thing we did here with Jackness's business. He did it in the last 2 months, it's on the books for the last 2 months, so we're going to the prior 12 months and went okay how many units did you sell during those prior 12 months or 10 months times a dollar per unit and we're doing an add back for that because that adjusted expense in the past went away and it does not carry forward; same thing, different scenario. Mark: Yup, absolutely. So I think there's 2 ways when we're looking at some of these kind of I don't want to creative add backs but the ones that require a little bit more explanation. The one thing that I would just encourage people to keep in mind is that when we see some of these add backs which go back and recast numbers there are some situations where it makes sense to rather than going back and doing that add back bake in some of the value into the multiple as opposed to the trailing 12 months. If we keep in mind that the basic approach to estimate in value in a basic valuation approach would be your trailing 12 months discretionary earnings times some multiple, it doesn't matter if you increase your discretionary earnings by 10% or increase your multiple by 10%; the result on your valuation is going to be the same. And so I think there is a little bit of discretion and strategy that needs be taken into account by both the broker and the seller when it comes to determining where do we want to get this value in. The thing you need to always keep in mind is are you actually offering real value to a potential buyer? Is this really going to be valuable for the forward-looking future for that; I don't know if there's a backward-looking future, for the future of the new owner of the business and where are they going to get that value? So you might be hearing this and thinking this is pretty complex I don't know if these things would be really a legitimate add back or not. Look if you find this difficult that's because some of it is and some of it does require discussion. And as I said at the beginning we have these discussions at Quiet Light all the time. We will share something with the entire team and say what do you guys think this? Here's what I'm thinking, I should have it added back. And sometimes we disagree but we always are able to figure out where that line should be. So I'm going to just throw this invite out; if you have a question on whether or not something would be an add back ask us. Hound us and say what do you think of this; do you think this would be a legitimate add back or not? And that would be on the buy-side or on the sell-side. If you're look at an opportunity and maybe with another broker or directly with the seller and they're adding something back and want to know what our thoughts are let us know. We'd love to weigh in on it. Joe: Let's route another invite there and let's find a way to do an actual valuation; we'll do video as well as audio. We'll remove the client's names. We'll just use first name and we won't use the business name. And we'll do it sort of Mike Jackness, Ecom Crew Under The Hood Valuation and record it so everybody can hear the process we go through. Man that being in a 2 or 3 part series because it's such a long in-depth, detailed process. The only thing I want to throw is that we are developing webinars here at Quiet Light that will be up on the new 48-month long redesign that Mark's been working on. Yes that's a little wise-ass comment there but the webinars will be up, they will be available in detail for you folks to dig deeper and see us go through some of this add back schedule in the process of doing one that is titled "What's a Legitimate Add Back?" and all of this will be in webinar format where you can see actual profit and loss statements and whatnot. Mark: Sounds great. I look forward to doing those. I don't have anything else on add backs. I think we've just covered the entire topic as deeply as you possibly could actually no we could probably talk for another couple of episodes in some of these things but I don't have anything else to add for this one. Do you have anything Joe? Joe: No, we're good. It was great having 2 very special guests on the podcast; one much more special. According to Andrew Youderian, you're special. Mark: I like that guy. He's such a good guy, isn't he? Joe: Andy Youderian. Has anybody reached out to him with my little Easter egg stuff that I did on the video? But we're not showing the video yet, right? Mark: I had and actually we are showing the video and that's something for you guys to know. Subscribe to us on YouTube at Quiet Light Academy. These podcasts are now up in video form so you can look at our pretty faces while you listen to us argue about add backs. I don't think anyone has reached out to him about the little Easter egg we had in that podcast episode. Because I talked to him recently and he didn't bring it up. Joe: So for those that have no idea what we're talking about and have stuck with us at the end of this podcast here's the deal. I was driving down the road listening to the Quiet Light Podcast where Mark had Andrew on with state of the e-commerce. Mark: One of the best episodes I think we ever did. Joe: Whatever you say Mark. I think this is the best episode we've ever done. Alright, so Andrew says yeah you guys have been doing a really good job. I got to tell you Mark I think you have a bit of an edge over Joe. Because Mark and I always competing with who's got the best episodes and the most downloads. And I swear I almost; I had to pull over I was laughing so out. It was so, so funny. He's a bit of a prankster. So I figured I'd get him back. And so I had an Incredible Exit Series on, we had somebody; actually it was an Incredible Acquisition, right? Karl Selle bought Smart And Fresh and so we had Karl on a podcast about that and during the podcast I pretended that our producer Chris interrupted us and handed me a sheet that it was kind of an emergency, he was looking to get in touch with somebody named Andy Youderian. I could not pronounce Andrew's name properly. But for those that go to the YouTube channel you'll see that I have an EcommerceFuel t- shirt on and that the EcommerceFuel podcast is in the background; a mouse pad is in the background. So clearly I know Andrew Youderian. I want to call him Youderainan from now on. Clearly I know Andrew. My kind would call those Easter eggs. I think that's what they're officially called in Marvel movies. So I just threw in a few Easter eggs there. It was kind of fun. We did get one person that sent an e-mail to me and he goes I think the person that your producer is looking for is Andrew Youderian for EcommerceFuel. And I said well that was kind of a joke. I had to send a note back. But it was kind of fun. Mark: Well he was right though. It is the person we're looking for. We have an Easter egg coming up in one of the movie quotes so you guys have to dig deep on these movie quotes. And I don't know which episode it's going to be live on. Listen to the different intros. There's going to be one that you're going to have a really hard time finding but I'll tell you what I want you to find this one whenever it airs. That's really, really difficult and I will get with our producer next week's podcast and make sure that we give you a little hint as to which podcast to listen to for this movie quote because it's just an absolute gem. Joe: Awesome. Let's wrap it up with that. Links and Resources: ECom Crew Episode Quiet Light Academy YouTube

Are Buyers or Sellers More at Risk with Sales Tax Successor Liability?

Play Episode Listen Later Jul 10, 2019 41:48

Ignorance is not bliss when it comes to sales tax. Believe it or not, today's topic is an exciting one for all buyers and sellers. Our guest is Diane Yetter from the Sales Tax Institute and Yetter Tax. She joins us to talk to us all about sales tax, sales nexus, click through Nexus, and more. Diane is a niche entrepreneur in her own right, uniquely helping other entrepreneurs navigate the tricky waters of sales tax. Diane businesses focus exclusively on sales tax, helping companies learn what sales tax means for them and what they need to do to be in compliance with state tax laws. SalesTax Institute and Yetter Tax are educational consultancies, providing people with all the tools they need to learn the why, when, where and how of remitting sales tax for each state where they do business. Episode Highlights: What click-through nexus is. Where and how affiliate payments are made. The Wayfair decision and the resulting state actions. Physical, Economic, and Marketplace nexus. Where to find the economic guide by state. Educational tools Diane offers on her website. Are there advantages to learning how these nexus' work versus hiring someone to do it? The penalties for collecting sales tax and not remitting it. Concerns and risks in the acquisitions realm. The process each state goes through to identify sellers out there. We go over the risks to buyers if the seller has not satisfied their state economic nexus. The odds of something coming back to haunt the new owner of a business if there are unpaid nexuses. The resources the Institute provides to help listeners wade through all this. Transcription: Mark: Alright guys welcome to another episode of the Quiet Light Podcast. Real quick before I talk to Joe; if anybody out there hasn't left a rating on the Quiet Light Podcast, do me a favor go to iTunes or Stitcher or wherever you listen to us, leave a rating, we certainly appreciate it. Makes us feel good. Makes us feel like we're doing a decent job at this whole podcasting thing. So thanks in advance to everybody that has done that. Okay, so Joe, when we're talking to a potential seller or even talking to a potential buyer one of the topics that comes up often, is how long does it take to complete the deal, right? And we have people wondering am I going to get this done in three months and what have you. The fact is these businesses are complex. On the upfront summaries what we see usually is pretty plain and simple. You see revenue, you see earnings, you see a multiple, and you kind of think well this should be nice and capsid and quick. And sometimes it is. But other times you have to look a little bit deeper. And you and I have talked about this before, right? For buyers to make sure you're looking beyond the multiple and the multiple is one point of data. And for sellers and buyers alike to also have patience with the process and understand that you're selling a complex asset. I know you had Carl on the podcast who is a recent buyer of one of our properties. And it was one of those situations where the deal took longer than expected and the numbers weren't as necessarily straightforward as maybe you would think when you just look at this. But the net result for him as a buyer and for a client were phenomenal by being patient and looking a little bit deeper. Joe: Yes, no question. This particular deal took I want to say from letter