The Quiet Light Podcast Incredible Exits: The Beard King (Part One) With Nicholas Galakovic
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.
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].
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