of intent to closing seven and a half months which is probably the longest I've ever had. There's really specific reasons for it. And Carl is partly to blame for it because he made a mistake on his application to the SBA lender. So we had to do the process essentially twice. The seller Kevin hung in there with Carl because Carl was a nice guy. It made a difference. And at one point when the deal fell apart, we had to go back. Well, my advice was to go back out to market for an awful lot more money because the business has grown a lot; probably worth $400,000 more. Carl and Kevin got along so well that Kevin said no I don't want to do that to Carl. Let's just bump the price thousand $160,000; crazy. Most buyers would walk away. They'd be like no. Yesterday it was this price today you want $160,000 more. Carl didn't do that and he's being rewarded greatly for it right away instant equity, in my opinion, a quarter of a million dollars in the business. And then some things that he's doing on his end immediately once that first container load comes in doubling the discretionary earnings because of a focus on reducing COGS. It's just fantastic what he's doing. And it's a great lesson for buyers and sellers to be patient, to be focused on helping each other, and not looking just at that multiple. Mark: You know I love this sort of story because I get it right from a buying standpoint you're looking at a lot of deal flow you need to evaluate businesses quickly. So the temptation is often to look at just the high-level metrics and to eliminate something based on that. But so many of these businesses and if I could just say you know maybe even a plug for Quiet Light you know when we bring a business to the market we usually believe in that company pretty strongly as being a good value play for buyers. And so taking the time to kind of dissect it and to understand more than the top-level metrics and what's going on underneath and look for those opportunities for that immediate win and again looking beyond that multiple. So this is a really good story of somebody doing just that and seeing a really quick reward on that. I want to listen to this. I want to hear all the dynamics. This is one of those more complex deals and I think a really good example of what happens when the deal isn't straightforward but still works out in the end. Joe: Yeah. Hey, one other thing. I had a really strange interruption everybody in the audience I want you to get 10, 15 minutes in. Chris, our producer asked me about a particular person. I'm trying to find out who this is. If you could just get that far listen in and shoot me a note. I want to try to track that person down. Thanks, Ben. I appreciate it. Let's go to the podcast. Joe: Hey folks it's Joe from Quiet Light Brokerage and believe it or not this is an exciting topic. It is about sales tax, sales tax nexus, click-through nexus; a term I had not heard until today. Our guest is Diane Yetter or she's from the Sales Tax Institute. So let me try that again. She's from the Sales Tax Institute, see being a podcaster is not as easy as it sounds. She's also from Yetter Tax; both all hers. Diane, welcome to the Quiet Light Podcast. Diane: Thanks, Joe. I'm glad to be here with you. Joe: Alright, so that I don't stutter and stumble my way through trying to tell people what you do, why don't you help us out with that? Diane: Sure. What we do is we are a business that focuses exclusively on sales tax. And we help companies learn what sales tax means to them. So we are primarily an education business. And then we also help them understand what they need to do to be in compliance with sales tax. So we do that through helping them understand where they have nexus, what's taxable that they buy and sell, help them get appropriate systems set up so that they can handle that correctly, and then in the hopefully not event that they get audited we can help them with that. So we do that through our consulting side. And then we also provide a variety of educational courses through our Sales Tax Institute. Joe: And it's good stuff. I just looked at some videos this morning and I've learned a bit already just in your free snippets online. And let's just throw out one of those things because I'm sure the vast majority of listeners have not heard of and I'm going to look at my notes click-through nexus. Let's just give them something that they don't know about right away before we reinforce what they should know about which is overall nexus and collecting sales taxes and the risks of not and the rewards of collecting when they go to sell their business someday. So why don't you just tell us what click-through nexus is, please? Diane: Sure. Click-through nexus is a concept that New York started in 2008. And it's really just the attempt to move to a digital equivalent of paying salesman commissions which was found to be constitutional back in a case against Crypto Corporation in about 1960. And so what click-through nexus is is when a promoter or a seller and this really was intended to go after Amazon. Back in the day when all Amazon sold was books and people like you, Joe, if you wrote a book and you put a link on your website that referred people to Amazon to go buy your book that you would then get paid a commission; a referral fee or making that referral to Amazon. So Amazon was the seller. You were not. They paid you for sending somebody to them. Really no different than a salesman going around and knocking on a door and when they made a sale they would get a commission. And so what New York started and about 25 other states followed along over the years is that paying that commission to somebody in a state if they generated at least a certain amount of sales. Most states had $10,000 of sales from one or more commissioned agents that that created nexus for the out-of-state seller in this example Amazon. Joe: Yeah. And it's a term I hadn't heard of before. I'm impressed if the state of New York actually originally called it click-through nexus back in 2008. Just curious do you know if they call it something else then and have [inaudible 00:09:09.2] click-through nexus? Diane: Well what it was affectionately or unaffectionately referred to by the media was the Amazon Tax. Joe: The Amazon Tax, okay. So most people look at nexus says okay I'm selling a physical product I've got a warehouse or Amazon has a warehouse in how many different states that's where my nexus is. What this is it's for the content sellers, it's for the affiliate marketers, it's for people that are doing product reviews where you don't actually have a physical presence. You don't have the—I'm sorry, the physical product. You're writing content, you're telling the story, you're doing reviews, and somebody in Hawaii—no I'm sorry, if you're in Hawaii and you write the content and somebody buys it in Minneapolis and there's no call center, there's no physical—I'm totally screwing this up, and there's no physical warehouse there, does that mean that you've got to collect sales taxes from that person that bought it or on that sale in Minneapolis? Diane: So what it applies to is if the seller; so in this case, if you are not the seller of the content that you're just the person promoting the content for somebody else that's selling it. Joe: The person that owns the physical product [crosstalk 00:10:24.5] sales taxes. Diane: The person that owns the physical product is the one that would need to collect the tax if they make payments to you as the promoter of it. Joe: Okay, so if anyone listening sells a brand on Amazon and also chose to do the affiliate program through Amazon and is allowing others to sell that product click-through. You should be collecting nexus wherever those sales. Is it—I'm sorry it's not where those sales occur or is it where that person that wrote the blog is? Diane: It is supposed to be a combination of those two. However, that's often difficult to ascertain as to whether or not that affiliate payment generated the sale in that state. And so it really is going after where the affiliate payment is made to. Joe: I got you. Okay, we may need title this to stumble through podcasts because sales taxes are crazy and there's so much information and misinformation. And is it really gray or is it all black and white conversations going out there that I think just the more we talk about the more we'll learn about it. So let's talk about the big Wayfair decision and what has come from that. Can you touch on that; what it was and the end result of for sales tax collection? Diane: Sure. So the confusion that we just talked about with the click-through nexus actually is almost kind of going away because of the Wayfair decision and the resulting state actions. So last June 21st; so close to a year ago, the U.S. Supreme Court issued their long-awaited decision in South Dakota v. Wayfair which was a record-breaking case in terms of how fast it got to the Supreme Court. The original law was only effective in May of 2016. So for a law to be in essence validated and decided by the Supreme Court in just over two years is pretty amazing. But basically what the case was a test and when South Dakota passed their law they wrote it in such a way that they were in violation of the longstanding Supreme Court decisions and Quill Corporation and National Bellas Hess as well as the Commerce Clause. And so what the Commerce Clause said is that a state cannot impose a tax collection responsibility on an out-of-state seller unless they have a substantial presence in the state. Now what the Quill case and the National Bellas Hess case over the last 50 years had interpreted is they added a word into that Commerce Clause test. They said substantial physical presence. What the Wayfair court determined was that physical was never a word in the Commerce Clause and that the state or the prior courts had simply interpreted it to require that physical presence. So by their decision where they actually stated that their decision in Quill was wrong; and they actually said that in the decision, they were overturning that Quill decision. By doing that they said physical presence is no longer a requirement before a state can impose a collection responsibility on an out-of-state business. Rather it needs to have a substantial presence. The company has to have a substantial presence in the state. And the South Dakota law defines substantial presence as having more than $100,000 of sales or more than 200 sale transactions which we define as an invoice into the state. And so that is— Joe: Does this make nexus defined as having a 3PL or Amazon having a warehouse, does this make nexus go away and it flips to what you're talking about now? Diane: It does not. Physical presence is still the first test that needs to be identified. So if there is an Amazon warehouse and you have inventory if you're an FBA seller then the economic nexus really doesn't matter. And the thresholds that are set in the states with the economic nexus are not relevant because of the physical presence of the inventory in the warehouse. Joe: Okay but if there's no physical nexus it then flips to economic nexus. Diane: Correct. Joe: Okay, and how many states currently have adopted the economic nexus? Diane: So we have almost all; every state has either enacted it and it's effective, enacted it and it will be effective. The latest one we have going effective I believe is July 1 right now, we've got some October ones that are in propose. And we've got I think its six states left that are in proposed status right now. The only one that has rescinded and doesn't look like it will pass this year is the state of Florida. Joe: God I love the state of Florida. Diane: Right. Joe: Where on your site and which sites; Sales Tax Institute or Yetter Tax can someone go right now and figure out which states have economic nexus? Do you have something like that? Diane: We absolutely do. So you can go to SalesTaxInstitute.com and then go to our resources section and on that, you'll see a link to the remote seller nexus chart. And on that there are; that page will have all of the different types of remote seller nexus. So the click-through we talked about, affiliate, marketplace, economic, and the notice and reporting. There will also be a link on their specific economic nexus state guide which will give you all of the various different nuances of the rules for economic nexus. Joe: Look at that you've even got a video in there as well. Fantastic. Okay, part of what you do at the Sales Tax Institute is education. You're training people to understand and learn about sales taxes. Are these a combination of in-person training or is it online training as well? Diane: So we do a variety of different types of training. We have monthly webinars that are live in-person or live webinars where you can actually interact with me and ask me live questions. So we have a variety of different topics that you can look at. Joe: Is there a cost to the webinars? Diane: There is. Those cost $175 but you can have your entire team gathered around one phone line and it's a single charge. Joe: And you'll sleep better that night or maybe not at all depending on really. Diane: Exactly. Joe: When I was looking at your some of the videos I wrote down is ignorance bliss?? And I think it's not when it comes to sales taxes. And we'll get into that a little bit more but—alright so there's a monthly webinar; very, very reasonable price. Diane: A monthly live webinar, we also have some on-demand webinars, and one of the ones that might be very helpful to those of you listening now is we have a sales tax 101 webinar. And so that's on-demand. The cost of that is also $175 but you can watch it as many times as you want in 30 days. And that will go through and give you all the basic concepts and it was updated after the Wayfair decision so it's got a lot of the current information about what's going on today. So we've got I think it's five on-demands and then we also have live in-person classes. So we have a three-day basics of sales tax class if you really need to get in depth. That's held in June annually and then we have; it is usually in Chicago. Joe: Okay. Diane: And then our advanced workshop is for people with four or more years of experience and that is held annually in the April-May. We just had that this year in Chicago and next year we'll be out on the West Coast. We also have a; we've offered it twice now, a nine-week online class. We call it sales tax jumpstart. So we will offer that again in September. Exact date not yet defined. And that is really meant and who a lot of our attendees have been in our first two cohorts of that are people that are like your listeners Joe that are smaller businesses, can't get away for three full days of sales tax, and we give them basically all the steps and tools for what they need to do to be compliant. So we break it down into two-hour blocks over nine weeks. And we also share with them a lot of the tools we use in advising our clients. So we try to help them be more self-sufficient. Joe: You know it's interesting as you're talking I know that we're sharing your URL. I mean we're 15 minutes into the podcast and we normally don't pitch and promote the people that are on. It's not about that it's about education. But I think that this is education that you can't listen to it; this podcast and understand everything about sales taxes. So I think I'm having Diane's share this folks early because this information is so complex and so in-depth and changing on a monthly basis because new states are enacting the economic nexus and you need to have some sort of downloadable chart to understand it. Or better yet Diane what we do here often is tell people to outsource. Like you can do the bookkeeping yourself but you're probably a marketer so focus on marketing and outsource the bookkeeping. Yeah, there's legal stuff you've got to do for your business, don't hire an attorney and bring them in-house so you'd outsource that. Why in the world does an entrepreneur that's running a small business with let's say a staff of six need to go through the Sales Tax Institute and learn all of these things themselves when they can hire a company just to do it all for them. I know you don't do that; you train, you educate, you consult. Why not just hire a company to do it all? Again is that a little bit of ignorance is bliss you still have to know it or can you just hire one of these firms that we hear about that will help you set it up and collect and pay the states, what to do and you just don't worry about it. Is that a fantasy? Diane: It's not exactly. You could certainly hire. There are a couple of different things that you need to do. If you're selling on a marketplace platform there are less requirements that you need to worry about and that is because the actual tax calculation is going to be handled by the marketplace. Joe: Let's call the marketplace Amazon. Is that Amazon is going to collect them? Diane: Amazon is the marketplace; correct. If you're selling on Amazon you don't need to acquire software to calculate the tax because Amazon is calculating the tax on that order. Now Amazon is going to send you the data and the financial dollars that they collect in the sales tax. In some of the states, you are going to have to prepare the sales tax return and remit that tax directly to the state. Now the trend that we're seeing in 2019 is states are saying you know what we're going to remove the burden to the sellers that sell on marketplaces and put that tax collection and remittance responsibility on the marketplaces. And so we've got a vast number of states that already have enacted that legislation. And we've got a large number of states that have it still proposed this year. We call this our marketplace nexus on our charts. And so what we're assuming is that—I think there's only five or six states that don't have any legislation proposed to this year or passed yet. And the rest of them are really moving towards saying we're going to remove that burden. Joe: Okay I just want to say. I love that. I love all in capital letters marketplace nexus because that takes the burden out of the hand of the entrepreneur, right? I mean they're just— Diane: It does as long as they are only selling on a marketplace. Joe: Right. Diane: I think what we find is a lot of the sellers that sell on marketplaces also have their own website. Joe: They should. In my opinion, it'll bring a higher value. The problem is that Amazon is growing at such a pace. There are more businesses that used to be 75% let's say Shopify, 25%t Amazon and now it's flipped. Diane: Right. Joe: That will level out over time I'm sure. But yeah let's talk about that. So somebody that is selling on third-party marketplaces but they've also got an Amazon store—I mean their own website, even if they're only selling 5% of their total revenues. Diane: Correct. So where it gets challenging is most of the states require you to include the sales on the marketplaces along with your direct sales in determining whether or not you exceed the threshold to determine if you have substantial taxes. With most states its $100,000 of sales or 200 transactions. So if you're very successful on Amazon and only selling maybe 5 to 20% of your sales are on your own website then you still may exceed those thresholds. And now you do need to have some sort of solution in your direct sales to calculate the tax and then you'll have the responsibility for remitting it. So yes there are companies that sell software that can integrate with your e-commerce platform. Some of the e-commerce platforms have some of the software baked in so to speak so that you don't have to separately license it. Joe: Which ones have that baked in? Diane: So Shopify Plus has a baked-in version of Avalara. Magento I think has some baked in of either Avalara or [inaudible 00:23:58.2] depending upon the version that you're on but others you may have to pay a license fee for that calculation side. The second piece of it is once you calculate and collect the tax you need to remit that tax to the various different tax authorities. Those software companies also could do that for you as an outsource, your bookkeeper may be able to do that for you, and there are also other firms that we work with that are just sales tax outsourcing compliance, providers. My firm doesn't do that but we do work with other firms that do. Joe: Do you have references for those firms on your website? Diane: We do. Joe: Okay. Diane: We got those on our website. Joe: So what would happen if somebody signs up for Shopify plus they collect all this money and they don't properly set up the remittance or the payment to the states? How long is it going to take for the states to figure out and what are they going to do? Diane: Well collecting tax and not remitting it is about the worst thing you can do. Joe: Can we call that a crime? Diane: It actually is criminal fraud. It will earn you an orange jumpsuit. Joe: It is the new black so that's— Diane: It is the new black. You're right. Joe: Thank you. I have to say it. Sorry, everyone. Diane: You had to. Everybody does. So just as you never want to be withholding income taxes from your employee's paychecks and not turn those over to the government collecting sales tax and not remitting it is at that same level. Sales taxes when you collected are considered trust taxes. So you need to make sure that you are remitting the tax that you collect. How quickly will the state find you? That really depends. Often it can happen because an auditor bought something from you and then doesn't see you registered. Or it could be a customer that complains. Joe: That could just be bad luck. Do the right thing folks; do the right thing. Ignorance is definitely not bliss. Let's talk about this a little bit. We're 20 minutes in let's get to the meat of what—say potential buyers and potential sellers are concerned about with both marketplace nexus and economic nexus know, right? Alright, I'm going to just redefine the economic nexus. I get that's when you hit a certain threshold. What's the first nexus? Oh, it's physical nexus. Diane: Physical; correct. Joe: Alright. So yeah this is the stumble through podcast. I'm going to rename it all. Okay, so we've got a business for sale. They've done four million dollars in revenue in the last 12 months. Let's just say they're keeping 20% so the profits are $800,000. The business is for sale for three and a half, four-time multiple and they get three point two million dollars. And let's say that they've been around for five years. They're selling on third-party marketplaces at this point it's probably that 75% there and 25% elsewhere on their own Shopify store, Zulily whatever the case might be. If they're only collecting sales taxes where they have physical nexus and in their own home state and I buy the business; it's an asset sale, not a stock sale. Diane: Right. Joe: What's the risk to me if any? Diane: So I think the first thing is if they're actually collecting in all of the states who have physical presence; so where they've got inventory sitting in an Amazon warehouse they're steps ahead because that's where we're finding a lot of the risk is that these Amazon sellers are not collecting in the states where there is inventory in the warehouse. So if the only risk that they have are the states where there was economic nexus past which the earliest the state goes back on any of that for all practical purposes we have a couple of outliers is June 21st which is the date of the decision 2018 with New York. We've got Massachusetts and Ohio that go back a little bit further because they have something just to add a little bit more confusion to it Joe that's referred to as cookie nexus which is a digital present. So if you drop cookies which every Amazon seller is dropping cookies on their visitor's websites—on their devices so that they can track them. That was deemed to be a physical presence in both Ohio and Massachusetts so they go back a little bit further. Let's take those guys out. Joe: Okay. Diane: So if we're saying today we're selling our business we've been registered in all of my Amazon warehouse states and I've just got economic nexus going back almost a year. And if I haven't been registered in those states then there is a risk although we think that it's probably not a great risk if it is just the economic nexus. Okay? Average sales tax rate across the country is somewhere between 8 ½, 9% is the average rate. Of course, we've got some lower and we've got some higher. And so your risk is not 8 ½% of your profit but 8% of your gross sales. And so it's 8 ½% of—let's say 25% of your 4 million is in economic only nexus, 8 ½% of your million for the last year of sales. Joe: And then you've got to further divide it up into—you've got to hit that economic nexus in those individual states. And with where you've got the physical nexus we're going to count that money and see if we hit that average $100,000 threshold or 200 transactions. It's very complex. Almost to the point where it makes me wonder if that state employee in the sales tax division making whatever they make really cares and is going to dig deep to try to find you that sold a widget after you've sold all the assets of your business. What is the process the state goes through to identify people that are selling products that didn't collect sales taxes properly? Diane: So just as probably most of the sellers listening to this podcast are using data analytics to figure out what should they price their products at, what is a hot product to sell, the states are starting to use data analytics and advanced methods to identify sellers. They've also used methods including subpoenaing; their subpoena power to go to Amazon and ask for the list of the sellers in their states. So we've seen I think about eight or nine states that have done that including New York and Connecticut and North Carolina, Wisconsin, California, Washington. So those are some of the states that have actually gotten that list of those sellers. And we know sellers have gotten those letters from those states saying we think you should be registered. Joe: Okay, they can figure it out is essentially what we're trying to say here. Let's talk about the risk to the—you said the risk to the seller it's still minimum if you've been collecting where you have physical nexus. So great that's the minimum. Well, what about the person that buys the business? And I'm going to try to say this in simple terms and you tell me, correct me, or lead me back on the right path here. Diane: Okay. Joe: Let's say I bought a business. I buy that business for three million dollars and it turns out that you; the seller didn't collect and pay on all the economic nexus that you may have had during your ownership and a few states figure this out and they go after you; your corporation. They're going to go after Diane's brand LLC. First, they're going to try to go after the state after you and if it's an empty—well if the LLC is an empty shell if you ever pierce that LLC by running personal stuff with a business they can then go after you personally for that. And then if you can't pay it on either of those things you're going to go okay well the assets are still being sold, the brand is still out there. I wonder who bought it. Let's go after them. Is that the right path and can they get all the way through to me if they first go after your LLC, can't get money out of the LLC, it's an empty shell or you closed it, okay fine they go after you because you pierced that corporate shell at one point, you're bankrupt, you've got nothing. Can they go after me and if so what's the real risk to me the buyer? Diane: They can and to clarify just a couple of things. Even without doing anything to pierce the LLC all the states have provisions that allow them to go after the officers, the owners, or responsible parties whether the business has been closed down or not. Joe: But everything else was I generally on the right path there in terms of the way it would work? Diane: Correct. They can and there is also provisions that they have that are called successor liabilities. So that means that if they sell the business then they can go after the seller—I'm sorry after the buyer. Joe: Let's just put a point of clarification on that successor liability, you said sell the business. These are assets sales for the most part. They're buying the assets of the business, not the entity itself. Does that successor liability carry through in that case? Diane: It does. Joe: Okay, are they going to go to that successor first or is that going to be the last resort? Diane: It depends on the state and it also can depend on whether or not the rules were followed. Most of the states have something called a bulk sale notification requirement that applies on the sale of bulk assets. So this is not typically required on a stock deal but it is required on an asset deal. And so if you sell those assets there is a requirement that the state be put on notice that that is happening so that they can do a couple of different things. One they now know that this transaction is occurring. In some states, there might actually be a tax on the transaction itself. The second thing is that it gives the state the opportunity to give what's called the tax clearance certificate. So if they've recently done an audit let's say of the seller they can tell the buyer this is all clear. If there hasn't been a sale made or if God forbid the company has not been registered in the state then they can provide information to the buyer in terms of an amount to put into escrow and withhold from the purchase price. Joe: Again though I'm trying to just visualize how that heck the state is going to do this. I buy the assets of the business. It's Diane's brand. I go to the state of North Carolina to get a tax clearance certificate or—no that's for the past is that right? Diane: Correct. Joe: So I want to start collecting sales taxes on my newly formed corporation for Diane's brands. Diane: Correct. Joe: And I do that there's going to—and I actually think I know the answer here. I was going to say how the heck is the state going to know that they were everest passed sales. Diane: Right. Joe: There's a questionnaire that I have to answer that have there been past sales. A few things, I mean I've heard some people just say no or whatever, people in authority, people that are experts like you, I've seen attorneys on this bulk sale notification go yeah no we're not doing that. Are these people just flat out wrong or is it—look the key thing here is risk. I think what I'm trying to help people understand and I need you to throw out numbers for me. I'm trying to understand the odds because that's what these sellers and buyers are going to look at because you can't change the past. You can't change what you did four years ago in terms of sales tax collection. In some case, you don't have to because economic nexus didn't exist back then. But what are the odds of this carrying through in this scenario? Again I'm buying your brand. You've been around. You sold four million bucks in the last 12 months. And I know you can't do this everybody calls labor the legend and I remember just after college I was at a temp agency trying to get a job and had to take a typing test. Diane: Yes. Joe: And I did it. And I was terrible. Terrible was like 82% accuracy at the time and the guy tells me it was. But I'm like what are you talking about. Like Larry Bird shot 66% from the free throw line and he was a legend. That actually got me the job nothing else; my expertise and anything else nothing. But Larry the Legend got me the odds, percentages; that's what people want to know. So I'm buying it. How much—is this going to keep me up at night or is there like a five or 10% risk here that some of this may carry through? Diane: So I think it depends on a couple of factors. So I hate to give you a fudged answer but here's a couple. Joe: I have to put you on the spot. We are recording. Diane: Yeah. So here's a couple of things that come into play. If the only nexus is economic I think the risk is fairly low. If you have been an FBA seller you've got inventory in the state and you haven't been collecting. I think that risk is significantly higher because there is now ways that the states are getting that information. Joe: Fairly low is 3% is that what you're talking? Diane: I would say transactions happening within the first year, we're saying it's probably—you know will the state come after somebody for economic less than 20% chance. Joe: Okay but first I bought your brand; first I'm going to go after you. First, they're going to go after your LLC then they're going to go after you. If they can't get money from either of those then they're going to come after me. So is that 20% on me or is it 20% first to you and then you're all saying— Diane: I think it's about 20% that they're going to go and find that an economic seller did not register when they should have; an economic nexus seller. Joe: And unless you're bankrupt they're going to take money from you first. Diane: Correct. Joe: And how do they get that money? Diane: They will do an audit. So they will look at your books for reference and then they will calculate an assessment. Joe: And if you can't write them a check you're going to work out a payment program. Diane: Correct. Joe: They are attorneys that can negotiate that down. Diane: Correct. Joe: All that still applies? Diane: Yup that would still apply. Joe: Okay, so economic nexus pretty low. Diane: Correct. Joe: Physical nexus fairly high but again even though their sell-through nexus—is that what you call it? There's so many different nexus here. The physical first; they're going to go after you first. The buyers here the concern should be fairly low unless the seller of the business is ultimately going to be filing for bankruptcy and there's no money there, right? Diane: Correct. And how you would get caught as you said when you're filling out your registration application for your business because now you're going to be compliant. One of the questions that is on there is did you buy this business from anybody else. And that's on I think virtually every state application. And that's how it would be identified. Now if you choose to leave that blank the applications are signed under penalty of perjury. Although I have never seen a state actually pursue perjury charges on somebody that answered the questionnaire incorrectly; I got to advise you that that's what it says. Joe: Sure. Okay, and we are 35 minutes in and generally we want to keep this short. Honestly, I feel like I could talk to you about this for another 35 minutes but I don't dare because the listeners would just drop right off a cliff. So Sales Tax Institute, Yetter Tax, what resources; we talked about them at the beginning and I was writing down—I can't even read my own notes, what resources are you making available on the length that we're providing. You're giving us a link on the QoP podcast so we know it's there and you're providing some specific resources for anybody listening. What are those? Diane: Correct. So we're going to make it easy for your listeners Joe. We're going to give you a specific link, SalesTaxInstitute.com/quiet-light-podcast and we're going to load all of these great resources that we talked about right there so it'll be one place that your listeners can go to. And on there we're going to give them the ability to download our white paper that talks all about these different kinds of nexuses and what you need to do. We're going to give them the link to what we call our remote seller nexus chart which will include all the different types of nexus; click-through affiliate which is common ownership and agencies doing things on your behalf, the economic nexus, the marketplace nexus, and the one that we didn't have time to get into which is the awful notice and reporting which is when you don't collect tax. So that chart will be on there. We're going to have a chart for the economic nexus which is all the states and the different thresholds by state, their actual effective dates, what dollars do you include in doing that threshold calculation. We're going to give you a link to one of our greatest FAQs about what is nexus that has a little video about all of those nexus types explaining what they are. And then we also offer a service called our Wayfair Risk Analysis. We can take your data and go through and do the analysis to figure out what your risk is as well as where should you be right. Joe: I love that. I hate that we're at the end of the podcast for that part of it because a lot of people just want to have this done for them. So you can do a risk analysis as part of— Diane: Absolutely. Joe: And do they—is that through Yetter Tax or the Sales Tax; since it'd actually to be through the link but look people listen and then they type it in. So if they go to is it Yetter Tax would they be able to figure out that analysis? Diane: The easiest thing to do is go to the SalesTaxInstitute.com and then click on the consultation button. Joe: I got it. Diane: Then you will see a link to our Wayfair Risk Analysis there. Joe: Alright, Diane you know your stuff. You are a sales tax nerd. I see it. I'm not insulting you. I see that on your Twitter handle. Thank you for being such a nerd and understanding this and sharing the knowledge with everyone here. Ignorance is not bliss. Learn about sales taxes because if you don't it's going to come up and bite you somewhere unpleasant and that's in your wallet. Thank you for your time, Diane. I greatly appreciate it. Diane: Thank you, Joe. It's been a pleasure. Links and Resources: https://www.salestaxinstitute.com/quiet-light-podcast https://www.salestaxinstitute.com http://www.yettertax.com/ https://www.linkedin.com/in/dianeyetter https://twitter.com/yettertax?lang=en Economic Nexus State Guide: https://www.salestaxinstitute.com/resources/economic-nexus-state-guide Remote Seller Chart: https://www.salestaxinstitute.com/resources/remote-seller-nexus-chart Wayfair Risk Analysis: https://www.salestaxinstitute.com/wayfair-risk-analysis Sales Tax Software Vendors: https://www.salestaxinstitute.com/resources/tax-software FAQ: What do I need to know about the Wayfair Case and Economic Nexus?: https://www.salestaxinstitute.com/sales_tax_faqs/wayfair-economic-nexus FAQ: What is nexus? : https://www.salestaxinstitute.com/sales_tax_faqs/what_is_nexus Whitepaper: Nexus after Wayfair – What you need to Know: https://www.salestaxinstitute.com/resources/five-things-to-understand-nexus-whitepaper Sales Tax 101 On-Demand Webinar: https://www.salestaxinstitute.com/sales-tax-education/sales-tax-101-on-demand-webinar Sales Tax Jumpstart Live Online Class: https://www.salestaxinstitute.com/sales-tax-education/sales-tax-jumpstart Consulting Service: http://www.yettertax.com/about-us-services/

Scaling the E-Commerce Market with Jungle Scout

Play Episode Listen Later Jun 18, 2019 35:05

It's a jungle out there. Today we invite you to reflect on the state of the internet world we live in as entrepreneurs and the impact e-commerce can have on hundreds of thousands of people. One of the most interesting trends we are seeing in the arena is the service companies popping up to support the thousands of Amazon merchants out there. Today's guest, who quickly turned his back on a career in engineering in his twenties, started dabbling in Amazon sales until he came up with the idea for Jungle Scout just before taking off on a three-year world tour. He talks to us about how he spent those years living the true entrepreneur experience while actually building his now 100 person company. Jungle Scout searches, captures, analyzes and refines billions of data points from Amazon to deliver the most accurate data in the industry. His 200,000 plus customers were all clearly in need of his merchant scaling tools. Jungle Scout also offers numerous free educational resources to give young entrepreneurs everything they need to succeed. Episode Highlights: How Greg convinced his wife to give everything up to travel the world. The hesitation, the results, and the payoff of that path. The employee structure of Jungle Scout. The company's original design and what it has evolved to today. Stories that stand out as models of success for Jungle Scout. The Five Minute Pitch – what it is and how it's helping entrepreneurs succeed. How the Jungle Scout scholarship program is motivating young entrepreneurs. What's coming up for Jungle Scout. The company's new initiatives for bringing ease into scouting suppliers and merchandise. How his products have created friction with people in the business but also brought them in as clients. Transcription: Mark: Alright allow me to relax philosophically here for just a minute and I invite you to reflect on just how impactful our current era is with the Internet. Back at Traffic & Conversion in February, I actually hear Richard Branson talk about what they would do to get attention and PR; crazy stunts, parachuting into places and doing these incredible things just to be able to impact large volumes of people. Well as online entrepreneurs we have that at our fingertips and can do that often from our bedrooms just by putting up a good marketing campaign online. But we have the ability to impact thousands of lives and have this network effect as well of these thousands of lives impacting other people's lives. And I looked at where we're at with the Internet today and I think one of the most influential areas are all the service companies that are popping up and SaaS companies popping up to service the Amazon merchants that are out there. And I'd say by far one of the leaders of the pack is Jungle Scout. They—most of everybody that is in the Amazon world, you know who Jungle Scout is. They're kind of ubiquitous with this idea of product research. Joe, you got to talk to Jungle Scout in this week's podcast. Joe: Yeah. Greg Mercer founded Jungle Scout just a few years ago; 4 ½, 5 years ago, an interesting story. Look we talked all about how he came up with a concept, even where he met his wife Lisa, how we started the business, travelled with his wife Lisa for 3 years overseas while growing Jungle Scout. He has only settled back in Austin for the last year and a half, and the size of the company. And then really it was about his entrepreneurial journey. And then we touched on some of the key features in Jungle Scout and some of the other things that Greg has done with his good fortune like scholarships that you can find on the Jungle Scout website and in the show notes here. You know being entrepreneurs and having an easier time impacting people one on one or directly is something that we know here at Quiet Light because we're fortunate enough to be in a situation where we do work one on one with most people. And we know what it means when they sell their business or buy a business and get to stay home and see their kids more. We talked about that a little bit with Greg and like most entrepreneurs he started Jungle Scout to make money. But now that he makes great money that relieves the stress, right? We all want to have money in our bank account to relieve the financial stress but the big thing that fills his cup is the impact that he's having on individual lives. And he gets to hear about that impact when he goes out to conferences and they have a booth like out at Prosper and people come up to him and say listen this is my story, this is how Jungle Scout changed my life. And Greg says quite honestly look it wasn't Jungle Scout; it was you, it was your effort, it was your risk, your reward. Jungle Scout was just a tool that you used. So he's very humble about that but a great guy. Just a good human and I think that there are 2 or 3 things that come out of this podcast. First and foremost you get to hear a great entrepreneur story. He didn't go to school for business yet here he is running a business with 100 the least. What it's like to travel all over the world with your wife? It's right for some people, it's wrong for others. And then just the good things that he's doing with Jungle Scout Scholars and then all the features that Jungle Scout has, and the scariest one. And folks you've got to listen all the way through because we talk more about it at the very end. This is not a pitch for Jungle Scout. It's more of a story of entrepreneurial success. But you can literally find—can I give this away Mark? Can we give it out, too much information; what do you think? Mark: Oh no it's a great tease so get to the end. Joe: You can find your favorite product on Amazon and then use the Jungle Scout tool to find out who the manufacturer is in China. It is scary. But like Greg said it doesn't mean you're going to be successful. We know that all great ideas don't achieve success. There's lots of motes around these great listings on Amazon so it's no guarantee of success even though you find them in [inaudible 00:05:10.9]. But, great podcast, great guy, looking for to get to know him over the years as well. Mark: So he's down in Austin, right? Joe: Yes he is. Mark: Is he going to come to our meet-up coming up at the end of May? Joe: Yes he is. Mark: And when and where is that meet-up? For anyone in the Austin area or who has always wanted to go to Austin area, this might be an awesome opportunity to meet Joe. I probably won't be there. Amanda will be there as well and some really, really good people are showing up to this as well. Joe: Yeah everybody that we've worked with over the years that's down in Austin are getting an invite and hopefully [inaudible 00:05:44.1] groups is going to go. Actually, one person replied today and said thanks for inviting all my friends. It's like you're throwing a party for my friends. I appreciate it. It was pretty funny. And that was RJ at 101. It's going to be May 29th at Oasis at Lake Travis from 6 to 9 pm and it's just drinks nor dares and coming out with friends. Mark: Awesome, and we're going to have a page up on the Quiet Light Brokerage website. We're going to make sure it's included in the e-mails that get sent out. And also on the show notes for this podcast so that you can RSVP if you do want to attend. We would love to see, we'd love to host it for the night; bring a friend, bring lots of friends. It should be a few hours of just really good networking and getting to know some really key players in the space. So please do show up. But now let's get to the good stuff [inaudible 00:06:27.7] Joe: Let's do it. Joe: Hey folks it's Joe here at Quiet Light Brokerage and today we've got another great guest on the Quiet Light Podcast. His name is Greg Mercer. Greg, how are you doing today? Greg: Joe I'm doing fantastic. Thank you very much for having me on and it's going to be fun to talk to you. Joe: Founder of Jungle Scout and many other things; a very impressive guy at a very young age. I just looked at your LinkedIn profile, listened to a couple of things on YouTube, and I saw your wife talking about you as well which was all positive by the way. Greg: Oh, that's good to hear. Joe: Well you know the drill, we don't have a whole lot of fancy introductions. So for those that don't know you and don't know the Jungle Scouts can you give a little bit of background on yourself and the business itself? Greg: I'd be happy to. So it's probably most relevant to rewind back to my college days real quick. I went to school to be a civil engineer and graduated. I got a job working as a civil engineer and I just didn't like it at all. I want to become an entrepreneur so I tried a number of different things. But the 1st thing I had a little bit of success with was selling physical products on Amazon. And that's ultimately what led me to quit my job. I was able to kind of replace my income by doing that. My wife and I actually at that point sold all our belongings and started traveling around the world and living out at Air B&B's and running our business from there. And one thing led to another and I—the biggest problem that I had with scaling my Amazon business was finding new products to sell. So I had a number of products up, some of them are doing really well, some weren't doing really well. I didn't really know why some were doing well and some weren't. And what it came down to was the amount of demand there was on Amazon for these products. So being kind of an engineer by background and a very data driven person, I was able to create some algorithms to estimate how well all products on Amazon sell. And that was ultimately how Jungle Scout got started. So I'd never started a software company before but I 1st built a simple extension. I was like no one will probably ever buy this thing but if nothing else I can just use it for myself. And it turns out we were able to get people to buy it because if you fast forward all the way today there's about roughly 100 people that work in Jungle Scout. We have over 200,000 customers so it's grown quite a bit since the 1st day when I didn't think anyone would buy it. Joe: That is absolutely crazy; 100 employees and did you say, 200,000 customers? Greg: Yup over 200,000. Joe: That's amazing. So I want to talk about a few things, I want to talk about you travelled the world with your wife while starting Jungle Scout so that's probably the most important thing. I love the fact that you went to school for civil engineering and then took a completely different path in the sense as an entrepreneur. But then you were able to start it as an entrepreneur while traveling the world and with your wife of all things. And then I want to talk a little bit about what Jungle Scout does and a couple of the other things that you're doing because of the good fortune you've had in the business through Jungle Scout. But let's get personal for a minute. I mean you are what 30, 31 years old I'm guessing? It looks like— Greg: 31. Joe: Right. So you've been at this for a long time. Did you meet your wife in college? Greg: I did actually so yeah we both went to school at Auburn and that's how we met. Joe: Amazing. And she actually was willing to sell everything and travel the world with you or was it her idea to do that? Greg: I think it was my idea. I had read Tim Ferris' book 4-Hour Workweek and I was like well this is pretty cool. Instead of living here we could go live in all these cool exotic places in much less money. And so I was like Elizabeth we should go and try this. And she was like yeah you're an idiot. We're not doing that. But I kept on bringing it up over the months and she's always really enjoyed travel. I think her biggest hesitation at the time was she was working for Target and was on a pretty fast crew path. And I think that's where she envisioned her career moving forward. So I think that was her biggest hesitation. It was like man I'm kind of going to give up my career a little bit, or at least put it on hold if we're going to do this for a year or 2 or 3 years or whatever. So I think that was her biggest hesitation but she's like you only live once let's go for it. And yeah we both ended up loving it. We did it for 3 whole years so we both ended up loving it a lot. Joe: And you launched Scott but just before you took off for a while you were over in Southeast Asia? Greg: Yeah it was actually just before I took off. I like the week before we took off. Joe: And how many years ago was that? Greg: That was is January of 2015, so 4 ½ years ago. Joe: So really you've run the business for the 1st 3 years of its existence by traveling. Greg: Yeah. Joe: That's incredible. Now the 100 employees that you have are they mostly remote, mostly they're in Austin, whereabouts in the world are they? Greg: When we started the company it was fully remote. I was traveling around so I didn't have an office to hire this people in. So we are fully remote. In January of 2018 is when I moved to Austin. That's where I live now. Since then we've been doing a lot of our hiring in Austin. So I think about maybe 40 of the people are in Austin now and the rest of the team is either remote. And then we also have an office in Vancouver. And then we opened up an office in Shenzhen in China about 6 months ago. So some of the team is there now. Joe: Amazing. So we'll talk about what some of those offices do for Jungle Scout and the subscribers in a bit. Now that you've gone through college, marriage, travelled the world, entrepreneur, you worked with directly and indirectly and inspire a lot of young entrepreneurs all over the world. Is selling everything, packing up, and traveling the world something you would say you got to do to that young man or woman that has the opportunity and is not tied down to things of this nature? Greg: You know I'd say it's not for everyone. And for me, it'll probably be like one of the most fond memories of my whole life. I kind of go in through a period. I think I learned a ton about myself. I met a lot of really interesting people. I learned a lot about different cultures. I think we visited roughly 30 different countries. We would spend about a month sometimes 2 months in each country. So when you spend like a month or 2 somewhere sometimes a little longer but you get like a pretty good sense of just kind of like what day to day life is and what the culture is really about much more than like on a weeklong vacation. So during that, I got to just learn a ton about all these different countries, fascinating things that a lot of countries do like very well. I was able to bring back individual things. I think certain countries do very well so that was really cool. So I'd say it's definitely not for everyone. I think to a lot of people it's very stressful. You're moving all around the world and you don't have any kind of—or we didn't have any kind of a home base. So with all that being said it's definitely for everyone. But if you're interested in it and that seems like something that you'd enjoy I would definitely recommend for you to try. Joe: Is there a particular book that you would have and go to? Is it Tim Ferris' 4-Hour Workweek or is there a great travel one? Greg: Probably. Joe: Probably; okay. Greg: Yeah I'll probably just do the Tim Ferris' 4-Hour Workweek. It's a little bit outdated now. I think it was written over a decade ago now but the spirit is still the same. Joe: I'm reading one of his books now and I'm looking around like my office here. I don't see it but it's the tools to tighten switches. It is one giant book. The great stuff all from the podcast off from those he's taken over the years and a lot of the 4-Hour Workweek stuff as well. It's funny we've had Bill D'Alessandro on the podcast. Do you know who Bill is? Greg: The name rings a bell. Joe: He's from South Charlotte and he runs a consumer products group down at Charlotte. He does a lot of speaking, very close friends with Andrew Youderian from eCommerceFuel and Bill had that same 4-Hour Workweek life at one point and do the same thing working from a beach in Southeast Asia or somewhere. And we talked about this on the podcast now he has staff, an office, a warehouse; in many ways just like you. And he finds that he actually has more freedom now than before because he's got people that can actually do everything for him instead of having virtual assistants that he has to check in with every day. Greg: Right. Joe: So it is not for everyone like you say but certainly something to explore. It's not for me and my wife. I was in your shoes once upon a time when I was living in the frigid cold of Portland Maine for those folks that are listening out from Portland Maine. And this is back in the day when I heard a commercial for GoToMeeting.com I'm like what? What is that? And I went across the hall—I signed up for a free trial. I went across the hall to my other office and log in get the free thing and then go to my PC is what it was. It was a derivative of that. And I log into my PC from across the hall, this is 2nd nature now but I was amazed. I was like this is incredible. I went home and I told Christiana and said hey we're going to Florida for the winter. And she said we are not, you're an idiot. [inaudible 00:15:35.1] we did it for 5 years and then we got the hell out of Maine because it was too cold. Sorry for those folks that are still there. Were in North Carolina now and do love it. But this isn't about me it's about Greg Mercer and Jungle Scout. So let's talk about Jungle Scout and what it does. I know what it does. I've used it a little bit in the past. I know a lot of clients that bought and sold business with Quiet Light have used it. So can you just touch on what it does—let's talk about the progression of it; what it originally did and what it's evolved to today. Greg: Yeah. That's a good way to frame it. So it started out as just a Chrome extension. So most of the listeners are probably familiar with Chrome extensions which is a little add on that you install into your Chrome browser. And what it did is when you were visiting Amazon and you were on the listing or on a search page, you'd click this little Chrome extension and you'd see a little pop up. And on that pop up there was a number of different pieces of data. But the one that people care about the most is the estimated sales data. So that's what I was talking earlier; developing these algorithms that can estimate how well any product on Amazon is selling. Back then it was pretty poor accuracy, today a pretty high degree of accuracy. So that's how it started. Shortly thereafter we launched a web application and the primary functionality in there was again to find good opportunities on Amazon or find out how well things were selling. And that's kind of been transitioning over the years. We now have keyword research functionality. We now have functionality to help you find high quality suppliers or factories. Actually launching in 2 weeks is functionality to help you launch your product on Amazon. And then by the end of the year, it's going to be everything to help you kind of like manage and optimize your Amazon business as well. So the way we like or our mission here at Jungle Scout is to really empower and inspire Amazon entrepreneurs with the tools and resources they need to be successful. So we're building all that into our software but then we also have just tons of free resources in education and a whole bunch of other stuff just to help people be more successful on Amazon. Joe: Yeah I've looked at some of that both on your website on LinkedIn on YouTube. You are all over the place. It's pretty impressive the reach that you've got and the folks that saying you are praising Scott Voelker is somebody we know in common does that well and does it all the time. I love the empower people approach and to fulfill their dreams not only the staff that you have but the people that used to program, the 200,000 or so subscribers that you have. A lot of people in your—let's call your world, I want to call you an influencer because I think that's what you are Greg. So in your world, a lot of folks say I've made X many millionaires. You've heard a lot of stories over the years of the way that the tools that Jungle Scout has and provides to people how it's changed their lives, can you think of anything or anyone that stands out and what an impact it had in terms of with their Amazon business and how it changed their lives? Greg: I can think of a whole bunch of stories. And actually, I was—I think the last time we saw each other was at Prosper Show. And going to conferences and stuff like that it's always a great chance that I talk to all these customers in real life. So like probably a dozen times throughout that 2 or 3 day conference whatever it is like someone came up to me very emotional a few different times in tears but like just telling me this life story about how they found Jungle Scout and how it helped them create this business. And that's like a really, really special thing to be a part of. I never would've thought that in a million years like starting this business that people would come up to me in tears being like—just telling a story about how they were at a really low spot or they hated their job or whatever else and especially starting the business is what changed their life. A lot of them kind of attribute or say like Jungle Scout is kind of what caused that or encouraged them to do so or empowered them with the tools to have the confidence to do so. So yeah I mean there are tons of stories but I think most of them have like a ton of things in common, at least the ones that are most memorable are impactful to me. Joe: And it's the impactfulness I think that is most interesting. I think that with success and some of the things that we do, and you do, and Scott does and Mike Jackness another friend in common it's A. being a good human and helping people. There's peace of mind that you get with money in your bank account but there's pure joy, satisfaction, and other things that are so intangible by helping others and having people come up to you like that and say what you've created has changed my life, what you did changed my life, what you said, the way you helped me change my life and very impactful stuff. Greg: Yeah very much so and if you would have kind of—if I would really listen to this podcast not that long ago, just like 4 or 5 years ago, I would've been able to really like understand that at all. I don't think—at the time this seems like super shallow. But if I'm just being honest with myself, my only goal was just to make money. And the reason that was my goal at the time is like that's how I kind of like saw freedom. It's like okay I can quit my job or I have the security so I don't have to worry about it or I was always like—my 1st few years being an entrepreneur I was always so scared. [inaudible 00:20:59.8] like go back and get a job. Now it's like the most terrifying thing to me. So honestly—when I'm being honest with myself all I cared about was like the money at the time. And then kind of like as I felt like I was financially secure and kind of like no longer have those worries. That's when you're going to start asking yourself those questions like man what really does bring me the most happiness or like the most joy? And for me helping entrepreneurs is like very, very high on the list if not the top thing. So I would do these different case studies or free educational piece of content or whatever else. And people often say to me why are you giving all this away for free or why are you doing this it's only creating more competition for you or whatever else. And when I hear that it would just remind me of like yeah okay 5 years ago I would have said the same thing. I wouldn't have understood it but then I talk to these other people who are like successful entrepreneurs or whoever else and they're the ones who kind of like can understand that a lot better. It's like okay once you get to a certain point it's about okay what really brings you a lot of joy in your life, a lot of happiness and you want to optimize for doing those things. Joe: Yeah and that free content and everything you're giving it away for free but you're helping people and if you're in this for the long term it's going to come back around. And I think you're in this for a long term. Absolutely, yeah. Some of the things that you've done over the past are overflowing into other things that you have ventured into. And I want to talk about a couple of them. You and a group of friends have started something called the 5 Minute Pitch. I took a look at an episode or 2 of that. I've talked to Mike about it. I saw the one with Andrew from ECF on it. Do you want to talk about what 5 Minute Pitch is and how you're helping entrepreneurs? Greg: Yeah. So this kind of goes back to what brings me joy. And helping entrepreneurs is definitely one of them. It's also fun to hang out with other people I enjoy being around. So this was like a nice mixture of the 2. 5 Minute Pitch is shark tank style pitch competition where anyone with a small internet business who hasn't raised institutional money is eligible to pitch; so different people with all different types of businesses. Everything from a small software business to an e-commerce store to just developing a product and selling it through Instagram ads or whatever else. They pitch their business to myself and 4 other judges. And at the end of the season, the season actually ends in just a few weeks; we're giving the winner a $50,000 prize. They don't have to give up any equity in their business or anything. It's just prize money to help grow. So yeah it was a—we've only done one season of it. It was really fun and we'll probably do a few more seasons in the future. Joe: That's great now everybody that listens to the podcast knows that we don't pitch products and services. But I think that they all should look closely at Jungle Scout and 5 Minute Pitch. Take a look at it if you've got a product that's just taking off and you want to get more into the e-commerce world. Take a look maybe you could be on season 2. Who is Kevin O'Leary in the 5 Minute Pitch? Who's—and have you said you're dead to me to anybody? Greg: You know I've been watching some Shark Tank before thinking about these different lines and me and most of the other judges I think most of us are all just a little too nice to be Kevin O'Leary; which in results probably makes it a bit worse for television. But we're kind of just ourselves on the show. Joe: We had the founder of Happy Feet on the podcast a few weeks ago and he said that—and he did a deal with Robert on Shark Tank. Greg: Okay. Joe: He said that when you're on shark—and I've talked to 5 or 6 people over the years that have been on, when you're on Shark Tank when you finish up they make you go sit with a psychiatrist for an hour. You can't leave 10 minutes n. It's at least for an hour because they want to make sure that you're not going to kill yourself because of some of the things that some people have said about your business; so pretty rough. Alright so let's talk about something else I looked at before we jumped on the podcast here and that is the Jungle Scout scholar; JS scholar. What are you doing there man? Greg: Yeah. So it's just a scholarship program that we started just over the years I'm thinking of different ways and kind of like give back to the communities especially things I'm kind of passionate about. So that's one that we're doing. Each semester we're giving a scholarship to someone who's kind of like in business school or maybe computer sciences or something in that area who also has kind of like an entrepreneurial spirit. So it's pretty easy. Just create a little short video and submit it. Each semester we choose someone to give the scholarship to. And then with that also comes some mentorship for me to help them get their business off the ground. Joe: That's awesome. I mean it really is. A lot of people talk about giving back and helping others, young entrepreneurs, entrepreneurs themselves but you're actually doing it. How long have you been doing that program? Greg: I think we've given away 5 scholarships now so that would be about 2 ½ years I've been doing it. So it's cool. Joe: That's impressive. Now I'm going to talk to my 17 year old when we're off. He's applying to college next year and— Greg: Tell him to apply. Joe: He is not going to business school. He'll probably be an engineer or maybe an art student, who knows we're still working that stuff out. They change their minds a lot. They really do. Greg: Yeah I do too. Joe: I did as well. And we've actually had people that have put their kids through college and then bought them a business when they graduated which is very interesting. It's almost like they shouldn't have spent that's $200,000 on college [inaudible 00:26:30.4] part of the business but kids get to grow up a little bit. What's down the road, what's in the future for Jungle Scout? What things are you going to add that are going to help those 200,000 plus subscribers and fend off some of the competition down the road? Greg: Yeah we have quite a few product initiatives going on right now. We've really grown our product team a lot over the past 6, 12 months. We're going to really build out a lot of this stuff but most of it is around kind of what I spoke about earlier about right now the Jungle has got a tool at least that gets you up to until you launched your product on Amazon. We have a few other businesses that we have acquired or built over the years but we're kind of combining those into a singular tool. So by the end of the year, the additional functionality you can expect is like the stuff from those other tools. So helping you manage your business in our PPC and optimize it; all these different areas is kind of like what we're building in this year in 2019. Joe: That's great I know that finding a great PPC company is often hard for folks, managing products we've got folks that buy businesses and just—I am looking for a great company that managed the entire thing for me so that's fantastic. One of the biggest issues people have Greg as you probably know is sourcing great products. Is that down the road or is that part of Jungle Scout at all now? Greg: Yeah so we actually just released—so our newest feature is actually probably the one I'm most proud of called supplier database. And we actually just released this like a month ago. So it's pretty cool Joe. So we—I guess you've seen this too that a lot of people have a lot of problems finding high quality suppliers. And I did too. And I also found like this was one of the biggest pain points of our audience. And when I really started to get into this, it's like okay what's the problem here because there are tons of factories on Alibaba. That's how I used to find all my factories, just on Alibaba. There's tons of them and what it really comes down to is it wasn't like a shortage of factories or finding the factories or being able to communicate with them what it really came down to was finding a quality factory and vetting the factory before you did a production run. So like most of the horror stories that you hear are that the quality didn't come out as expected or every once in a while you hear a horror story about someone who a factory just ran off with someone's money or whatever else. And so there's a few ways I used to try to combat this; one was ordering a sample at a time. However, the problem is that when you're only ordering one unit, of course, they're going to give you the nicest one. They're going to like polish that one up extra but it's like oh can I do that on a production run of a 1,000 or 2,000 units and that's oftentimes not the case. So that was one way I tried to combat it. The other way was to get an inspection once the production run was finished. The problem there is when it didn't meet the quality sometimes you weren't able to get them to really fix what you wanted or is like sometimes a little bit too late at that point. So anyway the ways to try to combat it, the list was long but [inaudible 00:29:30.6] that effective. So what we did is we collected all of the US import trade data. So when you import something in the US you file some paperwork, yo give it to the government, and through this law called the Freedom of Information Act in the US, we're able to get access to that data. We put it into a database. We made it easy to filter and search through. And the way that it's able to solve this quality problem is you're able to find factories on there, you're able to see who their customers are, how often they import into the US, and how long they've been importing to US, the quantities; a number of different factors like that. So that's really cool but we kind of took it one step further by being able to essentially search for any Amazon product or any brand on Amazon in here and you could find out who are their factories. Joe: Holy cow, that's amazing and almost offensive in some ways. I would think if you're an Amazon seller and you're able to scrape through their manufacturers. That's pretty incredible. Greg: Yeah it's really incredible. It's like the old way for me of finding factories was when I found product idea I went to Alibaba, order a bunch of samples, whatever else. My new way of finding factories is like when I find something that I want to sell, and like sitting next to me right here is a little espresso. So if I want to sell espresso cups, I would just go to Amazon, I would search for espresso cups, I would see who gets the highest ratings. So who has like 5 out of 5 stars with a whole bunch of reviews and I just find their factory. Because then like right away then you know that there's a high quality factory. Joe: And you did that through sheer tenacity and hard work. What you're doing at the Jungle Scout is you're giving a tool to do it for them. Greg: Yeah. That what— Greg: And that's what I do now; I just who the factory is of the highest quality product on Amazon and I just contact them and I buy from them. So it's a much easier way to do it. Joe: Wow that's amazing; that's scary and amazing. Still, though I think for those that are going oh my God I'm never going to sell on Amazon because of that; it's that moat that you build around with thousands of reviews. I did a valuation today for something that is a fairly competitive it's in a very competitive niche but they've guy 17,000 reviews and the closest one has maybe like 1,100. That's an enormous gap in reviews. So there's a pretty big moat there. Greg: Right, and you know this Joe it's—when we launched this there was definitely—we probably got a dozen emails of like really pissed off people because now everyone can find out who their factory is. But you realize this because you deal with people who are buying business all the time but it takes a lot more than just knowing a factory to create a successful business, right? [inaudible 00:32:09.4] like a lot of other steps. Joe: A ton of a lot. Greg: So just because people can find out who your factory is that doesn't mean that they can just copy your whole business. There's a lot more steps to it than that so I wouldn't be too worried about it. We actually saw this exact same thing when I originally launched Jungle Scout because prior to Jungle Scout no one knew how well products on Amazon were selling. And now all of a sudden you could see how well every product on Amazon sold. So same thing I got like dozens of people emailing me pissed off because I was telling the whole world about how well their products were selling on Amazon. Joe: That was—they were pissed off shortly before they subscribed probably though, right? Greg: Right. So we've kind of seen a little bit of a similar thing with the supplier database. And then to your exact most people are like wow, well I'd rather have all this data and the whole world be able to know who my factory was than this type of thing not exist out there. Joe: Yeah I hate you but I'm going to give you my money every month because you created a great product. That's awesome; fantastic. I didn't know that it went to that depth and level where you can find the products manufacturer. That's incredible. Alright, Greg, we're running out of time, obviously, Jungle Scout is how do they find it? JungleScout.com? Greg: Yeah JungleScout.com if you're not familiar with it you can read up all about it on the website. If you're interested in just selling on Amazon too, I might be a little bit biased but I think we have like the best educational content out there and it's all for free. You can find all of it under the free resources section of the website. So any format you like learning in whether that's on audio or video or written it's all on there. There's a lot of—a bunch of end up guides. We do this thing called the Million Dollar Case Study where we launched 4 products from start to finish. You get to see the products and everything along the journey. So yeah that's tons of stuff on there if you just [inaudible 00:33:52.5] on Amazon too. Joe: Fantastic; a great educational tool and a great product. And for those out there with kids that are going to college in the next couple of years how do they get to the JS Scholarship or scholar site? Greg: JungleScout.com/jungle-scholar and you can find in the footer of the website too. Joe: I got it. I found it on LinkedIn. And then there's the 5 Minute Pitches well we'll put all this in the show notes as well. Greg Mercer, thank you very much for spending time with us. I know you're a very busy guy. I appreciate it. Greg: Thanks again. I'm glad I'm here. Take care. Links and Resources: Jungle Scout Jungle Scholar The 5 Minute Pitch

E-Commerce Businesses: State of the Merchant Report for 2019